Zepp Health Corp (ZEPP) 2024 Q1 法說會逐字稿

Thank you for standing by that Zep health Corporation's first quarter 2024 earnings conference call. At this time, all participants are in listen only mode and today's conference call is being recorded.

感謝您出席 Zep health Corporation 2024 年第一季財報電話會議。此時，所有參與者都處於僅聽模式，並且正在錄製今天的電話會議。

I will now turn the call over to your host, Ms. Grace Zhang, Director of Investor Relations for the company. Please go ahead, Grace.

現在我將把電話轉給你們的東道主，公司投資者關係總監張女士。請繼續，格蕾絲。

Hello, everyone, and welcome to Zepp Health Corporation first quarter 2024 earnings conference call. The company's financial and operating results were issued in a press release that our newswire services earlier today and are posted online. You can also view the earnings press release and slides referred to on this call by visiting the IR section of the company's website at ir.com

大家好，歡迎參加 Zepp Health Corporation 2024 年第一季財報電話會議。該公司的財務和經營業績已在我們的新聞專線今天稍早發布的新聞稿中發布，並發佈在網路上。您也可以造訪該公司網站 ir.com 的 IR 部分，查看本次電話會議中提到的收益新聞稿和幻燈片

Participating in today's call are Mr. Wang one song, our Chairman of the Board of Directors and Chief Executive Officer, and Mr. Liang, our Chief Financial Officer of the company's management will begin with the prepared remarks and the call will conclude with a Q&A session. Mr. Mike Yonker, our Chief Operating Officer, will join us for the Q&A session.

參加今天的電話會議的有我們的董事會主席兼首席執行官王一鬆先生和我們的首席財務官梁先生。我們的營運長 Mike Yonker 先生將參加我們的問答環節。

Before we continue, please note that today's discussion will contain forward-looking statements made under the Safe Harbor provision of the US 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.

在我們繼續之前，請注意，今天的討論將包含根據 1995 年美國私人證券訴訟改革法案的安全港條款做出的前瞻性陳述。前瞻性陳述涉及固有風險和不確定性，因此公司的實際結果可能與今天表達的觀點有重大差異。

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, 2023, and other filings as filed with the US Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required under applicable law.

有關此風險和其他風險和不確定性的更多資訊包含在該公司截至 2023 年 12 月 31 日的財年 20-F 表格年度報告以及向美國證券交易委員會提交的其他文件中。除適用法律要求外，本公司不承擔更新任何前瞻性聲明的義務。

Please also note that that earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial information. That press release contains a reconciliation of the unaudited known GAAP measures to the unaudited most directly comparable GAAP measures.

另請注意，收益新聞稿和本次電話會議包括對未經審計的 GAAP 財務資訊以及未經審計的非 GAAP 財務資訊的討論。該新聞稿包含未經審計的已知 GAAP 衡量標準與未經審計的最直接可比較的 GAAP 衡量標準的調整表。

I'll now turn the call over to our CEO. Wayne Huang .

我現在將把電話轉給我們的執行長。黃偉恩。

Hello, everyone. Welcome and thank you for joining our call. Before delving into this quarter's performance, I would like to recap. Our transformation journey and center stage for the year ahead, as we are shifting focus to self-branded products and diversifying our offerings today, our self-branded product sales contributed over 85% of total revenue.

大家好。歡迎並感謝您加入我們的通話。在深入研究本季的業績之前，我想回顧一下。我們的轉型之旅和未來一年的中心舞台，隨著我們將重點轉向自有品牌產品並實現產品多元化，我們的自有品牌產品銷售貢獻了總收入的 85% 以上。

Our gross margin has nearly doubled over the past two years. This recent quarter showing 37% compared to 16% Q1 2023 Notably, the MAU of our Zepp application is over 10 million, making an early success in our transformation journey. Within our self-branded smartwatch category. We offer a diverse range of serious tailored to various market needs. These include the lifestyle series in featuring product lines such as balanced and active, the adventure series encompassing product lines like T-Rex, the Performance Series comprehensively partners such as Cheetah and Falcon.

過去兩年我們的毛利率幾乎翻了一番。最近一個季度的成長率為 37%，而 2023 年第一季為 16% 值得注意的是，我們 Zepp 應用程式的月活躍用戶數超過 1000 萬，在我們的轉型之旅中取得了早期成功。在我們自有品牌的智慧手錶類別中。我們提供一系列針對各種市場需求而量身訂製的產品。其中包括以平衡、活躍等產品線為特色的生活方式系列，以霸王龍等產品線為特色的冒險系列，以獵豹、獵鷹等產品線全面合作的性能係列。

And lastly, the essential serious housing popular part aligned like beef and band. Each of these series is strategically positioned with clear competitors and price range in mind. This strategic alignment enables us to compete effectively as a key player in this market variables, offering our customers a comprehensive suite of solutions. And to that, that I list these as we are heading into 2024 and 2025 to continue on our transformation journey towards a self reliant company, driven mainly by our branded product sales. We are adapting our product strategy at the same time.

最後，重要的嚴肅住房流行部分像牛肉和樂隊一樣排列。每個系列都經過戰略定位，考慮到明確的競爭對手和價格範圍。這種策略聯盟使我們能夠作為此市場變數的關鍵參與者進行有效競爭，為我們的客戶提供全面的解決方案。為此，我列出了這些，因為我們即將進入 2024 年和 2025 年，繼續我們的轉型之旅，邁向一家自力更生的公司，主要由我們的品牌產品銷售推動。我們同時也在調整我們的產品策略。

Today, I would like to draw your attention to a few of key elements being to begin this, how a fresh and balanced model within the last five years has solidified a strong market share in the price range of $200 to $249.

