管理層發言
Hello, ladies and gentlemen. Thank you for standing by for Zepp Health Corporation's First Quarter 2026 Earnings Conference Call. Today's conference call is being recorded. I will now turn the call over to your host, Grace Zhang, Director of Investor Relations for the company. Please go ahead, Grace.
Hello, everyone, and welcome to Zepp Health Corporation's First Quarter 2026 Earnings Conference Call. The company's financial and operating results were issued in our press release at the newswire services earlier today and are posted online. You can also view the earnings press release and the slides referred to on this call by visiting the IR section of the company's website. Presenting today are Huang Wang, our Founder and Chief Executive Officer; and Leon Deng, our Chief Financial Officer. Joining us today, we also have Mike Yeung, Chief Operating Officer and General Manager of North America; and Eric Flemming, Vice President of Capital Markets for North America. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties are included in the company's annual report on Form 20-F for the fiscal year ended December 31, 2025, and other filings as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Please also note that Zepp's earnings press release and this conference call includes discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial information. The press release contains a reconciliation of our unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. I will now turn the call over to our CEO, Mr. Wang Huang. Please go ahead.
Hello, everyone, and thank you for joining us today. We are pleased to begin 2026 with a promising start, delivering another solid quarter. In the first quarter, Amazfit branded revenue grew 33.8% year-over-year, demonstrating exceptional resilience during what is traditionally a softer season for the consumer electronics industry. This strong performance was primarily driven by the successful launches of the Amazfit Active Max, Active 3 Premium and our flagship T-Rex Ultra 2. Delivering this level of growth in a seasonally quieter quarter further reinforces our conviction that the market opportunity we are capturing is structural rather than cyclical. More importantly, we do not view this quarter simply as a revenue growth story. We see it as another early validation of the structural changes we have been building: stronger premium product mix, improving pricing power, expanding gross margin and a clear brand position in performance-oriented training. During our last earnings call, I outlined how Zepp Health is evolving into a comprehensive hybrid training platform, seamlessly integrating endurance, strength and recovery through hardware, AI-driven training intelligence, software, and data. Our 2026 ambition is clear. We aim to build a global leadership position in hybrid training. To advance this strategy, we further deepened our collaboration with HYROX, one of the world's fastest-growing hybrid endurance sports organizations, through a new exclusive three-year global partnership. This expanded partnership enhances the HYROX athlete experience across training, competition and recovery, leveraging a broader portfolio of exclusive smart wearable categories, including smart watches, smart rings, smart cameras, smart glasses and smart straps, alongside connected app experience, HYROX-specific training modes and selective performance data integrations. This partnership represents more than a sponsorship. It is a strategic step for us to participate in and help shape the emerging hybrid training category. By engaging directly with HYROX's global athlete community, gym ecosystem, coaches and race environment, we can build a more authentic connection with users whose training behaviors span strength, endurance, recovery, nutrition and performance readiness. This gives us a differentiated position in the market beyond endurance and general smart lifestyle, and we have the opportunity to build authority around hybrid training and a more complete training system. We believe one of the most important opportunities at the moment is when a user moves from casual checking to more serious training. At that point, the phone ecosystem becomes less important and the training value becomes more important. HYROX and gym-based hybrid training help create that moment, allowing Amazfit to enter through app experiences, training content, HYROX-specific modes and lower-friction products before users make a full device switch. At a recent New York HYROX event, we introduced Balance 3 and Balance Ultra in the real hybrid training environment. This launch setting was intentional. These products are designed for users who balance strength, endurance, recovery, work, stress and daily life, powered by Hybrid-Charge Energy Intelligence in the Zepp app. They bring together BioCharge live load and the training load into one clear view of personal capacity, helping users better understand when to push, when to recover and how to maintain consistency over the long term. These activities are important because premiumization is not only about higher price points. It is about building trust in the environments where serious users decide which brands they rely on by showing up in marathon preparation, trail and expedition environments and hybrid training communities. Amazfit is strengthening the credibility required to support higher-value products, improved product mix and long-term pricing power. Our premiumization strategy is strongly supported by our hybrid training positioning. We are already seeing early evidence that users are willing to move up the price ladder across certain product families. Within the T-Rex lineup, our