Tuya Inc. (NYSE: TUYA) Third Quarter 2022 Results Conference Call November 9, 2022 7:30 p. m. Eastern Time
Participating companies
Reg Chai – Associate Head of Capital Markets
Jerry Wang – Founder, CEO and Director
Jessie Liu – Senior Vice President, Chief Financial Officer and Chief Financial Officer
Conference Call Participants
Yang Liu-Morgan Stanley
John Wang – Goldman Sachs
Mingran Li – CICC
Operator
Good morning and good evening, girls and gentlemen. Thank you for being here and welcome to Tuya’s Inc. ‘s Third Quarter 2022 Results Conference Call. At this time, all participants are in listen-only mode. We will conduct an inquiry and respond after comments prepared by management.
I now give the floor to the first speaker today, Mr. Reg Chai, Associate Director of Capital Markets at Tuya. Keep going, sir.
Reg Chaï
Thank you. Hello everyone. Welcome to our call for the effects of the third quarter of 2022. We registered today with Tuya’s founder and CEO, Mr. Jerry Wang; and our Chief Financial Officer, Ms. Jessie Liu. The monetary effects of the third quarter of 2022 and the webcast of this convention call will be available on ir. tuya. com. A replay of this call will also be available on our online page. in a few hours.
Before proceeding, I refer you to our Safe Harbor in our earnings press release, which applies to this call, as we will be making forward-looking statements.
Having said that, I will now call our founder and CEO, Mr. Jerry Wang. Jerry will deliver his remarks in Chinese, followed by an English translation.
Jerry Wang
Hello everyone. Thank you for our third quarter 2022 earnings call. I will begin today’s call with a review of our monetary and operating performance.
Our third quarter effects reflect the demanding situations we face and the opportunities we are aiming for. In the third quarter, headline inflation continued to rise and remained high. At the end of September, the US CPI reached a new record of 10% in Europe. Meanwhile, the intensification of the Russian-Ukrainian war, the resulting geopolitical turmoil and regional turmoil have had a significant effect on global power and client sectors. As such, the global business environment is still full of demanding situations and uncertainties.
As everyone knows, the discretionary customer sector is experiencing a serious stock correction. Major online and offline retail channels, plus Walmart, Best Buy and Amazon, are cutting their stock to appropriate levels, especially in electronics and family products. Throughout the year, many customer electronics brands maintained their stock control and conservative procurement methods in the first 3 quarters of the year in reaction to market uncertainties. The contraction of downstream. . .
As part of our efforts to navigate the downcycle, we are actively channeling our resources, refining our visitors’ design, investing in promising new product lines, and optimizing pricing and operating expenses. Those efforts will allow us to emerge with an advanced visitor base and more effective operational design when the macro environment recovers.
Total third-quarter cash at $45 million, of which our SaaS and other cash revenue increased 60% year-over-year to $8. 9 million. Our gross profit for the third quarter was $19. 6 million and overall gross margin was 43. 6%, while maintaining a strong environment. Most importantly, we reduced our non-GAAP operating expenses by 37. 1% year-over-year to $43. 4 million and reduced our non-GAAP net loss by 49% to $15. 9 million as we continued to optimize our operations.
Now, let me expand on each of those areas. First, the number of our premium IoT PaaS 265 consumers in the third quarter, remaining strong compared to 267 in the current quarter. On closer inspection, we had over 30 consumers who fell below the premium visitor earnings contribution threshold. This is more than offset by more than 30 others who qualified for the premium visitor in the third quarter. The addition of this new premium visitor is a positive sign that, despite the challenging environment, we are still well placed to leverage our premium IoT PaaS offerings to continue to expand our visitor base and navigate a challenging environment.
The total number of customers we served in the third quarter was 3100, down 24% sequentially and 31% year-over-year from 4500 at the same time last year. Let me what led to the adjustments in our visitor numbers. First, the existing environment has forced brands and downstream channels to tighten budgets and reduce orders. Many of our small and medium-sized clients on our platform have had to suspend their operations and remain idle during the market downturn. In addition, some of our long-term consumers with small operations and less business resilience who were experimenting with IoT have reduced their business or abandoned IoT.
