Core Insights - Zepp Health Corporation has filed its annual report on Form 20-F for the fiscal year ending December 31, 2024, with the SEC [1] - The company is a leader in smart wearables and health technology, focusing on optimizing health, fitness, and wellness for users [3] Company Overview - Zepp Health Corporation, listed on NYSE as ZEPP, has shipped over 200 million units of its products and operates in more than 90 countries and regions [3] - The company was founded in 2013 as Huami Corp and rebranded to Zepp Health Corporation in February 2021 to emphasize its health focus [3] - Zepp Health's product offerings include leading consumer brands such as Amazfit, Zepp Clarity, and Zepp Aura, supported by its proprietary Zepp Digital Management Platform [3] Investor Relations - The annual report is accessible on the company's investor relations website and the SEC's website, with hard copies available upon request for shareholders and ADS holders [2]

Financial Performance - For the year ended December 31, 2024, total revenues amounted to $182.6 million, with third-party revenues at $182.6 million and inter-company revenues at $0[52]. - For the year ended December 31, 2023, total revenues were $352.9 million, with third-party revenues at $352.9 million and inter-company revenues at $0[52]. - The total revenues for the year ended December 31, 2022, were $613.6 million, with a net loss attributable to Zepp Health Corporation's shareholders of $43.2 million[53]. - The net loss attributable to Zepp Health Corporation's shareholders for the year ended December 31, 2024, was $75.7 million, compared to a net loss of $31.0 million for the year ended December 31, 2023[52][53]. - The total cost and expenses for the year ended December 31, 2024, were $229.9 million, resulting in a loss from subsidiaries and VIEs of $69.7 million[52]. Cash Flow and Dividends - The company declared and distributed cash dividends of approximately $6.3 million to shareholders and ADS holders in April 2022[40]. - The company aims to retain available funds and future earnings to operate and expand its business[40]. - Cash transferred from the Hong Kong company to PRC subsidiaries, the VIEs, and their subsidiaries was $(6,025) thousand in 2022, $(26,338) thousand in 2023, and $(46,990) thousand in 2024[38]. - Net cash paid by the VIEs to subsidiaries in operating activities was $(72,262) thousand in 2022, $(63,305) thousand in 2023, and $(87,304) thousand in 2024[38]. - The company does not plan to declare or pay any dividends in the near future, intending to retain funds for business operations and expansion[217]. Assets and Liabilities - As of December 31, 2024, total assets amounted to $528,593,000, a decrease from $635,519,000 as of December 31, 2023, representing a decline of approximately 16.8%[55][56]. - Total liabilities as of December 31, 2024, were $275,865,000, compared to $282,767,000 as of December 31, 2023, indicating a reduction of about 2.5%[55][56]. - Total equity increased to $252,728,000 as of December 31, 2024, from $352,752,000 as of December 31, 2023, reflecting a decrease of approximately 28.4%[55][56]. - Cash and cash equivalents decreased from $133,669,000 in 2023 to $91,069,000 in 2024, a decline of about 31.8%[55][56]. Regulatory and Compliance Risks - The company faces significant risks related to its corporate structure, particularly regarding compliance with PRC regulations affecting its VIEs[64]. - The PRC tax authorities may scrutinize VIE contractual arrangements, potentially leading to additional tax liabilities and penalties that could negatively impact financial condition[163]. - The company may require CSRC approval for offshore offerings, and failure to obtain such approval could lead to sanctions and adversely affect operations[170]. - The PRC government has implemented new regulations for overseas securities offerings, requiring companies to file with the CSRC for future equity securities issuances[171]. - The company is subject to significant discretion from PRC authorities, which may impose fines or revoke business licenses if deemed necessary[173]. Market and Operational Risks - Supply chain risks include potential shortages and long lead times for key components, which could disrupt operations and affect financial performance[74]. - The company relies on contract manufacturers for production, which poses risks related to operational difficulties and potential disruptions[79]. - The ongoing geopolitical tensions and trade policies, particularly between the U.S. and China, may adversely affect the company's business and financial condition[142]. - The company may face increased labor costs and inflation, which could adversely affect profitability due to severe competition in the smart wearable device market[129]. Shareholder and Governance Matters - As of February 28, 2025, holders of Class B ordinary shares represent 51.0% of total outstanding shares and 91.2% of total voting power, giving them decisive influence over corporate matters[220]. - Officers, directors, and principal shareholders collectively hold 93.5% of total voting power, which may adversely affect the trading price of the company's ADSs[222]. - The company has anti-takeover provisions that could limit shareholders' opportunities to sell shares at a premium, potentially discouraging third-party control attempts[221]. - The dual-class voting structure may limit the ability of Class A shareholders to influence corporate matters[219]. Technology and Innovation - The company has applied AI expertise to emerging industrial medical imaging technologies, enhancing its analytics capabilities[28]. - The company has received certification for its blood pressure measurement software as a Class II medical device in 2023, indicating a focus on medical applications[71]. - The company aims to expand its brand recognition through its Amazfit and Zepp brands, targeting the mid- to high-end market since 2015[72]. Currency and Exchange Rate Risks - Fluctuations in exchange rates, particularly the Renminbi against the U.S. dollar and Euro, may adversely affect the company's operational results and investment value[185]. - The effectiveness of hedging against currency fluctuations is limited, and the company may not be able to adequately hedge its exposure[188]. - Significant revaluation of the Renminbi could negatively impact the conversion of U.S. dollars received from offerings into Renminbi for operations[187]. Strategic Partnerships and Market Expansion - The company is actively seeking strategic partnerships to enhance product performance and expand sales channels, including a partnership with HYROX, the World Series of Fitness Racing[121]. - The company is expanding into international markets including Italy, Spain, Germany, the UK, the US, Japan, India, and Brazil, incurring significant expenses for marketing and brand recognition[103].