今天，我想提請您注意幾個關鍵要素，首先是過去五年中新鮮而平衡的型號如何在 200 美元至 249 美元的價格範圍內鞏固了強大的市場份額。

Smart watches in Europe and US markets marking a $50 increase from the original GT Series $199 price point. Although our price is increased, we notice that many customers have switch from brands such as Samsung and Apple for the guild need features a balance. We are also delighted to observed that the balanced model has not only gain popularity among consumers. Box has also received high praise from key opinion leaders on social media platforms demonstrated our cutting edge product capabilities.

歐洲和美國市場的智慧手錶比原 GT 系列 199 美元的價格上漲了 50 美元。雖然我們的價格上漲了，但我們注意到許多客戶已經放棄了三星和蘋果等品牌，因為行會需要功能平衡。我們也很高興地看到，平衡模型不僅受到了消費者的歡迎。Box也獲得了社群媒體平台上意見領袖的高度讚揚，展現了我們前沿的產品能力。

Our customers are particularly impressed by the long battery life and the sleek attractive industrial design of our watches. We were the pioneer in the smartwatch industry to incorporate large language model, AI technology for handling interactions and responding to user messages.

我們的手錶的超長電池壽命和時尚迷人的工業設計給我們的客戶留下了特別深刻的印象。我們是智慧手錶產業的先驅，將大型語言模型、人工智慧技術用於處理互動和回應用戶訊息。

This is positioning us well ahead of our competitors. Our products, our product differentiation and artificial intelligence has led consumers to recognize our product value at a higher price stand, which has built strong product momentum in the market. This gives us an opportunity to realize exponential growth in our revenue in the upcoming peak season through our marketing activities.

這使我們遠遠領先競爭對手。我們的產品、我們的產品差異化和人工智慧讓消費者以更高的價格認識到我們的產品價值，從而在市場上建立了強大的產品動力。這使我們有機會透過行銷活動在即將到來的旺季實現收入的指數級增長。

In the first quarter, we show a considerable escalation in our brand visibility and outreach. Our dynamic digital marketing campaigns, including out-of-home advertisements in Magic Apple and sponsoring the recent Rotterdam Madison has significantly expanded our audience reach, bolstering our market presence and driving our future sales.

在第一季度，我們的品牌知名度和影響力顯著提升。我們充滿活力的數位行銷活動，包括在 Magic Apple 中的戶外廣告以及贊助最近的鹿特丹麥迪遜節，顯著擴大了我們的受眾範圍，增強了我們的市場佔有率並推動了我們未來的銷售。

Next, our Active product line within the Lifestyle series has shown significant growth potential as well. It is an upgrade and continuation of our bestselling $99 Mini product line, enhanced by Zepp Aura and Zepp Fitness health services along with the Zepp watch faces and apps ecosystem. This innovation has delivered significant value to our users enabling us to position the product lines to achieve a $129 selling price and generate better gross margins.

接下來，我們的生活風格系列中的 Active 產品線也顯示出巨大的成長潛力。它是我們最暢銷的 99 美元 Mini 產品線的升級和延續，並透過 Zepp Aura 和 Zepp Fitness 健康服務以及 Zepp 錶盤和應用程式生態系統得到增強。這項創新為我們的用戶帶來了巨大的價值，使我們能夠定位產品線以達到 129 美元的售價並產生更好的毛利率。

More recently, on May 2, we unveiled the new Amazfit Bip 5 unit within the Essential series through the stainless-steel appearance and bigger screen, we have brought many user favorite software functions from our mid-to-high-end Active and Balance product lines to Unity, and brought richer apps and watch faces through Zepp OS 3.0 to Unity, strengthening our sub $100 market competitiveness and further expand our market share in markets such as India, Spain and South America.

最近，5月2日，我們推出了Essential系列的新款Amazfit Bip 5，透過不銹鋼的外觀和更大的螢幕，我們在中高端Active和Balance產品中帶來了許多用戶喜愛的軟體功能並透過Zepp OS 3.0為Unity帶來了更豐富的應用程式和錶盤，增強了我們在100美元以下市場的競爭力，並進一步擴大了我們在印度、西班牙和南美等市場的市場份額。

Our proprietary operating system, Zepp OS. has been upgraded to Version 3.5, integrating that Roger language model-based that flow AI system. This brings large language model, AI. interaction and messaging capabilities to our entire product line. You made functionality not available in other brands, smart watches.

我們的專有作業系統 Zepp OS。已升級至3.5版本，整合基於Roger語言模式的流程AI系統。這就帶來了大語言模型，AI。我們整個產品線的互動和訊息功能。您提供了其他品牌智慧手錶所不具備的功能。

This has established our brand's image as an innovator in the consumer electronics market. Together, this though continuously over the air upgrade of their software used in our smart watches, it greatly improves the competitiveness of our smart watches.

這確立了我們作為消費性電子市場創新者的品牌形象。總而言之，透過不斷地對我們的智慧手錶中使用的軟體進行無線升級，大大提高了我們智慧手錶的競爭力。

As I have mentioned in previous quarters, the rapid application and innovation of large language model, AI technology provides us our smartwatch is part of this opportunities to surpass competitive, showcasing our company's execution and creativity and preparing for new opportunities in the smart wearable market.

正如我在前幾個季度提到的，大語言模型的快速應用和創新，AI技術為我們的智慧手錶提供了超越競爭對手的機會，展示了我們公司的執行力和創造力，為智慧穿戴市場的新機會做好了準備。

During April, the fishing and running features on the Amazfit Falcon, T-Rex Ultra and Cheetah Pro received significant enhancements, enabling users to enjoy the prime season for fishing and running. At the same time, we updated our operating system to AI powered Zepp OS 3.5 across different hardware platforms.

4月份，Amazfit Falcon、T-Rex Ultra、Cheetah Pro的釣魚和跑步功能大幅增強，讓使用者享受釣魚和跑步的黃金季節。同時，我們在不同的硬體平台上將作業系統更新為人工智慧驅動的 Zepp OS 3.5。

All these updates are part of our commitment to providing personalized and advanced health support, Empowering users to manage their well-being effectively. We will soon apply these AI capability to our sports and outdoor smart watches,, within the performance and adventure series, bringing innovative experiences to assays and outdoor issuances and significantly boosting the competitiveness and differentiation of our sport and outdoor product lines.

