Zepp Health Corp (ZEPP) 2024 Q3 法說會逐字稿

Hello, ladies and gentlemen. Thank you for standing by for Zepp Health Corporation's third quarter 2024 Earnings Conference Call. (Operator Instructions) Today's conference call is being recorded.

女士們、先生們，大家好。感謝您參加 Zepp Health Corporation 2024 年第三季財報電話會議。（操作員指示）今天的電話會議正在錄音。

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

現在我將電話轉給主持人、公司投資人關係總監 Grace Zhang 女士。請繼續，格蕾絲。

Hello, everyone, and welcome to Zepp Health Corporation's Third Quarter 2024 Earnings Conference Call. The company's financial and operating results were issued in a press release via the 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.zepp.com.

大家好，歡迎參加 Zepp Health Corporation 2024 年第三季財報電話會議。該公司的財務和營運結果於今天早些時候透過新聞通訊社以新聞稿形式發布，並在網路上發布。您也可以透過造訪本公司網站 ir.zepp.com 的 IR 部分查看本次電話會議中提到的收益新聞稿和投影片。

Participating in today's call are Mr. Wayne Wang Huang, our Chairman of the Board of Directors and Chief Executive Officer; and Mr. Leon Cheng Deng, our Chief Financial Officer. The company's management will begin with prepared remarks, and the call will conclude with a Q&A session. Mr. Mike Yeung, our Chief Operating Officer, will join us for the Q&A session.

參加今天電話會議的有我們的董事會主席兼執行長黃汪先生；以及我們的財務長 Leon Cheng Deng 先生。公司管理階層將以準備好的發言開始會議，最後以問答環節結束。我們的營運長楊麥克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 provisions 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美國安全港條款做出的前瞻性陳述。1995年私人證券訴訟改革法案。前瞻性陳述涉及固有風險和不確定性。因此，該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 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.

有關此風險和其他風險和不確定性的更多資訊包含在本公司截至 2023 年 12 月 31 日的財政年度的 20-F 表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，該公司不承擔更新任何前瞻性聲明的義務。

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

另請注意，Zepp 的收益新聞稿和本次電話會議包括未經審計的 GAAP 財務資訊以及未經審計的非 GAAP 財務資訊的討論。Zepp 的新聞稿包含未經審計的非 GAAP 指標與未經審計的最直接可比較 GAAP 指標的對帳。

I will now turn the call over to our CEO, Mr. Wayne Wang Huang. Please go ahead.

現在我將電話轉給我們的執行長黃韋恩先生。請繼續。

Hello, everyone. Welcome, and thank you for joining our call. Despite a slowdown in discretionary consumer spending across the globe, we sustained our sales momentum through the focused execution of our strategic transformation in the third quarter of 2024. I am pleased to share that this quarter marked our highest sequential growth in Amazfit product sales for the year.

大家好。歡迎您並感謝您加入我們的電話會議。儘管全球可自由支配的消費支出放緩，但我們透過 2024 年第三季專注於執行策略轉型，維持了銷售動能。我很高興地告訴大家，本季是我們 Amazfit 產品銷售今年以來的最高連續成長。

Furthermore, this marks the third consecutive quarter of overall company's sales expansion with self-branded sales increasing by 10% quarter-over-quarter and contributing more than 95% of the company's total revenue. Thanks to a better mix of products with higher gross margins, we also hit the highest gross margin in our history. These achievements signal that the most challenging phase of our transformation is now behind us. And we are optimistic about maintaining this momentum into the upcoming quarters.

此外，這標誌著公司整體銷售連續第三個季度擴張，自有品牌銷售額環比增長 10%，貢獻了公司總收入的 95% 以上。由於產品結構更合理，毛利率更高，我們也達到了歷史最高毛利率。這些成績的取得，標誌著我們轉型過程中最艱難的階段已經過去。我們對未來幾季保持這一勢頭充滿信心。

Our commitment to product innovation remains central to our growth strategy as demonstrated by the market's positive reception of our recent launches, especially the newly introduced Amazfit T-Rex 3, which we launched at IFA Berlin in September. It is a rugged smartwatch tailored for modern explorers. It features advanced GPS accuracy, extended battery life of fly map for snowing the weather, enriched outdoor features and extensive health monitoring, idea for users who seek resilience and high performance in extreme environments.

我們對產品創新的承諾仍然是我們成長策略的核心，市場對我們最近推出的產品的積極接受就證明了這一點，尤其是我們 9 月在柏林 IFA 上推出的新推出的 Amazfit T-Rex 3。這是一款專為現代探險家量身定制的堅固智慧手錶。它具有先進的 GPS 精度、適合下雪天氣的飛行地圖的延長電池壽命、豐富的戶外功能和廣泛的健康監測，非常適合在極端環境下尋求彈性和高性能的用戶。

The T-Rex 3 launch was met with robust demand, selling out in multiple locations, encouraged by excellent reviews from consumers and KOLs. This success showcases the product design as well as the effectiveness of our expanding sales channels in reaching a broader audience. However, due to its strong-than-expected popularity across various markets, we are currently experiencing some supply constraints, which has had a negative impact on our top line in Q3. Our team is working tirelessly to resolve this, and we expect the situation to improve in Q4.

