Q1 2022 Zepp Health Corp Earnings Call
Hello, Ladies and gentlemen, thank you for standing by for Zap Health Corp's first quarter 2022 earnings conference call.
At this time, all participants are in listen only mode.
Today's conference call is being recorded.
I'll now turn the call over to your host MS Grace Zhang Director of Investor Relations for the company. Please go ahead Grace.
Hello, everyone and welcome to gut Health Corporation's first quarter.
Earnings Conference call, the company's financial and operating results were issued a press release by Newswire services earlier today and are posted online you can also view the earnings press release, and the slides, which we will refer on this call by visiting the IR section of the company's website.
And I are does that dot com.
Participating in todays call are Mr. Huang Wang our chairman of the board of Directors, and Chief Executive Officer, and Mr. Leandro <unk>, 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 Yeah.
Chief operating officer John .
Joining the call for the Q&A session.
Four we continue please note that today's discussion will contain forward looking statements under the safe Harbor provision of the U S. Private Securities Litigation Reform Act of 1985.
Forward looking statements involve inherent risks and uncertainties.
Touched the Companys actual results may be materially different from the views expressed.
You bet.
Further information regarding this and other risks and uncertainties is included in the company's annual report on form 20-F for the fiscal year ended December 31st that'd be tied to one 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 statement, except as required under applicable law. Please.
Please also note that the.
Earnings Press release, and this conference call includes discussion of all I'll go to the GAAP financial information as well as all did you non-GAAP financial information that press release contains a reconciliation of the altitude non-GAAP measure.
Should be all audited most directly comparable GAAP measures.
Now turn the call over to our CEO . Mr. Firewall. Please go ahead.
Okay.
Hello, everyone.
Thank you for joining our call.
Several months have been challenging given the ongoing COVID-19 pandemic compounded by geopolitical unrest.
Against these bad jobs.
We're pleased that our first quarter revenue came in light of your guidance.
We achieved Zillow, one 8 billion in revenue.
Representing a decrease of.
<unk>, 4%.
Over here.
Revenue was affected by the decrease in Mi band six turbines.
Consumers are waiting for the new generation Mi band Lodge.
Well as you do this placed ordinary spending.
Consumers cut back amidst the inflationary environment.
I change and logistic interruption due to lockdowns and other logistics showing the power of the pandemic prevention and control measures in China.
Also impacted our first quarter.
You highlight however.
That the first quarter has also typically being a slow quarter for sales due to seasonality.
Despite all of these.
Had been.
We were also pleased to see that our revenue mix continued to shift towards our self branded products.
Now contribute more than 65% of our total revenue.
This demonstrates once again the broad appeal of our product.
We focus on connecting health with technology.
To enhance users I've styles and held them effective play magnitude they are health conditions.
To further build out our sales channels, we continue to expand and deepen our partnerships with large retail outlets in the overseas market.
The result, we showed particularly strong performance in North American region.
Where our self branded product revenue.
By more than 110% year over year.
These achievements are.
A testament not only to our own successful operation despite challenges and uncertainties, but also to the lifestyle evolution. We are part of this.
With health care services supported by Smart variable if they liked this.
Transforming People's Daily lives.
We expect.
Deniable benefits all marked variable devices.
Couples with innovations in software sector.
And now the hardware to provide continued tailwind to our future growth.
We strive to be a leader in this macro trend.
We have been working relentlessly to harness the power of technology to enhance our product and have established a comprehensive AI athletes and system.
Income passing.
Santa Clara how big data.
It should be incorporate into our product designed to help our users realize their health and fitness goals.
To that end.
We are preparing to unveil our next generation smart watches today, we launched our upgraded outdoor watch he like to.
And has your frequency G P S.
Later this year.
Also upgrade our most popular G D S and G J Hart and theaters.
Newcomers to our basic and sport part of life.
These devices, both meaningful multi dimensional enhancements in housing related some finality.
Style and algorithms.
I'll add to it.
Additionally, we continually upgrade and add new features to our existing product to enhance user experience.