所有這些更新都是我們承諾提供個人化和先進的健康支援的一部分，使用戶能夠有效地管理他們的健康。我們很快就會將這些人工智慧能力應用到我們的運動和戶外智慧手錶中，在性能和冒險系列中，為檢測和戶外發行帶來創新體驗，並顯著提升我們的運動和戶外產品線的競爭力和差異化。

Before the summer Sport Fusion arrived, we will launch advertisements in major global markets in to amplify our market presence. We will also collaborate this major global channels like the Carsen, bringing our innovative at full range products to users during this ssummer's sports crazy to increase our sales for the second half of the year.

在夏季Sport Fusion到來之前，我們將在全球主要市場投放廣告，以擴大我們的市場影響力。我們也將與Carsen這樣的全球主要管道合作，在這個夏季的運動熱潮中，為用戶帶來我們創新的全系列產品，以增加我們下半年的銷售量。

We have many exciting new products in the pipeline for the upcoming months. So stay, tuned. Now turning to our exciting new innovative product line, the pay new rate, our smart rings, which presents a significant expansion of our user experience, allowing users who prefer not to wear watches while sleeping to a pain. 24-hour comprehensive health data monitor.

在接下來的幾個月裡，我們將推出許多令人興奮的新產品。所以留下來，繼續關注。現在轉向我們令人興奮的新創新產品線，支付新費率，我們的智慧戒指，它顯著擴展了我們的用戶體驗，讓那些不喜歡在睡覺時戴手錶的用戶感到痛苦。 24小時全方位健康數據監測。

This enhances recovery for athletes and provides readiness analysis for general users, ensuring a holistic user experience with both smartwatches and smart rings. This marks the beginning of a new era in the market, with us being the first smartwatch brand to offer such a solution, placing us ahead of competitors.

這可以增強運動員的恢復能力，並為普通用戶提供準備分析，確保智慧手錶和智慧戒指的整體用戶體驗。這標誌著市場新時代的開始，我們是第一個提供此類解決方案的智慧手錶品牌，使我們領先於競爭對手。

Last, but not the least after several years of organizational transformation as streamlining our operations, our company has becoming more global with about 90% of revenue is generated from outside China. I'll call it a Zack of it include myself now oversee operations from offices based in Europe and North America, enabling submit decision making in response to market dynamics and to be more a ton to consumer and market demand.

最後但並非最不重要的一點是，經過幾年的組織轉型和精簡運營，我們公司變得更加全球化，約 90% 的收入來自中國境外。我將其稱為扎克（Zack），包括我自己現在負責監督歐洲和北美辦事處的運營，從而能夠根據市場動態提交決策，並更多地滿足消費者和市場需求。

The diversity, within our team and the globalization of our R&D and marketing efforts have impared us to develop, sell and market our products with greater speed and precision. We believe this consumer center approach will set us aside in longer run, through the above mentioned building blocks, we realize enhanced returns on our product sales, translating into elevated gross margins for that company.

我們團隊的多樣性以及研發和行銷工作的全球化使我們無法以更快的速度和精度開發、銷售和行銷我們的產品。我們相信，從長遠來看，這種以消費者為中心的方法將使我們脫穎而出，透過上述構建模組，我們實現了產品銷售回報的提高，從而轉化為該公司毛利率的提高。

While we keep our overall operating costs in check this financial. But if it patient facilitates increased sales and possibly affinity for ourself branded products, and this will bring sustain profitability should use our branded products in the future. However, the ongoing transaction of the business is indeed longer and sometimes harder than our initial expectations and patience is needed.

雖然我們會控制我們的整體營運成本，但這項財務。但如果它能耐心地促進銷量的增加，並可能提高我們對自有品牌產品的親和力，並且這將帶來持續的盈利能力，那麼將來應該使用我們的品牌產品。然而，正在進行的業務交易確實比我們最初的預期更長，有時更困難，需要耐心。

However, we remain optimistic about our strategic direction on both our sales and marketing strategy and upcoming products, our emphasis on cutting edge products and operational excellence. Combined this expanding our global reach and offering innovative and diverse partners and services to our vibrant user community prepares us for longer-term sustainable growth. We are confident this strategy will establish is that SL. leading healthy gross separately land grow both Mark valuable and health care solution provider.

然而，我們對銷售和行銷策略以及即將推出的產品的策略方向、對尖端產品和卓越營運的重視仍然持樂觀態度。將擴大我們的全球影響力並為我們充滿活力的用戶社群提供創新和多樣化的合作夥伴和服務相結合，為我們的長期永續成長做好準備。我們有信心這項戰略將確立為SL。領先的健康單獨土地成長馬克價值和醫療保健解決方案提供者。

I will now turn the call over to Leon to go over the highlights of our first quarter financial results.

我現在將把電話轉給萊昂，回顧一下我們第一季財務表現的亮點。

Greetings, everyone, thank you for joining our earnings call. I would like to start by discussing some of the key metrics from the first quarter before diving further into the financial results. In the past quarters, we have been making healthy investments in innovation and our investments remain focused on two things with the first one on attracting new customers. And the second one is on getting our existing customers to upgrade slash, adding more products to better themselves.

大家好，感謝您參加我們的財報電話會議。我想先討論第一季的一些關鍵指標，然後再進一步討論財務表現。在過去的幾個季度中，我們一直在創新方面進行健康的投資，我們的投資仍然集中在兩件事上，第一件事是吸引新客戶。第二個是讓我們現有的客戶大幅升級，增加更多產品來改善自己。

There are three things I would like to highlight. First is to echo what Wayne just mentioned that we launched the Helio reign in our US markets. And by mid June, we'll expand into other markets and with a variation of the range which is tailored to the mass market. This launch gave us a foothold into a new multibillion-dollar category, which grows at a CAGAR off 30% towards 2028, expanding the number of categories we're playing and further diversifying ourselves. This has been a multiyear investment, and we expect that to pay off in spades in Q3 and beyond.