T-Rex 3 的推出受到了熱烈追捧，在消費者和 KOL 的一致好評下，多個地點均已銷售一空。這項成功展示了產品設計以及我們不斷擴大的銷售管道在吸引更廣泛受眾方面的有效性。然而，由於其在各個市場的受歡迎程度超出預期，我們目前遇到了一些供應限制，這對我們第三季的營業收入產生了負面影響。我們的團隊正在不懈地努力解決這個問題，我們預計情況將在第四季度有所改善。

Turning to complementing devices like the Amazfit Helio Ring and newly introduced Amazfit UP Open Wearable Stereo earbuds. This not only extended our product ecosystem, but also further enhanced the user experience. Amazfit UP earbuds when paired with an Amazfit smartwatch provide users with real-time workout updates then Zepp can interact with voice assistance using the AI-powered Zepp Flow functionality. They also use AI algorithms to reduce background noise during calls, improving sound clarity in noisy environments.

轉向補充設備，如 Amazfit Helio Ring 和新推出的 Amazfit UP Open 可穿戴立體聲耳機。這不僅擴展了我們的產品生態系統，而且進一步增強了使用者體驗。Amazfit UP 耳塞與 Amazfit 智慧手錶搭配使用時，可為用戶提供即時鍛鍊更新，然後 Zepp 可以使用 AI 驅動的 Zepp Flow 功能與語音助理互動。他們還使用人工智慧演算法來減少通話期間的背景噪音，提高嘈雜環境中的聲音清晰度。

The showcase product, Amazfit UP earbuds is paving the way for us to tap into a market with a 20% year-over-year growth. And we have already received some early positive feedback, especially in the Europe region. The Amazfit smartwatches as well as the earbud and Helio Ring provide a 24-hour health tracking ecosystem for wellness-focused users. Beyond new product launches, our core products like Balance and Active have seen continued popularity and growth in demand. These advancements reflect our position as a leader in fitness-focused technology and further establish Amazfit as a trusted name in wearable innovation.

展示產品 Amazfit UP 耳機為我們進入同比增長 20% 的市場鋪平了道路。我們已經收到了一些早期的正面回饋，特別是在歐洲地區。Amazfit 智慧手錶以及耳機和 Helio Ring 為注重健康的用戶提供了 24 小時健康追蹤生態系統。除了推出新產品外，我們的核心產品（如 Balance 和 Active）也持續受到歡迎且需求不斷成長。這些進步反映了我們在健身科技領域的領先地位，並進一步確立了 Amazfit 作為穿戴式創新領域值得信賴的品牌地位。

Technological innovation remains a core driver at Zepp Health, empowering us to push boundaries in wearable technology. Our latest Zepp OS 4.0 is an advanced operating system that integrates OpenAI's GPT 4, making our Amazfit smartwatches more intuitive and responsive with upgrades in language processing and an array of health-focused mini apps. Zepp OS 4.0 turns our devices into comprehensive wellness companions, providing users with a richer, more personalized experience.

科技創新仍然是 Zepp Health 的核心驅動力，使我們能夠突破穿戴式科技的界限。我們最新的 Zepp OS 4.0 是一款先進的作業系統，它整合了 OpenAI 的 GPT 4，使我們的 Amazfit 智慧手錶更加直覺、響應更快，語言處理功能也得到了升級，並配備了一系列以健康為中心的小型應用程式。Zepp OS 4.0 將我們的裝置變成全面的健康伴侶，為使用者提供更豐富、更個人化的體驗。

Recently, we also enhanced our redesigned Zepp App. This latest version of the app is designed to deliver a better wellness experience, empowering users worldwide to understand their health trend and make informed lifestyle decisions. The app has been updated with a more user-friendly and newly streamlined interface and comprehensive features. Users can view top scores on their home page and dive deeper into their fitness subsequent more in-depth pages.

最近，我們也增強了重新設計的 Zepp App。該應用程式的最新版本旨在提供更好的健康體驗，使全球用戶能夠了解他們的健康趨勢並做出明智的生活方式決定。該應用程式已更新，具有更用戶友好、全新簡化的介面和全面的功能。用戶可以在主頁上查看最高分數，並在後續更深入的頁面上深入了解自己的健康狀況。

Enhanced smart analytics offers real-time data analysis and personalized health recommendations with actionable insights, including Zepp Aura sleep music, meditation support and AI sleep assistance, along with Zepp Coach for general workout guidance. For example, exertion and health and heart health monitoring includes a dynamic exertion score that adapts on a daily basis to guide users towards optimal fitness with targeted workout recommendations.

增強的智慧分析功能提供即時數據分析和個人化的健康建議以及可操作的見解，包括 Zepp Aura 睡眠音樂、冥想支援和 AI 睡眠輔助，以及用於一般運動指導的 Zepp Coach。例如，運動和健康和心臟健康監測包括每天調整的動態運動分數，以透過有針對性的運動建議指導使用者達到最佳健身效果。

Furthermore, the heart health dashboard provides a comprehensive overview of cardiovascular metrics like heart rate, HRV and blood oxygen to effectively support the users' heart health. Moreover, we recently partnered with Wild.AI to integrate its wellness app into Amazfit smartwatches. This collaboration offers women personalized health insights, including checking their menstrual cycle, delivering a uniquely effective on watch experience regarding female health.

