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]

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]

Market Overview - The global luxury smart jewelry market is projected to reach USD 429.97 million by 2030, with a compound annual growth rate (CAGR) of 18.7% from 2024 to 2030 [1][8]. Market Drivers - Increasing demand for multifunctional and aesthetically appealing jewelry, along with the growing adoption of wearable technology, is driving market growth [2]. - The integration of Internet of Things (IoT) technology and a rising focus on wellness and health are expected to further propel market growth [2]. Consumer Trends - There is a growing focus on fitness and personal health, leading to increased popularity of smart rings that track essential health metrics [3]. - The prevalence of chronic diseases necessitates continuous health monitoring, with an estimated 129 million individuals in the U.S. having at least one major chronic disease [3]. Market Segmentation - The fitness tracking segment dominated the market in 2023, driven by health and fitness awareness and rising internet and smartphone penetration [6]. - Smart rings were the leading product in 2023, offering advantages such as tracking blood oxygen levels, sleep patterns, heart rates, and temperature [6]. - The adult segment led the market in 2023, particularly among younger tech-savvy adults and the working-class population [6]. - Online distribution channels dominated the market in 2023 due to the convenience and wide product selection offered by e-commerce platforms [6]. Regional Insights - North America held the largest share of the global market, supported by a significant presence of major market players and a high demand for health-promoting devices [6]. Competitive Landscape - Key players in the luxury smart jewelry market include Oura Health Oy, RINGLY, Samsung, Motiv, Inc., Boat, and Zepp Health Corporation, which are implementing strategic initiatives to expand their distribution networks and enhance product functionality [5][10].