Example, we wrote off a sunburn uptake for a nice big G. T I agree and GTS at three excuse me like this in late April and added a text it's Paul.
<unk> booked in coming calls.
Optimization for the alarm clock feature music download and systems.
Ability.
We also recently made meaningful inroads in our exploration of the medical grade health care industry.
And launched the first product in our March hearing aid part of life.
Is that correct you want.
Chocobo comfortable invisible and discrete device for those with hearing loss and.
And especially for those who don't want others to notice.
Notably <unk>.
That karate Kid one offers more than just a device.
It also comes with a customer for a best in class support team guided by audiology professionals to ensure the best possible possible experience for users.
Last but not least our collaboration they sell me continues to be fruitful.
Good day.
Lodged mi band seven.
And we look forward to building on the previous successes of the past generations of these powerful product line.
I'm, taking his journey one step further.
We remain committed to connecting health with technology, you continue to drive technological innovation.
In collaboration with universities and by engaging our user community.
Together with the University of Science and technology of China U.
Launched our first <unk>.
Oh as technology, and how campus innovation context.
Inspiring students to develop apps, both mopped valuable devices that can improve People's health management habit.
We also collaborate with UC Berkeley on their co pack is that to encourage new users worldwide to join our ecosystem.
The core values that'd be whole theory here at SAP will continue to help our users.
Better manage their health and wellness and design their life by healthy choices.
Our inclusive and innovative zappos ecosystem has drawn develop globally to design apps and watch faces on our pretzel.
Contributing to our fraud aging yoga community that is more vibrant than ever.
To conclude we.
We are making progress amidst the macro economy uncertainties.
Going forward, we will continue to invest in and capture the enormous opportunities.
Opportunities in the health care services industry by focusing on technological innovation in AI chips, how big data and algorithms.
But our product portfolio expansion.
Despite the short term impact from geopolitical conflicts the pandemic the surgeon.
And the associated supply chain and logistics challenges, we are very excited about that long term.
Aspects of.
We remain dedicated to shaping the technologies of tomorrow, while meeting the needs of our users per day.
With that I will now turn the call over to Leah to go a little highlight of our first quarter financial results.
Thank you.
I'd like to start by highlighting some of the key matrix driving that development.
Before providing further details on our financial performance I would like to briefly elaborate on the macro environment issues. We have faced so far in 2022.
Which is shaping up to be a year of packed with challenges.
Q1, 2022, Lockdowns of China's Tianjin and Shenzhen part.
And two the significant disruption in March 2022, two hour export route through Shenzhen, Hong Kong vital to our global supply chain and product.
Ability has been to erupt it our deliveries and sells worldwide.
The more the pandemic related restrictions in the youngster Bay for a Delta seems much also has some impact on our supply chain he already Q2.
My over the global semi conductor shortage continues to constrain our supply chain, albeit our supply chain team has been working hard in seeking alternative solutions to resolve the ongoing situation.
Separately escalating geopolitical strife among countries, notably the conflict between Russia, and Ukraine is creating turbulence done paying consumer confidence, causing inflation, which all led to a slowdown in consumer discretionary spending.
These adverse conditions weighed down our revenues generated in our overall gross margin.
Together. These factors have affected our Q1 results and continue to impact our ongoing Q2 2022 performance.
Despite these ongoing had waste in 2022, we reported revenue of RMB 8 billion kilowatt.
It come within our guidance range against a very difficult macro environment.
Revenue was down 34% compared with Q1 2021 again, the decrease was mostly driven by the decrease in me by themselves in the meantime, kill COVID-19, and chip shortages also constrained the growth of our self branded products.
I have to say that we are very proud of our self branded products performance, especially in light of all these headwinds of our self branded products contributed over 65% of the total revenue of the quarter.
We believe ourself branded products will continue to gain momentum as we further develop our product capabilities and he has our breadth Brent market recognition globally.
Now, let's look at gross margin, which can be affected by product mix product launch timing and product life cycles, including model upgrades are.
