ZEPP

• Strategic Pivot to Hybrid Training: ZEPP Health is positioning itself as a leader in 'hybrid training' (integrating endurance, strength, and recovery). This strategy aims to capture users transitioning from casual tracking to serious athletic training, where brand loyalty is higher and the smartphone ecosystem is less dominant.
• Premiumization Success: The company achieved significant premiumization, with Average Selling Price (ASP) increasing over 20% year-over-year. In March and April, premium T-Rex models ($399-$549) accounted for nearly 50% of unit sales in that family, demonstrating strong pricing power despite rising component costs.
• Key Product Launches: Q1 saw successful launches of the Amazfit Active Max, Active 3 Premium, and flagship T-Rex Ultra 2. Additionally, the Balance 3/Ultra (for hybrid training) and Cheetah 2 lineup (for runners) were introduced to deepen engagement in specific sports verticals.
• Strategic Partnership with HIROX: A new three-year exclusive global partnership with HIROX (a leading hybrid endurance sports organization) was announced. This includes integrating smart wearables, kinetic apps, and performance data into the HIROX ecosystem to build authentic connections with serious athletes.
• Market Share Gains: Amazfit ranks among the top six smartwatch brands by value share in both the US and Europe. Sequential value share expansion occurred across EMEA, the US, and Asia Pacific.
• Software Ecosystem: The ZEPP OS continues to drive retention through proprietary features like ZAP Coach, BioCharge, and hybrid training modes, creating a sticky ecosystem that differentiates the brand from competitors.

• Q2 2026 Revenue Guidance: Management guided Q2 2026 revenue to be between US$63 million and US$68 million.
• Growth Expectations: This range represents approximately 6% to 14% year-over-year growth.
• Context: The guidance accounts for normal shipment timing and potential delays in product launch windows (some products may slip from Q2 to Q3).
• Full Year Outlook: While no specific full-year financial guidance was provided, management expressed confidence in achieving profitable growth for FY2026 compared to FY2025, driven by continued demand and margin improvement strategies.

The provided transcript does not break down revenue by specific product segments (e.g., Smartwatches vs. Accessories) or provide absolute financial figures and revenue contribution percentages for distinct business units. The company reports consolidated revenue of US$51.5 million, with Amazfit branded revenue growing 33.8% year-over-year. No other segment-level financial data is disclosed.

• Rising Component Costs: Increased costs for memory components (due to industry transition from DDR4 to DDR5 and AI/data center demand) are creating near-term pressure on gross margins.
• Foreign Exchange Fluctuations: Unfavorable currency movements (appreciation of Euro and RMB against the USD) negatively impacted reported revenue and operating expenses.
• Supply Chain Disruptions: Potential delays in manufacturing and product launches could impact quarterly revenue recognition, as noted with some Q2 products potentially slipping to Q3.
• Competitive Pricing Pressure: While competitors are raising prices, ZEPP Health notes its pricing remains relatively low compared to rivals like Garmin, suggesting ongoing competition in the mid-to-premium tier.

Q: Analyst Sid Rajeev asked about the number of expected product launches for the remainder of 2026 and opportunities for cost reduction given rising R&D and marketing spend. / A: CFO Leon Deng confirmed that total annual launches will likely exceed nine, noting the first half is launch-heavy which drives higher R&D and front-loaded marketing expenses (e.g., HIROX event). He expects these costs to normalize in the second half, with a long-term operating expense run rate targeting around $30 million per quarter or lower.

Q: Frank Dugan sought clarification on Q2 revenue guidance volatility and the long-term profitability outlook for 2026. / A: Deng explained the $63M-$68M range accounts for potential shipment slippage from Q2 to Q3 due to manufacturing timing. He reaffirmed that while full-year guidance isn't provided, the company targets profitable growth in 2026 over 2025 levels, supported by broad-based demand and improved product mix.

Q: Dugan also asked how the company plans to monetize the new three-year global partnership with HIROX. / A: Deng stated the partnership aims to establish ZEPP's authority in hybrid training by integrating devices and software directly into the HIROX athlete experience. The goal is to become the device of choice for users when they transition from casual fitness to serious training, leveraging HIROX’s growing community to drive brand loyalty and premium adoption.