此外，心臟健康儀表板提供心率、HRV 和血氧等心血管指標的全面概述，以有效支持使用者的心臟健康。此外，我們最近與 Wild.AI 合作，將其健康應用程式整合到 Amazfit 智慧手錶中。此次合作為女性提供了個人化的健康見解，包括檢查她們的月經週期，為女性健康提供了獨特有效的手錶體驗。

On the marketing front, we are expanding our Amazfit athlete team. In addition to those announced previously, we recently partnered with e Bea Gonzalez, a top Padel player from Spain, Hunter and Meg, U.S. Hyrox Champion, and [Indiscernible], a renowned outdoor adventurer. These partnerships are helping us build brand recognition among sports insurances and strengthen our brand image. The positive reception of our T-Rex 3 reflects the success of these campaigns and the strong market response.

在行銷方面，我們正在擴大我們的Amazfit運動員團隊。除了先前宣布的合作之外，我們最近還與西班牙頂級 Padel 球員 Bea Gonzalez、美國 Hyrox 冠軍 Hunter and Meg 以及著名戶外探險家 [聽不清楚] 合作。這些合作關係有助於我們在體育保險中建立品牌知名度並加強我們的品牌形象。我們的 T-Rex 3 獲得的正面反應反映了這些活動的成功和強烈的市場反應。

Moreover, in Q3, we partnered with HYROX for the World Series of Fitness Racing in Chicago, Dublin and Beijing, exemplifying our innovation focus. As the official wearable and timekeeping partner, we have integrated a dedicated HYROX app that offers athletes key health metrics tailored to HYROX endurance challenges, enabling real-time performance monitoring, we are the only smart watch that can offer this functionality. By embedding our wearable into the HYROX experience, we are supporting athletes at all levels and reinforcing Amazfit's presence in competitive fitness.

此外，在第三季度，我們與 HYROX 合作參加在芝加哥、都柏林和北京舉辦的世界健身賽事系列賽，體現了我們的創新重點。作為官方可穿戴和計時合作夥伴，我們整合了專用的 HYROX 應用程序，為運動員提供針對 HYROX 耐力挑戰量身定制的關鍵健康指標，實現即時性能監控，我們是唯一能夠提供此功能的智慧手錶。透過將我們的穿戴式裝置嵌入 HYROX 體驗，我們正在支持各個級別的運動員並增強 Amazfit 在競技健身中的地位。

In conclusion, our third quarter results and ongoing transformation highlights the strength of our strategic focus on technology, product innovation and expanding international visibility. Looking ahead, we are focused on broadening our global footprint and diversifying our product offerings to meet evolving customer needs by tailoring our market entry strategies to local consumer preferences and forging strategic partnerships, we aim to strengthen our global influence and drive international sales growth.

總之，我們第三季的業績和持續的轉型凸顯了我們對技術、產品創新和擴大國際知名度的策略重點的實力。展望未來，我們致力於擴大我們的全球影響力，並透過根據當地消費者的偏好制定市場進入策略和建立策略合作夥伴關係來多樣化我們的產品以滿足不斷變化的客戶需求，我們的目標是加強我們的全球影響力並推動國際銷售成長。

In addition, we are exploring opportunities to expand our product lines beyond traditional wearables. Recognizing the increasing consumer demand for comprehensive health and fitness solutions, we are investing in the development of integrated health platform that combines hardware, software and services. This strategic direction aligns with industry trends towards personalized wellness and preventative health care, positioning us to capitalize on new market opportunities.

此外，我們正在探索將我們的產品線擴展到傳統穿戴式裝置之外的機會。我們意識到消費者對全面健康和健身解決方案的需求日益增長，因此我們正在投資開發集硬體、軟體和服務於一體的綜合健康平台。這一策略方向與個人化健康和預防性醫療保健的行業趨勢一致，使我們能夠利用新的市場機會。

This quarter, we also expanded our buyback program from the next 24 months, reflecting our confidence in our long-term strategy, and we look forward to delivering more to all of our stakeholders. Thank you for your continued support and confidence in Zepp Health.

本季度，我們也將回購計畫從未來 24 個月擴大到未來，這反映了我們對長期策略的信心，我們期待為所有利害關係人帶來更多收益。感謝您對 Zepp Health 的持續支持與信任。

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

現在我將把電話轉給 Leon，讓他來回顧我們第三季財務表現的亮點。

Thank you, Wang, and greetings to everyone. I would like to start by highlighting some of the key metrics from the third quarter before diving further into the financial results.

謝謝王總，向大家問好。在進一步探討財務結果之前，我想先強調第三季的一些關鍵指標。

Self-branded products revenue grew 10% over previous quarter to USD 40 million, primarily driven by ASP growth of 44%. Q3 gross margin reached 41%, the highest in our history. Despite this directionally positive Q3 developments, the operating results in the third quarter somewhat fall short of our expectations as we navigate global macroeconomic headwinds impact consumer discretionary spending, the supply constraints on our newly launched T-Rex 3 model and competition offering larger-than-usual discounts to acquire users.

自有品牌產品營收較上一季成長 10%，達到 4,000 萬美元，主要得益於平均售價成長 44%。第三季毛利率達41%，為史上最高。儘管第三季度取得了積極的進展，但由於全球宏觀經濟逆風影響了消費者可自由支配的支出、我們新推出的 T-Rex 3 型號的供應限制以及競爭對手為吸引用戶而提供比平時更大的折扣，第三季度的經營業績仍未達到我們的預期。

However, we're cautiously optimistic to see that, according to Canalys, smart wearable market is growing and especially faster in the outdoor and sports segment. We believe our product road map positions us to participate in these growth areas and more. At the same time, in order to better position us to participate in the growth of the market, as a profitable company in 2025 and beyond, we continue to take aggressive approach to reduce our operating expenses significantly.

