Zepp Health Corporation Reports Second Quarter 2025 Unaudited Financial Results

Zepp Health Corporation

Reports Second Quarter 2025 Unaudited Financial Results

August 3, 2025 /PRNewswire/ -- Zepp Health Corporation ("Zepp" or the "Company") (NYSE: ZEPP) today announced

its unaudited financial results for the second quarter of 2025.

Second Quarter 2025 Financial and Operating Highlights:

Mr. Wang "Wayne" Huang, Chairman and CEO of Zepp, commented,

"In the second quarter of 2025, we are pleased to report 46.2% year-over-year revenue growth-driven entirely by Amazfit products-marking

our first overall revenue growth since 2021. Coupled with continued improvement in our bottom line, this achievement underscores the effectiveness

of our strategic pivot to Amazfit-branded ecosystem in recent years. More importantly, it serves as a compelling testament to the enhanced

global brand awareness of Amazfit brand. Additionally, our diversified global supply chain has successfully mitigated a big part of the

tariff risks as projected, and the operational progress we made in the first half of the year has offset majority of these headwinds through

volume growth and cost efficiencies."

"Our multi-tiered product strategy continues to resonate strongly

with diverse consumer groups, driving sales growth across all three product segments. With our high-end adventure series, the T-Rex 3,

sustaining its outperformance and setting new benchmarks for durability, battery life, and advanced sport modes in the premium outdoor

category. Our newest flagship ecosystem, the Balance 2 smartwatch and Helio Strap, has been exceptionally well received, offering breakthrough

accuracy, seamless training and recovery insights, and features that traditionally required multiple high-cost competitor devices. At

the same time, our entry-level Bip 6 and lifestyle-focused Active 2 series delivered steady growth worldwide, supported by strong retail

and e-commerce partnerships that expanded shelf presence and order volumes. We also made a major leap forward in software innovation with

the launch of Zepp OS 5.0, powered by AI-driven features like Zepp Flow 2.0, enabling voice-controlled workouts, smarter performance tracking,

and deep integrations with leading fitness platforms such as Strava and Training Peaks. Together, these advancements strengthen our ecosystem,

elevate the user experience across every product tier, and reinforce Amazfit's position as an innovation leader shaping the future

of performance wearables."

1 Adjusted net income/(loss) attributable to Zepp Health

Corporation represents net income/(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, and (vi) tax effects of the above non-GAAP adjustments.

See "Reconciliation of GAAP and non-GAAP results" at the end of this press release.

"We continue to foster a strong Amazfit Athletes team, now boasting

over ten sports stars. This quarter, we're excited to welcome Derrick Henry-NFL standout and Rob Farvard, Ultra Runner-to

our growing roaster of Amazfit athlete ambassadors. They will work closely with us on product testing, athlete led storytelling and grassroots

community events to help bring the brand endurance focused innovations to life. Complementing this, our targeted, multi-layered global

marketing campaigns across YouTube, TikTok, and Instagram have formed a powerful "marketing ecosystem." Amazon Prime Day recently

served as a compelling testament to the impact of these efforts: in the U.S., Amazfit ranked as the second most improved wearables brand

year-over-year; in EMEA, Prime Day sales surged approximately 60% versus the 2024 event."

"This quarter is just the beginning of our upward trajectory.

With a robust pipeline of innovations, we're well-equipped to build on this momentum, driving sustained growth and value through

the second half of 2025 and beyond," Mr. Huang concluded.

Mr. Leon Deng, Zepp's Chief Financial Officer, added, "In

the second quarter of 2025, we exceeded the high end of our revenue guidance, driven by strong demand for our Amazfit Bip 6, Active 2,

and T-Rex 3 models. The June launches of the Helio Strap and Balance 2 also contributed positively, together with a strong second

half product pipeline, positioning us for a strong second half. We delivered our best-ever Prime Day performance in a relative soft macro

environment -further evidence of our brand's growing strength and product appeal.