Our first quarter 2022, gross margin was 21% compared with 22, 5% for the first quarter of 2021, and 19, 3% for the fourth quarter of 2021.
Lower gross margin versus last year was mostly affected by the increase in freight costs and a pandemic, while the improvement versus Q4, 2021 what supported by refinements to our product mix, including an increased proportion of sell branded products.
Turning now to costs, which has to be a key focal point of my both in terms of absolute amounts as well as a percentage of cells.
A portion of operating expenses are fixed so it takes time and creativity to gradually reduce these expenses well, we'll have to carefully balance our costco chose with expenditures to feel growth.
I'm pleased to report that we have already seen a decreasing trend in total operating expenses since Q3 'twenty 'twenty.
Going forward, we will continue to rightsize, our operating expenses from their current level in order to deliver profitable growth in the following quarters.
First quarter 'twenty Hitachi to operating expenses decreased slightly in absolute terms compared with the same period in 2020 one.
However, at 46% of cells. They represented a percentage increase when compared with the first quarter of 2021 during which operating expenses were 26, 9% of sales. This was mostly driven by the lower top line.
Given the headwinds I, just explained above where consistently streamlining costs to protect future profitability as spending on research and R&D. In Q1, 2022 was RMB $146 4 million a decrease of 39% year over.
For a year.
Though given the low revenue levels COVID-19.3% of revenue versus 13, 3% for the same period.
The lower spending absolute terms reflects our effective R&D expenses called shows.
Kilowatt 12, 22, selling and marketing expenses were RMB $103 1 million net increase of 13, 6% year over year, comprising 13, 6% of revenue compared with seven 9% of the revenue for the same period in 2021.
Mainly due to higher advertising and promotions for self branded products and the increase off the overseas sales personnel to serve the local market.
G&A expenses were RMB $58 2 million in the first quarter of 2022, representing a decrease of 10, 9% year over year, largely due to effective cost controls.
It accounted for seven 7% of revenue compared with five 7% and Interstate parrot in 2021.
Regarding net income the first quarter of 2022 saw adjusted net loss of RMB $75 7 million compared with the adjusted net loss of RMB 29.0 million for the first quarter of 2021.
Now turning to balance sheet, that's the Shenzhen locked down in March impeded key components supply and our production our inventories grow in 'twenty in Q1, 2022 by RMB, two $281 3 million versus December 31, 2021.
We are optimistic the chip shortage and oversupply issues or start to ease in the second half of this year.
And despite the challenging circumstances, our balance sheet remains robust cash and cash equivalents as of March 31st 2022 was RMB, one point, a year or 2 billion compared with RMB 1.09 billion as of March 31, 2021 as we continue to implement.
Disciplined working capital management practices.
In November 2021, the board approved the allocation of up to.
U S dollars $20 million towards a share repurchase program.
In Q1, 2022 we continued to repurchase program, reflecting our confidence in our growth strategy and financial performance.
<unk> bought back U S dollar $6 9 million worth of shares until March 31st 2022, and intend to carry on with this buyback program.
In addition, the company paid out a special dividend for 2021 two ABS holders on April 15th 2022.
Lastly, moving to our outlook due to the ongoing challenges our outlook for the second quarter of 2022 currently protects net revenue to be between RMB one eight.
8 billion and RMB, one 3 billion.
Compared with RMB 184 billion in the second quarter of 2021.
The second quarter performance is very much driven by new product launch timing.
I have to admit that six was launched in March 2021 wildly by southern launched today may 24th 2022.
This outlook also reflects the continued uncertainty of the potential effects of COVID-19 pandemic ourselves.
In the electric component delays as well as the lower discretionary consumer spending.
Given this outlook, we will continue to apply strict cost control measures and disciplined working capital management through 2022.
Please note that our outlook is based on existing market conditions and reflects the management's current and preliminary estimates of the market and operating conditions as well as customer demand, which are all subject to change.
This concludes our prepared remarks, we'll now open the call to questions. Operator. Please go ahead.
We will now begin the question and answer session.
