Zepp Health Corporation Reports First Quarter 2022 Unaudited Financial Results BEIJING

Zepp Health Corporation Reports First Quarter

2022 Unaudited Financial Results

BEIJING, May 24, 2022 /PRNewswire/ -- Zepp Health

Corporation ("Zepp" or the "Company") (NYSE: ZEPP) today reported revenue of RMB0.8 billion (US$119.4 million);

GAAP diluted net loss per share of RMB0.36 (US$0.06); and GAAP diluted net loss per ADS of RMB1.42 (US$0.22) for the first quarter ended

March 31, 2022. Each ADS represents four Class A ordinary shares.

"We achieved RMB0.8 billion in revenue in

the first quarter, meeting our guidance range despite the pandemic resurgence and a slowdown in consumer discretionary spending due to

geopolitical and macroeconomic factors during the quarter," said Wang Huang, Chairman and CEO of Zepp Health. "Amid all the

challenges around us, our fundamentals continue to be strong and our commitment to Connecting Technology With Health remains unwavering.

We made solid progress across our product portfolio including the newly launched Zepp Clarity One hearables as well as our Zepp OS ecosystem

during the first quarter, and we are ready for the upcoming launch of the next generation Amazfit Bip, Pop, and T-Rex - not to mention

the Mi Band 7 which was lauched just today - all with more features to assist and delight our users. Our inclusive and innovative Zepp

OS ecosystem has drawn more than 2,000 developers globally to design apps and watch faces on our platform, contributing to a flourishing

user community that is more vibrant than ever."

Zepp Health CFO Leon Deng stated, "The ongoing

COVID-19 pandemic compounded by geopolitical unrest dampened our revenue in the first quarter, which declined 34% year-over-year. However,

we are pleased to see that our revenue mix continue to shift towards our self-branded products, which contributed more than 65% of our

total revenue. Adjusted net loss for the quarter was RMB75.7 million, versus RMB29.0 million for the same period last year mainly due

to lower sales. As the uncertainty persists, we will continue to streamline our costs to try to regain our future profitability, while

executing our growth strategy and creating long-term shareholder value."

First Quarter 2022 Financial Summary

in 2021 are referenced with the prior 6-K disclosures, which translations from RMB to US$ are made at a rate of RMB6.5518 to US$1.00,

the effective noon buying rate for March 31, 2021 as set forth in the H.10 statistical release of the Federal Reserve Board.

Adjusted net loss attributable to Zepp Health Corporation is a non-GAAP measure, which excludes share-based compensation expenses. See

"Reconciliation of GAAP and Non-GAAP Results" at the end of this press release.

diluted net loss is the abbreviation of adjusted net loss attributable to Zepp Health Corporation, which is a non-GAAP measure and excludes

share-based compensation expenses attributable to Zepp Health Corporation, and is used as the numerator in computation of adjusted basic

and diluted net loss per ADS attributable to Zepp Health Corporation.

First Quarter 2022 Financial Results

Total units shipped in the first quarter 2022 decreased by 41.3% year-over-year

to 3.7 million, compared with 6.3 million in the first quarter of 2021. This was caused by a 45.5% decrease in units of products built

for Xiaomi, and a 31.6% decrease in unit shipments of Amazfit and Zepp branded products.

Revenues for the first quarter of 2022 reached

RMB0.8 billion (US$119.4 million), a decrease of 34.0% from the first quarter of 2021. The decrease was mostly driven by the decrease

in Mi band shipments due to the anticipation of next generation Mi band launch. Our self-brand product sales were hampered by the lower

consumer discretionary spending, and also impacted by COVID-19 lockdowns in China. On top of these factors, the first quarter is typically

the lowest market demand quarter throughout the year.

Impact of COVID-19 and Russia-Ukraine Conflict

The global impact of the COVID-19 pandemic continued

in the first quarter of 2022, although abating in some degree in Europe and USA where some restrictions were lifted. The fresh lockdowns

in China affected the retail store sales and brought challenges to our supply chain globally. Shortages of electronic components and chips

for different industries persisted and accordingly affected the supply and production cycle for the Company. Furthermore, the lockdowns

of several megacities in China, especially Shenzhen, weakened consumer demand, as well as posted big challenges to the Company's

supply chain for the quarter, causing delays for our products to arrive at target markets, and this continued into the second quarter.

