Full Press Release Details
Zepp Health Corporation Reports Fourth Quarter
and Full Year 2024 Unaudited Financial Results
MILPITAS, Calif., March 26, 2025 /PRNewswire/
-- Zepp Health Corporation ("Zepp" or the "Company") (NYSE: ZEPP) today announced its unaudited financial results
for the fourth quarter of 2024.
Fourth Quarter 2024 Financial and Operating Highlights:
| Revenue reached US$59.5 million representing a 40.2% of quarter over quarter increase, out of which our Amazfit-branded products grew by 43.4% quarter-over-quarter. | ||
| Gross margin was 36.8% compared with 34.7% in the same period last year. | ||
| Adjusted operating loss 1 was US$7.4 million, which was the lowest level in 2024. |
Full Year 2024 Financial and Operating Highlights:
| Gross margin was 38.5% compared with 26.2% in the full year of 2023. | ||
| Adjusted operating expenses 2 was US$110.4 million, compared with US$111.7 million in the full year of 2023. |
Mr. Wang 'Wayne' Huang, Chairman and CEO of Zepp, commented, "In
the fourth quarter of 2024, despite macroeconomic challenges and supply bottlenecks, we kept transitioning to a higher-margin, enhanced
brand power model. Our fourth quarter of 2024 sales rose 40% quarter-over-quarter, in line with guidance. In 2024, our gross margin was
38.5%, up from 26.2% in 2023. We ended the year with US$111 million in cash, enabling investment and market response. The T-Rex 3 became
a dark horse in the outdoor and sports watch market. Six months after launch, user activations rose steadily, with plenty of positive
feedback from users and KOLs. We're confident it'll keep rising, driving Amazfit sales with good margins and bringing us closer to near-term
Wayne added, "In branding, we've been beefing up the Amazfit athletes
team. Five-time Olympic medallist Gabby Thomas and Italian tennis star Jasmine Polini recently joined as Athlete Ambassadors. We're also
deepening the HYROX collaboration and will launch more powerful HYROX products and features. These partnerships have boosted confidence
among major offline key account partners in the US and Europe, who have allocated us more display space to replace competitors' counters,
which will fuel growth in the second half of the year. "
operating income/(loss) represents operating income/(loss) excluding: (i) share-based compensation expenses and (ii) amortization of intangible
assets resulting from acquisitions and business cooperation agreements. Please refer to the section titled "Reconciliation of GAAP
and non-GAAP results"
operating expenses represent operating expenses excluding (i) share-based compensation expenses and (ii) amortization of intangible assets
resulting from acquisitions and business cooperation agreements. Please refer to the section titled "Reconciliation of GAAP and
Wayne concluded: "Leveraging Active 2 and Bip 6 series, we're
expanding market share, growing the entry-level user base, and enhancing brand influence in the value-for-money segment, especially in
emerging markets. Since its launch in the first quarter, Active 2 has gained strong momentum in Europe and the U.S., with excellent media
reviews calling it the best smartwatch at the $100 price point, and very positive user feedback.
On the technology side, we're advancing Zepp OS with OpenAI 4.5
integration. In nutrition tracking, our food logging feature by picture and video analytics within the Zepp App is now available in Europe
and North America, receiving increasingly strong user adoption. To accelerate large-scale deployment of both Zepp OS and food logging
capabilities, we're exploring DeepSeek's power to significantly reduce processing costs. With a robust roadmap and an integrated
ecosystem, we've never been more confident about our future."
Zepp Health's CFO, Mr. Leon Deng, said, "The fourth quarter of
2024 revenue grew 40.2% quarter-over-quarter due to T-Rex 3 launch, but declined 28.3% YoY due to product structure changes and macro
headwinds. The gross margin was 36.8% in the fourth quarter 2024, up from 34.7% in the fourth quarter of 2023 and grew from 26.2% in the
full year of 2023 to 38.5% in the full year of 2024, helped by better product mix and brand awareness. Operating costs were in check and
aligned with guidance, achieving the highest quarterly adjusted EBIT3 in 2024, moving towards break even. The fourth quarter
of 2024 GAAP loss was US$36.9 million with various provisions, which are non-cash and one-off in nature.
As of December 31, 2024, the company had US$111 million in cash, down
from US$140 million as of Dec 31, 2023, mainly due to lower operating profit offset by better working capital management. Inventory balance
stood at US$56.8 million on Dec 31, 2024, it was the lowest since 2018. By February 2025, the company has successfully refinanced majority
of its short-term debts maturing in 2025 into long-term debt instruments with a low coupon rate. Following this adjustment, long-term
debt accounts for around 75% of the company's overall debt structure. Since the first quarter of 2023, US$56.3 million of the total debt
had been retired and the capital structure would be further optimized as operating cash flow strengthened.
