Q3 2024 Zepp Health Corp Earnings Call
[inaudible] Do The Empire State of America
Speaker Change: Hello, ladies and gentlemen. Thank you for standing by for Zepp Health Corporation's third quarter 2024 earnings conference call.
At this time, all participants are in a listen-only mode.
Speaker Change: Today's conference call is being recorded. I will now turn the call over to your host, Ms. Grace Zhang, Director of Investor Relations for the company. Please go ahead, Grace.
Grace Zhang: Hello everyone and welcome to CEP Health Cooperation's 3rd Quarter 2024 Early Conference Call.
Grace Zhang: The company's financial and operating results were issued in a press release via the Newsreel 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 irwebsites.com.
participating in today's call are Mr. Wang, Wang Huang.
Grace Zhang: our Chairman of the Board of Directors and Chief Executive Officer and Mr. Leon Chen Deng, our Chief Financial Officer.
The company's management will begin with prepared remarks.
Grace Zhang: And the call will conclude with the Q&A session. Mr. Mike Young, our Chief Operating Officer, will join us for the Q&A session.
Grace Zhang: Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.
forward-looking statements involved in harming race and other certainties
Grace Zhang: As such, the company's actual results may be materially different from the views extracted today.
Grace Zhang: 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.
Grace Zhang: The company does not assume any obligation to update any forward-looking statements except as required under applicable law.
Thank you for watching!
Grace Zhang: Please also note that Zep Ernst's press release and this conference call include discussions of our audited GAP financial information as well as our audited non-GAP financial information.
Grace Zhang: The abstract release contains a reconciliation of the unaudited non-GAP measures to the unaudited most directly comparable GAP measures.
Speaker Change: I will now turn the call over to our CEO, Mr. Wang Huang. Please go ahead.
Thank you for watching!
Hello, everyone.
Welcome and thank you for joining our call.
Speaker Change: Despite a slowdown in discretionary consumer spending across the global, we sustained our sales momentum through the focus
Speaker Change: execution of our strategic transformation in the third quarter of 2024.
Speaker Change: I am pleased to share that this quarter markets our highest sequential growth in mainstream product sales for the year.
Speaker Change: Furthermore, this marks the third consecutive quarter of overall company's sales expansion.
Speaker Change: with self-branded sales increasing by 10% over quarter and contributing more than 95% of the company's total revenue.
Speaker Change: Thanks to a better mix of products with higher growth margins, we also hit the highest growth margin in our history.
Speaker Change: These achievements signal that the most challenging phase of our transformation is now behind us.
Speaker Change: And we are optimistic about maintaining this momentum into the upcoming quarters.
Speaker Change: Our commitment to product innovation remains central to our growth strategy.
Speaker Change: as demonstrated by the market's positive reception of our recent launches, especially the newly introduced MaceFit GX3, which we launched at IFA Berlin in September.
It is a rugged smartwatch tailored for modern explorers.
Speaker Change: It features advanced GPS accuracy, extended battery life, a flying map for snowy weather,
Speaker Change: enriched outdoor features and extensive health monitoring. Ideal for users who seek resilience and high performance in extreme environments.
The Chi-Lek tree launch was met with
Labath Demand
Speaker Change: selling out in multiple locations in college by excellent reviews from consumers and KOF.
Speaker Change: 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 stronger-than-expected popularity across various markets,
Speaker Change: We are currently experiencing some supply constraints, which have had a negative impact on our top line in Q3.
Speaker Change: Our team is working tirelessly to resolve this, and we expect the situation to improve in Q4.
Speaker Change: Turning to complementing devices like the Amazfit Hearing and newly-introduced Amazfit Up open-ear earbuds.
Please now only extend it.
Speaker Change: our product ecosystem, but also further enhance the user experience. Amazfit Up Earbuds when paired with an Amazfit smartwatch.
Speaker Change: provide users with real-time workout updates, then that can interact with voice assistance using the AI-powered ZFlow functionality.
Speaker Change: They also use AI algorithms to reduce background noise during calls, improving sound clarity in noisy environments.
Speaker Change: The showcase product, Amazfit Up Earbuds, is paving the way for us to tap into a market with 20% year-over-year growth.
and we have already received some earlier positive feedback.
especially in the Zhuoluo region.
Speaker Change: The Amazfit smartwatches, as well as their earbuds and earrings, provide a 24-hour health-checking ecosystem for wellness-focused users.