The moment is the constant execution of our giant account strategy since the beginning of the year. Now focusing on efficiency, we have upgraded our visitor service systems and reformed our service team to use trilateral collaboration to deliver PaaS aimed at new and existing consumers. For our long-tail consumers and those who have suspended their business, we have incorporated them into our platform operating style to continue serving them through our operating groups while matching them with the appropriate resources.
With this strategy, we make more of the design and improve the quality of all those new consumers that we acquired during the quarter. In the IoT PaaS segment, the number of consumers with initial advertising scale, which we describe as consumers spending more than $20,000 on our PaaS IoT solution, surpassed the same point in the era last year. Notably, one Spanish allocation company contributed approximately $1 million to our earnings in the third quarter. These types of consumers with initial ad duration jointly contributed approximately 64% of our new consumer earnings. , compared to less than 50% at the same time last year. The subtle structuring of our visitor base further illustrates the effectiveness of our improved and more targeted visitor acquisition methods and will allow us to further improve our efficiency.
In the third quarter, when the world reopened in the wake of the pandemic, our control and operations groups visited our consumers around the world, from Hong Kong, Singapore and other parts of Asia and Southeast Asia to North America and Europe. Through our visits, we have forged new partnerships with many consumers of major regional brands and strengthened our long-standing relationships with existing consumers through discussion of their needs. I to highlight some examples of IoT PaaS consumer upgrades.
The robotic vacuum cleaner brands of the leading manufacturer of household vacuum cleaners in the United States with more than a hundred years of history have demonstrated a partnership with us in smart appliances. One of the largest importers in Germany and Europe with products ranging from batteries and power equipment for household appliances and non-public healthcare also has our customer.
One of the largest retail channels of customer electronics and workplace materials in Mexico is creating its own smart home ecosystem by adding pet, lighting and electrical products based on our platform. quarter. Our collaboration will be on products, adding gateway systems and device motive force products, for which we expect to complete the intelligent transformation of local motive power production in the fourth quarter.
We also expanded our presence in the Indian regions during the quarter. We acquired a Jstomer comprising indexed Chinese corporations with operations in India and the Indian business divisions of telecom groups, adding Lava, a local cellular Jstomer electronics logo and the Kent RO system, which owns 40%. of the purifier market share in India [indistinguishable]. These Jstomers can now leverage our value-added facilities through the Tuya platform to execute their smart device product strategies.
At the recent IFA, many of our key account logos and distribution customers such as Calex, Netis, [indistinguishable] shared their new product strategies, market insights, key product selections and long-term strategy updates. on site. As customers, we have noticed many dominant logos of family appliances in Europe or around the world, such as the prominent Italian logo of family appliances Candy, the prominent German logo of the Hama customer electronics, a leading logo of the family and kitchen. Home appliances in Spain, the Taurus Group and one of the leading logos of household appliances in Greece, MORRIS also showcased the wide diversity of products it has developed through its partnership with us.
These products included appliances such as coffee makers, sweepers, oil diffusers, portable air conditioners, and products such as lawn mowers and scooters. A world-renowned Japanese home appliance company will also pre-install the Tuya OEM app on its Android TV as one of the portals to its home IoT ecosystem in its European operations. We have also partnered in Italy with a well-known Italian appliance logo with an extensive network of local connections to drive the implementation of smart responses in local Italian production companies.
When it comes to customer electronics such as TWS headsets, we will leverage our [EQ support] and tracking features to impress various customers. For example, a well-known Spanish logo of electronic products for customers, Energy Sistem, exhibited its PBT smart headphones at IFA. We then shared the successful use case with other customers of the headphone logo and generated great interest.
Previous clients come with existing clients who are deepening their partnerships with us and new clients who have just established a relationship. While our downstream consumers are facing peak stock market tension and inflation, they remain excited and positive about the transition to smart products in the long term.