Financial Data and Key Metrics Changes - Overall sales in Q4 2024 rose by more than 40% quarter over quarter, aligning with guidance [10] - Gross margin for the year 2024 reached 39% compared to 26.2% for the full year 2023 [10][40] - Cash on hand at the end of 2024 was $112 million, providing ample runway for investments [11] Business Line Data and Key Metrics Changes - The successful launch of the T-Rex 3 significantly boosted market demand and sales growth [12] - The T-Rex 3 is noted for its durability, battery life, and AI integration, establishing a strong position in the market [13] - The upcoming Amazfit Active 2 and Bip 6 series are expected to expand market reach and drive sales growth [16] Market Data and Key Metrics Changes - Global smartwatch sales fell by 7% in 2024, with Apple shipments declining by 19% [31] - Sales in China grew from 19% to 25% of the market, marking a significant shift [31] - The Indian market saw a decline from 30% to 23% due to quality issues with ultra-cheap devices [32] Company Strategy and Development Direction - The company is focusing on a brand transition to a high-margin business model and enhancing global marketing [9] - The strategy includes launching one to two new products each quarter in 2025 to drive demand [37][122] - Partnerships with athletes and organizations like HYROX are aimed at increasing brand visibility and market share [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth trajectory despite macroeconomic challenges [27] - The company anticipates a recovery in the global market driven by AI features and health data [34] - The outlook for Q1 2025 includes expected revenue growth of 14% to 29% year over year [55] Other Important Information - The company is committed to a share repurchase program in 2025, reflecting confidence in long-term value [28] - Inventory levels were reported at $57 million, the lowest since 2018, indicating strong inventory management [52] - The company has successfully refinanced short-term debts into long-term instruments, improving financial stability [53] Q&A Session Summary Question: Impact of new tariffs on smartwatch imports - Management indicated minimal impact due to proactive supply chain management and dual sourcing strategies [30][61] Question: Percentage of manufacturing outside China - Approximately 20% to 25% of the overall portfolio is manufactured outside China [63] Question: Impairment loss details - The impairment loss was due to investments in upstream and downstream technology companies that did not perform as expected [66][70] Question: Shift in demand towards lower-priced players - Management noted that while the market declined, there are bright spots in the outdoor and sports smartwatch segments, with strong performance from brands like Garmin [75][80] Question: Long-term strategy and vision - The company is diversifying its product portfolio and exploring B2B opportunities while focusing on building a global health ecosystem [90][91] Question: Relationship with Xiaomi - The relationship remains strong, but the company is transitioning to focus on self-branded products for profitability [96][100] Question: Stock liquidity concerns - Management acknowledged the illiquidity of the stock and emphasized ongoing buyback programs and growth strategies to improve market perception [106][110] Question: New product roadmap for 2025 - The company plans to launch multiple new products across different price segments, which is expected to drive revenue growth [118][122]

