Viomi Pivots to Water Solutions, Divests IoT@Home for RMB65M

TL;DR

**VIOT is shedding its IoT@Home segment to double down on water solutions, a risky but potentially rewarding pivot that will reset its financial baseline.**

AI Summary

Viomi Technology Co., Ltd. (VIOT) reported a significant strategic shift in its 20-F filing for the fiscal year ended December 31, 2024. The company divested its IoT@Home business (excluding range hoods, gas stoves, and water heaters) in August 2024 for RMB65 million in cash, aiming to implement a "Focus" strategy for home water solutions. This divestiture materially impacted the company's financial structure, with revenues contributed by VIEs decreasing from 88.9% in 2023 to 45.0% in 2024. The historical financial results of the divested IoT@Home business are now reflected as discontinued operations. The company expects its financial condition and results of operations for 2025 to be materially affected by this divestiture, making historical results not indicative of future performance. Viomi continues to operate in China through its WFOEs and VIEs, with contractual arrangements providing control over the VIEs, which include Beijing Yunmi Technology Co., Ltd. and Guangzhou Interconnect Technology Co., Ltd. The company acknowledges risks associated with these contractual arrangements, including potential ineffectiveness compared to direct ownership and uncertainties in PRC legal enforcement.

Why It Matters

This strategic divestiture signals a major repositioning for Viomi, narrowing its focus to the competitive home water solutions market. For investors, this means a potentially leaner, more specialized company, but also one with a significantly altered revenue base and future growth trajectory, as evidenced by the 45.0% VIE revenue contribution in 2024 compared to 88.9% in 2023. Employees and customers of the divested IoT@Home business will experience a change in ownership and operational structure. The broader market will observe how Viomi's 'Focus' strategy impacts its ability to compete against established players in the home water systems and kitchen appliance sectors, particularly given the uncertainties surrounding its VIE structure in China.

Risk Assessment

Risk Level: high — The risk level is high due to the significant strategic shift and the inherent risks of Viomi's corporate structure. The 2024 reorganization transaction, which involved divesting a substantial portion of its business for RMB65 million, will materially affect 2025 financial results, making historical performance irrelevant. Furthermore, the company's reliance on contractual arrangements with its VIEs, which contributed 45.0% of total revenues in 2024, presents substantial legal and operational uncertainties under PRC laws, as these arrangements may not be as effective as direct ownership.

Analyst Insight

Investors should carefully re-evaluate VIOT's investment thesis, focusing on its new 'Focus' strategy for home water solutions and the financial implications of the divestiture. Monitor the company's performance in its core water business and assess its ability to generate sustainable revenue and profit post-reorganization. Due diligence on the enforceability and stability of its VIE structure in China is also critical.

Financial Highlights

debt To Equity

Not Disclosed

revenue

Not Disclosed

operating Margin

Not Disclosed

total Assets

Not Disclosed

total Debt

Not Disclosed

net Income

Not Disclosed

eps

Not Disclosed

gross Margin

Not Disclosed

cash Position

Not Disclosed

revenue Growth

Not Disclosed

Revenue Breakdown

Key Numbers

• $0.00001 — Par value per Class A and Class B ordinary share (Standard par value for Viomi's shares)
• 203,824,094 — Total ordinary shares outstanding (As of December 31, 2024, reflecting issued and outstanding shares)
• 101,059,544 — Class A ordinary shares outstanding (As of December 31, 2024, excluding reserved and repurchased shares)
• 102,764,550 — Class B ordinary shares outstanding (As of December 31, 2024)
• RMB65 million — Cash consideration for divestment (Received in August 2024 for the divested IoT@Home business)
• 90.2% — VIE revenue contribution (Percentage of total revenues from VIEs for the year ended December 31, 2022)
• 88.9% — VIE revenue contribution (Percentage of total revenues from VIEs for the year ended December 31, 2023)
• 45.0% — VIE revenue contribution (Percentage of total revenues from VIEs for the year ended December 31, 2024, significantly reduced post-divestiture)
• 3 — Class A ordinary shares per ADS (Each American depositary share represents three Class A ordinary shares)
• 7.2993 — RMB to US$ exchange rate (As of December 31, 2024, used for translations in the report)