One of the world’s leading brands with a dominant share of the positionpositionposition cooling fan market partnered with us and purchased our value-added facilities to the voice control capability of their products. At the same time, this consumer also told us that they are very positive. on the smart devices sector and in a position to make large investments. However, they have not been able to place really large orders this year in the existing market position position environment. They will wait for a transparent signal from the market position rebound to start developing their wise devices business.
On the other hand, from a product perspective, we are encouraged by the warm reception given to our centrally controlled products and that those products have the potential to explode in the market. In the third quarter, our core control segment revenue increased through more than 140% year-over-year, although the contribution remains relatively low in dollar terms compared to our overall business. This segment demonstrated physically powerful expansion momentum and positive market reaction in the first 3 quarters.
Similarly, in the existing scenario where energy and environmental issues are important, there is a strong demand for energy-efficient products in the residential and advertising sectors downstream. Cargo-related products generated a 155% year-over-year earnings expansion in the first 3 quarters of the year. We will also continue to leverage our industry research resources to maximize power as we invest and expand responses in those emerging areas.
In SaaS and other segments, we have slowed the expansion of our hotel business in China due to the effect of the resurgence of COVID. However, we have achieved several key milestones in our overseas expansion. These milestones included signing our distributor in the UK and moving towards signing our distributor in Hungary. These intelligent hardware vendors will offer our SaaS consumers the answers and equivalent features needed for hotel and rental SaaS products to further assist our consumers’ intelligent business implementation.
In the SaaS segments of advertising lighting and real estate, we have partnered with the world-renowned company Honeywell. Honeywell is committed to helping structure owners and operators build healthier, safer, energy-efficient and sustainable services, and we will provide IoT PaaS ecosystems in various facets such as intelligent hardware programs and a cloud progression platform. To date, for devices, we have collaborated on visual intercoms and Honeywell has finished the progression of its [Live Smart] application and the progression of the cloud platform will continue to use the Intelligent Personal Cloud Cube and deepen our partnership. For example, we will harness the power of the smart asset structure by employing [broad] SaaS fabric solutions.
In terms of value-added installations, our SVAs, adding products such as cloud storage, application-like installations, and VAS similar to device capabilities, such as qualified voice installations, generated strong effects in the third quarter. In addition, we have partnered with several leading global telecom operators in their respective regions for our IoT installations. These partners included a Fortune 500 and also one of the largest telecommunications groups in Latin America, as well as major regional telecom operators in Thailand, Indonesia and Nigeria.
Telecom operators have unique business strengths in terms of users and channels, as well as robust communications facilities and infrastructure to support their technology functions. Our software features and hardware ecosystem would allow them to deliver more value-added installations to their users and their use. operations. These telecom operators may also be potential consumers of our Cube smart personal cloud.
Moving into our personal cloud business segment, with our key account methods and tireless efforts, we have added several new consumers or projects to our Cube personal cloud business. For example, Thailand’s leading building fabric industry with over a hundred years of operation uses Cube’s personal cloud to grow its hardware ecosystem in its residential IoT projects through the Cube platform.
Another example is a well-known multinational conglomerate Fortune 500, which has been our IoT PaaS customer, has also followed Cube to build a smart home allocation in India with plans to reflect its good fortune in Europe in the future. An Australian distributor of well-known cell phone brands have already paid upfront to leverage our personal cloud, [Smart Life] app, central control screen and other devices to configure assets for local quality of life. These consumers have already paid the deposit and this source of income will be identified after the implementation and acceptance of the products.
In addition to the visitor use cases I have highlighted so far in the call, we are also actively gaining a large number of high-quality new consumers with great commercial potential. Therefore, we consolidate our partnerships with existing consumers, while capitalizing on new opportunities. Undoubtedly, Tuya and many other corporations in the sector are in the midst of an economic slowdown and an increasingly challenging macroeconomic environment. However, I would like to highlight the changes and efforts we have made in the face of those challenges. Constant path to break-even point, our long-term commitment to the IoT industry and the search for mutually favorable relationships with our consumers.