Speaker Change: Beyond new product launches, our core products like Balance and Active have seen continued popularity and growth in demand.
Speaker Change: These advancements reflect our position as a leader in friendliness-focused technology and further establish Amazfit as a trusted name in wearable innovation.
Thank you for watching!
Speaker Change: Technological innovation remains a core driver at ZEPP Health, empowering us to push boundaries in wearable technology.
Speaker Change: Our latest ZEPP OS 4.0 is an advanced operating system that integrates OpenAI's GPT-4, making our mainstream smartwatches more intuitive and responsive.
Speaker Change: This operates in language processing and an array of health-focused mini-apps.
Zappos 4.0 turns our devices into comprehensive wellness companions.
providing users with a richer, more personalized experience.
Speaker Change: Greetings everybody. I am a northern Chinese cultural skillful martial artist, Yuan Fang'nan. Actually, in the Eastern Han people, our guardions just stay at reserve and stay at rest.
Recently, we also enhanced our redesigned ZEPP app.
Speaker Change: This latest version of the app is designed to deliver a better wellness experience, empowering users worldwide to understand their health trends and make informed lifestyle decisions.
Speaker Change: The app has been updated with a more user-friendly and newly streamlined interface and comprehensive features.
Speaker Change: Users can view top scores on the homepage and dive deeper into their experience on subsequent
Speaker Change: more in-depth pages. Enhanced smart analysis offers real-time data analysis and personalized health recommendations with actionable insights.
Speaker Change: including ZEPP Aura sleep music, meditation support, and AI sleep assistance.
along with ZEPP coach for general walkout guidance. For example,
Speaker Change: Copyright © 2021 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent.
Speaker Change: exertion and health and heart health monitoring includes a dynamic exertion score that adapts on daily basics to guide users towards optimal fitness with targeted workout recommendations.
First of all,
Speaker Change: The Hot Health Dashboard provides a comprehensive overview of cardiovascular metrics.
Speaker Change: like heart rate, HRV, and blood oxygen to effectively support the user's heart health.
Speaker Change: Moreover, we recently partnered with White AI to integrate its VioNet 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.
Speaker Change: On the marketing front, we are expanding our Amazfit athletes team.
Speaker Change: In addition to those announced previously, we recently partnered with Bea González, a top paddle player from Spain.
Hunter and Mac, U.S. Hi-Rez champions
and Weiqiang Zhu, a renowned outdoor adventurer.
Happy Birthday!
Speaker Change: These partnerships are helping us build brand recognition, amount sports insurances, and strengthen our brand image.
Speaker Change: The positive reception of our cheerleaders reflects the success of these campaigns and the strong market response.
moreover in Q3
Thank you. Thank you.
Speaker Change: Moreover, in Q3, we partnered with HIROS for the World Series of Venice Racing in Chicago, Dublin, and Beijing.
exemplifying our innovation focus.
Speaker Change: As their official wearable and timekeeping partner, we have integrated a dedicated HiRise app that offers athletes key health metrics.
pair up to high-risk endurance challenges.
Speaker Change: Enabling real-time performance monitoring, we are the only smartwatch that can offer this functionality.
by embedding our variable into the high-loss impedance.
Speaker Change: We are supporting athletes at all levels and reinforcing amazing presence in comprehensive
Comparative fairness.
In conclusion,
Speaker Change: Our third quarter results and ongoing transformation highlight the strengths of our strategic focus on technology, product innovation, and expanding international visibility.
Speaker Change: Looking ahead, we are focused on broadening our global footprint and diversifying our product offerings to meet involving customer needs.
Speaker Change: by tailoring our market entry strategies to local consumer preferences and forging strategic partnerships.
Speaker Change: We aim to strengthen our global influence and drive international sales growth.
Speaker Change: Hello, I'm Grace Zhang. Nice to meet you. I'm Wali. Nice to meet you. Welcome to Throwback Soaps! With me, you've gotty Shaun. Right! I'm Transport Advertiser Wang where it's all about well,
In addition,
Speaker Change: We are exploring opportunities to expand our product lines beyond traditional wearables.
Speaker Change: The person I'd like to introduce today is bewusst speaker WOMAN�Shin Tang. Some people can call him poet. His favorite poetry is Tao Se, He specifically uses it to describe women's
recognizing
Speaker Change: The increasing consumer demands for comprehensive health and fairness solutions. We are investing in the development of integrated health platforms that combine hardware, software, and services.
