Good morning and good evening ladies and gentlemen. Thank you for standing by and welcome to Tuya Inc.'s Third Quarter 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. We will be hosting a question-and-answer session after management's prepared remarks. And I will now turn the call over to the first speaker today, Mr. Reg Chai, Investor Relations Associate Director of Tuya. Please go ahead, sir.

Thank you. Hello everyone. Welcome to our third quarter 2021 earnings call. Joining us today are Founder and CEO of Tuya, Mr. Jerry Wang; Co-Chairman and President of Tuya, Mr. Leo Chen; and our CFO, Ms. Jessie Liu. You can refer to our third quarter of 2021 financial results on our company's IR website at ir.tuya.com. You can also access a replay of this call when it becomes available in a few hours on our IR website. Before we start, please note that this call may contain forward-looking statements made pursuant to the Safe Harbor provision for the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and observations that involve known and unknown risks, uncertainties, and other factors not under the company's control, which may cause actual results, performance, or achievements of the company to be materially different from the results, performance, or expectations implied by these forward-looking statements. All forward-looking statements are expressly qualified in their entirety by cautionary statements, risk factors, and details of the company's filing with SEC. The company undertakes no duty to revise or update any forward-looking statements for the selected events or circumstances after the date of this conference call. I will now turn the call to our first speaker today Founder and CEO of Tuya, Mr. Jerry Wang.

[Foreign Language] Hello everyone and thank you for joining us on our third quarter of 2021 earnings conference call. The third quarter of 2021 was a challenging quarter for the industry despite the impacts of the global pandemic which caused volatile sequential growth, Amazon store closures, shipping difficulties, and other global events. We still achieved roughly 45% year-over-year growth in our total revenues, which reached $85.6 million, in-line with our expectations and guidance. Our SaaS and other business segments, which are mainly 2B services were less affected by the systemic risk factors and achieved strong year-over-year growth of over 210%. Our overall gross margin remained stable, increasing slightly on a sequential basis to reach 42.6% for the quarter. During the quarter, we leveraged our industry leadership position and empowered our main customer groups to remain competitive amid macro adverse factors such as chip shortage and supply chain constraints. Next, we'll like to share our quarterly progress in IoT PaaS, SaaS, and developers. For the trailing 12 months ended September 30th, 2021, the dollar-based net expansion rate for our IoT PaaS business was 179% as we continue to maintain one of the leading rates for this metric in the industry for the eighth consecutive quarter since we began tracking this metric. Our number of premium customers, which are defined as customers contributing to over $100,000 in IoT PaaS revenue during the trailing 12 month period grew to 306 as of September 30th 2021 from 289 as of June 30th, 2021. During the third quarter, we acquired over 1,000 new IoT PaaS customers growing our IoT PaaS customer accounts by 46% year-over-year. Meanwhile, the number of brands on our platform grew to over 3,800 from 3,300 at the end of last quarter. Some of these customers include one of the top three…

Thank you, Jerry. Before I begin, please note that all amounts are in U.S. dollars and all comparisons on a year-over-year basis unless otherwise stated. We navigated a challenging quarter to deliver approximately $85.6 million in total revenue, approaching to the higher end of the guidance range that we previously provided. Our IoT PaaS revenue reached $72.6 million achieving year-over-year growth of 37.4% compared with the first half of 2021 is the relatively slow year-over-year growth for third quarter IoT PaaS revenue was mainly in the range of challenges Jerry mentioned earlier. Because we are in a sector of IoT that involves real physical devices, the majority of which are consumer level devices, our short-term revenue may be impacted by the downstream fluctuations of the entire consumer electronics industry. We believe that looking at our performance for a longer period of time, such as the sum of the first three quarters of 2021 will provide a better picture of our actual condition and long-term growth. Total revenue for the first three quarters of 2021 was $227.1 million, up 94% year-over-year and IoT PaaS revenue was $199.3 million, up 105% year-over-year. We totaled 306 premier IoT PaaS customers for the trailing 12 months ended September 30, 2021, up 87.7% from 163 for the same period ended September 30, 2020. During the third quarter of 2021, premium customers accounted for approximately 89.2% of our IoT PaaS revenue. Number of IoT PaaS customers and new customers we served during each quarter grow sequentially this year. This expanding customer may checks demonstrate a healthy customer structure and a potential for future organic business growth. Our dollar based net expansion rates for IoT PaaS segment was 179% for the trailing 12 months ended September 30, 2021, flat year-over-year. We have maintained 160% or higher, which…

Thank you. [Operator Instructions] Your first question comes from the line of [indiscernible] Lee with CICC. Your line is open.

[Foreign Language] Thanks management. Congratulations on the continued strong growth of SaaS business. Could you give us more color on development plans for SaaS business? Which areas are your top priorities to expand next, whether there will be organizational structure adjustments? Second question is could you share some latest scores and plans on domestic business? Should we expect to increase on the proportion of the domestic revenue in the future?