Finally, I will communicate a little on the subject, which has been a topic of interest. Last week, we participated in the launch event in the Netherlands organized through the Connectivity Standards Alliance, the Matter committee. One of our co-founders, Alex, delivered a keynote speech on the assignment of Tuya Matter on the occasion, which caught the audience’s attention. At the same time, CSA issued the first batch of Matter product certifications for Tuya.
This is a testament to our strong generation and product leadership, as well as our ongoing efforts to announce IoT advancements and the open intelligence ecosystem. The president and CEO of the Connectivity Standards Alliance said Tuya’s commitments as a board member and active player in the alliance are critical to Matter’s good fortune. Its adoption and integration of Matter will enable global consumers to announce good fortune and offer a fun party for wise home consumers.
With that, I’ll pass the word on to our CFO, Jessie, to give everyone a deeper look at our operating and monetary performance.
Jessie Liu
As I review our results, please note that all amounts are in U. S. dollars and all comparisons are year-over-year, unless otherwise stated.
For the third quarter of 2022, overall revenue was $45 million, a low of 47. 4%. The low is basically due to a 57. 4% year-over-year decrease in our IoT PaaS revenue, which was reduced to $30. 9 million for the quarter. Note that the RMB weakened against the dollar in the third quarter from 6. 69 RMB to 7. 1 RMB, resulting in a decrease in RMB revenue of $2. 9 million compared to the exchange rate at the beginning of the quarter.
Let’s focus on the business. Of all the product lines in our IoT PaaS business, the customer’s lighting sector has come under maximum strain due to slowing customer requests. In response, our customers slowed down orders as they adjusted their inventory. Developers overreacted to strong market situations last year and overstocked their inventory. As a result, almaximum all online and offline retail channels are now running on their excess inventory. This summer, brands and wholesalers experienced significant order cancellations from retailers. Our customers’ demand and the general environment through macro public knowledge and specialized knowledge, estimating retail channel sales volume, economic trends and shipping data directly from our customers.
By breaking down the contribution to earnings across the product line in the third quarter, we achieved a more balanced earnings structure. Contributions were balanced between 20% and 30% for the customer’s IoT PaaS category, which includes electrical, security and customer lighting and sensors, appliances, and others. The contribution to profits of non-customer products, such as commercial smoke detectors, circuit breakers, mine lighting, heat pumps, electric chargers, is more than nearly 3% of total IoT PaaS gains. This is the result of successful execution of our vertical expansion strategies.
Based on geographic and market demand, we know that the contribution of each region has remained stable. We constantly try to maintain balance in our global business. SaaS and other earnings in the third quarter of 2022 rose 16. 2% to $8. 9 million, up from $5. 6 million in the same era of 2021, supporting its physically powerful expansion drive. Growth has been driven primarily through our ongoing efforts to offer value-added facilities and diverse software products with a strong pricing proposition for our customers.
Our gross margin increased from 42. 6% in the same era of 2021 to 43. 6% in the third quarter, primarily due to a higher-margin SaaS revenue accumulation. IoT PaaS gross margin increased from 42. 9% in the same era of 2021 to 37. 2% in the third quarter. The contraction was primarily due to a $1. 6 million accrual in the provision for accumulated stock for certain slow-moving IoT chips, which negatively impacted our gross IoT PaaS margin by approximately five percentage points. First, we stockpiled those structures in 2021 to offset the risks of chip shortages at that time. Without the effect of stock provisioning, our IoT PaaS gross margin would have been approximately 42. 2%, representing a strong and healthy trend. in recent quarters.
Let us now turn to our operating activities and similar expenses. Please note that we provide our operating expenses on a non-GAAP basis through stock-based reimbursement expenses of our GAAP figures to provide greater channel clarity about our actual operating expenses so that you can review functionality in the same way as our control team.