higher-priced premium models are becoming an increasingly meaningful part of the overall sales mix. This reinforces an important point: consumers are not choosing Amazfit solely for affordability. In March and April, our premium T-Rex models priced at USD 399 and priced at USD 549 accounted for nearly 50% of total T-Rex family unit sales. As we continue to strengthen our product differentiation and premium brand positioning, users are showing a growing willingness to engage with Amazfit at more premium price tiers. By embedding hybrid training more deeply into both our hardware and software ecosystem, we are enhancing the perceived value of the Amazfit brand and driving a consistent shift toward higher-end product positioning. This remains one of our key strategic priorities as we move into 2026. In the first quarter, this strategy delivered tangible results, with average selling price point increasing more than 20% year-over-year. Notably, even amidst rising memory component costs and broader storage chip price inflection, we were still able to achieve gross margin expansion, reflecting the effectiveness of our product mix improvement and disciplined cost execution. In April, we expanded this philosophy into one of the world's largest performance running communities. By adapting our hybrid training methodology to runners, we are enabling them to train more intelligently, improve endurance and support long-term health and durability. This strategy is embodied in our newly launched Cheetah 2 app, including the Cheetah 2 Pro, a performance-focused watch design for marathon training, and the Cheetah 2 Ultra engineered for the most demanding mountain and trail environments. Both integrate seamlessly with Zepp Coach with a full suite of running metrics and personalized training paths, recovery insights and third-party training platform integrations. These devices deliver structured, hybrid-style training guidance directly to endurance runners, further strengthening our penetration in the dedicated running segment. Notably, our first quarter growth was broad-based across both entry and premium tiers. At the high end, the T-Rex Ultra 2 crafted from Grade 5 Titanium elevates our price ceiling to USD 550, marking the highest in Amazfit history and further reinforcing our premium brand positioning. At the same time, in our core value segments, the Amazfit Active Max and Active 3 Premium positioned around a $169 price point, expand our reach among everyday fitness influencers and entry-level runners beginning their structured training journeys. Most recently, we also introduced FitMax, the latest addition to our most popular entry-level series. Our strategic progress is also reflected in continued market share gains. In the first quarter, we achieved sequential value share expansion across EMEA, the U.S. and Asia Pacific supported by strong performance across our full product matrix. According to third-party data sources, Amazfit now ranks among the top six smartwatch brands in both the United States and Europe by value share, underscoring the growing global resonance and market change of the brand. Turning to software, we continue to strengthen our ecosystem through Zepp OS proprietary features such as Zepp Coach, BioCharge and our expanding suite of hybrid training and HYROX modes being deployed across a growing range of devices, driving deeper user engagement and retention as we increasingly tailor our training intelligence for running and other endurance disciplines. Our software ecosystem is becoming a key reason users choose and remain loyal to our brand, further widening the competitive moat around our platform. Across running, outdoor and hybrid training, we are increasingly connecting Amazfit products with real performance environments and elite athlete validation. In running, Cheetah 2 Pro was supported by major marathon moments in Paris, London and Boston, including proof points from Yeman Crippa, Mao Puhua and Rory Linkletter. In outdoor, the T-Rex Ultra 2 continues to gain credibility through high-altitude ascents and real expedition use cases; these achievements strengthen the aspirational outdoor positioning of the T-Rex series. We also continue to build credibility around elite performance moments. During the HYROX Warsaw Major, Amazfit athlete Joanna Wietrzyk completed a clean sweep of all four HYROX majors this season while setting a new HYROX world record. We are also supporting Josh Kerr's Project 2:22, his attempt to break the mile world record at the London Diamond League. Together, these moments reflect how Amazfit is showing up at the highest level of both hybrid training and endurance performance. Against the macroeconomic backdrop, our premiumization strategy, expanding pricing power, vertically integrated supply chain and diversified manufacturing footprint across China and Vietnam provided us with multiple levers to mitigate these pressures. We remain confident that the alignment of our product mix, channel strategy and cost structure will support sustainable growth and a clear path towards long-term profitability. Looking ahead to the second quarter, we expect revenue to be in the range of $63 million to $68 million. This outlook reflects continued year-over-year growth, supported by demand across our product portfolio, while also accounting for normal shipment timing and product launch phasing during the quarter. More importantly, we will continue to focus on the quality of growth, product mix, pricing power, growing gross margin structure and user engagement rather than only short-term revenue volume. With that, I will now turn the call over to Leon to walk through the financial details. Leon, please go ahead.