Thank you, [indiscernible]. Yes, the overall SaaS and other segment is growing strongly and we saw a huge demand for IoT upgrades in various business scenarios other than home. With the gradual improvement and the maturity of our SaaS and industry developer products, we can better serve and meet the needs of different business scenarios for IoT, providing business scenarios operators with high efficiency energy saving safe and user experiences. In the third quarter, we delivered SaaS and industry developer products to over 400 customers. Next, I will give an update and the development directions of the segment. Hotel and apartments SaaS, we have currently covered over 40,000 hotel and apartment rooms in China, connecting approximately 500,000 connected by Tuya consumer electronics devices in daily use. And a substantial majority of the revenue in the segment was generated in China. With the improvement of our software, products, and enrichment of how connected by Tuya's hardware ecology for hotel and apartments, we foresee that there is still a considerable room for growth in the future. And also, with the ease of the COVID situation, we received more hotel and apartment SaaS request from overseas customers. In the future, we will work with our OEM and brand customers together to grow the overseas hotel and apartments segment. For real estate and community SaaS, we delivered good result in this segment this year, and also in third quarter. Many very well-known Chinese real estate developers and property management firms purchased real estate and community SaaS from Tuya in third quarter, including New Hope Service, an excellent group both the top real estate group and property management firms in China. They further applied Tuya SaaS to residential communities. For example, [indiscernible], which started cooperating with us since last year, as applied Tuya's real estate…

[Foreign Language] Now, we first establish our IoT business in the overseas market and we started our IoT business in China in the first half of 2019. We've made very good progress in the past three years. Right now the distribution of our business across the global region is becoming more balanced and will continue to increase the proportion of our business in China. We now have very active cooperation with different brands. So, devices empowered by Tuya has penetrated into many distribution channels, for example, consumer electronics products that's powered by Tuya can be found on all major e-commerce platforms in China. We also cooperate with channels such as the home improvement market, telecom operators, et cetera, so they can sell smart devices that are powered by Tuya. SaaS an industry cloud developer businesses have also carved out a niche market in China as these scenarios use Tuya IoT SaaS or IoT Core, they will also adopt a large number of products empowered by Tuya as the -- and the operators of these scenarios many of which are extremely well-known enterprises with very strong negotiation power in the market. So, they can require top tier brands that they work with to deploy Tuya IoT PaaS, which is very beneficial for us because this coming in effect will be more powerful when dealing with friends by ourselves in terms of customer acquisition. We'll continue to focus on business opportunities in China and consistently increase the percentage of revenue generated in China. Thank you

Thank you. Your next question comes from the line of Yang Liu with Morgan Stanley. Your line is open.

[Foreign Language] I will do the translation. The first one is -- the first question is can management share about the financial contribution from the newly released IoT PaaS on private cloud? Is it a substitute of existing IoT PaaS addressable market or is a completely new addressable market for Tuya? The second question is, as it is approaching the year end, when Tuya discuss with the premium customer or big customer about the next year's demand, what is your outlook? Could you please share about their shipment plan or demand plan? Thank you.

[Foreign Language] Let me take the first question. Now, our private PaaS is filled in an early developmental stage, many large accounts are showing interest such as large telecom operators, large retail channels, and some well-known leading brands. And a lot of them are in the preliminary communication process with us, for example, a global top 10 brand of electric power tools and some large telecom operators in the South and Southeast Asia. And there will be some private cloud deployment costs, maintenance costs, and IoT PaaS charges upon deployment of the devices. As we are still in the initial stage of the development of the business, we are going to continue to improve our potential products and pricing models et cetera. Thank you.

I just want to add ON one last point for this question. So, our private cloud the PaaS is a -- in addition to our major product, the public cloud, this is not going to replace the existing market, this is to open a new market, because there are certain customers, especially some large customers just have strong requirement need to place all their data on their own private cloud, which the public cloud product cannot serve. So, we believe we offer a private cloud product, which still enable all the devices deployed on the private cloud able to connect our other brands on our private cloud is able to open a new market for us. For next question, which -- Liu Yang asked, let me take on it. Usually, we communicate with our major customers about their plan for next year at the end of December. At present, customers are closely observing the holiday season sales, shipping prices, and a chance in raw material prices. They are generally now more cautious compared to the same time last year. Branded customers are concerned about the impact of high inflation on purchase power, the chip shortage, shipping delays, and the currently still high sea freight prices, which are all happening in parallel. So, generally speaking, it is currently a stage of weakness in global consumption. However, a relatively good situation is that from our communications with brands, they have exercised the caution. So, most of brands inventories are in a healthy condition. Although there are many uncertainties in the macro situation, major accounts have generally expressed the interest grow and continue to expand new product categories next year. This is also a major advantage for Tuya IoT cloud platform. On our cloud platform, we are constantly launching new product support capabilities, allowing reputable customers with channel advantages to easily expand their IoT products. For example, as the epidemic gradually eases, although IoT devices will embrace strong demand, many of our large accounts have expressed interest in working on outdoor IoT devices. So, we will continue to help customers to expand by creating more valuable IoT devices.

Thank you, Jessie. Thank you, Leo.

Okay. So, I think -- go ahead.

Thank you. This is the end of the Q&A session due to the time constraints. I'd like to hand the conference back to our management for closing remarks.

Okay, yes. So, before we end the call, I want to make one last clarification. We noticed this morning, there's news saying that Tuya missed the market consensus for the loss. We just want to clarify, we're contacting the new source to correct -- taking the new source met the non-GAAP loss from the market consensus, which is $0.06 per share compared to the GAAP loss. Our non-GAAP loss is also $0.06 per share, so it does match the market consensus. So, thank you again for joining our call. If you have any further questions, please feel free to contact us -- our request through the IR website. We look forward to speaking with everyone in our next earning call. Hope you have a good day.

This concludes today's conference call. Thank you for participating. You may now disconnect.