Zepp Health (ZEPP) Q4 2024 Earnings Call March 26, 2025 07:00 PM ET Company Participants Grace Yujia Zhang - Director of Investor RelationsWang Huang - Founder, Chairman & CEOLeon Cheng Deng - Chief Financial OfficerSiddharth Rajeev - Head of ResearchYan Yeung - Chief Operating OfficerNicolas Britten-Jones - Managing Director Conference Call Participants None - Analyst Grace Yujia Zhang And other risks and uncertainties are included in the company's annual report on Form 20 F for the fiscal year ended 12/31 ...

Core Insights - Zepp Health Corporation reported a 40% quarter-over-quarter increase in sales for Q4 2024, despite a 28.3% year-over-year decline, primarily due to macroeconomic challenges and changes in product structure [1][2][7] - The company achieved a gross margin of 36.8% in Q4 2024, up from 34.7% in Q4 2023, and a full-year gross margin of 38.5%, significantly higher than 26.2% in 2023 [2][24] - The company ended 2024 with $111 million in cash, down from $140 million in 2023, but still positioned to invest in growth opportunities [3][18] Financial Performance - Q4 2024 revenues reached $59.5 million, a decrease of 28.3% year-over-year but a 40.2% increase quarter-over-quarter, driven by the successful launch of the T-Rex 3 [5][7] - Full-year revenues for 2024 totaled $182.6 million, a decline of 48.3% from 2023, largely due to an 88% drop in sales of Xiaomi wearable products [23] - The adjusted operating loss for Q4 2024 was $7.4 million, the lowest level in 2024, compared to an adjusted operating income of $3.0 million in Q4 2023 [14][16] Cost Management - Total operating expenses for Q4 2024 were $30.9 million, a 9.4% increase year-over-year, while adjusted operating expenses were $29.3 million [13][30] - Research and development expenses decreased by 0.6% year-over-year to $11.1 million in Q4 2024, reflecting a focus on resource efficiency [9][25] - Selling and marketing expenses increased by 10.6% year-over-year to $13.3 million, driven by promotional campaigns [10][28] Market Position and Strategy - The T-Rex 3 has gained traction in the outdoor and sports watch market, with user activations increasing and positive feedback from users and key opinion leaders [1][2] - The company is expanding its Amazfit brand through partnerships with athletes and collaborations, enhancing brand recognition and market presence [1][2] - The launch of the Amazfit Active 2 and Bip 6 series is expected to further increase market share and brand influence, particularly in emerging markets [1][2] Outlook - For Q1 2025, management expects net revenues to be between $40 million and $45 million, indicating a growth of 14% to 29% for Amazfit-branded products compared to Q1 2024 [32]

Core Viewpoint - Zepp Health Corporation will report its fourth quarter and full year 2024 unaudited financial results on March 26, 2025, after market close [1] Group 1: Earnings Call Details - A conference call is scheduled for 7:00 p.m. Eastern Time on March 26, 2025, with access numbers provided for US, international, and mainland China listeners [2] - Participants are advised to dial in at least 10 minutes before the scheduled start time [2] Group 2: Company Overview - Zepp Health Corporation is a global leader in smart wearables and health technology, focusing on optimizing health, fitness, and wellness journeys through its brands, including Amazfit, Zepp Clarity, and Zepp Aura [3] - The company has shipped over 200 million units and operates in more than 90 countries and regions [3] - Founded in 2013 as Huami Corp., the company rebranded to Zepp Health Corporation in February 2021 to emphasize its health focus [3]