然而，我們謹慎樂觀地看到，根據 Canalys 的數據，智慧穿戴市場正在成長，尤其是在戶外和運動領域的成長速度更快。我們相信，我們的產品路線圖使我們能夠參與這些成長領域以及更多領域。同時，為了讓我們更好地參與市場的成長，作為2025年及以後的獲利公司，我們將繼續採取積極的方式大幅削減我們的營運費用。

To date, we have brought down our overall operating expenses from around RMB 180 million in 2022 to around RBM 100 million per year by the end of 2024. To be clear, we're not cutting our way into profitability. We are continuing on our journey to operate in a leaner, more focused manner that we believe will be sustainable and strategic for long-term success and improved financial performance. We want to do so while pursuing a product roadmap we believe will drive innovation, differentiation and growth, demonstrated by our new product launches such as T-Rex 3, the OWS earbuds and many more.

到目前為止，我們已將整體營運費用從 2022 年的約 1.8 億元降至 2024 年底的每年約 1 億元。需要明確的是，我們不會透過削減開支來獲取獲利。我們將繼續以更精簡、更專注的方式開展運營，我們相信這將是可持續的、具有戰略意義的，有助於實現長期成功並提高財務業績。我們希望在追求產品路線圖的同時做到這一點，我們相信該產品路線圖將推動創新、差異化和成長，這從我們推出的 T-Rex 3、OWS 耳塞等新產品中可見一斑。

Once again, according to third-party market research firms, the global wearable technology market is projected to grow from USD 70 billion in 2024 to USD 150 billion by 2029, with a CAGR of 16.8%. Canalys data also shows that product segment priced under $200 represented 40% of the market in 2022, rising to around 60% by 2024. This data indicates a rapidly expanding market with strong growth potential for wearable technology that we're placed in. As we move through the next quarter, we are better positioned than ever to capitalize on emerging opportunities and drive shareholder value through sustained growth and profitability.

再次，根據第三方市場研究公司的數據，全球穿戴式科技市場預計將從 2024 年的 700 億美元成長到 2029 年的 1,500 億美元，複合年增長率為 16.8%。Canalys 的數據還顯示，售價低於 200 美元的產品細分市場在 2022 年佔據了 40% 的市場份額，到 2024 年這一比例將上升到 60% 左右。這些數據表明，我們所處的穿戴式科技市場正在快速擴張，具有強勁的成長潛力。隨著下一季的到來，我們將比以往任何時候都更有能力利用新興機遇，並透過持續的成長和獲利來推動股東價值。

Echoing Wang's statements, we believe the most challenging phase of our transformation is behind us. Overall sales for the third quarter come in line with the low end of the guidance range. We saw a 10% increase in self-branded sales versus Q2, marking the strongest quarter-on-quarter growth this year. At the same time, the decline in year-on-year sales compared with last year was driven by a few key factors: reduced Xiaomi product sales plays a role, but also supply constraints on long lead time components from our newly launched T-Rex 3 product line.

與王的說法一致，我們相信，我們轉型過程中最具挑戰性的階段已經過去。第三季的整體銷售額與預期範圍的低端一致。與第二季相比，自主品牌銷售額成長了 10%，這是今年以來最強勁的季度環比成長。同時，與去年相比，銷售額年減主要是由幾個關鍵因素造成的：小米產品銷售下降是原因之一，但我們新推出的T-Rex 3產品線的長交貨期零件供應也存在限制。

However, new product launches, notably the T-Rex 3 and the increasing popularity of our mainstream products such as Balance and Active as well as our Smart greens drove the sales growth from Q2 to Q3. Looking ahead to Q4, we anticipate much higher sales of self-branded products.

然而，新產品的推出，尤其是 T-Rex 3 以及我們主流產品（例如 Balance 和 Active）以及 Smart greens 的日益普及，推動了從第二季度到第三季度的銷售成長。展望第四季度，我們預期自有品牌產品的銷售量將會大幅增加。

Turning to gross margin, which can be influenced by various factors such as product mix, product launch timing and product life cycles, including model upgrades. In Q3, our gross margin continues the expansion trend, which begins in Q3 of last year, marking the highest gross margin in our history and reflecting our ongoing focus on building profitability. This success is driven by the higher gross margins of our self-branded products, thanks to a favorable product mix, a higher portion of new products and reduced clearance activities. Together with the new product launches in the pipeline, we're confident to continue on this margin expansion journey into the next quarters.

談到毛利率，它會受到產品結構、產品發佈時間和產品生命週期（包括型號升級）等多種因素的影響。第三季度，我們的毛利率延續了自去年第三季開始的擴張趨勢，創下了歷史最高毛利率，也反映了我們持續致力於獲利能力的提升。這項成功的動力是，由於有利的產品組合、更高的新產品比例以及減少的清倉活動，我們自有品牌產品的毛利率更高。隨著新產品的推出，我們有信心在接下來的幾季繼續提高利潤率。

Now let's turn to costs. We remained steadfast in our commitment to cost management, continuing with the program which we began in Q3 2020 on reducing overall operating costs. Our overall operating costs for the quarter stood at USD 29 million, which includes a foreign exchange loss of USD 1 million due to a sharp RMB to dollar exchange rate appreciation, which we couldn't fully hedged. Excluding this, our operating costs were USD 28 million, just below RMB 200 million threshold and in line with our previous guidance.