Speaker Change: This strategic direction aligns with industry trends towards personalized wellness and preventative healthcare.
positioning us to capitalize on new market opportunities.
Speaker Change: This quarter, we also extended our buyback program from the next 24 months, reflecting our confidence in our long-term strategies.
Speaker Change: and we look forward to delivering more to all of our stakeholders.
Speaker Change: Thank you for your continued support and confidence in ZEPP Health.
Speaker Change: I will now turn the call over to Leon to go over the highlights of our third quarter financial results.
Leon: Thank you, Wayne, 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.
Thank you for watching!
Q3 gross margin reached 41%, the highest in our history.
Despite these directionally positive Q3 developments,
Leon: 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.
Leon: However, we are cautiously optimistic to see that, according to Canada's Smart Wearable Market is growing, and especially faster in the outdoor and sports segment.
Leon: We believe our product roadmap positions us to participate in these growth areas and more.
Leon: 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.
Leon: We will continue to take an aggressive approach to reduce our operating expenses significantly.
Leon: To be clear, we are 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.
Leon: We want to do so while pursuing a product roadmap we believe will drive innovation, differentiation, and growth.
Speaker Change: Calilist data also shows that product settlement priced under $200 represented 40% of the market in 2022, rising to around 60% by 2024.
echoing Weiyan's statements.
Speaker Change: We believe the most challenging phase of our transformation is behind us.
Speaker Change: over ourselves for the third quarter, coming line with the no end of the guidance range.
Speaker Change: We saw a 10% increase in self-branded cells versus Q2, marking the strongest quarter-on-quarter growth this year.
Speaker Change: 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 GeedX3 product line.
Speaker Change: 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 Rings, drove the sales growth from Q2 to Q3.
Speaker Change: Looking ahead to Q4, we anticipate much higher sales of self-branded products.
Thank you for watching!
Speaker Change: 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
Speaker Change: In Q3, our Gross Margin Continuous Net 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.
Speaker Change: This success is driven by the higher growth margins of our self-branded products thanks to a favorable product mix, a higher portion of new products, and reduced clearance activities.
Speaker Change: Together with the new product launches in the pipeline, we're confident to continue on this market expansion journey into the next quarters.
Thank you for watching!
Now, let's turn to costs.
We remain steadfast in our commitment to cost management.
Speaker Change: continuing with the program which we began in Q3 2020 on reducing over operating costs.
Thank you for watching!
Speaker Change: Our overall operating costs for the quarter stood at U.S. dollars $29 million, which includes a foreign exchange loss of U.S. dollars $1 million due to a sharp RMB to dollar exchange rate appreciation which we couldn't fully hedge.
Speaker Change: Excluding this, our operating costs were USD $28 million, just below RMB $200 million threshold, and in line with our previous guidance.
Thank you for watching!
Speaker Change: Research and development expenses in the third quarter of 2024 were U.S. dollars $10.6 million.
are increased by 11.7% year-over-year.
Thank you for watching!
Speaker Change: This accounted for 24.9% of revenue compared to 11.4% for the same period in 2023.
Speaker Change: The increase was a result from our investment in new technologies, including AI, to maintain our competition edge against our peers.
Speaker Change: At the same time, we focus on refined research and development approaches.
Speaker Change: As we consistently evaluated resource efficiency to ensure maximum return on investment and productivity.
Thank you for watching!
Speaker Change: selling and marketing expenses in third quarter were US dollars 11.9 million increased by 23.9 percent year-over-year
Speaker Change: This accounted for 27.9% of the revenue compared to 11.5% for the same period in 2023.
Speaker Change: 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 our retail profitability and channel mix improvement.
Speaker Change: which included meticulous refinement of our retail channels and strategic staffing arrangements across the regions.
Speaker Change: We are committed to investing efficiently in marketing and branding to ensure our sustained growth.
Thank you for watching!
Speaker Change: G&A expenses were U.S. dollars $6.7 million in the third quarter of 2024, an increase by 14.7% year-over-year. This accounted for 15.7% of revenue compared with 7% in the same period in 2023.
Speaker Change: 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%.
Thank you for watching!
Speaker Change: Despite reporting an operating loss this quarter, largely attributed to cost coverage issues, our performance showed an improvement throughout the year.
Speaker Change: Stripping off the foreign exchange result in the previous quarters, we are on track to improve the financial profitability of the company sequentially and narrow the loss further in the third quarter of 2024.