我想強調三件事。首先是呼應韋恩剛才提到的，我們在美國市場推出了 Helio 統治。到六月中旬，我們將擴展到其他市場，並推出針對大眾市場量身訂製的產品系列。此次發布讓我們在價值數十億美元的新類別中站穩了腳跟，該類別到 2028 年的 CAGAR 成長率將達到 30%，擴大了我們所涉足的類別數量，並進一步實現了多元化。這是一項多年投資，我們預計將在第三季及以後獲得豐厚回報。

Second is increasing the brand awareness through a more above-the-line marketing activities in Europe and USA to drive sell-through. Most recently, we have the out of the home advertising in Madrid, International Airport in Spain, and there will be more TV commercials in Europe's main sports channels coming up as we're heading to the EuroCup and the Summer Olympics, more consumers will get to know us. And we have seen some early data points on the conversion rates improving.

其次是透過在歐洲和美國開展更多線上行銷活動來提高品牌知名度，以提高銷售量。最近，我們在馬德里、西班牙國際機場都有戶外廣告，隨著歐洲盃和夏季奧運的臨近，歐洲主要體育頻道也會有更多的電視廣告，更多的消費者會看到了解我們。我們已經看到一些關於轉換率改善的早期數據點。

Last but not least this quarter, we experimented some stimulating additional product sales in our install base by delivering limited-time coupons, flash gift cards. So some of our most loyal long tenured customers. We have always trying to explore how we can better use our unique data and insights to deliver more personalized experiences for our customers.

最後但並非最不重要的一點是，本季度，我們嘗試透過提供限時優惠券、閃購禮品卡來刺激我們的安裝基礎中的額外產品銷售。所以我們有一些最忠實的長期客戶。我們一直在努力探索如何更好地利用我們獨特的數據和見解，為客戶提供更個人化的體驗。

The outcome of the promotions surpassed our expectations, affirming the value of our continuous investments in advancing data systems to effectively leverage and maximize our data resources. The strategy of offering both new and existing products to our current customer base presents, it looks to have revenue potential. This instills confidence in the success of our upcoming product launch in new categories and strengthens our belief in our capacity to expand and elevate this business in the future.

促銷的結果超出了我們的預期，肯定了我們持續投資於推進數據系統以有效利用和最大化我們的數據資源的價值。向我們目前的客戶群提供新產品和現有產品的策略表明，它看起來具有收入潛力。這為我們即將推出的新類別產品的成功注入了信心，並增強了我們對未來擴展和提升這項業務能力的信心。

I want to emphasize that we remain steadfast in concentrating on what is within our control. We are embarking on a multiyear product cycle where we will reap the rewards of our research and development efforts to attract new customers and increase sales to our current customer base. We are strategically positioning the company to enhance our growth trajectory while managing expenses effectively to achieve margins pension in the upcoming years.

我想強調的是，我們仍然堅定地專注於我們控制範圍內的事物。我們正在開始一個多年的產品週期，我們將透過研發努力獲得回報，以吸引新客戶並增加現有客戶群的銷售。我們對公司進行策略性定位，以增強我們的成長軌跡，同時有效管理費用，以在未來幾年實現利潤退休金。

Now turning to our first quarter 2024 sales performance, which broadly aligned with our guidance. Several factors influenced the decline in sales. Firstly, the seasonal patterns typically in our consumer-driven sector during Q1. Secondly, the ongoing decrease in Xiaomi product sales and thirdly the absence of any new product launches during Q1 2020 for unlike the first quarter of 2023, while for instance, were introduced the new GTR mini.

現在轉向我們 2024 年第一季的銷售業績，該業績與我們的指導大致一致。有幾個因素影響了銷售額的下降。首先，第一季消費者驅動型產業的季節性模式。其次，小米產品銷售持續下降；第三，與 2023 年第一季不同，2020 年第一季沒有任何新產品發布，例如推出了新款 GTR mini。

Moving on to gross margin, which can be influenced by various cost factors such as product mix, product launch timing and product life cycles, including model upgrades. As Wayne has highlighted, the company's gross margin continued its impressive performance in the first quarter at a robust 37%. Our first quarter gross margin marks a new historical high, representing a sequential increase from the previous quarters achieved in third and fourth quarter of 2023. This growth in gross margin is predominantly attributable to the higher profitability of our self branded products as well as a more favorable product mix, including the higher proportion of new products and lower levels of clearance.

接下來是毛利率，毛利率可能受到各種成本因素的影響，例如產品組合、產品發佈時間和產品生命週期（包括型號升級）。正如 Wayne 所強調的，該公司的毛利率在第一季繼續保持令人印象深刻的表現，達到 37% 的強勁表​​現。我們第一季的毛利率創下歷史新高，較 2023 年第三季和第四季實現的環比增長。毛利率的成長主要歸因於自有品牌產品更高的獲利能力以及更有利的產品組合，包括更高的新產品比例和更低的清倉水平。

Looking ahead, together with new product launches planned for the following quarters of 2024, we anticipate this positive trajectory to persist into Q2 and throughout 2024.

展望未來，加上計劃在 2024 年接下來幾季推出的新產品，我們預計這種積極的軌跡將持續到第二季​​和整個 2024 年。

Now let's turn our attention to costs. As we have discussed, cost management remains a critical area of focus for our company, both in terms of their absolute amount and as a percentage of sales. As we continue to exercise disciplined control over our expenses during the quarter since Q3 2020 we have consistently reduced our overall operating costs while strategically investing in innovative products and technologies as well as geographical expansion.

現在讓我們把注意力轉向成本。正如我們所討論的，成本管理仍然是我們公司關注的關鍵領域，無論是從絕對金額還是佔銷售額的百分比來看。自 2020 年第三季以來，我們繼續對本季的支出進行嚴格控制，我們不斷降低整體營運成本，同時對創新產品和技術以及地理擴張進行策略性投資。

As a result, adjusted operating expenses for Q1 2024 were USD28 million decreased 11.4% compared with Q1 2023.