Key Players & Entities

• Viomi Technology Co., Ltd (company) — Registrant and Cayman Islands holding company
• Xiaoping Chen (person) — Chief Executive Officer and controlling shareholder of Foshan Viomi post-reorganization
• Foshan Viomi (company) — Former VIE, divested in 2024 reorganization transaction
• Guangzhou Interconnect Technology Co., Ltd. (company) — New VIE after 2024 reorganization transaction
• Beijing Yunmi Technology Co., Ltd. (company) — Continuing VIE
• Zhumeng Hulian Technology (Guangdong) Co., Ltd. (company) — WFOE II, entered new contractual arrangements with Guangzhou Interconnect
• RMB65 million (dollar_amount) — Total consideration for the divestment of IoT@Home business
• Nasdaq Stock Market LLC (regulator) — Exchange where VIOT ADSs are listed
• Xiaomi Corporation (company) — Principal shareholder of Viomi
• SEC (regulator) — Securities and Exchange Commission

FAQ

Risk Factors

• VIE Structure Risks [high — legal]: Viomi operates through VIEs, which carry risks including potential ineffectiveness compared to direct ownership. Uncertainties in PRC legal enforcement and the ability to enforce contractual rights are significant concerns.
• Strategic Shift Impact [high — operational]: The divestiture of the IoT@Home business represents a major strategic shift. The company acknowledges that historical financial results are not indicative of future performance, creating uncertainty for investors.
• PRC Regulatory Environment [medium — regulatory]: Operating in China exposes Viomi to evolving PRC laws and regulations, particularly concerning VIE structures and foreign investment. Changes in these regulations could materially impact operations and profitability.
• Dependence on Contractual Arrangements [medium — financial]: The company's control over VIEs relies on contractual arrangements. Any disruption or challenge to these contracts could affect financial consolidation and reporting.

Industry Context

Viomi operates within the competitive Chinese home appliance and smart home market. The company's strategic pivot towards home water solutions suggests a focus on a segment that may offer growth potential, possibly driven by increasing consumer demand for health and wellness products. However, this also means competing with established players in the water purification and appliance sectors.

Regulatory Implications

The reliance on VIE structures for operations in China exposes Viomi to significant regulatory risks. Changes in PRC laws regarding foreign investment, VIE arrangements, or data privacy could materially impact the company's ability to consolidate VIE financials or enforce contractual agreements.

What Investors Should Do

1. Monitor the performance of the 'Focus' home water solutions business.
2. Assess the ongoing risks associated with the VIE structure.
3. Evaluate the impact of the discontinued operations on historical comparability.

Key Dates

• 2024-08-01: Divestiture of IoT@Home Business — Marks a significant strategic shift towards a 'Focus' strategy on home water solutions, materially altering the company's financial structure and revenue mix.
• 2024-12-31: Fiscal Year End — Reporting period for the 20-F filing, reflecting the impact of the divestiture on financial statements and VIE revenue contribution.

Glossary

VIE (Variable Interest Entity)

An entity that is controlled by a foreign-invested enterprise through contractual arrangements rather than direct equity ownership, often used by Chinese companies to circumvent foreign ownership restrictions. (Viomi operates through VIEs, and their revenue contribution has significantly decreased post-divestiture, impacting the company's financial reporting and control structure.)

Discontinued Operations

A component of a business that has been divested or is held for sale, and whose operations and cash flows can be clearly distinguished from the rest of the company. (The divested IoT@Home business is now reported as discontinued operations, meaning its historical financial results are separated from ongoing operations.)

WFOE (Wholly Foreign-Owned Enterprise)

A type of business entity in China that is wholly owned by one or more foreign investors. (Viomi operates in China through WFOEs alongside its VIEs, representing its direct operational presence.)

ADS (American Depositary Share)

A negotiable certificate issued by a U.S. depositary bank representing a specified number of ordinary shares of a foreign company. (Viomi's Class A ordinary shares trade in the form of ADSs, with each ADS representing three Class A ordinary shares.)