Core Insights - Zepp Clarity launched a "Try Before You Buy" program at CES 2025 to enhance hearing aid adoption among older adults [1][2][3] - The program aims to alleviate concerns regarding the effectiveness and commitment associated with hearing aids, which currently see only 15% to 30% adoption among those with mild-to-moderate hearing loss [2][3] Product Offerings - Zepp Clarity features three advanced hearing aid models: Clarity Omni, Clarity One, and Clarity Pixie, allowing users to trial these products in their homes [3] - The Zepp Clarity Pixie is highlighted as a next-generation hearing aid with a nearly invisible design, wireless connectivity, and a lightweight titanium alloy shell [5][6] - Key features of the Pixie include IPX7 water resistance, 17-hour battery life, and customizable settings via the Zepp Clarity App [5][6] Customer Support and Accessibility - The company offers a lifetime customer support guarantee and access to certified audiologists, ensuring users receive professional guidance [4] - Zepp Clarity aims to empower individuals with hearing loss, impacting 48 million Americans and nearly 430 million people globally, by combining technology with audiology expertise [7] Regulatory and Market Position - Zepp Clarity's hearing aids are registered as FDA-Exempt Class II medical devices, designed for adults aged 18 and older [8] - The brand emphasizes the importance of hearing health as part of overall wellness, leveraging advanced technologies and AI healthcare algorithms [9]

Core Viewpoint - Amazfit has launched the Amazfit Active 2 smartwatch, combining elegance and functionality for health-conscious consumers [1][2] Product Features - The Amazfit Active 2 features a stylish design with a stainless steel body and a 1.32-inch high-definition AMOLED display that reaches a peak brightness of 2,000 nits [3] - Two models are available: a premium version priced at $129.99 with a black genuine leather strap and sapphire glass, and a standard version at $99.99 with a silicone strap [3] - The smartwatch includes advanced health monitoring technology with the BioTracker™ 6.0 PPG biosensor and upgraded algorithms for heart rate and sleep tracking [4] - Additional sensors include a barometer for altitude measurements, an accelerometer, a gyroscope, and an ambient light sensor [5] - The device offers a robust battery life of 10 days under typical use [5] Technological Innovations - Zepp Flow™ allows voice control for watch settings and message replies for Android users [6] - Zepp Pay enables secure contactless payments in Europe for the premium version [6] Fitness and Wellness Features - The smartwatch supports over 160 sports modes, including a smart Strength Training mode and new winter sports like skiing [7] - Offline maps with turn directions are supported by 5 satellite systems, enhancing navigation capabilities [8] - Zepp Coach™ provides personalized training plans for users of all fitness levels [8] - The Wild.AI mini app offers tailored wellness insights for women related to menstrual and hormonal cycles [9] - Advanced health insights include a daily Readiness score and HRV feature for recovery data [10] Availability and Pricing - The Amazfit Active 2 is available for pre-order in the U.S. and will be globally available in February, starting at $99.99 for the standard version and $129.99 for the premium version [11] Company Background - Amazfit is a leading global smart wearable brand under Zepp Health, focusing on health and fitness, with a presence in over 90 countries [12][14]