因此，2024 年第一季調整後營運費用為 2,800 萬美元，較 2023 年第一季下降 11.4%。

Adjusted R&D expenses in the first quarter of 2024 were USD12.4 million, a decrease of 15.4% year over year. This comprised 31.2% of the revenue. The decrease was primarily attributed to our refined R&D strategy as we consistently assess resources efficiently to maximize return on investment and productivity. Also, we integrated a AI-based R&D platform to improve our efficiency. At the same time, we're committed to investing in new technologies and should buy suitable AI functions to maintain our competitive edge against our competitors.

2024年第一季調整後研發費用為1,240萬美元，年減15.4%。這佔收入的31.2%。這一下降主要歸因於我們完善的研發策略，因為我們始終如一地有效評估資源，以最大限度地提高投資回報和生產力。此外，我們還整合了基於人工智慧的研發平台，以提高我們的效率。同時，我們致力於投資新技術，並應該購買合適的人工智慧功能，以保持我們相對於競爭對手的競爭優勢。

Our adjusted selling and marketing expenses for Q1 2024 were USD10.5 million, down 10.9% year over year and accounted for 26.3% of total revenue. The reduction in the amount was mainly due to our ongoing efforts to improve profitability and refine ourselves channel mix.

2024年第一季度，我們調整後的銷售和行銷費用為1,050萬美元，年減10.9%，佔總營收的26.3%。金額減少主要是由於我們不斷努力提高獲利能力和完善自己的通路組合。

Furthermore, we initiated Out Of Home campaign in Madrid and sponsored the Rotterdam Barroso actions that will contribute significantly to bolstering our brand presence, particularly among our target consumers. We're committed to making smart investments in marketing and branding activities that will fuel our long-term growth.

此外，我們在馬德里發起了戶外活動，並贊助了鹿特丹巴羅佐行動，這將大大有助於增強我們的品牌影響力，特別是在我們的目標消費者中。我們致力於對行銷和品牌活動進行明智的投資，這將推動我們的長期成長。

Our adjusted G&A expenses in Q1 2024 USD5.3 million, lowered by 1.5% year over year. Owning to disciplined cost control initiatives, we have maintained a prudent approach with the overall adjusted operating costs at or below $28 million, consistent with Q3 and Q4 2023 levels and in line with our guidance.

2024 年第一季調整後的一般管理費用為 530 萬美元，年減 1.5%。由於採取嚴格的成本控制舉措，我們一直保持謹慎的態度，調整後的整體營運成本等於或低於 2800 萬美元，與 2023 年第三季和第四季的水平一致，也符合我們的指導。

Looking ahead, we remain committed to cost management anticipating that costs will stay at their current levels or lower in the coming quarters.

展望未來，我們仍然致力於成本管理，預計未來幾季成本將保持在當前水準或更低。

We continue to invest in R&D activities and marketing expenses to bolster our long-term competitiveness while closely scrutinizing discretionary spending. We have lost a loss in our operating results in the first quarter, primarily due to seasonal driven cost coverage issues. This performance represents an improvement over 2023 Tier one adjusted loss narrowed by 20.4% versus Q1 2023.

我們繼續投資研發活動和行銷費用，以增強我們的長期競爭力，同時密切審查可自由支配支出。我們第一季的經營業績出現了虧損，這主要是由於季節性驅動的成本覆蓋問題。這一業績較 2023 年第一季有所改善，調整後虧損較 2023 年第一季收窄 20.4%。

Now turning to the balance sheet. At March 31, 2024, our overall cash balance stands at USD132.3 million, providing us ample runway to invest and capitalize on potential market opportunities.

現在轉向資產負債表。截至 2024 年 3 月 31 日，我們的現金餘額總額為 1.323 億美元，為我們提供了充足的投資空間和利用潛在的市場機會。

On the working capital management front, we remain steadfast in our commitment to practicing disciplined working capital management. Despite the PNL loss, we have achieved positive operating cash flow for the seventh consecutive quarter.

在營運資本管理方面，我們仍然堅定地致力於實行嚴格的營運資本管理。儘管盈虧虧損，我們仍連續第七個季度實現正營運現金流。

In Q1 2023 We have initiated the retirement of portions of our Scotts flash long-term debt portfolio. Since then, including Q1 2024, we have successfully retired USD46.7 million of debt. As our operating cash flow continues to strengthen, we intend to do more in the coming quarters.

2023 年第一季度，我們已啟動部分 Scotts 短期長期債務投資組合的退役。此後，包括 2024 年第一季度，我們已成功償還了 4,670 萬美元的債務。隨著我們的營運現金流持續增強，我們打算在未來幾季採取更多行動。

In keeping with our commitment to delivering long-term value to our shareholders. We'll continue our buyback program throughout 2024. In conclusion, while we faced some challenges in Q1, our focus of optimizing our revenue structure, reducing our reliance on a single customer, expanding our self-branded products, and diversifying our product offering positions us well to become a self-reliant global smart wearable and health care solution provider, driving our long-term sustainable growth.

履行我們為股東提供長期價值的承諾。我們將在 2024 年繼續實施我們的回購計畫。總而言之，雖然我們在第一季面臨一些挑戰，但我們專注於優化收入結構、減少對單一客戶的依賴、擴大自有品牌產品以及產品供應多元化，這使我們能夠成為自力更生的全球智慧企業可穿戴和醫療保健解決方案提供者，推動我們長期可持續成長。

In Q2 2024, we anticipate revenue to range between USD40 to USD55 million. With that uptick quarter over quarter expected in sales of our self-branded products, we'll continue that stock repurchase program to demonstrate the confidence of our strategy.

2024 年第二季度，我們預計營收將在 40 美元至 5,500 萬美元之間。隨著我們自有品牌產品的銷售量預計逐季度上升，我們將繼續實施股票回購計劃，以展示我們策略的信心。

Thank you once again for your time. I would now like to open the call for any questions. Operator, please go ahead.