Year-Over-Year Comparison

The most significant change from the previous filing is the strategic divestiture of the IoT@Home business in August 2024. This has drastically reduced the revenue contribution from VIEs to 45.0% in 2024, down from 88.9% in 2023, and shifted the company's focus to home water solutions. Consequently, historical financial results are no longer indicative of future performance, and the divested business is now classified as discontinued operations.

Key Financial Figures

• $0.00001 — Class A ordinary shares, par value US$0.00001 per share * The Nasdaq Stock Market L
• $1 — t were made at a rate of RMB7.2993 to US$1.00, the exchange rate set forth in the

Filing Documents

• viot-20241231x20f.htm (20-F) — 4659KB
• viot-20241231xex2d5.htm (EX-2.5) — 140KB
• viot-20241231xex4d14.htm (EX-4.14) — 28KB
• viot-20241231xex4d15.htm (EX-4.15) — 102KB
• viot-20241231xex4d16.htm (EX-4.16) — 102KB
• viot-20241231xex4d17.htm (EX-4.17) — 113KB
• viot-20241231xex4d18.htm (EX-4.18) — 30KB
• viot-20241231xex4d19.htm (EX-4.19) — 55KB
• viot-20241231xex4d20.htm (EX-4.20) — 183KB
• viot-20241231xex4d21.htm (EX-4.21) — 112KB
• viot-20241231xex8d1.htm (EX-8.1) — 10KB
• viot-20241231xex11d2.htm (EX-11.2) — 61KB
• viot-20241231xex12d1.htm (EX-12.1) — 12KB
• viot-20241231xex12d2.htm (EX-12.2) — 12KB
• viot-20241231xex13d1.htm (EX-13.1) — 6KB
• viot-20241231xex13d2.htm (EX-13.2) — 6KB
• viot-20241231xex15d1.htm (EX-15.1) — 8KB
• viot-20241231xex15d2.htm (EX-15.2) — 2KB
• viot-20241231x20f010.jpg (GRAPHIC) — 39KB
• viot-20241231x20f019.jpg (GRAPHIC) — 21KB
• viot-20241231xex15d1001.jpg (GRAPHIC) — 31KB
• viot-20241231xex15d1002.jpg (GRAPHIC) — 11KB
• viot-20241231xex15d2001.jpg (GRAPHIC) — 11KB
• 0001104659-25-094717.txt ( ) — 17831KB
• viot-20241231.xsd (EX-101.SCH) — 110KB
• viot-20241231_cal.xml (EX-101.CAL) — 139KB
• viot-20241231_def.xml (EX-101.DEF) — 416KB
• viot-20241231_lab.xml (EX-101.LAB) — 884KB
• viot-20241231_pre.xml (EX-101.PRE) — 716KB
• viot-20241231x20f_htm.xml (XML) — 2804KB

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS 3 PART I 4 Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS 4 Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE 4 Item 3. KEY INFORMATION 4 Item 4. INFORMATION ON THE COMPANY 62 Item 4A. UNRESOLVED STAFF COMMENTS 90 Item 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS 90 Item 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 106 Item 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 114 Item 8. FINANCIAL INFORMATION 116 Item 9. THE OFFER AND LISTING 117 Item 10. ADDITIONAL INFORMATION 118 Item 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 128 Item 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES 129 PART II 131 Item 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES 131 Item 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS 131 Item 15.

CONTROLS AND PROCEDURES

CONTROLS AND PROCEDURES 131 Item 16A. AUDIT COMMITTEE FINANCIAL EXPERT 132 Item 16B. CODE OF ETHICS 133 Item 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES 133 Item 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES 133 Item 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS 133 Item 16F. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT 134 Item 16G. MINE SAFETY DISCLOSURE 135 Item 16H. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 135 Item 16I. INSIDER TRADING POLICIES 135 Item 16J. CYBERSECURITY 136 PART III 137 Item 17.

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS 137 Item 18.

