Zepp Health Corp (ZEPP) Q1 2025 Earnings Call Highlights: Revenue Growth and Strategic ...
Amazfit Revenue Growth: 10% year-over-year increase in Amazfit revenue.
Gross Margin: Achieved 37.3%, higher than both Q4 2024 and Q1 2024.
Operating Expenses: USD31.5 million in Q1 2025, up from USD29.3 million in Q4 2024 and USD27.8 million in Q1 2024.
Adjusted Operating Loss: USD17.2 million in Q1 2025, compared to USD13.1 million in Q1 2024.
Cash Balance: USD104 million as of March 31, 2025, down from USD110 million in Q4 2024.
Debt Repayment: USD11.5 million repaid in Q1 2025, with a total of USD67.8 million retired cumulatively.
Revenue Guidance for Q2 2025: Expected to be in the range of USD50 million to USD55 million, indicating 23% to 35% year-over-year growth.
Warning! GuruFocus has detected 5 Warning Signs with ZEPP.
Release Date: May 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Zepp Health Corp (NYSE:ZEPP) reported a 10% year-over-year growth in Amazfit revenue, marking the first growth after a two-year transformation period.
The company successfully launched new products, Amazfit Active 2 and Amazfit Bip 6, which received positive reviews and strong initial sales momentum.
Zepp Health Corp (NYSE:ZEPP) has diversified its supply chain by expanding operations in Vietnam and exploring opportunities in the NAFTA region, enhancing operational agility.
The company achieved a gross margin of 37.3% in Q1 2025, higher than both Q4 2024 and Q1 2024, driven by new product launches.
Zepp Health Corp (NYSE:ZEPP) has strengthened its brand presence through strategic partnerships with athletes and participation in global events, enhancing brand visibility and market share.
Despite the sales growth, fixed operating expenses were not fully absorbed, putting pressure on operating profit.
The company faced a $1 million impact from foreign exchange headwinds during the quarter.
Operating expenses increased year-over-year, driven by higher R&D and marketing expenses.
Zepp Health Corp (NYSE:ZEPP) reported an adjusted operating loss of $17.2 million for Q1 2025, compared to a loss of $13.1 million in the same period of 2024.
The company remains exposed to potential tariff impacts, with an estimated $2 million to $3 million impact for the full year 2025, although efforts are being made to offset this through efficiency gains.
Q: Can you provide more details on the impact of tariffs, especially considering the 90-day pause and potential increase to 46% in July? A: Leon Cheng Deng, CFO, explained that the full-year tariff impact is estimated to be around $2 million to $3 million, based on a 10% tariff. This impact is expected to be fully offset by global operating efficiency gains. Zepp Health's smartwatches are exempt from the highest tariffs, and the company uses Vietnam as a backup for dual sourcing. They plan to front-load inventories to mitigate potential tariff impacts.
Q: Are you and your competitors planning to raise prices to pass costs to consumers? A: Leon Cheng Deng, CFO, stated that Zepp Health is not planning to be the first mover in raising prices. They will monitor competitors like Apple and Garmin and adjust pricing strategies on a region-by-region basis if necessary.
Q: When do you expect to achieve your goal of reducing operating expenses to $25 million to $27 million per quarter? A: Leon Cheng Deng, CFO, mentioned that a significant reduction is expected in Q2. The high expenses in Q1 were due to product launch events and currency exchange headwinds, which are not recurring.
Q: How many new products or upgrades are planned for the remainder of the year? A: Leon Cheng Deng, CFO, indicated that Zepp Health aims to refresh all major product lines throughout the year, with more than two new products expected in the upcoming quarters.
Q: Can you provide more color on the full-year 2025 performance expectations? A: Leon Cheng Deng, CFO, expressed optimism for 2025, highlighting a strong lineup of new products and expected revenue growth, particularly in the second half of the year. The company anticipates maintaining or improving gross margins and offsetting tariff costs with operational efficiencies.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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View source version on Contacts UBS Group AG and UBS AG Investor contactSwitzerland: +41-44-234 41 00Americas: +1 212 882 57 34 Media contactSwitzerland: +41-44-234 85 00UK: +44-207-567 47 14Americas:+1-212-882 58 58APAC: +852-297-1 82 00
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