再次感謝您抽出時間。我現在想打開電話詢問任何問題。接線員，請繼續。

Thank you. (Operator Instructions)

謝謝。（操作員說明）

Sid Raji with Sentimental Resource Corp.

Sid Raji 與 Sentimental Resource Corp.

Hi, gentlemen. Nice to see the growth in gross profit and improvement in EPS. I have a few questions. You're expecting growth in full-year revenue from self-branded units with results back end loaded. But Leon just mentioned that you might see an uptick in revenue in Q2. But just to give I was wondering if you could give more color with the C sell-down units are softer in Q2, Q3 and the spike in Q4, or you would see us start seeing improvement earlier?

嗨，先生們。很高興看到毛利的成長和每股收益的改善。我有幾個問題。您預計自有品牌單位的全年收入將會成長，並加載結果。但萊昂剛剛提到，第二季的收入可能會上升。但我想知道您是否可以對第二季、第三季的 C 銷售單位疲軟以及第四季度的飆升提供更多的說明，或者您會看到我們更早開始看到改善嗎？

Hi Sid, let me take this question. So I think on new awards, normally, our business follows a seasonal pattern whereby Q1 is always the lowest in the year for us.

嗨，席德，讓我回答這個問題。因此，我認為就新獎項而言，通常情況下，我們的業務遵循季節性模式，第一季始終是我們一年中最低的。

And then from Q2 onwards, the business will start to recover, and Q3 and Q4 are traditionally the high seasons for us. So you will see uptick of the revenue in Q2. That's why we also guided a higher range than Q1.

然後從第二季開始，業務將開始復甦，第三季和第四季是我們傳統的旺季。所以你會看到第二季的收入上升。這就是為什麼我們的指導範圍也高於第一季。

And then the I think the you will see a material increase of the revenue starting from Q3 and Q4 because number one, this also has into the traditional high seasons for Europe and the USA. And also it couples with our new product launch window, which is also around the June, July, all the way through towards the September market.

然後，我認為從第三季和第四季開始，您將看到收入的實質成長，因為第一，這也進入了歐洲和美國的傳統旺季。它也與我們的新產品發布窗口相結合，該窗口也在六月、七月左右，一直到九月市場。

Thank you. Since you don't provide segmental revenue, I was wondering if you could give or if you're able to share the top two revenue-generating product lines and what percent of revenue, do they contribute?

謝謝。由於您不提供細分收入，我想知道您是否可以提供或是否能夠分享前兩條創收產品線以及它們貢獻的收入百分比是多少？

I think majority, as we just mentioned. So we have a few different series, which covers different type of product ranges where we play, right. I think and if you are thinking about the biggest revenue contributor is definitely the essential products registered, which are the bibs and the banks, which are also from a quality perspective, the best selling products, they're serious for us, right? That should account for around 40% of the total revenue base for ourselves.

我認為大多數，正如我們剛才提到的。所以我們有幾個不同的系列，涵蓋了我們所從事的不同類型的產品範圍，對吧。我認為，如果您考慮最大的收入貢獻者肯定是註冊的基本產品，即圍脖和銀行，從品質角度來看，它們也是最暢銷的產品，它們對我們來說很重要，對吧？這應該占我們總收入基礎的 40% 左右。

And then the next one two, it would be the balance at the active life, which are assets, our Samsung and Apple competitors. These are the the also the biggest portion of our revenue where it's coming from. And I think we just mentioned, we were able to increase the ASP of these products by roughly USD30 to USD50 on average over the past one year and 1.5 period. And this part of the product sales would account for roughly another 30% to 40% of our total revenue.

接下來的一兩個，將是活躍生活的平衡，即資產，我們的三星和蘋果競爭對手。這些是我們收入的最大組成部分。我想我們剛才提到，在過去一年 1.5 的時間裡，我們能夠將這些產品的平均售價平均提高約 30 美元到 50 美元。這部分產品的銷售大約會占到我們總收入的30%到40%。

And the remainder 20% to 30% actually goes to our so called performance and adventure series, which are the running watches, for example, the Cheetah Pro and also our outdoor ranges, the famous T-Rex One. And so these are also our very high ASP product ranges which we used to compete with, for example, the Apple Watch Ultra and the Garmin watches.

剩下的 20% 到 30% 實際上用於我們所謂的性能和冒險系列，即跑步手錶，例如 Cheetah Pro 以及我們的戶外系列，即著名的 T-Rex One。因此，這些也是我們用於競爭的非常高的 ASP 產品系列，例如 Apple Watch Ultra 和 Garmin 手錶。

SoI think that's overall should give you some clearly our product mix.

所以我認為總體而言應該讓您清楚地了解我們的產品組合。

How about the geographical distribution. I think last year you had 25% of revenue from North America, Europe account for 50%. Is it similar or has it skewed more to North America.

地理分佈怎麼樣？我想去年你們有25%的收入來自北美，歐洲佔50%。是相似還是更偏向北美？

I think at this moment, if we look at Q1, that still is the case. Europe stands for 50%. Asia Pacific and North America stands for another 50% in general, but we do see growth potential in Asia Pacific and US coming up this year. And although I think the impact of that, you will see more clearly towards the second half of the year. That's why we say also our result is a little bit back-end loaded.

我認為目前，如果我們看第一季度，情況仍然如此。歐洲佔50%。亞太地區和北美總體上佔另外 50%，但我們確實看到亞太地區和美國今年的成長潛力。儘管我認為其影響，你會在今年下半年看到更清楚的。這就是為什麼我們說我們的結果有一點後端加載。

We do see a probably we're going to fortify Europe and then the growth will be more coming from Asia Pacific and North America.

我們確實看到，我們可能會加強歐洲的實力，然後成長將更多來自亞太地區和北美。

Okay. Just final question. Any updates on the non-compliant letter from NYC.? I know you're doing your buybacks, of course, you have the reverse split that you can do anytime and resolve this issue or anything else that you have in the pipeline? Any updates?