To ask a question you May press Star then one of your telephone keypad.
If you're using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
And please note.
For the benefit of all participants on today's call. If you wish to ask your question to the company's management and Chinese police immediately repeat your question in English.
Our first question will come from young Luo with P. S. Securities you May now go ahead.
Right.
Our son, who don't people taking the question.
Congratulations.
Chris Connor.
First of all can you share some really high impact COVID-19 in Shanghai.
I find that the Covid is a very.
Uh huh.
The impact of about your operation sometime in June .
Thank you.
Yeah. Thank you very much the impact of Shanghai is relatively.
A small part to us versus the impact on Shenzhen right, because most of our supply chain and factories are based out of southern China, rather than the youngsters Taotao River area, which I just mentioned.
However, we do have our factory in one of our factories in Suzhou, which is to actually create a creating a making some new products for our company as well.
The lockdown was.
Kind of constrained with in Shanghai, the impact is relatively limited to us for.
For for the sports Shanghai.
As a region.
However, things Shanghai was among one of the top cities in China, who there's a lot of consumers who are purchasing our watches right.
The two bonds locked out in Shanghai, obviously, dampens the sales outlook for our Q1 as well as our Q2 sales for China.
But however, we will try to promote our products across China in different regions. So that we could compensate for the shortfall in Shanghai.
Yeah.
Okay.
And like many Christians.
Okay.
So we've still got a global approach.
Part of the cool people don't mention changes.
And on the receiver.
Footprint right.
Right.
Emerging market.
So how are you a full cost of the consumer.
Consumer electronics market and the smartwatch market next year.
So yeah, it's a it's a good question.
We do notice that there's a few issues, which I mentioned also in the script that we do see some slow down in Russia and Ukraine are.
As a specific markets and we do see a slowdown on consumer discretionary income in a market like Europe and also in the United States, We see that People's discretionary income is very much squeezed to some extent by the inflation right. So overall there.
As a certain degree.
Degree of Oh Alpha also off a decrease on the discretionary spend from the consumers.
But however, we also see some interesting signs our brands actually taking over other brands for example in United States and also in certain parts of Europe .
Tell me better than.
Then the others right. So the future is still a very fluid picture as you can see that in our guidance. Our Q2, our number is already much better than our Q1 number and then we do have high hopes that in Q3 and Q4 together with our new.
Product launches.
On the whole year level, we should still have Ah at least similar level of the rapid new F. 2021 or even with a single digit growth to that extent, but it's this is all very early to for us to predict and.
If you look at the growth of the smartwatch market are at least from the IDC report, which we see at this moment in time, which probably doesn't reflect the latest the insights we have they are still pointing to a growth of the overall market in the years to come.
So we're still relatively optimistic about the wearables market in which we operate at a gain as well.
Okay.
Okay.
Thank you.
Our next question will come from Kevin Chang with China Renaissance.
Oh go ahead.
Hi, Thank you management for taking my question.
And congratulation on the good results I have a question regarding onshore.
I mean look since your.
Guidance for two Q, it's pointing to a very strong Q on Q rebound grows.
Sure.
Characterizes is mostly driven by new product or also our own brand product as well and how do we see.
The xiaomi related revenue contribution.
I think this past quarter, it was only down to about 35%.
Did you see this trend going forward for the rest of the year.
Thank you.
Yeah. Good question so.
Oh the outlook.
As I said Q2 is already pointing on a call it a strong quarter on quarter rebounds.
And the.
The.
Our quarterly number it's very much linked to the new product launch time.
As I said just now Xiaomi six the last time was March last year and then in Q2, you actually can count for a full quarter AR, which was that the fact in last year, but this year the new Mi band seven was only launched now and wait.
We'll stop selling as per June 1st So we can only count for the new product sells for a mouse instead of a whole quarter. So that actually kind of explained the difference between our Q2 last year sales versus Q2. This year sales your question regard.
The Xiaomi mix in our revenue I think the number was self branded products would continue to grow together with Xiaomi is all in the outgoing quarters would definitely expect that xiaomi revenue would increase whereas the car.