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS 137 Item 19. EXHIBITS 137

SIGNATURES

SIGNATURES 140 i Table of Contents INTRODUCTION Unless otherwise indicated and except where the context otherwise requires, references in this annual report on Form 20-F to: "2024 reorganization transaction" are to the transactions to effect the divestment of our divested IoT&Home business by termination the contractual arrangements between Yunmi Hulian Technology (Guangdong) Co., Ltd. and Foshan Yunmi Electric Appliances Technology Co., Ltd., or Foshan Viomi, which has resulted in Foshan Viomi's shareholder, Mr. Xiaoping Chen, fully controlling Foshan Viomi and its subsidiaries including Foshan Xiaoxian Hulian Electric Appliances Technology Co. Ltd., Foshan Qutansuo Electric Technology Co., Ltd., Guangdong AI Touch Technology Co., Ltd., and Zhuawa Technology (Guangdong) Co., Ltd. Additionally, Zhumeng Hulian Technology (Guangdong) Co., Ltd. and Guangzhou Interconnect Technology Co., Ltd., or Guangzhou Interconnect, have enter into a new set of contractual arrangements, as a result of which the Company has controlled Guangzhou Interconnect and consolidated its financial results. " ADSs " are to our American depositary shares, each of which represents three Class A ordinary shares of par value US$0.00001 each; " AI " are to artificial intelligence; " China " or the " PRC " are to the People's Republic of China, excluding, for the purposes of this annual report only, Hong Kong, Macau and Taiwan; " Class A ordinary shares " are to our Class A ordinary shares of par value US$0.00001 per share; " Class B ordinary shares " are to our Class B ordinary shares of par value US$0.00001 per share; " divested IoT@Home business " are to the businesses and assets involving certain IoT@Home portfolio products (excluding range hoods, gas stoves, and water heaters) that have been divested by us in August 2024; " IoT " are to the Internet of Things, an interconnected network of devices that can communicate with one another through the internet; our " home water syste

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS This annual report on Form 20-F contains forward-looking statements that relate to our current expectations and views of future events. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigations Reform Act of 1995. You can identify some of these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "is/are likely to," "potential," "continue" or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements relating to: our operations and business prospects; our future business development, financial conditions and results of operations; our expectations regarding the home water solutions products market and the home appliances market in China; our expectations regarding the development of our overseas business; our expectations regarding the application of AI technology in home water solutions products; our expectations regarding our relationships with our ecosystem partners; our expectations regarding the success of our sales channel expansion and optimization; competition for, among other things, capital, technology and skilled personnel; our dividend policy; changes to regulatory and operating conditions in the industry and geographical markets in which we operate; and all other risks and uncertainties described in " Item 3. Key Information—D. Risk Factors ." You should read this annual report and the documents

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS Not applicable.

OFFER STATISTICS AND EXPECTED TIMETABLE

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE Not applicable.

KEY INFORMATION

ITEM 3. KEY INFORMATION Our Holding Company Structure and VIE Contractual Arrangements Viomi Technology Co., Ltd is not a Chinese operating company but rather a Cayman Islands holding company that does not conduct business directly and has no equity ownership in our VIEs. We conduct our operations in China through (i) our WFOEs and (ii) our VIEs with which we have maintained contractual arrangements. PRC laws and regulations restrict and impose conditions on foreign investment in internet and other related businesses in China. According to the Special Administrative Measures (Negative List) for Foreign Investment Access, our provision of internet information services falls within the restricted category and the equity ratio of foreign investment in the enterprises operating the business under the restricted category is subject to the cap of 50%. In addition, although our provision of e-commerce services falls within the permitted category, foreign investments in this business are still restricted by other requirements under related regulations in China. Accordingly, we operate this business in China through our VIEs, and rely on contractual arrangements among our WFOEs, our VIEs and the nominee shareholders of the VIEs to control the business operations of our VIEs. Our VIEs are consolidated for accounting purposes, but are not entities in which our Cayman Islands holding company, or our investors, own equity. Revenues contributed by our VIEs accounted for 90.2%, 88.9% and 45.0% of our total revenues for the years ended December 31, 2022, 2023 and 2024, respectively. As used in this annual report, "we," "us," "our company," "our," or " Viomi " refers to Viomi Technology Co., Ltd, its subsidiaries, and, in the context of describing our operations and consolidated financial information, our VIEs in China. Our VIEs currently include Beijing Yunmi Technology Co., Ltd., or Beijing Viomi, and Guangzhou Interconnect Technology Co., Ltd., or Guangzhou Interconnect, and,

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View this 20-F filing on SEC EDGAR