好的。只是最後一個問題。來自紐約市的不合規信函有任何更新嗎？我知道您正在進行回購，當然，您可以隨時進行反向分割並解決此問題或您正在處理的任何其他問題？任何更新？

And I think the only thing which I can say is the noncompliance letter. It's just a technical thing. And as you just mentioned, there's definitely technical ways which can resolve that. But the management where I'm representing is actually very confident in maintaining our US mainboard listing status. So I think this is a thing which we also mentioned in our press release that we will try to tackle that in time.

我想我唯一能說的就是那封不合規信。這只是一個技術問題。正如您剛才提到的，肯定有技術方法可以解決這個問題。但我所代表的管理層實際上對維持我們在美國主機板上市的地位非常有信心。所以我認為我們在新聞稿中也提到了這一點，我們將盡力及時解決這個問題。

Thank you, Leo, and I'm looking forward to Q2.

謝謝你，Leo，我很期待第二季。

Thank you.

謝謝。

Nicholas Jones, Brookfield investments.

尼古拉斯瓊斯，布魯克菲爾德投資。

Hi, management. Thank you for taking my question and I have a number of questions, so I'd like to start off. And firstly, regarding the high gross margin levels, can management provide insight into whether these margins are sustainable in the upcoming quarters ?

嗨，管理層。感謝您提出我的問題，我有很多問題，所以我想開始。首先，關於高毛利率水平，管理層能否提供有關這些利潤率在未來幾季是否可持續的見解？

So yes, let me take that question because it's about the gross margin, right. So what you can see is that starting from Q. three, 2023, our gross margin for the overall company has been consistently above the line of 30%. So if I remember clearly at tQ3, 2023 our gross margin was 33%, and then it turned out to 35% in Q4 2023. And then now we stand at around 37% in Q1 2024.

所以，是的，讓我回答這個問題，因為它與毛利率有關，對吧。所以你可以看到，從2023年第三季開始，我們整個公司的毛利率一直在30%的線以上。因此，如果我記得清楚的話，2023 年第 3 季我們的毛利率為 33%，2023 年第 4 季的毛利率為 35%。現在，到 2024 年第一季度，這一比例約為 37%。

So we have shown three quarters of a gross margin improvement trend. And because of our transformation journey, which is more focusing on the self-branded products and of course, there's a product mix issue. There's also a channel mix issue which allow us to actually post delivery higher than what we achieved in the previous years.

所以我們已經展示了四分之三的毛利率改善趨勢。由於我們的轉型之旅更加關注自有品牌產品，當然，存在產品組合問題。還有一個渠道組合問題，使我們實際上能夠比前幾年實現更高的交付量。

On the gross margin percentage as ourselves. So if you look at Q1 2024, our gross margin is at 37%. That is more than doubling on the gross margin performance, which we achieved in Q1 2023 last year, right? And we're confident that through the new product launches, which we have lined up in the upcoming months that we also launched a few new products in May, right.

就毛利率而言，我們自己。因此，如果你看看 2024 年第一季度，我們的毛利率為 37%。這比我們去年 2023 年第一季實現的毛利率表現增加了一倍多，對吧？我們有信心，透過在未來幾個月內推出的新產品，我們也在五月推出了一些新產品，對吧。

And also in June, there's going to be also new products, as we mentioned in the presentation earlier and all the way towards Q3, Q4 together with the new product launches. And you know that new product launches actually cover offers a higher gross margin and both from an absolute amount perspective also from a percentage perspective and the old ranges. So that's why we say it actually gives us the confidence that, together with the new product launches and our consistent effort in refining our product mix and channel mix, we're confident that our gross margin percentage is going to expand in the quarters to come.

同樣在 6 月，還將推出新產品，正如我們在先前的演示中提到的那樣，一直到第三季、第四季以及新產品的發布。而且您知道，新產品的推出實際上涵蓋了更高的毛利率，無論是從絕對金額角度還是從百分比角度和舊範圍。這就是為什麼我們說它實際上給了我們信心，加上新產品的推出以及我們在完善產品組合和通路組合方面的持續努力，我們有信心我們的毛利率百分比將在未來幾個季度擴大。

Thank you. Then moving on, given that the start of 2024 was slower than expected. Could management share more color on your perspective for the full year outlook?

謝謝。然後繼續前進，因為 2024 年的開始速度比預期要慢。管理階層能否分享更多關於您對全年展望的看法？

Yes. Normally, we don't guide for our full year performance and also our revenue number. But I think what we're looking at is that, yes, it's a slow start for Q1, and we hope that we're going to and you already see in the guidance that we are to guide a little bit higher for Q2. And then as I just explained to sit in Q3, Q4, normally this are our high seasons.

是的。通常，我們不會對全年業績和收入數據進行指導。但我認為我們正在考慮的是，是的，第一季的開局緩慢，我們希望我們能夠做到這一點，而且您已經在指導中看到，我們將為第二季度提供更高的指導。然後，正如我剛才解釋的，要坐在第三季、第四季度，通常這是我們的旺季。

So last year, full year, if I remember clearly, our total revenue actually stands at around $350 million for the full year. So I think this year, we're also looking at a range somewhere between $200 million to $300 million for our top line. So we and we're looking at and doing our best to actually turning it because we have told to you and others that we that the ultimate goal, which we would like to achieve is to actually sustain the company's profitability through the self-branded product sells, right. So actually, we hope by the end of this year, we're going to deliver that target.

所以去年，全年，如果我記得清楚的話，我們全年的總收入實際上約為 3.5 億美元。因此，我認為今年我們的營收範圍也將在 2 億至 3 億美元之間。因此，我們正在考慮並盡最大努力實際扭轉這一局面，因為我們已經告訴您和其他人，我們希望實現的最終目標是透過自有品牌產品實際維持公司的獲利能力來賣，對吧。所以實際上，我們希望在今年年底，我們將實現該目標。

Great. Thank you. And again, referring to a question that I'd like to understand more about the recent noncompliance notice on the New York Stock Exchange due to the taking time out of your ATM falling below the required thresholds. Could you elaborate on the steps that is planning to take during the Q&A period to regain compliance? And yet are you considering a share split or other options?