Level and that increase would also go into July .
In August so basically it's going to be a very much in Q3 and Q4.
Of the Xiaomi mix, obviously, it's going to our self branded products. It's also going to grow because as Wade mentioned in his script that we also launched our T. Rex new product today, and we are going to launch our new.
A baseline pump a watches are in June as well and not to mention the new T series, which are scheduled to be launched in Q3, So our self branded products a lunchtime. It's also more skewed towards a June and Q3 Q4.
Or rather than last year, it was a little bit earlier in the year and then some so that actually creates some kind of a mismatch the rack with you our outlook for our self for this year right. So what I'm, saying is on a full year.
We're a basis I think what I just mentioned.
I mentioned that in the previous question I answered that as well that full year revenue for the company should be we're still looking at a at least at the same level in absolute amount versus 2021 all with a single digit growth and.
On the mix between Xiaomi, and and and our self branded products for sure our self branded products will take a bigger mix in this.
In this overall number but of course in the coming quarters Q2, Q3, Q4, you will see a proportional increase of xiaomi weight in the overall revenue mix out of ourselves.
So I hope that gives you some flavor on the outlook for the year.
Yeah.
Okay very clear.
Oh, sorry.
Question regarding our own brand product.
What kind of.
Functional upgrade our refocusing them this year and how.
How would you expect this hum.
Change yard.
He used to be ordered.
Margin profitability wise due to the sudden you upgrades.
Uh huh.
Okay. So let me try to answer the easy one is obviously the product <unk> T. We definitely wanted to see increase of our self branded products and then and we do see a increase from Q4 last year to Q1. This year and then this trend should continue right that's on the product.
S P Park and all the self branded products.
Thank you actually know that we have different lighten up off the self branded products to kind of cater for different consumers tastes right. The for example, the the newly launched T. Rex two product is a very much focusing on outdoor and.
For example, the accuracy of the G P S and hardcore sports and outdoor activities right, while our G. T theory, which is actually one of.
Our biggest launch which we're going to have in Q3 is going to be very much towards the marks I know, which is creating kind of a competitive product for the Apple watch and the Samsung watch we do have our LOE and the so called deep and pulp series, which have very.
Much focus on the entry level, what users and these are very much the value product, which we used to address the demand of the bigger mass who is very sensitive to price and to compete with all of those potentially the white label.
Products I saw different product lineup, we have would have different appeal to different consumers.
And I think a.
Most of the the updates you'll see this year from us.
It's going to be coming from for sure the specs and the feature upgrades of the watch that's number one both from screen from the battery standby time.
Et cetera et cetera.
And also it's going to come from the death of wax, which we launched last year and.
And as.
We mentioned in our scripted before we're creating our ecosystem using exactly all of us and we're trying to make it.
Now more apps, which are more appealing to their consumers and I think the third one is definitely the house functions, which we're going to have.
Be it S. T O two pet blood pressure measurement and either a century update of our watches. So those three hopefully is going to lift our asp's for our self branded products.
Great. Thank you very much thank you.
Okay.
Next question will come from Clive Cheung with Credit Suisse. You May now go ahead.
Hi, Good evening and thank you for taking my question.
My first question is a follow up to Leon's comments, just now on extension in Sep O S.
Given the macro and Brian and then being challenging and we could see you know.
The decline in shipments slowdown and shipment growth at least I was looking to accelerate the monetization of our.
Oh S. You know in terms of.
New application offerings. So at offerings. That's my first question. My second question is on the Opec's I think previously.
We have a target of achieving approximately 300 million.
And give or take in terms of kind of opec's per.
Quota given the slower or lower revenue. This year do we have any color or any planning on a target for this lego amount until opex. Thank you.
And thank your clients I mean, those are very good questions. So let me first coming down does that Alaska monetization.
Yes for sure we are actually trying to make that little asked one of the differentiating factors for our products compare with the others right and doesn't we you you you probably noticed that we have announced that we have.