Thank you, Wang. Greetings, everyone. Thank you again for joining our first quarter 2026 earnings call. Let me start with revenue. In the first quarter of 2026, our revenue was USD 51.5 million, up 33.8% year-over-year, in line with our guidance range. As Wang mentioned before, this growth was driven primarily by our new product launches such as Active MAX, Active 3 Premium and T-Rex Ultra 2, even as the first quarter is traditionally a low season for the consumer electronics business. Turning to gross margin. Our performance continued to reflect a combination of factors, including product mix, launch timing and normal product life cycle dynamics such as model upgrades. In the first quarter, gross margin was 37.7%, an expansion of 0.4% compared with Q1 2025, and moderated from the record high 40.4% achieved in Q4 2025. There are two important points worth highlighting. First, the first quarter is traditionally the period whereby we refresh our entry-level product portfolio, which naturally carries a lower gross margin and therefore weighed on the sequential comparison. Second, during the quarter, we absorbed some higher memory component costs as well as the impact of unfavorable foreign currency exchange fluctuation. Despite these headwinds, we still delivered year-over-year gross margin expansion where gross profit increased 35.3% to USD 19.4 million. This demonstrates the resilience of our operating model and the continued improvement in our brand positioning. Before turning to expenses, let me briefly address the macro backdrop. On memory, we expect higher memory costs to create near-term pressure on gross margins, driven by the industry-wide transition from DDR4 to DDR5 and high-bandwidth memory. As AI and data center demand continue to tighten supply, we began preparing for this environment in early 2025 by securing supply through diversified sourcing channels to support manufacturing continuity. We are also using our engineering expertise to optimize memory requirements across current and future products without compromising performance or customer experience. While this is a real headwind, we have multiple levers to help mitigate the impact, including continued increases in average selling prices and a potential refund of previously paid tariffs, which could provide some offsets. We believe we are managing this challenge from a position of preparation and discipline while staying focused on driving sustainable revenue growth and improved profitability. Now turning to expenses. We remain committed to a prudent cost management program, which we began in 2020. Total adjusted operating expenses for the first quarter were USD 35.7 million compared with USD 31.5 million in Q1 2025, and USD 37.1 million in Q4 2025. Out of the year-over-year increase of USD 4.2 million, there is a translation difference of approximately USD 1.8 million on operating expenses in the first quarter of 2026, due to euro and RMB appreciation against the dollar. Then USD 1.4 million is directly attributable to certain e-commerce platform charges, which was a kind of fixed ratio sales channel charge to drive revenue growth. The remaining USD 0.6 million was primarily due to front-loaded investments in marketing and branding activities such as CES and HYROX. Excluding USD 6.2 million of one-off provisions, fourth quarter 2025 operating expenses were approximately USD 30.9 million. The sequential increase of USD 4.8 million was primarily driven by USD 1.8 million foreign exchange impact, as mentioned above, and USD 1.4 million increase in R&D investment to support new product launches in upcoming quarters, USD 0.5 million of front-loaded marketing and branding investments and lastly, USD 0.2 million in severance costs related to targeted initiatives to enhance organizational efficiency. Going forward, we will maintain a cost-conscious approach while continuing to invest in R&D, marketing and branding activities that support our long-term competitiveness. Let me break down the year-over-year and sequential comparison by line item. Adjusted R&D expenses were USD 11.9 million compared with USD 11.5 million in the first quarter of 2025 and USD 10.2 million in the fourth quarter of 2025. Out of the sequential increase of USD 1.7 million, USD 0.3 million was attributed to foreign currency translation differences. The remaining USD 1.4 million increase was due to investment in new products that will be launched in the coming quarters. We continue to invest in a series of cutting-edge products and new technologies including AI, to maintain our competitive edge while consistently evaluating resources efficiently to optimize our return on investment and productivity. Adjusted selling and marketing expenses were USD 16.4 million compared with USD 13.8 million in the first quarter of 2025 and USD 15.6 million in the fourth quarter of 2025. Of the year-over-year increase, approximately USD 0.8 million was attributed to foreign exchange translation differences, another