Zepp Health Corporation Q4 FY2025 earnings call

• Revenue grew 78.5% year-over-year, driven by multi-tier product strategy. Flagship Amazfit T-Rex 3 Pro launched in September, well-received. Balance 2 and Heliosharp continued strong performance. Entry-level lines had steady sales. - Acquired core assets from Wired AI, integrated capabilities for personalized coaching. Enhanced ZEP OS and ZEP Pro, upgraded firmware with new training modes. BioCharge feature upgraded on Balance 2. Received RED Network Security NB Certificate. Athletes and community initiatives strengthened brand equity. - Adjusted operating expenses remained prudent, focused on R&D and marketing. Margin improved sequentially due to mix management and margin improvement initiatives.

In the third quarter of 2025, revenue increased 78.5% year-over-year to $75.8 million. Gross margin was 38.2% or 39.4% excluding tariff impact, down from 40.6% in Q3 2024. Adjusted operating expenses totaled $28.6 million, 37.7% of sales. Adjusted R&D expenses were $10.2 million, adjusted selling and marketing expenses were $11.9 million, and adjusted G&A expenses were $6.5 million. Cash balance was $103 million as of September 30, up from $95 million in Q2 2025. Inventory levels increased slightly. Revenue for Q4 is expected to be between $82 million and $86 million, a 38% to 45% year-over-year growth.

• Anticipates Q4 revenue to be between $82 million and $86 million, a 38% to 45% year-over-year growth compared to Q4 2024. - Confident in continued growth supported by strong product pipeline, margin improvement initiatives, and disciplined execution. - T-Rex 3 Pro 44mm version started selling on October 25th, with upcoming new product launches expected to drive top-line expansion into holiday season.

• Macro environment impact on Q3 performance. - Tariff situation and necessary short-term business model adjustments. - Memory chip supply constraints impacting HelioStripe, with lead times long. - Typhoon-related shipment delays late in the quarter. - Inventory levels increased slightly due to strategic stock buildup in key product lines.

Q: Press release mentions supply constraints on helios trap, give more color.

A: Memory chip issue impacts industry, lead time long for securing quantity. HelioStripe popular, shortage in every region operated. Typhoon in southern east China area towards quarter end tightened situation. Working to resolve, situation expected to improve in Q4 and into Q1.

Q: Regarding impact of tariffs, would North America still account for approximately 15% of total shipments?

A: Around 15 to 20%, dual sourcing strategy with majority products in USA from Vietnam, tariff impact relatively small.

Q: Was T-Rex Pro the only product launched last quarter, numbers for Q3 and Q4?

A: In Q3, only T-Rex 3 Pro 48-millimeter version launched in September. In Q4, T-Rex 3 Pro 44mm version started selling on October 25th, new products in pipeline for Q4 but details not fully disclosed.

Q: New product momentum and holiday sales, color on TR-3 Pro launch and 44mm feedback, holiday season demand signals and plan?

A: Holiday season sales signal positive. T-Rex 3 Pro 48mm version performed well, 44mm version launched a week ago with increasing activation. Q4 guidance prudent, considering holiday season and product launches. Marketing expenses likely to be flat, focusing on ROI.

Q: Outlook for Q4 top-line guidance, underlying assumptions for price and volume growth, discounting approach, marketing initiatives and sales and marketing expenses trajectory?

A: Assumes good holiday season, tried to pull average ASP up with new product launches. Will do discounting selectively, targeting certain consumers and product groups. Marketing expenses likely to be around 10-11 million per quarter, flat in Q4. Focus on ROI.

Q: Product roadmap, new product launches this year and next year plans?

A: In Q3, T3 Pro launched. Q4, T-Rex 3 Pro 44mm version started selling. Next year, similar cadence of 2-3 new product launches per quarter, with product iteration and lineup expansion planned, but specific products to be announced later.