I have a different third party Oh S actually are working inside the Depo X. For example, Spotify for example, Gopro and Oh, we're going to actually add a few more of those popular apps, which are healthy the users which are being appreciated by the users we're not going.
Just going for the mere amount of amount, we're actually going for the quality.
And we do have a certain services are which we actually went.
On lie in a small are a handful of countries are by Q4 last year, which is our sleep and are focusing our type of services, which is actually connecting the hardware together with the AI powered music too.
Help you to sleep better I'd focus more that type of functionality, we're actually rolling it out as we speak in more geographies as we speak right. So obviously, we're definitely try to widen the use of F. O S and actually tried to built and link more popular third part.
D apps towards our depot S. So hopefully that answers your first question.
The move to the OPEC right.
Our opex in the past quarters has always been hovering around 300 million give or take per quarter right in certain quarter. If the top line is going.
Way above our threshold I mean would they allow ah.
The team to spend a little bit more but you could take the average we're actually below the line of 300 million for quarter 444 for last year and then the same goes for this year, and then where actually signaling a right sizing of our cost and we are actually trying to make.
I stepped down on this cost level as well, but you might have because a lot of this is actually linking to people right.
If you wanted to rightsize that people you know that you need to incur cost first before you see a step change on the cost base, we're doing that as we speak. So E Q2 are you.
We would still see a similar kind of 300 million mark for the costs, but then you should be able to see a step down from Q3 onwards.
On the cost level so that.
We can achieve a rebound and capture the upside once the demand comes back.
If youre looking for a guidance on how base that stepped out would be I think for the time being I you you can use a range of 10.
10% to 15% versus its current level.
Which we reported in Q1.
Okay. Thank you very much very clear thanks Shneur.
Again, if you have a question. Please press Star then one.
Our next question will come from Abhiseka Sohu with Templeton you May now go ahead.
Yeah, Hi, Thanks for taking my all my questions. So the first question I have is though is on the mix in the current quarter or you know so how how.
What does the the growth that you're seeing in a in a maze fig.
And going forward in the coming quarters.
What kind of growth would you expect to sustain and be amazed with Brooks.
Yeah. So have you checked I mean very good question. So the Q1 number is kind of a slow quarter because the pharmacy. The Nike perspective, Q1 is actually are also the lowest demand quarter for the consumers.
And this year Q1, as I mentioned in the script were a kind of a having a perfect storm whereby there's a Ukraine and Russia calculate and then there's also a locked out of our factory in Shenzhen for a week towards the end of the quarter, so that all compounded together.
Other it's a kind of a hammered our rather new for Q1 are not only the xiaomi was shipped but more so on our self branded products. So if you actually strip out all of that effect I would say our self.
Self branded products should continue to grow maybe not at the double digit growth rate, which we reported.
Last year, but at least it should be a growth versus a decline, which we reported this.
This year right and if you look at the outlook for Q2, obviously, we already see that the the supply chain, the lockdown kind of east China and that all has a positive impact on us. So that's the self branded product sells for sure is going.
It will be bigger than Q1.
But whether or not it's going to be on par with last year for sure that is something which we're working towards and then for the full year number for the self branded products I think we still want to change the mix overall, so basically I sat in Nash.
In the previous ulcers are towards the the other analyst.
At this moment in time, we're still looking at from a absolute amount perspective overall company's revenue will be at least.
Flat versus 2021 a.
Or with a small single digit growth for the year and to achieve that that will be all coming from our self branded products growth right. So that's from a seasonality.
Seasonality perspective, I think what you would see is that Q1 will be the lowest Q2 gradually improving and then Q3 Q4 will be the quarters, which is going to make the year.
Also traditionally the high seasons, giving the prime day sellers as well as the double 11 that Chris myself in Q3 in Q4.
I hope that gives you a color for how you look at the revenue growth for and the mix for this year.
Got it thanks, Thank you and.
Also.
On a related point.
While the mix continues to shift in favor of the self branded products.