USD 1.4 million was directly attributable to fixed channel costs that scale with our revenue growth, and the remaining USD 0.4 million was allocated to promotions and branding initiatives that fueled the adoption of our new products. Compared to Q4 2025, selling and marketing expenses increased by USD 0.9 million, out of which USD 0.4 million was attributable to the appreciation of foreign currencies against the dollar and the remaining USD 0.5 million was due to front-loaded investments in marketing and branding activities such as CES and HYROX. At the same time, we continue to push retail profitability and channel mix improvement, including meticulous refinement of our retail channels and disciplined staffing arrangements across our sales regions. Adjusted G&A expenses were USD 7.4 million compared with USD 6.2 million in Q1 2025 and USD 11.3 million in Q4 2025. The year-over-year increase reflected approximately USD 0.3 million of foreign exchange translation differences and USD 0.2 million in brand and intellectual property protection related fees. Excluding the USD 6.2 million of nonrecurring provisions in the fourth quarter, G&A expenses were USD 5.2 million in Q4 2025. The sequential increase of USD 2.1 million was mainly attributable to USD 1.1 million of negative foreign exchange impact as well as USD 0.2 million severance costs as part of the targeted initiatives to enhance organizational efficiency. We continue to streamline our G&A and drive operational efficiency. With higher revenue and improved year-over-year gross margin, partially offset by higher operating costs and unfavorable foreign exchange translation differences, our operating loss narrowed to USD 6.3 million compared with USD 17.2 million in the first quarter of 2025. Adjusted net loss was USD 17.9 million, or 34.8% of sales, compared to USD 18.1 million, or 41% of sales, in the first quarter of 2025. Turning to the balance sheet and working capital. We continue to manage our inventory rigorously, ending the quarter with inventory of USD 62.8 million, down from USD 72.8 million as of Q4 2025. We ended the quarter with USD 103.2 million in cash and cash equivalents, nearly flat compared with USD 103.8 million a year ago and lower than USD 112.9 million at the end of 2025. The sequential decline was driven primarily by our net operating losses and partially offset by improved working capital management. Turning to our capital structure. Total debt, including both short-term and long-term debt remained broadly stable both sequentially and year-over-year. We continue to actively manage our debt maturity profile and financing costs. As debt approaches maturity, we evaluate prevailing market interest rates and available credit capacity to refinance or extend the duration of our borrowings where appropriate. The change in the mix between short-term and long-term debt in the first quarter of 2026 was primarily driven by accounting classification as certain borrowings originally maturing in late 2026 or 2027 were reclassified from long-term debt to short-term debt due to their remaining maturity profile. Importantly, while the classification between short-term and long-term debt may fluctuate from quarter-to-quarter, our long-term focus remains on maintaining disciplined control over total debt levels and optimizing our debt duration and interest expenses over time. Since the beginning of 2023, the company has cumulatively retired USD 46.7 million of debt, and we'll continue to optimize the capital structure for the company. We also remain committed to our share repurchase program. As of March 31, 2026, we have repurchased USD 17 million out of the USD 20 million authorized program. We view this program as an effective use of capital that aligns with our focus on delivering sustainable long-term value to shareholders. Finally, our outlook. For the second quarter of 2026, we expect revenue to be in the range of USD 63 million to USD 68 million, representing year-over-year growth of approximately 6% to 14%. This outlook reflects continued year-over-year growth, supported by demand across our product portfolio, while also accounting for normal shipment timing and product launch phasing during the quarter. More importantly, we will continue to focus on the quality of the growth rather than only short-term revenue volume. With a healthy margin profile, disciplined cost control and continued operational improvement, we are well positioned to deliver sustainable growth and create long-term value for our shareholders. Thank you all for your time today. I will now open the call for questions. Operator, please go ahead.
分析師問答
Today's first question comes from Siddharth Rajeev with Fundamental Research Corp.
Congratulations on the strong Q1 revenue growth. In the last earnings call, Leon, you guided to potentially nine product launches this year, the same as last year with four announced so far. Should we expect about five more this year? Am I in the correct ballpark?