現在我們來談談成本。我們堅定不移地致力於成本管理，繼續執行於 2020 年第三季啟動的降低整體營運成本的計畫。我們本季的整體營運成本為 2,900 萬美元，其中包括因人民幣兌美元匯率大幅升值而產生的 100 萬美元外匯損失，而我們無法完全對沖這筆損失。除此之外，我們的營運成本為 2,800 萬美元，略低於 2 億元人民幣的門檻，與我們先前的預期一致。

Research and development expenses in the third quarter of 2024 were USD 10.6 million, an increase by 11.7% year-over-year. This accounted for 24.9% of revenue compared to 11.4% for the same period in 2023. The increase was a result from our investment in new technologies, including AI, to maintain our competition edge against our peers. At the same time, we focused on refined research and development approaches as we consistently evaluated resource efficiency to ensure maximum return on investment and productivity.

2024年第三季研發費用為1,060萬美元，年增11.7%。這佔營收的 24.9%，而 2023 年同期為 11.4%。這一成長源於我們對包括人工智慧在內的新技術的投資，以保持我們相對於同行的競爭優勢。同時，我們專注於改進研究和開發方法，並持續評估資源效率，以確保最大程度的投資回報和生產力。

Selling and marketing expenses in the third quarter were USD 11.9 million, an increase by 23.9% year-over-year. This accounted for 27.9% of the revenue compared to 11.5% for the same period in 2023. The increase was primarily as a result of the investments in marketing campaigns for newly launched products to boost our brand awareness. At the same time, we consistently pushed on retail profitability and channel mix improvement, which included meticulous refinement of our retail channels and strategic staffing arrangements across the regions.

第三季銷售和行銷費用為1190萬美元，年增23.9%。這佔營收的 27.9%，而 2023 年同期為 11.5%。成長主要歸因於對新推出產品的行銷活動的投資，以提高我們的品牌知名度。同時，我們不斷推動零售獲利能力和通路組合改善，包括對零售通路的細緻完善和跨地區的策略性人員配置安排。

We are committed to investing efficiently in marketing and branding to ensure our sustained growth. G&A expenses were USD 6.7 million in the third quarter of 2024, an increased by 14.7% year-over-year. This accounted for 15.7% of revenue compared with 7% in the same period in 2023. The increase was largely attributed to negative foreign exchange rate fluctuations. Normalizing this FX impact, G&A expense has a year-over-year decline of 18%.

我們致力於在行銷和品牌方面進行有效投資，以確保我們的持續成長。2024年第三季的G&A費用為670萬美元，年增14.7%。這佔營收的 15.7%，而 2023 年同期為 7%。成長主要歸因於外匯匯率的負面波動。將此匯影響標準化後，G&A 費用較去年同期下降了 18%。

Despite reporting an operating loss this quarter, largely attributed to cost coverage issues, our performance showed an improvement throughout the year. Stripping off the foreign exchange result in the previous quarters, we're on track to improve the financial profitability of the company sequentially and narrow the loss further in the third quarter of 2024.

儘管本季度報告了營業虧損，主要歸因於成本覆蓋問題，但我們的業績全年都有所改善。除去前幾季的外匯結果，我們有望逐步提高公司的財務獲利能力，並在 2024 年第三季進一步縮小虧損。

Looking ahead, we'll continue to adhere to our prudent cost management approach, and we expect cost levels to remain at their current level or lower. At the same time, we'll maintain our investment in R&D and marketing activities to sustain our long-term capabilities while strictly controlling discretionary spending.

展望未來，我們將繼續堅持審慎的成本管理方針，並預期成本水準將維持在目前水準或更低水準。同時，我們將繼續對研發和行銷活動進行投資，以維持我們的長期能力，並嚴格控制可自由支配的開支。

Now turning to the balance sheet. We maintained effective working capital management, delivering an inventory level within a relatively low level since Q2 2019. We'll continue to exercise tight inventory controls in the coming quarters. Our overall cash balance stands at USD 128 million, the same level as Q2 despite a loss. This provides us with ample runway to invest and seize potential market opportunities.

現在轉向資產負債表。我們維持了有效的營運資本管理，自2019年第二季以來庫存水準一直處於相對較低的水準。我們將在未來幾季繼續嚴格控制庫存。我們的整體現金餘額為 1.28 億美元，儘管虧損，但仍與第二季持平。這為我們投資和抓住潛在市場機會提供了充足的空間。

Starting Q1 2023, we have initiated the retirement of our short/long-term debt portfolio. Since then, and including Q3 2024, we have successfully retired USD 52 million of debt. As our operating cash flow continues to strengthen, we'll continue to optimize the capital structure for the company. As part of our commitment to deliver long-term value for the shareholders, we will continue our share buyback program throughout 2026.

從 2023 年第一季開始，我們開始註銷短期/長期債務組合。自那時起，包括 2024 年第三季度，我們已成功償還 5,200 萬美元的債務。隨著我們的經營現金流不斷增強，我們將繼續優化公司的資本結構。作為我們為股東提供長期價值的承諾的一部分，我們將在 2026 年繼續我們的股票回購計劃。

I'm also pleased to share that we have regained compliance with the NYSE in October, reinforcing our market standing. Looking ahead to the fourth quarter, we're guiding revenue in the range of USD 55 million to USD 70 million, with the self-branded products expected to contribute over 90% of our revenue base, representing a 29% to 65% growth for revenue compared to the third quarter of 2024.