Gross margin came in at 36.2%, consistent with the prior quarter. GAAP

and adjusted operating expenses2 totaled US$27.6 million and US$26.4 million, down from US$32.7 million and US$31.5 million

in the first quarter of 2025 and aligned towards our quarterly run rate target. Concurrently, we remain committed to investing in R&D

and marketing activities to ensure our long-term competitiveness.

2 Adjusted operating expenses represent operating expenses

excluding (i) share-based compensation expenses and (ii) amortization of intangible assets resulting from acquisitions and business cooperation

agreements. See "Reconciliation of GAAP and non-GAAP results" at the end of this press release.

GAAP and adjusted operating loss3 narrowed to approximately

US$6.1 million and US$4.9 million, marking a meaningful improvement versus last year and previous quarter.

We ended the quarter with US$95.3 million in cash. Inventory increased

as the company strategically increased stock in key product lines to prepare for our upcoming product launches and offset potential tariff

impacts, while our capital structure remained stable-with long-term debt accounting for the significant part of obligations. Our

2025 share repurchase program remains active, underscoring confidence in our long-term outlook.

For the third quarter, we project revenue

of US$72.0 million to US$76.0 million, representing 70% to 79% year-over-year growth. This forecast reflects our strong execution

and sustained product momentum, particularly the positive market reception of our recent new launches."

3 Adjusted 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. See "Reconciliation of GAAP and non-GAAP results"

at the end of this press release.

Second Quarter of 2025 Financial Results

second quarter of 2025 reached US$59.4 million, an increase by 46.2% and 54.2% from the second quarter of 2024 and first quarter

of 2025, respectively, marking a return to year-over-year growth since the second quarter of 2021. The increase was mainly driven by the

popularity of our Amazfit Bip 6 and Active 2 ranges, as well as the T-Rex 3 and newly launched products namely Amazfit Helio Strap and

Balance 2 in June 2025. Looking at the third quarter of 2025, we are expecting the Amazfit-branded sales continue to grow.

Gross margin in the second quarter of 2025 was

36.2%, which was in line with first quarter of 2025 but worse than the second quarter of 2024. The year-over-year gross margin decline

is due to a higher revenue proportion of relative lower-margin entry-level products namely Amazfit Bip 6 and Active 2 smartwatches and

the clearance of older mid-range Balance 1 products at reduced prices to prepare for the new Balance 2 range launches. Gross margin remained

stable sequentially. As we are entering the third quarter of 2025, with a full quarter of Balance 2 and new products launch, we expect

the positive trend in gross margin to continue.

Research and Development Expenses

Research and development

expenses in the second quarter of 2025 were US$11.2 million, an increase by 3.1% year-over-year. The increase was a result from

our investment in new technologies, including AI, to maintain our competitive edge against our peers. Furthermore, our pipeline is robust

with a series of cutting-edge products set to launch. At the same time, we focused on refined research and development approaches, as

we consistently evaluated resource efficiency to optimize return on investment and productivity.

Selling and Marketing Expenses

Selling and marketing

expenses in the second quarter of 2025 were US$12.1 million, an increase by 14.2% year-over-year, and decrease of 12.9% quarter-over-quarter.

The year-over-year increase was primarily due to the promotional campaigns to build brand recognition and drive sales growth. The quarter-over-quarter

decrease was primarily due to the absence of large-scale physical launch events, such as the CES exhibition held in the first quarter

of 2025, however, we continue to invest in selling and marketing expenses and signed a few more renowned athletes to expand of our Amazfit

Athletes team to build brand recognition. 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$4.4

million in the second quarter of 2025, compared with US$4.9 million in the same period of 2024, a decrease by 9.7% year-over-year. We

continue to streamline on our general and administrative expenses.

expenses for the second quarter of 2025 were US$27.6 million, an increase by 5.2% 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$26.4

million, compared with US$24.8 million in the same period of 2024. The increase was due to continues investment in cutting-edge technologies

and new products innovation, as well as marketing and brand building initiatives. We will maintain our cost-conscious approach

and remain committed to investing in R&D and marketing activities to ensure our long-term competitiveness.

Operating Income/(Loss)

the second quarter of 2025 was US$6.1 million, which was narrowed by 38.2% compared with the second quarter of 2024.