Yes. I think in the end, we probably would have more than nine, but yes, there are many new product launches still underway.
Okay. Where do you see opportunities to reduce cost? Because it seems like it's difficult to cut R&D or marketing or branding expenses at this point.
No, that's not entirely right. You see that R&D expenses year-over-year actually increased a bit. It is because of the new product launches, which we have to prepare for. Towards the end of Q2, you will see that R&D expenses trend down because by the end of the first half, we'll probably go through a majority of the new product launches we have scheduled for the year, although there will be some left for the second half. You have witnessed that there are a lot of new products which have been launched already, including the Active MAX, Active 3 Premium, T-Rex Ultra 2 and now the Balance and Cheetah. This first half of the year is actually launch-heavy from a product perspective. Therefore, R&D expenses are a little bit higher than before, but they should trend towards the norm starting from the second half of the year and going forward. On the other hand, we also front-loaded some marketing expenses into Q1 and Q2. For example, we hosted the Balance 3 product release at HYROX New York, which was a high-profile event tied to specific event timing. Because of that, we spent some of the marketing and branding-related expenses skewed towards the first half of the year. That should also average down in the second half of the year. Not to mention G&A expenses, I think you will see a step down already in Q2 and going into Q3 and Q4. So we still stand behind a run rate of around USD 30 million a quarter or even lower, which you witnessed for the rest of last year as we go.
That's good to hear. Just one more question, if I may. Are other industry players raising product prices to offset some of these higher memory costs?
Yes, to some extent, because we have noticed that our competitors are also raising prices. Not to mention Garmin. Compared with a lot of our competitors, our pricing at this point in time is still relatively low. So I think we have more room to raise the price compared with our competitors. But nevertheless, we are focusing on the product itself. Raising the price is definitely not the final goal. In the end, we want to present to the user the best product with the best user experience and best features at the best price they can get in the market. That is the goal we want to strive for.
Our next question today comes from Frank Dugan at Brooks Investments.
Congratulations on the first quarter performance. My first question would be around the Q2 revenue guidance. Can you talk more about that and how do you view the profitability outlook for the full year?
Yes. Frank, thank you. We don't give guidance on the full year, but I can give you some color. With regard to Q2, it is between USD 63 million to USD 68 million, which is roughly growth of 6% to 14%. This number accounts for normal shipment timing and product launch phasing during the quarter. If certain products we initially wanted to produce and sell in Q2 cannot be manufactured in time and meet the sales window, they might slip into Q3. We have one or two examples of that happening in Q2, which impacted our revenue forecast for Q2. However, our long-term strategy and our target for the year remain a profitable growth path because given Q1 and Q2, we see continued year-over-year growth supported by demand across our product portfolio on a broad base. We believe that heading into the second half of the year, we should be able to continue the growth path and, for the 2026 full year, we are looking at profitable growth over 2025. I hope that gives you some color for the future.
Yes. One more question around the new three-year global HYROX partnership. How do you plan to leverage that to drive long-term monetization?
HYROX is actually part of a bigger trend in hybrid training. We want to establish our authority in hybrid training by working closely with HYROX. It comes in two folds. Number one, as HYROX participants increase — they have increased significantly over the past years — we believe that will continue. Looking at New York HYROX, participants are as many as the participants of the New York Marathon. We want to deepen our relationship with HYROX and make our features work better with HYROX, for example helping HYROX athletes to track their timing and deliver better timing every race. Hopefully that will establish our brand authority in HYROX. Number two, by doing that, we would like to become users' choice when they look beyond their current watch. For a normal consumer, there is a moment when they start considering serious sports, be it running, hybrid training or other disciplines. By establishing authority in HYROX, we want to become the user's choice once they decide to be serious about a specific sport in their journey. That is what we want to achieve through HYROX.
As there are no further questions, I'd like to turn the call back over to the company's IR Director, Grace Zhang for closing remarks.
Thank you once again for joining us today. If you have further questions, please feel free to contact Zepp Health's Investor Relations department. Thank you.
Thank you. This concludes this conference call. You may now disconnect your lines. Thank you, and have a pleasant day.