During the quarter, non-GAAP overhead decreased 37. 1% to $43. 4 million from $69 million in the same quarter of 2021. Specifically, R non-GAAP expenses
Our average number of payroll workers during the quarter decreased approximately 38% year-over-year. The reduction has been accompanied by power improvement projects. that this power improvement measure will continue to benefit the Company in the long term. We also continue to launch projects that leverage our power innovations and drive our progress toward our business goals.
Now let’s move on to our back line. Our non-GAAP operating loss decreased 27. 1% to $23. 7 million in the third quarter, compared to $32. 5 million in the same era in 2021, and our non-GAAP net loss particularly decreased by 49% to $15. 9 million in the quarter, compared to $31. 2 million in the same era in 2021. In the third quarter, our non-GAAP operating margin was negative by 52. 7%, compared to less than 38% year-over-year, as overall revenue declined faster than expenses.
But our non-GAAP net margin was negative 35. 4%, an increase of 1. 1 percentage points from minus 36. 5% in the same era in 2021. The difference between our non-GAAP operating margin and non-GAAP net margin primarily included the net economic source of income of $6. 8 million, comprised primarily of interest source of income. Since our economic assets are primarily charged in U. S. dollars held in major banks, we generate more sources of interest income due to higher interest rates on U. S. dollar holdings.
Turning to money, net money used in operating activities for the third quarter of 2022 decreased 70. 6% to $13. 5 million from $46. 1 million in the third quarter of last year, due to significant relief in operating expenses. As of September 30, 2022, money, money equivalents, and short-term investments that were primarily time deposits totaled $945. 9 million, a decrease of $5. 6 million sequentially, representing approximately 0. 6% of total liquidity. Here I need to reiterate a point that Jerry made.
We remain committed to maintaining a strong monetary position during these challenging economic times. Our valuation in the market implies that we will consume a lot of liquidity. Our goal is quite the opposite. We have particularly reduced our expenses and are actively working to stabilize our gross margin. We have enough money to sustain ourselves during the recession. We inspire our investors in our efforts to maintain liquidity and our ability to conserve money when analyzing our market. valuation.
Finally, let’s move on to the buyback percentage program. In accordance with the general terms of reference for repurchasing percentages from directors approved by the General Assembly, our Board approved a new percentage buyback plan to acquire up to $50 million percentages, adding the form of ADS announced tonight — [ this] Hong Kong time or morning time. This shows the Company’s long-term confidence in this business outlook.
Before concluding, I need to talk about the short-term outlook. Inflation remains at its highest and the goal of the global central bank company is to prevent inflation before it spirals out of control. They don’t seem to have finished raising rates and the global recession. It’s a genuine possibility. In this situation, our task is, first of all, to continue to operate prudently and keep our money during the recession. Second, invest in promising new products that will eventually allow us to grow temporarily and profitably in the long term.
With that, operator, we are now in a position to answer questions. Thank you.
Q&A session
Operator
[Operator Instructions] The first is from Yang Liu’s lineage with Morgan Stanley.
Yang Liu
It is ok. I will translate my query into English. My query is about the application. Given the relatively low demand existing and based on Tuya or discussion with the price chain, what is the existing stock point for key consumers?And based on the existing speed of stock digestion, when we deserve to see stocks fall to a comfortable point and consumers reset to accumulate their stock or do we see a demand for recovery from Tuya?
Jessie Liu
It is ok. Based on the data we have recently, it’s hard to know exactly when we might see the tipping point in downward market demand. However, based on publicly available data from downstream consumers or other sources, certain qualitative evidence is likely to be a percentage as a reference. . Please note that we cannot guarantee the accuracy and reliability of data from this market.
On the stock side, as market situations are quickly replaced, we estimate that it will take 8-12 months for OEMs, brands, wholesalers and stores to jointly manage their overstock and return to a healthy stock position. However, the news is that end-market sales of smart devices appear to have increased in the third quarter after experiencing uninterrupted sequential declines in the segment’s year-over-year expansion since the beginning of the year.
Therefore, as the trend of slow but steady recovery continues in the fourth quarter, which is usually the full-year peak sales season, it will be a smart signal to the industry as the market balances source and demand in the existing economic environment. There is still significant downward demand for IoT devices in the long term. The challenge is too much stock in retail, wholesale, warehouse and OEM channel brands.