Financial Data and Key Metrics - Self-branded products revenue grew 10% quarter-over-quarter to USD 40 million, driven by a 44% increase in ASP [27] - Q3 gross margin reached 41%, the highest in the company's history, due to a better product mix with higher gross margins [27][33] - Operating expenses were reduced from RMB 180 million in 2022 to around RMB 100 million by the end of 2024, reflecting a leaner operational approach [29] - The company reported an operating loss in Q3, largely due to supply constraints and foreign exchange losses, but expects improvement in Q4 [38][50] Business Line Performance - Amazfit product sales achieved the highest sequential growth in 2024, with self-branded sales contributing over 95% of total revenue [10][27] - The newly launched Amazfit T-Rex 3 experienced robust demand but faced supply constraints, impacting Q3 revenue [13][49] - Complementary devices like the Amazfit Helio Ring and Amazfit UP Open Wearable Stereo earbuds extended the product ecosystem and enhanced user experience [14][15] Market Performance - The global wearable technology market is projected to grow from USD 70 billion in 2024 to USD 150 billion by 2029, with a CAGR of 16.8% [30] - The outdoor and sports segment of the smart wearable market is growing faster, aligning with the company's product roadmap [28] - Early positive feedback on Amazfit UP earbuds in Europe indicates strong market potential [15] Strategic Direction and Industry Competition - The company is focusing on product innovation, expanding international visibility, and diversifying product offerings to meet evolving customer needs [22][23] - Investments in AI and new technologies, such as Zepp OS 4.0, aim to maintain a competitive edge in wearable technology [16][35] - Strategic partnerships with athletes and events like HYROX reinforce the brand's presence in competitive fitness [20][21] Management Commentary on Operating Environment and Future Outlook - Management is optimistic about maintaining sales momentum into upcoming quarters, despite global macroeconomic headwinds [11][22] - The company expects Q4 revenue to range between USD 55 million and USD 70 million, with self-branded products contributing over 90% [42] - Long-term growth is supported by a balanced product launch cadence and the success of the T-Rex 3 [60] Other Important Information - The company expanded its share buyback program, reflecting confidence in its long-term strategy [24][52] - Compliance with NYSE listing standards was regained in October 2024, reinforcing market standing [42] Q&A Session Summary Question: Expected revenue growth in Q4 and product contributions - The T-Rex 3 and Amazfit UP earbuds are expected to drive Q4 revenue growth, with supply constraints for the T-Rex 3 being resolved [45][46] - Q4 is traditionally a strong sales season, supported by events like Double 11, Black Friday, and Christmas [47] Question: Supply constraints for the T-Rex 3 - The bottleneck was due to unexpectedly high demand, with factories now operating 24/7 to meet production needs [48][49] Question: Foreign exchange loss in Q3 - A sharp RMB appreciation led to a USD 1 million FX loss, but a tailwind is expected in Q4 [50][51] Question: Cash deployment strategy - The company plans to continue its share buyback program and explore small bolt-on M&A opportunities [52] Question: Q3 net loss and future profitability - The net loss was attributed to supply constraints, front-loaded marketing expenses, and FX headwinds, but profitability is expected to improve in Q4 [54][58] Question: Sustainability of sales growth - The company anticipates sustained growth in 2025, driven by a balanced product launch cadence and the success of the T-Rex 3 [59][60]

Financial Performance - Zepp Health Corporation reported revenues of US$42.5 million for Q3 2024, a decrease of 48.9% compared to Q3 2023, primarily due to reduced sales of Xiaomi wearable products and self-branded products constrained by production capacity and macroeconomic factors [5][6] - The gross margin for Q3 2024 was 40.6%, an increase from 33.9% in Q3 2023, marking the highest gross margin in the company's history, supported by a favorable product mix and strong performance of self-branded products [7] - The company experienced an operating loss of US$12.5 million in Q3 2024, compared to an operating income of US$1.4 million in Q3 2023, largely due to lower sales volume [13][14] Product and Market Developments - Amazfit branded sales saw a 10% quarter-over-quarter increase, attributed to the successful launch of the T-Rex 3 smartwatch, which received positive market feedback [2] - The introduction of Amazfit UP OWS earbuds expanded the product ecosystem, enhancing user experience during outdoor activities [2] - Zepp Health was named the official wearable partner and timekeeper of HYROX, a fitness racing event with over 300,000 participants per season across the EU and US [3] Research and Development - Research and development expenses for Q3 2024 were US$10.9 million, accounting for 25.6% of revenues, reflecting a 4.8% year-over-year increase as the company invests in new technologies, including AI [8] Marketing and Operational Strategies - Selling and marketing expenses increased by 21.9% year-over-year to US$11.9 million, representing 28.0% of revenues, driven by various marketing campaigns and partnerships with athletes [9][10] - General and administrative expenses rose by 5.4% year-over-year to US$7.0 million, largely due to foreign exchange rate fluctuations [11] Liquidity and Capital Resources - As of September 30, 2024, the company had cash and cash equivalents of US$127.7 million, maintaining a similar level compared to the previous quarter, which provides a runway for future investments [17] - The company recorded inventory of US$76.6 million, reflecting a 6.5% increase from the previous quarter but a 29.0% decrease compared to the same period in 2023 [18] Future Outlook - For Q4 2024, management expects net revenues to be between US$55 million and US$70 million, indicating a growth of 29% to 65% for self-branded products compared to Q3 2024 [22]