You don't shouldn't that and in terms of percentage margins shouldn't that lead to a much higher <unk>.
Number than the 20% that we're currently reporting.
I I would've thought that you know would be the sell branded products comfort, though at a much higher margin rate.
Is that that that that should oh, yeah, I mean, that's a that's a good question. So so what you. What you saw here is that already versus Q4, there's a step change. So there's a there's already a 1% increase on the overall margin versus Q4, <unk> and Q4, our self branded products or what's already accounted for more than <unk>.
60% of that mix, right, so and and and.
Q1, there were certain one offs for example, the freight cost was extremely high.
Ah the that the run rate, we had in 2021 because of the lockdown and those type of a macro issues, but then that those factors are also gradually going away in Q2, and then as we go into the second half of the year. So what I'm, saying is that you would definitely see.
From a seasonality perspective also the Ah self branded products together with the new product launch, which there was no. There was zero in Q1 are there going to be a few of that in Q2, and then there's going to be a lot of that in Q3 than these.
In fact would definitely push the gross margin of self branded products up in Q2, and then also gradually going up in Q3 and Q4.
So yes to answer your question I think you would see a button off the gross margin now that that should are gradually going up as we entered into the second half of the year.
Understood. Thanks.
Another issue that I wanted to understand is you know just be the quantum of the buyback the peer done so far.
If we were to.
Goodbye.
Your expectations for the full year and a gradual improvement through the year.
You know shouldn't be accelerated the pace of buybacks you know if we believe that the business is undervalued right so that.
That is one and and you know also.
Any updates from you on the on the ADR listing and.
What are the scenarios that we're looking at currently Oh, and yes that you know is there any risk of delisting at all in your view.
Yeah. So so let me first comment on the buyback, yes, so we're actually continuing our buyback and then to be honest.
By March 30, 31st our March 31st that was the number of $6 9 million I know, we continue to a two two to buy back shares as we speak I think by the.
End of <unk>.
Our Q2 are we publish our Q2 results you will definitely see that number going up.
So so.
And we will continue with the buyback as we move towards the.
In the second half of this year and then we do still have the space to do that.
So so that would definitely committed uncalled continue to do so and Ah.
With regard to the the delisting risk as you mentioned I think that's a systematic risk which is overhand across all the Chinese are tech companies we.
We do are where we're actually monitoring the situation very closely and we're considering different options.
Including the second listing in Hong Kong, and I'm working closely with our audit firms to get the the P. C. L. B clearance. So so those are being worked upon as we speak and.
So updates for sure.
We will push out a release of that product.
But I guess I'm gonna.
In the in the short to mid term, we don't see any risk oh negative impact from that ought to be all or take it to another.
Yeah 2222 to two <unk>.
To say the least we think our company is undervalued and that's why we'll continue to do the buyback as we committed to do.
Got it got it and.
And finally from my side.
How should we think about B Michel me relationship evolving right I mean, if if if.
If you don't be the smart barron's as a as a category, where do where do continue declining Oh and you know if bernard expanding the relationship could do into other categories.
And then how should we think about B b engagement with with Xiaomi you'd want to be.
We are in discussions for other product lines product categories.
You know what what could be the nature of our relationship going forward. Please.
No so our relationship with Xiaomi Ace.
It has always been very strong right. So that's why we will launch to be bad seven today together with the CEO of Xiaomi right.
And that's relationship will remain strong as mentioned by our CEO and then now we're already working on the next generation badge for next year.
With that I'm doing that already right and then to answer the second part of your question for sure we're exploring with them a different form factors of products and different categories, but that's still in discussion and we cannot say too much on.
Fortunately in this call, but then the whenever there's a progress on that we were definitely issue a separate press release on that.
Got it. Thank you so much and all the very best.
Thank you.
As there are no further questions now I'd like to turn the call back over to the company for closing remarks.
Thank you once again for joining us today.
Southern questions. Please feel free to contact Investor Relations Department through the contact information provided on our website. This concludes this conference call. You may now disconnect. Your line. Thank you.