偉大的。謝謝。再次，提到一個問題，我想更多地了解紐約證券交易所最近因 ATM 提取時間低於要求的閾值而發出的不合規通知。您能否詳細說明在問答期間計劃採取哪些措施來恢復合規性？但您是否正在考慮股份分割或其他選擇？

Yes. Yes, I think I think I have already explained that quite clearly to us that we believe that this is a technical thing and there's a technical solution to it. And the company and the management is actually working very hard on resolving that. And we don't think that's going to be any issue per se. And our commitment to continuing with the U.S. mainboard listing status is there. So I think that we are very confident that during the cure period we are going to resolve this matter.

是的。是的，我想我已經向我們解釋得很清楚了，我們相信這是一個技術問題，並且有一個技術解決方案。公司和管理層實際上正在努力解決這個問題。我們認為這本身不會成為任何問題。我們對繼續在美國主機板上市的承諾是存在的。所以我認為我們非常有信心在治療期間解決這個問題。

That's great. Thank you. And then I'm now moving on to new developments at with the Helio ring to collaborate on updates regarding topics, features and sales volumes.

那太棒了。謝謝。然後我現在將繼續開發 Helio 環，以協作更新有關主題、功能和銷售的資訊。

And yes, so I think Helio, Ray, obviously, is a new and that form factor of the wearable devices, which we launched at. We actually announced this product in CES beginning of this year. And by May, we start shipping the product. So we're still at the in earlier stage of ramping up the sales as we go. And I also mentioned before that we're going to launch this product in Europe and the Asia Pacific regions in the coming months as well.

是的，所以我認為 Helio、Ray 顯然是我們推出的穿戴式裝置的新的外形尺寸。我們實際上在今年年初的 CES 上發布了這款產品。到五月，我們開始出貨。因此，我們仍處於增加銷量的早期階段。我之前也提到過，我們也將在未來幾個月內在歐洲和亞太地區推出該產品。

So what you will see is that and we should be able to start shipping this rate in volume more towards the end of June. And then potentially this this one could slip into July, which is going to be two, three ourselves. And we do have high hopes on this product because the Helio Ring because of the form factor because a lot of people I don't like to sleep with a watch right?

因此，您將看到的是，我們應該能夠在 6 月底開始以此價格批量發貨。然後這個可能會滑到七月，我們自己會是兩三年。我們確實對這款產品抱有很高的期望，因為 Helio Ring 的外形因素，因為很多人不喜歡帶著手錶睡覺，對嗎？

They don't like the feeling of something which is on their risk, but a wearing a ring would get you would resolve that issue and still allow you to actually monitor your vitals 24/7 during the day you have where the watch and the rain. And we also offer infusion functionalities that both status would combine and merge and become more accurate and night. If you're not wearing your watch, you can't just do with only the ring.

他們不喜歡讓自己承擔風險的感覺，但是佩戴戒指可以解決這個問題，並且仍然可以讓您在白天有手錶和下雨的情況下 24/7 實際監控您的生命體徵。我們還提供輸液功能，將兩種狀態結合併融合，變得更加準確和夜間。如果您沒有戴手錶，則不能只戴戒指。

So will be the only smart watch brand who is going to offer that solution couples the Ring and the watch together. So basically, you're actually getting into a one-stop shop to monitoring your vitals to take care of their house and act actually to get a readiness analysis through our app. So actually, more and more, we would like to actually provide this type of new innovative products, so the consumers so they can actually better control and prevent any issues out there, health in the future.

因此，這將是唯一一個提供將指環和手錶結合在一起的解決方案的智慧手錶品牌。所以基本上，您實際上進入了一站式商店來監控您的生命體徵以照顧他們的房子，並實際採取行動透過我們的應用程式獲得準備情況分析。因此，實際上，我們越來越希望實際提供此類新的創新產品，以便消費者能夠更好地控制和預防未來的健康問題。

Interesting. Thank you. I have just one last question to management. Could you clarify if the reported MAU to $10 million include users from your Xiomi collaborations.

有趣的。謝謝。我只有最後一個問題要問管理階層。您能否澄清一下，所報告的 1000 萬美元月活躍用戶數是否包括與小米合作的用戶。

And now so this number, the $10 million, which has been mentioned by by way in before, was only talking about the MAUs for our amazing fit branded which it ourself branded products and including Xiaomi, that would add another $20 million to $25 million to it. So basically, our total MAU at this moment for the company is actually around $30 million to $35 million users MAU.

現在，這個數字，即之前提到的 1000 萬美元，只是談論我們的 Amazing Fit 品牌的 MAU，它是我們自己的品牌產品，包括小米，這將另外增加 2000 萬至 2500 萬美元它。所以基本上，我們公司目前的總 MAU 實際上約為 3000 萬至 3500 萬美元的用戶 MAU。

Thank you management that. That's very helpful.

謝謝你的管理。這非常有幫助。

Thank you, Nicola.

謝謝你，尼古拉。

Thank you. As there are no further questions now I'd like to turn the call back over to the company's IR Director, Grace Zhang for closing remarks.

謝謝。由於現在沒有其他問題了，我想將電話轉回給公司的投資者關係總監 Grace 張，讓其結束語。

Thank you once again for joining us today. If you have further questions, please feel free to contact our Investor Relations department through the contact information provided on our IR website.

再次感謝您今天加入我們。如果您還有其他疑問，請隨時透過我們的投資者關係網站上提供的聯絡資訊聯絡我們的投資者關係部門。

This concludes this conference call. You may now disconnect your line in queue.

本次電話會議到此結束。現在您可以斷開佇列中的線路。