As a result, the source of upstream sales lags behind downstream demand for several quarters. As such, if we first assume that our brand customers worldwide are selling the same number of electronic devices for IoT customers in the end market in 2023 as they were in 2022 this year and the assumed time, the amount of IoT PaaS we ship next year is almost the same as this year. Then, through the fourth quarter of 2023, the downward inventory point of PBT devices will return to a relatively healthy point as it was before.
In addition, we analyzed data from various indexed corporations in the customer electronics sectors, as well as upstream chip developers, downstream OEMs, brands and retail channels. Both the upstream and downstream markets showed a year-over-year trend at first. quarters this year. However, starting in the third quarter, we noticed that upward and downward trends in customer electronics diverged somewhat.
Upstream chip developers, especially those focusing on smart device chips, IoT communication chips and customer products, saw year-over-year profit decline in the third quarter, or even better than the first two quarters. Meanwhile, some downstream brands and brands such as robotic vacuum cleaner brands have begun to slow down the decline in their profits. While this is likely to be a positive outcome of the competitive correction of downstream inventory, those corporations have reduced order sizes and conservative sourcing technique is still putting pressure on upstream suppliers.
At the macro level, as discussed above, inflation grades in Europe and the United States have remained high, but have not yet increased. We expect this to be the [well chosen for inflation]. If the economy remains strong and stops deteriorating, we deserve to see a slow easing of stock market tension in the short- to medium-term balance of source and demand in the market. Of course, the expansion of the industry will be determined by general economic situations. and the customer landscape. We still want to look at peak sales season sales figures in the fourth quarter to make new judgments. That said, we will dynamically adjust our sales and pricing methods as needed to help our customers meet challenges.
So here’s my first question. Now we can move on to the question of timing.
Operator
Next up is from Mingran Li with CICC. [Technical difficulty] It seems that Mr. Li fell.
[Operator Instructions] Next is from John Wang with Goldman Sachs.
John Wang
Can you share some colors in the measures of your position?What will your target workforce be until the end of the year and next year?And more measures to reduce operating costs?Can you share your goal of balancing profits?
Jessie Liu
It is ok. Since the end of last year, we have strategically optimized our equipment design as planned for our visitor service powerhouse, the R.
We have established an evaluation formula to evaluate the return on investment of our project — R
On the other hand, we produce various monthly and quarterly monetary effects for each product line to help us review and pay outside the R.
Marketing activities are undoubtedly important, but in today’s economic environment, we want to evaluate which marketing activities are most effective. For example, some expenses stored through our marketing systems can be used to stop at our key customers, help us in key relationships, and expand business strategies.
We have been actively refining our team’s design over the past year with this initiative. Last year, we temporarily expanded our groups such as the snowboard industry. Today, our workforce is back to the same point as it was at the end of 2020, so it does, to about 1900 and we have a solid operation. Salary increases over the past two years, higher expenses as a combined public company and additional expenses as we grow our business have offset some of the expenses we have stored by improving our efficiency.
However, excluding one-time expenses such as severance and lease termination, we have reduced our non-GAAP operating expenses to the same extent as at the end of 2020 two years ago. So, in addition, we are executing the projects that I mentioned earlier. In the step, we still have room for long-term optimizations. So until next year, we’ll do our best to make the team concise, and whenever we see an opportunity to improve efficiency, we’ll continue to do so.
Based on our 2022 revenue, estimated gross margin and existing headcount of 1900 employees, our lighting, electrical and appliance product lines in our PaaS segments are beneficial after all expenses, adding up all properly amortized overhead for each of the business segments. As a component of our 2023 budget, we ask all product groups to prioritize better profitability by adjusting profits or reducing losses in a component manner in order to make a profit in a few years for each of the lines, adding new lines.