我也很高興地告訴大家，我們已於十月重新符合紐約證券交易所的規定，從而鞏固了我們的市場地位。展望第四季度，我們預計營收將在 5,500 萬美元至 7,000 萬美元之間，其中自有品牌產品預計將貢獻我們收入基礎的 90% 以上，與 2024 年第三季度相比，營收將成長 29% 至 65%。

To conclude, our focus on delivering profitable growth remains steadfast, and we are confident in our ability to build on the ongoing momentum demonstrated during this quarter and in the quarters to come.

總而言之，我們始終堅定不移地專注於實現盈利性成長，並且我們有信心能夠延續本季度以及未來幾季的持續發展勢頭。

Thank you once again for your time and continued support. I will now open the line for any questions. Operator, please go ahead.

再次感謝您的時間和持續的支持。我現在將開通熱線來回答大家的提問。接線員，請繼續。

Sid Rajeev from Fundamental Research Corp.

基礎研究公司的 Sid Rajeev

You're expecting a major spike in revenue in Q4. I realize that the T-Rex 3 will be a major contributor. But could you please provide some more details on other avenues or other products where you expect real growth?

您預計第四季度的收入將大幅增加。我意識到 T-Rex 3 將發揮主要作用。但您能否提供一些您預計會真正成長的其他途徑或其他產品的更多細節？

This is Leon. Yes, you might hear from our prepared remarks that T-Rex 3, we kind of experienced a supply constraint in Q3 because the product itself is a good product and then it's, to some extent, comparable to the Garmin Fenix 8. And then it's actually the demand of that is shooting to the roof whereby we cannot produce that much. But we are working day and night to actually resolve the supply constraints, which we had on T-Rex 3. So hopefully, in Q4, you will see an increase of the sales level for T-Rex 3 because of that. So I think that is actually one of the levers for our Q4 sales spike.

這是萊昂。是的，您可能從我們準備好的評論中聽說 T-Rex 3，我們在第三季度遇到了供應限制，因為該產品本身是一款好產品，並且在某種程度上可以與 Garmin Fenix 8 相媲美。但實際上，需求正在激增，以致我們無法生產那麼多。但我們正日以繼夜地工作以真正解決 T-Rex 3 的供應限制問題。因此，希望在第四季度，您會看到 T-Rex 3 的銷售量上升。所以我認為這實際上是我們在第四季度銷售激增的槓桿之一。

And on top of that, you also heard that we launched the OWS earbuds, which is actually an open ear system, which allows you to exercise better while you can still hear the ambulance environment some. It's actually a very good companion for the smart watch.

除此之外，大家還聽說了我們推出的 OWS 耳塞，它實際上是一種開放式耳朵系統，可以讓您在鍛煉時更好地聽到救護車環境的聲音。它實際上是智慧手錶非常好的伴侶。

And actually, we are providing a one-stop shop to the consumers who want to have a good understanding of their health and well-being with the help of smart watches, the OWS earbuds and also our Helio Ring, the Smart Ring, right? So we are actually providing consumers a comprehensive solution, which also contributes to the higher sales you're going to see in Q4.

實際上，我們為想要了解自己健康狀況的消費者提供一站式服務，借助智慧手錶、OWS 耳機以及我們的 Helio Ring，對嗎？因此，我們實際上為消費者提供了全面的解決方案，這也有助於您在第四季度看到更高的銷售額。

And then not to mention, Q4 is traditionally the best selling season for us, not -- in China, you have the -- just finished Double 11 event, whereby our T-Rex 3 stand out in every single board on the outdoor and sports watch segment. And then in Europe, you have the Prime Day 2, and we're heading into the Black Friday and the Christmas sales. So we're actually quite confident on delivering the Q4 number. And also, we're actually shooting for an even higher number than what we put forward over there.

更不用說，第四季度傳統上是我們最好的銷售季節，在中國，剛結束的雙十一活動，我們的 T-Rex 3 在戶外和運動手錶領域的每一塊板上都脫穎而出。在歐洲，我們有 Prime Day 2，我們正迎來黑色星期五和聖誕節促銷。因此，我們對第四季的業績非常有信心。而且，我們實際上正在爭取一個比我們在那裡提出的更高的數字。

Thank you, Leon. Where exactly is the bottleneck in terms of the supply constraints?

謝謝你，萊昂。供應限制方面的瓶頸到底在哪裡？

Sorry Sid, I missed you for. . .

對不起，Sid，我錯過了你。。 。

Where exactly is the bottleneck in terms of the supply constraints? The supply constraints you mentioned?

供應限制方面的瓶頸到底在哪裡？您提到的供應限制？

Yes. The supply constraints, it's the following. I think it's not -- it's more a demand issue than a supply issue, right? So I think we have encountered a spike in the demand of the T-Rex 3, whereby on the other hand, we didn't anticipate that demand to come in, not in that volume because, to be honest, the T-Rex 3 is not a cheap product, it's MSRP $300 product, right? So we do prepare some stock for it. But then with the spike in the demand, we couldn't satisfy that demand, which is coming from all over the world. But as we're heading into Q4, the factories are running 24/7 to produce as many T-Rex 3 as they can. So I think that will be one of the key levers for the sales increase in Q4 for us.