Given the evolving nature of the COVID-19 pandemic at the time of this release, the Company cannot predict the extent of future negative

impacts on market conditions or the Company's operations.

The continued conflict situation between Russia

and the Ukraine affect the demand for and sales of Xiaomi wearable products and our self-branded products in the affected regions. As

Europe is one of biggest sales region for the Company, the conflict also affected on consumer confidence in Europe and the EUR currency

value. Revenue from sales of products in Russia and Ukraine accounted for approximately 4% of our total revenues in 2021. Currently the

situation does not have a material adverse impact on the Company.

Gross margin in the first quarter of 2022 was

20.1%, lower by 2.4% compared with 22.5% for the same period of 2021 and higher by 0.8% compared with 19.3% for the fourth quarter of

2021. Lower gross margin in the first quarter of 2022 resulted from higher freight cost versus the same period last year. Gross margin

and gross profit were affected by product mix as different products had different margin contributions. These changes can also be influenced

by the stage of the product in its lifecycle, product iterations, and new product introductions.

Research and Development

Research and development expense in the first

quarter of 2022 was RMB146.4 million, decreasing 3.9% year-over-year, and comprising 19.3% of revenue, versus 13.3% for the same period

last year. This reflects effective expense control in R&D activities. The company optimized its integrated product development process

to effectively develop new smart devices and promoted its open platform ZEPP OS to welcome more outside developers to upload their apps

and programs on the smart watches and also saved our development resources.

Selling and Marketing

Selling and marketing expense in the first quarter

of 2022 was RMB103.1 million, increasing 13.6% year-over-year, and comprising 13.6% of revenue, compared with 7.9% of revenue for the

same period in 2021. The growth was due to the increase of overseas sales personnels to serve for local market and self-branded products

advertisement promotions in both domestic and overseas market. The marketing expenses decreased by RMB49.0 million, 32.2% quarter-over-quarter,

compared with the fourth quarter period in 2021. The decrease was due to effective expense control on marketing expense while balancing

investments to expand sales channels and markets around the world.

General and Administrative

General and administrative expense was RMB58.2

million in the first quarter of 2022, decreasing 10.9% year-over-year, and comprising 7.7% of revenue, compared with 5.7% in the same

period in 2021. It was largely attributable to tighter cost control on our daily operating activities.

Total operating expenses for the first quarter

of 2022 were RMB307.7 million, a decrease of 0.2% year-over-year, which accounted for 40.6% of revenue for the period, as compared with

26.9% in the first quarter of 2021. In this year, the Company will continue to work on streamlining the cost further to strive for profitability

realization for the future.

Operating Income/(Loss)

Operating loss for the first quarter of 2022 was

RMB155.4 million, which decreased by RMB105.2 million from operating loss of RMB50.2 million for the same period in 2021.

Net loss attributable to Zepp Health Corporation

for the first quarter of 2022 was RMB88.7 million, compared with RMB40.4 million net loss in the first quarter of 2021. The first quarter

typically sees the lowest revenue level in the year due to seasonality, and this first quarter was also further weakened by the Russia

Ukraine conflict and lockdowns in China.

Liquidity and Capital Resources

As of March 31, 2022, the Company had cash and

cash equivalents of RMB1,022.0 million (US$161.2 million), compared with RMB1,468.5 million as of December 31, 2021 and RMB1,090.5 million

as of March 31, 2021.

Share Repurchase Program Update

The Company had announced in its third quarter

2021 earnings release that the board had authorized a share repurchase program of up to US$20 million. As of March 31, 2022, the

Company has used US$6.9 million to repurchase 1,540,703 ADSs. The Company intends to continue the repurchase program.

On March 16, 2022, the

Company announced that its Board of Directors had approved a special cash dividend of US$0.025 per ordinary share (US$0.1 per ADS) on

its outstanding shares to shareholders of record as of the close of trading on March 28, 2022, with ex-dividend date being March 25. The

company paid out dividends to ADS holders on April 15, 2022.

For the second quarter

of 2022, the management of the Company currently expects: