BEIJING, May 13, 2021 /PRNewswire/ -- Zepp Health Corp.
(NYSE: ZEPP) today reported revenue of RMB1.1 billion (US$175.1
million); GAAP diluted net loss per share of RMB0.16 (US$0.02);
and GAAP diluted net loss per ADS of RMB0.64 (US$0.10)
for the first quarter ended March 31,
2021. Each ADS represents four (4) Class A ordinary
shares.
"We reached the high end of our guidance range, leveraging the
growing revenue from sale of our self-branded Amazfit and Zepp
products, which grew 84% year-over-year in the first quarter,
despite the continuing pandemic prevailing in many of our key
markets," said Wang Huang, Chairman
and CEO of Zepp Health. "First quarter results included normal
seasonality, and anticipation of the Xiaomi Band 6, which will
benefit the second quarter. With the sales records of our
self-branded products in the first quarter, and many exciting
product enhancements yet to come, we are well positioned and
optimistic about the upcoming quarters this year."
Added Chief Financial Officer, Leon
Deng, "Our strong guidance for the second quarter reflects
our expectation of continued strength of our Amazfit and Zepp
brands, as well as new Xiaomi shipments. While we continue to
manage expenses, the ongoing pandemic has brought challenges to our
expense coverage, and we keep investing in the growth of our
business. We expect to return to
GAAP profitability in Q2 this year."
First Quarter 2021
Financial Summary
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
GAAP in millions,
except for percentages and per share/ADS amounts
|
|
Mar. 31,
2021
|
Mar. 31,
2020[1]
|
|
Revenue
RMB
|
|
1,147.3
|
1,088.5
|
|
Revenue
USD
|
|
175.1
|
153.7
|
|
Gross
Margin
|
|
22.5%
|
22.5%
|
|
Net
income/(loss) attributable to Zepp Health Corp. RMB
|
|
(40.4)
|
19.2
|
|
Adjusted net
income/(loss) attributable to Zepp Health Corp.
RMB[2]
|
|
(29.0)
|
25.5
|
|
|
|
|
|
|
Diluted net
income/(loss) per share RMB
|
|
(0.16)
|
0.07
|
|
Diluted net
income/(loss) per ADS USD
|
|
(0.10)
|
0.04
|
|
Adjusted diluted net
income/(loss) per share RMB[3]
|
|
(0.12)
|
0.10
|
|
Adjusted diluted net
income/(loss) per ADS USD
|
|
(0.07)
|
0.06
|
|
Units
Shipped
|
|
6.3
|
7.6
|
|
[1] The USD
numbers in 2020 are referenced with the prior 6-K
disclosures.
|
[2] Adjusted net
income/(loss) attributable to Zepp Health Corp. 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.
|
[3] Adjusted
diluted net income/(loss) is the abbreviation of Adjusted net
income/(loss) attributable to Zepp Health Corp., which is a
non-GAAP measure and excludes share-based compensation expenses
attributable to Zepp Health Corp., and is used as the numerator in
computation of adjusted basic and diluted net income/(loss) per ADS
attributable to Zepp Health Corp..
|
First Quarter 2021 Financial Results
Revenue
Total units shipped in the first quarter 2021 decreased by 17.1%
year-over-year to 6.3 million, compared with 7.6 million in the
first quarter of 2020. This was driven by a 34.3% decrease in units
of products built for Xiaomi, partially offset by a 111.1% increase
in unit shipments of Amazfit and Zepp branded products.
Revenues for the first quarter of 2021 reached RMB1.1 billion (US$175.1
million), an increase of 5.4% from the first quarter of
2020. In the first quarter of 2021, revenue from Xiaomi products
decreased by 39.9% and revenue from self-branded products increased
by 84.4%, each compared with the same period in 2020, primarily
driven by the company's popular premium GT series, the basic Bip
and Pop models, and the rugged T-Rex. Both sequential and
year-over-year quarterly revenue changes can be affected by the
seasonality of purchase patterns as well as by timing of new
product introductions.
Impact of COVID-19 on Our Business
The impacts of COVID-19 continued in the first quarter 2021,
including some production delays that affected inventory
availability for some new products. In key European, Indian and
South American markets for Zepp Health products, continued battles
with infection rates and lockdowns dampened the company's first
quarter 2021 sales. The company's costs and profitability were
affected in the first quarter by the termination of subsidies to
enterprises that were affected by the pandemic granted by the
Chinese government, as well as exemptions for social insurance
contributions, which were in effect in 2020.
Gross Margin
Gross margin in the first quarter of 2021 was 22.5%, consistent
in the same period in 2020. Gross margin in the first quarter of
2021 was affected by model run-outs and product mix. Gross margin
and gross profit were affected by product mix as different products
had different margin contributions, and these could change over the
life of a product.
Research & Development
Research and development expense in the first quarter of 2021
was RMB152.3 million, increasing
28.7% year-over year, and comprising 13.3% of revenue versus 10.9%
in the year-ago period. The growth was mainly attributed to higher
salary and wages costs mainly driven by more headcounts, offsetting
by the better resource consumption management during testing
process. We have implemented expense control in R&D activities
since second half-year of 2020, and we have seen positive results
in 2021.
Sales & Marketing
Sales and Marketing expense for the first quarter of 2021 was
RMB90.8 million, increasing 65.5%
year-over-year, and comprising 7.9% of revenue, compared to 5.0% of
revenue in the same period in 2020. Higher sales and marketing
expense in 2021 was driven by increased advertisement promotion
expenses and sales and marketing headcounts. S&M expense
decreased sequentially by RMB26.1
million from the fourth quarter 2020.
General & Administrative
General and Administrative expense was RMB65.3 million in the first quarter 2021,
increasing 28.3% year-over-year, and comprising 5.7% of revenue,
compared to 4.7% in the same period in 2020, mainly attributed to
higher salary and wages costs and higher depreciation and rental
fee due to office expansion. We have also implemented expense
control in G&A activities since the second half-year of 2020,
and we have seen positive results in 2021.
Operating Income/(Loss) and Expenses
Total Operating Expense for the first quarter 2021 was
RMB308.4 million, which increased by
37.6% from the same period in 2020, comprising 26.9% of revenue in
the first quarter 2021, compared to 20.6% in the first quarter
2020. Higher expenses reflect investments in new product
development and global market expansion.
Total operating expense declined sequentially in each of the
last two quarters from the third quarter 2020 as the company had
instituted new expense control efforts. The company will continue
to exercise control on expenses in the future, to improve operating
efficiency as a whole.
Operating Loss for the first quarter 2021 was RMB50.2 million, which decreased by RMB70.7 million from operating income
RMB20.5 million for the same period
in 2020.
Liquidity and Capital Resources
On March 31, 2021, the Company had
cash and cash equivalents of RMB1,090.5
million (US$166.4 million),
compared with RMB2,273.3 million as
of December 31, 2020. In the first
quarter 2021, the company used RMB863.7
million to invest in Jiangsu Yitong High-Tech Co., Ltd..
Outlook
For the second quarter of 2021, the management of the
Company currently expects:
- Net revenues to be between RMB1.7
billion and RMB1.8 billion,
compared with RMB1.14 billion in the
second quarter of 2020.
The above outlook is based on the current market conditions and
reflects the Company management's current and preliminary estimates
of market and operating conditions and customer demand, which are
all subject to change.
Conference Call
The Company's management will hold a conference call at
8:00 a.m. Eastern Time on Thursday,
May 13, 2021 (8:00 p.m. Beijing Time
on May 13, 2021) to discuss financial
results and answer questions from investors and analysts. Listeners
may access the call by dialing:
US (Toll
Free):
|
+1-888-346-8982
|
International:
|
+1-412-902-4272
|
Mainland China (Toll
Free):
|
400-120-1203
|
Hong Kong (Toll
Free):
|
800-905-945
|
Hong Kong:
|
+852-3018-4992
|
Participants should dial-in at least 10 minutes before the
scheduled start time and ask to be connected to the call for "Zepp
Health Corp.".
Additionally, a live and archived webcast of the conference call
will be available at https://ir.zepp.com/investor.
A telephone replay will be available one hour after the call
until May 20, 2021 by dialing:
US (Toll
Free):
|
+1-877-344-7529
|
International:
|
+1-412-317-0088
|
Replay
Passcode:
|
10156106
|
About Zepp Health Corporation (NYSE: ZEPP)
Zepp Health changed its name from Huami Corp. (HMI) on
February 25, 2021 to emphasize its
health focus with a name that resonates across languages and
cultures globally. The company's mission continues to be connecting
health with technology. Since its inception in 2013, Zepp Health
has developed a platform of proprietary technology including AI
chips, biometric sensors, and data algorithms, which drive a
broadening line of smart health devices for consumers, and data
analytics services for population health. Zepp Health is one of the
largest global developers of smart wearable health and consumer
fitness devices, shipping 46 million units in 2020. Zepp Health
Corp. is based in Hefei, China,
with U.S. operations, Zepp Health USA, based in Cupertino, Calif..
Use of Non-GAAP Measures
We use adjusted net income, a non-GAAP financial measure, in
evaluating our operating results and for financial and operational
decision-making purposes. Adjusted net income represents net income
excluding share-based compensation expenses, and such adjustment
has no impact on income tax. Adjusted net income attributable
to Zepp Health Corp. is a non-GAAP measure, which excludes
share-based compensation expenses attributable to Zepp Health
Corp., and is used as the numerator in computation of adjusted net
income per share and per ADS attributable to Zepp Health Corp..
We believe that adjusted net income and adjusted net income
attributable to Zepp Health Corp. help identify underlying trends
in our business that could otherwise be distorted by the effect of
certain expenses that we include in net income and net income
attributable to Zepp Health Corp.. We believe that adjusted net
income and adjusted net income attributable to Zepp Health Corp.
provides useful information about our operating results, enhances
the overall understanding of our past performance and future
prospects and allows for greater visibility with respect to key
metrics used by our management in its financial and operational
decision-making.
Adjusted net income and adjusted net income attributable to Zepp
Health Corp., should not be considered in isolation or construed as
an alternative to net income, basic and diluted net income per
share and per ADS attributable to Zepp Health Corp. or any other
measure of performance or as an indicator of our operating
performance. Investors are encouraged to review the historical
non-GAAP financial measures to the most directly comparable GAAP
measures. Adjusted net income and adjusted net income attributable
to ordinary shareholders, presented here may not be comparable to
similarly titled measures presented by other companies. Other
companies may calculate similarly titled measures differently,
limiting their usefulness as comparative measures to our data. We
encourage investors and others to review our financial information
in its entirety and not rely on a single financial measure.
Exchange Rate
The Company's business is primarily conducted in China and the significant majority of revenues
generated are denominated in Renminbi ("RMB"). This announcement
contains currency conversions of RMB amounts into U.S. dollars
("US$") solely for the convenience of the reader. Unless otherwise
noted, all translations from RMB to US$ are made at a rate of
RMB6.5518 to US$1.00, the effective noon buying rate for
March 31, 2021 as set forth in the
H.10 statistical release of the Federal Reserve Board. No
representation is made that the RMB amounts could have been, or
could be, converted, realized or settled into US$ at that rate on
March 31, 2021, or at any other
rate.
Safe Harbor Statement
This announcement contains forward-looking statements. These
statements are made under the "safe harbor" provisions of the U.S.
Private Securities Litigation Reform Act of 1995. These
forward-looking statements can be identified by terminology such as
"will," "expects," "anticipates," "future," "intends," "plans,"
"believes," "estimates," "confident" and similar statements.
Statements that are not historical facts, including statements
about the Company's beliefs and expectations, are forward-looking
statements. Forward-looking statements involve inherent risks and
uncertainties. A number of factors could cause actual results to
differ materially from those contained in any forward-looking
statement, including but not limited to the following: the
cooperation with Xiaomi, the recognition of the Company's
self-branded products; the Company's growth strategies; trends and
competition in global wearable technology market; changes in the
Company's revenues and certain cost or expense accounting policies;
governmental policies relating to the Company's industry and
general economic conditions in China and the global. Further information
regarding these and other risks is included in the Company's
filings with the United States Securities and Exchange Commission.
All information provided in this press release and in the
attachments is as of the date of this press release, and the
Company undertakes no obligation to update any forward-looking
statement, except as required under applicable law.
For investor and media inquiries, please contact:
In China:
Zepp Health Corp.
Grace Yujia Zhang
E-mail: ir@zepp.com
The Piacente Group, Inc.
Yang Song
Tel: +86-10-6508-0677
E-mail: zepp@tpg-ir.com
In the United States:
Zepp Health Corp.
Brad Samson
Tel: 1+714-955-3951
E-mail: brad.samson@zepp-usa.com
Zepp Health
Corp.
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(Amounts in
thousands of Renminbi ("RMB") and U.S. dollars
("US$")
|
except for number
of shares and per share data, or otherwise noted)
|
|
|
|
|
|
|
|
|
As of December
31,
|
|
As of March
31,
|
|
|
2020
|
|
2021
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
2,273,349
|
|
1,090,523
|
|
166,446
|
Restricted
cash
|
|
2,401
|
|
2,306
|
|
352
|
Term
deposit
|
|
5,000
|
|
5,000
|
|
763
|
Accounts
receivable
|
|
298,038
|
|
333,191
|
|
50,855
|
Amounts due from
related parties, current
|
|
860,213
|
|
382,016
|
|
58,307
|
Inventories
|
|
1,217,537
|
|
1,452,143
|
|
221,640
|
Short-term
investments
|
|
18,430
|
|
18,736
|
|
2,860
|
Prepaid expenses and
other current assets
|
|
152,898
|
|
216,970
|
|
33,116
|
Total current
assets
|
|
4,827,866
|
|
3,500,885
|
|
534,339
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
124,619
|
|
150,896
|
|
23,031
|
Intangible asset,
net
|
|
145,213
|
|
141,204
|
|
21,552
|
Goodwill
|
|
62,515
|
|
62,772
|
|
9,581
|
Long-term
investments
|
|
443,986
|
|
1,492,791
|
|
227,844
|
Deferred tax
assets
|
|
120,190
|
|
129,639
|
|
19,787
|
Other non-current
assets
|
|
28,165
|
|
19,767
|
|
3,017
|
Non-current operating
lease right-of-use assets
|
|
151,165
|
|
140,100
|
|
21,383
|
Total
assets
|
|
5,903,719
|
|
5,638,054
|
|
860,534
|
Zepp Health
Corp.
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(Amounts in
thousands of Renminbi ("RMB") and U.S. dollars
("US$")
|
except for number
of shares and per share data, or otherwise noted)
|
|
|
|
|
|
|
|
|
As of December
31,
|
|
As of March
31,
|
|
|
2020
|
|
2021
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
1,951,335
|
|
1,339,017
|
|
204,374
|
Advance from
customers
|
|
42,502
|
|
27,782
|
|
4,240
|
Amount due to related
parties, current
|
|
11,185
|
|
5,075
|
|
775
|
Accrued expenses and
other current liabilities
|
|
252,275
|
|
307,774
|
|
46,975
|
Income tax
payables
|
|
27,706
|
|
15,304
|
|
2,336
|
Short-term bank
borrowings
|
|
504,671
|
|
680,376
|
|
103,846
|
Total current
liabilities
|
|
2,789,674
|
|
2,375,328
|
|
362,546
|
Deferred tax
liabilities
|
|
22,374
|
|
22,103
|
|
3,374
|
Long-term
borrowing
|
|
60,000
|
|
201,570
|
|
30,766
|
Other non-current
liabilities
|
|
185,168
|
|
214,577
|
|
32,751
|
Non-current operating
lease liabilities
|
|
116,245
|
|
105,471
|
|
16,098
|
Total
liabilities
|
|
3,173,461
|
|
2,919,049
|
|
445,535
|
Zepp Health
Corp.
|
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(Amounts in
thousands of Renminbi ("RMB") and U.S. dollars
("US$")
|
|
except for number
of shares and per share data, or otherwise noted)
|
|
|
|
|
|
|
|
|
|
|
As of December
31,
|
|
As of March
31,
|
|
|
2020
|
|
2021
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
Ordinary
shares
|
|
157
|
|
158
|
|
24
|
Additional paid-in
capital
|
|
1,552,109
|
|
1,573,194
|
|
240,116
|
Accumulated retained
earnings
|
|
1,133,368
|
|
1,092,940
|
|
166,815
|
Accumulated other
comprehensive income
|
|
44,624
|
|
48,417
|
|
7,388
|
Total Zepp Health
Corp. shareholders' equity
|
|
2,730,258
|
|
2,714,709
|
|
414,343
|
Noncontrolling
interests
|
|
-
|
|
4,296
|
|
656
|
Total
equity
|
|
2,730,258
|
|
2,719,005
|
|
414,999
|
Total liabilities
and equity
|
|
5,903,719
|
|
5,638,054
|
|
860,534
|
|
|
|
|
|
|
|
|
Zepp Health
Corp.
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Amounts in
thousands of Renminbi ("RMB") and U.S. dollars
("US$")
|
except for number
of shares and per share data, or otherwise noted)
|
|
|
|
For the Three
Months Ended March 31,
|
|
|
2020
|
|
2021
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
|
|
Revenues
|
|
1,088,461
|
|
1,147,263
|
|
175,107
|
Cost of
revenues
|
|
843,901
|
|
889,058
|
|
135,697
|
Gross
profit
|
|
244,560
|
|
258,205
|
|
39,410
|
Operating
expenses:
|
|
|
|
|
|
|
Selling and
marketing
|
|
54,843
|
|
90,787
|
|
13,857
|
General and
administrative
|
|
50,883
|
|
65,285
|
|
9,964
|
Research and
development
|
|
118,336
|
|
152,330
|
|
23,250
|
Total operating
expenses
|
|
224,062
|
|
308,402
|
|
47,071
|
Operating
income/(loss)
|
|
20,498
|
|
(50,197)
|
|
(7,661)
|
Other income and
expenses:
|
|
|
|
|
|
|
Interest
income
|
|
7,671
|
|
5,728
|
|
874
|
Interest
expense
|
|
(724)
|
|
(6,648)
|
|
(1,015)
|
Other income
(expenses), net
|
|
(8,431)
|
|
2,501
|
|
382
|
Gain from fair value
change of long-term investment
|
|
1,293
|
|
-
|
|
-
|
Income/(loss)
before income tax and income/(loss) from equity
method investment
|
|
20,307
|
|
(48,616)
|
|
(7,420)
|
Income tax
(expenses)/benefits
|
|
(2,033)
|
|
7,598
|
|
1,160
|
Income/(loss)
before loss from equity method investments
|
|
18,274
|
|
(41,018)
|
|
(6,260)
|
Net (loss)/income
from equity method investments
|
|
(332)
|
|
457
|
|
70
|
Net
income/(loss)
|
|
17,942
|
|
(40,561)
|
|
(6,190)
|
Less: Net loss attributable to
noncontrolling interest
|
|
(1,226)
|
|
(134)
|
|
(20)
|
Net income/(loss)
attributable to Zepp Health Corp.
|
|
19,168
|
|
(40,427)
|
|
(6,170)
|
Net income/(loss)
per share attributable to Zepp Health Corp.
|
|
|
|
|
|
|
Basic income/(loss)
per ordinary share
|
|
0.08
|
|
(0.16)
|
|
(0.02)
|
Diluted income/(loss)
per ordinary share
|
|
0.07
|
|
(0.16)
|
|
(0.02)
|
|
|
|
|
|
|
|
Net
income/(loss) per ADS (4 ordinary shares equal to 1
ADS)
|
|
|
|
|
|
|
ADS –
basic
|
|
0.31
|
|
(0.64)
|
|
(0.10)
|
ADS –
diluted
|
|
0.30
|
|
(0.64)
|
|
(0.10)
|
|
|
|
|
|
|
|
Weighted average
number of shares used in computing net
income/(loss) per share
Ordinary share –
basic
|
|
247,657,168
|
|
250,794,275
|
|
250,794,275
|
Ordinary share –
diluted
|
|
259,574,866
|
|
250,794,275
|
|
250,794,275
|
Zepp Health
Corp.
|
Reconciliation of
GAAP and Non-GAAP Results
|
(Amounts in
thousands of Renminbi ("RMB") and U.S. dollars
("US$")
|
except for number
of shares and per share data, or otherwise noted)
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended March 31,
|
|
|
2020
|
|
2021
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
|
|
Net income/(loss)
attributable to Zepp Health Corp.
|
|
19,168
|
|
(40,427)
|
|
(6,170)
|
Share-based
compensation expenses
|
|
6,378
|
|
11,378
|
|
1,736
|
Adjusted net
income/(loss) attributable to Zepp Health
Corp.2
|
|
25,546
|
|
(29,049)
|
|
(4,434)
|
|
|
|
|
|
|
|
Adjusted net
income/(loss) per share attributable to
Zepp Health Corp.
|
|
|
|
|
|
|
Adjusted basic
income/(loss) per ordinary share
|
|
0.10
|
|
(0.12)
|
|
(0.02)
|
Adjusted diluted
income/(loss) per ordinary share
|
|
0.10
|
|
(0.12)
|
|
(0.02)
|
|
|
|
|
|
|
|
Adjusted net
income/(loss) per ADS (4 ordinary
shares equal to 1 ADS)
|
|
|
|
|
|
|
ADS –
basic
|
|
0.41
|
|
(0.46)
|
|
(0.07)
|
ADS –
diluted
|
|
0.39
|
|
(0.46)
|
|
(0.07)
|
|
|
|
|
|
|
|
Weighted average
number of shares used in
computing adjusted net income/(loss) per share
|
|
|
|
|
|
|
Ordinary share –
basic
|
|
247,657,168
|
|
250,794,275
|
|
250,794,275
|
Ordinary share –
diluted
|
|
259,574,866
|
|
250,794,275
|
|
250,794,275
|
|
|
|
|
|
|
|
Share-based
compensation expenses included
are follows:
|
|
|
|
|
|
|
Cost of
revenues
|
|
7
|
|
-
|
|
-
|
Selling and
marketing
|
|
632
|
|
160
|
|
24
|
General and
administrative
|
|
4,097
|
|
8,218
|
|
1,254
|
Research and
development
|
|
1,642
|
|
3,000
|
|
458
|
Total
|
|
6,378
|
|
11,378
|
|
1,736
|
View original
content:http://www.prnewswire.com/news-releases/zepp-health-corp-reports-first-quarter-2021-unaudited-financial-results-301290653.html
SOURCE Zepp Health Corp.