EBIT is a non-GAAP financial measure, which is defined as net loss, excluding (i) share-based compensation expenses, (ii) amortization
of intangible assets resulting from acquisitions and business cooperation agreements, (iii) gain/(loss) from fair value change of long-term
investment, (iv) impairment loss from long-term investments, (v) income/(loss) from equity method investments, (vi) income tax (benefit)/
expense, and (vii) interest income and interest expense.
We are pleased to see that revenue resumed an upward trend in the first
quarter of 2025, boosting confidence for 2025. The share repurchase program would continue in 2025, showing faith in Zepp Health's long-term
potential and commitment to shareholder value."
Fourth Quarter 2024 Financial Results
Revenues for the fourth quarter of 2024 reached
US$59.5 million, a decrease by 28.3% from the fourth quarter of 2023. The decrease was primarily due to the decrease in the sales of Xiaomi
wearable products, as well as the decrease in sales of Amazfit-branded products, due to different new product launch timing and product
mix, with fewer SKUs currently on sale compared to 2023. Also, supply was still somewhat constrained by the production capacity for T-Rex
3 in the fourth quarter. However, compared with the third quarter of 2024, revenue of Amazfit-branded products increased by 43.4%, which
is the highest quarter-over-quarter increase in 2024, the increase was primarily driven by the positive market reception of our recent
launches, especially the newly introduced Amazfit T-Rex 3, and our core products such as Balance, Active, have seen continued popularity
Gross margin in the fourth quarter of 2024 was
36.8%, compared to 34.7% in the same period of 2023. Higher gross margin of Amazfit-branded products was primarily driven by the product
mix, especially higher gross margin of T-Rex 3.We expect the positive gross margin trend to continue into 2025 with the new product launches,
such as Amazfit Active 2 and Amazfit Bip 6.
Research and Development Expenses
Research and development expenses in the fourth
quarter of 2024 were US$11.1 million, a decrease by 0.6% year-over-year. The decrease was as a result of our refined research and development
approaches, as we consistently evaluated resource efficiency to ensure maximum return on investment and productivity. We are committed
to investing in new technologies and AI to maintain our competitive edge against our peers.
Selling and Marketing Expenses
Selling and marketing expenses in the fourth quarter
of 2024 were US$13.3 million, an increase by 10.6% year-over-year.
The increase was primarily due to the peak season
for promotional campaigns to build brand recognition and drive sales growth. At the same time, we consistently pushed on retail profitability
and channel mix improvement, which included meticulous refinement of our retail channels and strategic staffing arrangements across sales
regions. We are committed to investing efficiently in marketing and branding to ensure our sustainable growth.
General and Administrative Expenses
General and administrative expenses were US$6.6
million in the fourth quarter of 2024, an increase by 28.5% year-over-year. The increase was largely attributable to provision for bad
debt and foreign exchange rate fluctuations.
Total operating expenses for the fourth quarter
of 2024 were US$30.9 million, an increase by 9.4% year-over-year. Adjusted operating expenses, which exclude share-based compensation
and amortization of intangible assets resulting from acquisitions and business cooperation agreements, were US$29.3 million. The increase
was primarily due to the launch of various marketing campaigns to build brand recognition and drive sales growth and provision for bad
debt. We will maintain our cost-conscious approach in the upcoming quarters. Concurrently, we remain committed to investing in R&D
and marketing activities to ensure our long-term competitiveness.
Operating Income/(Loss)
Operating loss for the fourth quarter of 2024
was US$8.9 million, compared to operating income of US$0.6 million for the fourth quarter of 2023. Adjusted operating loss for the fourth
quarter of 2024 was US$7.4 million, compared to adjusted operating income of US$3.0 million for the fourth quarter of 2023. The loss was
mainly due to lower sales volume, which resulted in an inability to fully cover operating expenses. The adjusted operating loss was the
narrowest among four quarters in 2024.
Net loss attributable to Zepp Health Corporation for the fourth quarter
of 2024 was US$36.9 million, compared to net loss of US$1.3 million in the fourth quarter of 2023, which included operating loss of US$8.9
million, income tax impacts of US$13.6 million (primarily result from valuation allowance for deferred tax assets) and net investment
results of US$12.9 million (including impairment loss from investments, loss from equity method investments, and loss from fair value
change of long-term investment), both are non-recurring and non-cash in nature.
Adjusted net loss attributable to Zepp Health
Corporation4 was US$22.5 million, compared to adjusted net loss of US$0.5 million in the fourth quarter of 2023. Adjusted EBIT