是的。供應限制如下。我認為不是——這更多的是需求問題而不是供應問題，對嗎？因此，我認為我們遇到了 T-Rex 3 需求的激增，另一方面，我們沒有預料到需求會這麼大，因為說實話，T-Rex 3 並不便宜，它的建議零售價是 300 美元，對吧？所以我們確實準備了一些庫存。但隨著需求的激增，我們無法滿足來自世界各地的需求。但隨著我們進入第四季度，工廠正在全天候運轉，盡可能多地生產 T-Rex 3。所以我認為這將成為我們第四季銷售成長的關鍵槓桿之一。

Okay. And you reported a ForEx loss this year, this quarter, when historically, you've been reporting gains. What really happened? And how do you expect this ForEx to play a role in the next quarter?

好的。今年和本季度，你們報告了外匯虧損，而從歷史上看，你們一直報告盈利。到底發生了什麼事？您預計 ForEx 在下個季度將發揮什麼作用？

Yes. We have a few currency pairs, all of which US and Euros are one of the major currencies and also the U.S. dollars to RMB is another pair because we procure a lot in China and so are the other consumer electronics companies. And you might notice or you might know that RMB to dollars actually appreciate a huge time in the last 15 days of the quarter in Q3.

是的。我們有幾種貨幣對，其中美元和歐元是主要貨幣之一，美元兌人民幣是另一對，因為我們在中國採購很多，其他消費電子公司也是如此。您可能注意到或知道，在第三季的最後 15 天，人民幣兌美元實際上大幅升值。

No matter how you can hedge it, you can never hedge it in full, right? And then throughout the year, if you look at it, every quarter, we have a so-called tailwind on the currency and then that flipped into a headwind for us in Q3. But as we are navigating through it and then with the recent currency movement, we're also expecting a tailwind in Q4.

無論你怎麼對沖，你都不可能完全對沖，對嗎？如果你看一下，那麼全年來看，每個季度，我們都會看到貨幣出現所謂的順風，但在第三季度，這種順風卻變成了逆風。但隨著我們不斷前行，並考慮到近期的貨幣走勢，我們也預期第四季將出現順風。

And so I think net-net, if you strip out the FX fluctuations and you compare the numbers without FX number or the FX impact for every single quarter in this year, you will notice that our profitability, albeit the loss has narrowed to its lowest level in Q3. So I think we're more having a cost coverage issue, which we're working and we expect it to resolve it very soon as we're heading into Q4.

因此，我認為，如果剔除外匯波動，並比較今年每季不含外匯數字或外匯影響的數字，您會注意到，儘管虧損已收窄至第三季的最低水平，但我們的獲利能力仍然良好。因此，我認為我們面臨的更多是成本覆蓋問題，我們正在努力解決這個問題，預計在進入第四季度時它將很快得到解決。

Just one more question, if I may. Your cash position, you're sitting on a lot of cash, $128 million. Market cap is a third of that. So obviously, in terms of how you plan to deploy this cash M&A? Or what can we think you might do in the coming 12 months, 24 months?

如果可以的話，我還有一個問題。你的現金狀況是，你持有大量現金，達 1.28 億美元。市值是其三分之一。那麼顯然，您計劃如何部署這筆現金併購？或者我們認為您在未來 12 個月、24 個月內可能會做什麼？

I think we're -- I'm not going to rule out on small bolt-on M&As. But I think one of the bigger thing, and we're continuing to do that is the share repurchase program, which we initiated two years ago. And actually, we're going to extend this program by another two years. So I think for sure, you will see that we're going to be more aggressive in buying back our shares. And secondly, we're going to look at how to deploy the cash and how to use that cash to drive and seize the marketing opportunities when it arises so that we are better positioned in this competition versus our competitors.

我認為我們—我不會排除小規模附加併購。但我認為其中一件更重要的事情，也是我們將繼續做的，就是兩年前啟動的股票回購計畫。實際上，我們將把該計劃再延長兩年。因此我想，您肯定會看到，我們將更積極地回購我們的股票。其次，我們將研究如何部署現金，以及如何利用現金來推動和抓住出現的行銷機會，以便我們在競爭中比競爭對手處於更有利的地位。

Nicolas Jones from Brooks Investment.

來自 Brooks Investment 的 Nicolas Jones。

I have several questions. But firstly, I'd like to start off with some sort of a better understanding on the Q3 net loss situation. Could you provide some more color around that? And how does that compare to previous quarters as well as to last year?

我有幾個問題。但首先，我想先更了解第三季的淨虧損情況。您能對此提供更多細節嗎？與前幾季以及去年相比如何？

Nicolas, this is Leon. So I guess I will take this question again. So yes, so as I said, and then I also kind of alluded to it with Sid is that there are a few issues in Q3. Number one is that we have the supply constraints on the newly launched product, which is T3. So the T-Rex 3, if you look at it, one month of sales because we launched it only in September, it is already higher than the previous generation T-Rex for a quarter of sales.

尼可拉斯，這是萊昂。所以我想我會再次回答這個問題。是的，正如我所說的，然後我也向 Sid 暗示過，Q3 中存在一些問題。首先，我們新推出的產品 T3 面臨供應限制。所以如果你看一下T-Rex 3，由於我們在9月份才推出它，所以它一個月的銷量已經高於上一代T-Rex一個季度的銷量。

So that actually gives you a feeling on how popular this product is and how successful this product is. So I think that sits a lot on our product innovation capabilities and our ability to develop and to give the best functionality product to the users. But we cannot manufacture them enough in Q3 so that there's demand we couldn't satisfy and we need to actually pull it into Q4. But that also explains why we're confident on delivering a higher sales quarter for Q4.

