Zepp Health Corporation Reports Third Quarter 2024 Unaudited Financial Results

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]