In the meantime, we have particularly improved our cash flow. Our outflows since the current quarter have particularly declined compared to the era between the third quarter of last year and the first quarter of this year. Therefore, profitability and power will be our most sensible precedent for the coming years.
So here is my question to John.
Operator
The next one will be from Mingran Li’s lineage with CCPI.
Li Mingran
Let me translate quickly. Given the relative demand for weakening customer electronics, we want to emphasize more expansion drivers. Could you give us more important points about expanding advancements besides customer electronics like advertising and advertising segments and personal cloud or anything else?
Jessie Liu
In addition to classic wise customer electronics, there are new instances of use that we can capture and develop. For example, first of all, the voice control products of our IoT PaaS business. Take the central control screen as an example. It combines voice, control demonstration, and other functions into a single entry-level product. The product can cover all desires for intelligent interactions in a given area with app-like positioning on a smartphone.
The existing market demand is much higher for this product, basically in instances of advertising use such as hotels, advertising buildings, offices, etc. In addition, there is a demand for domestic use for this product. However, no logo has been able to implement high-quality IoT software applications to integrate the affected ecosystems. Therefore, our central control product line spans other industries and instances of use, integrating third-party voice purposes into our software applications to make the product more versatile.
Therefore, we can provide developers with voice workstations to lower configurations and progression barriers. We will also offer value-added operational facilities and other features to enable consumers to adhere to the product and generate revenue.
We have also developed a flagship edition, an economical edition and a strategic component for other types of visitors. Geographically, we have other answers according to American and European criteria to satisfy the wishes of visitor groups. As a component of our software and hardware improvement strategy. , the revenue we generated from the voice capability product line grew more than 110% year-over-year in the first 3 quarters of this year and more than 140% year-over-year in Q3.
The power and energy saving products of our PaaS business can serve a wide variety of advertising instances and advertising usage that align with today’s environmental and sustainability concepts. During our trip abroad in the third quarter, we discovered that the demand for power savings in Singapore, Southeast Asia and other parts of the world is expanding rapidly. There is a lack of effective software and hardware solutions. Based on our experience in SaaS advertising lighting and asset force management, we have already developed instances of repeatable use of energy saving products in the industry. I’m going to percentage some examples. First, we have a bare metal ecosystem in a dual Wi-Fi and Bluetooth style SOC solution that covers existing major software and flexible remote force distribution. With the solution, we have partnered with a company discovered in Asia, indexed in Asia and specializing in new strength and battery equipment, the partnership focuses on the progression of strength garage responses and investors leveraging responses from multiple force adaptive intelligent loading discovered in our Tuya Link Interface with extensive knowledge functions, quantitative force generation gains analysis and robust self-test and alarm functions and other fundamental abilities.
On the software side, at the end of September, we introduced a low-carbon, energy-saving sub-program to optimize our value-added services. This release paved the way for our long-term release of algorithms, reports, and other feature programs. Lately we are testing the power meter control formula for wise meters in asset use cases. We also present our wise sensor control formula aimed at the sensor market and branded companies. Meanwhile, we have new energy garage responses in R.
We have noticed a steady expansion in the personal cloud sector, signing more consumers in the third quarter, adding one of the largest telecom operators in Latin America. For our SaaS solutions, we have focused on the Chinese market for the past 3 years. We are now expanding to 12 countries, adding the UK, Spain, Italy, Germany, France, Canada, Singapore, Mexico, Brazil and other countries.
Our expansion will feature regional vendors in the country, offering built-in hardware and software responses to serve local customers. Currently, we have signed national distribution agreements in several European countries. We negotiate with the best professional suppliers in almost one and others of the most productive. countries we have surrounded. We will continue to expand into customer electronics segments to overcome this era of peak inflation.
Thank you for our call today.
Operator
There are no more questions at this time. I will pass the call to the control team for any final comments.
Jessie Liu
Thank you for joining our call. If you have further questions, please feel free to contact us or ask on our IR website. We look forward to talking to everyone on our next effects call. Have a wonderful day.
Operator
That concludes today’s call. Thank you for your participation. You can now disconnect your lines.