這實際上讓您感受到這款產品有多受歡迎以及這款產品有多成功。所以我認為這很大程度上取決於我們的產品創新能力以及我們開發和向用戶提供最佳功能產品的能力。但我們在第三季無法生產足夠的產品，因此無法滿足需求，我們需要將其拉到第四季。但這也解釋了為什麼我們對第四季的銷售成長充滿信心。

So I think that's number one, which also impact on the revenue expectations for Q3, which leads to a cost coverage issue for us in Q3. So that's -- I think that's the first thing I would like to call out. And the second thing, I just mentioned is that we have experienced an FX headwind in Q3, while we -- for the other quarters of the year, we had a tailwind. I think in Q4, the FX is going to swing into a tailwind again for us so that the negative FX impact is not going to hit us that hard like it was in Q3.

所以我認為這是第一點，這也會影響第三季的營收預期，導致我們在第三季面臨成本覆蓋問題。所以這是——我認為這是我想指出的第一件事。第二件事，我剛才提到的是，我們在第三季度經歷了外匯逆風，而在今年其他季度，我們遇到了順風。我認為在第四季度，外匯將再次成為我們的順風，因此外匯帶來的負面影響將不會像第三季度那麼嚴重。

And then the third one is that we also front-loaded some of the marketing expenses. Wang mentioned higher-ups and there's also athletes which we signed up in Q3, which are preparing us for better brand awareness and also for the high seasons as we're heading into Q4. So I think all those 3 things, i.e., the supply constraints, the front-loaded on the expenses, the negative FX impact, impacted us in Q3. And if you strip out the negative FX impact, what I just posted, and you do an apple-to-apple comparison, I think Q3, from a profitability perspective, we are actually heading into the lowest loss situation in the year. And with the revenue start to pick up in Q4, we're confident that we're going to turn this wheel very fast, and it's just upcoming on the horizon.

第三個是，我們也預付了部分行銷費用。王提到了高層，還有我們在第三季簽約的運動員，這有助於我們提高品牌知名度，也為進入第四季的旺季做好準備。所以我認為這三個因素，即供應限制、前期費用、負面外匯影響，都對我們在第三季產生了影響。如果你剔除我剛才發布的負面外匯影響，並進行同類比較，我認為從盈利能力的角度來看，第三季度我們實際上正邁向今年虧損最低的局面。隨著第四季收入開始回升，我們有信心快速轉動這個輪子，而它即將出現在視野中。

That sounds great. And you've also given a lot of details around the Q4 sales. I suppose looking further ahead, can you give some sort of indication about how sustainable the expected growth in sales?

聽起來不錯。您還提供了許多有關第四季度銷售的細節。我想展望未來，您能否透露一下預期銷售額的成長將有多可持續？

Yes. I think that's a good question. I'm not going to jump the gun here, but I can give you some feeling and flavor on it. So number one, I think T-Rex stands out as a very successful product. And actually, it would be account for a big part of our revenue for Q4 and going into Q1 and Q2, right? And then apart from T-Rex, and we are also -- as you may notice that we didn't launch too many new products this year. So majority of our product portfolio is up for renewal, for example, the Bip series, the Active series and the Balance series for next year.

是的。我認為這是一個好問題。我不會在這裡妄下結論，但我可以給你一些感受和感受。所以首先，我認為 T-Rex 是一款非常成功的產品。實際上，它將占我們第四季以及第一季和第二季收入的很大一部分，對嗎？除了 T-Rex 之外，您可能注意到，我們今年沒有推出太多新產品。因此，我們的大部分產品組合都將進行更新，例如明年的 Bip 系列、Active 系列和 Balance 系列。

So -- and this year, I'm more referring to 2025, we're going to have a more balanced new product launch window and cadence versus 2 years ago, whereby everything is concentrated into Q4 and then you kind of have a spike and then it stays up, right?

所以 - 今年，我更多地指的是 2025 年，與 2 年前相比，我們將擁有更加均衡的新產品發布窗口和節奏，即一切都集中在第四季度，然後出現高峰，然後保持上升趨勢，對嗎？

So now we're going to have, for example, a product -- one significant product review of one of our Bip product line in a quarter, i.e., probably a renewal of the Active series in Q1, the Bip series in Q2 or the Balance in Q3, something like that. The sequence might change. But I think with that, and plus the successful launch of T-Rex 3, we're quite confident that next year, every quarter, the revenue will be much bigger than what you saw this year.

因此現在我們將進行例如一個產品 - 在一個季度內對我們的 Bip 產品線之一進行一次重要的產品評估，例如，可能是在第一季度更新 Active 系列，在第二季度更新 Bip 系列，或者在第三季度更新 Balance，諸如此類。順序可能會改變。但我認為，有了這一點，再加上 T-Rex 3 的成功推出，我們非常有信心明年每季的營收都將比今年高得多。

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.

由於沒有其他問題，現在我想將電話轉回給公司的投資者關係總監 Grace Zhang 做結束語。

Thank you once again for joining us today. If you have further questions, please feel free to contact Zepp's Investor Relations department through the contact information provided on our IR website. You can now -- this now concludes the call. Thank you

再次感謝您今天的參與。如果您還有其他問題，請隨時透過我們的 IR 網站上提供的聯絡資訊聯絡 Zepp 的投資者關係部門。您現在可以—通話到此結束。謝謝

The conference has now concluded. Thank you for attending. You can now disconnect your lines.

會議現已結束。感謝您的參加。現在您可以斷開線路。