Speaker Change: 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.
Speaker Change: At the same time, we will maintain our investment in R&D and marketing activities to sustain our long-term capabilities while strictly controlling discretionary spending.
Thank you for watching!
Speaker Change: Now turning to the balance sheet, we've maintained effective working capital management, delivering an inventory level within a relatively low level since Q2 2019.
Speaker Change: will continue to exercise tight inventory controls in the coming quarters. Our overall cash balance stands at US$128 million, the same level as Q2, despite a loss.
Speaker Change: This provides us with ample runway to invest and seize potential market opportunities.
Speaker Change: Starting Q1 2023, we have initiated the retirement of our short-slash-long-term debt portfolio. Since then, and including Q3 2024, we have successfully retired US$52 million of debt.
Speaker Change: As our operating cash flow continues to strengthen, we will continue to optimize the capital structure for the company.
Thank you for watching!
Speaker Change: As part of our commitment to deliver long-term value for the shareholders, we will continue our share-by-back program throughout 2026.
Speaker Change: I'm also pleased to share that we have regained compliance with the NYSE in October, reinforcing our market standing.
Thank you for watching!
Speaker Change: Looking ahead to the fourth quarter, we're guiding revenue in the range of U.S. dollars 55 million to U.S. dollars 70 million.
Speaker Change: with the self-rented products expected to contribute over 90% of our revenue base.
Speaker Change: representing a 29% to 65% growth for revenue compared to the third quarter of 2024.
To conclude, our focus on delivering profitable growth remains stealthfast.
Speaker Change: and we are confident in our ability to build on the ongoing momentum demonstrated during this quarter and in the quarters to come.
Speaker Change: Thank you once again for your time and continued support. I will now open the line for any questions.
Operator, please go ahead.
Thank you.
We will now begin the question and answer session.
Speaker Change: To ask a question, please press star and 1 on your telephone keypad.
Speaker Change: If you are using a speakerphone, please pick up your handset before pressing the keys.
To withdraw your questions, please press star then 2.
thanks all.
Speaker Change: The first question today comes from Sid Rajiv from Fundamental Research Corp. Please go ahead.
Speaker Change: Hi, thank you for the prepared remarks. You're expecting a major spike in revenue in Q4. I realize that the TRX3 will be a major contributor.
Could you please provide some more details on...
Speaker Change: You know, other avenues, other products where you expect real growth.
Thank you for watching!
Leon: Hi, this is Leon. Yes, you might hear from our prepared remarks that T-Rex 3, we kind of experienced
supply constraint in Q3.
Leon: because the product itself is a good product and then it's...
Leon: But we are working day and night to actually resolve the supply constraints which we had on TRX-3. So hopefully in Q4 you will see an increase of the sales level for TRX-3 because of that.
Leon: So I think that is actually one of the levers for our Q4 sales spike.
Leon: And on top of that, you also heard that we launched the OWS.
Thank you. Bye-bye.
Speaker Change: which is actually an open-ear system which allows you to exercise better while you can still hear the ambulance environment sound. It's actually a very good companion for the smartwatch.
Speaker Change: And actually, we're 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
Speaker Change: the OWS earbuds and also our Helio ring, the smart ring, right? So we're actually providing consumers a comprehensive solution which also contributes to the higher cells you're going to see in Q4.
and then...
Speaker Change: Not to mention, Q4 is traditionally the best-selling season for us. In China, you have the just-finished Double 11 event, whereby our T-Rex 3 stands out in every single board on the outdoor and sports watch segment.
Speaker Change: And then in Europe, you have the Prime Day, too. And we're heading into the Black Friday and the Christmas sales.
Speaker Change: 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.
Health to the Supply Constraint.
Sorry, since I missed you for...
Speaker Change: Where exactly is the bottleneck in terms of the supply constraint?
Thank you. Thank you.
the supply constraints you mentioned?
Thank you for watching!
Oh yeah, the supply sounds strange.
Speaker Change: It's the following, I think it's more a demand issue than a supply issue, right? I think we have encountered a spike in the demand of the T-Rex III, whereby, on the other hand, we didn't anticipate that demand to come in.
Speaker Change: not in that volume because, to be honest, the T-Rex V is not a cheap product, it's a MSRP $300 product, right?
Speaker Change: 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 out from all over the world.
Speaker Change: But as we are heading into Q4, the factories are running 24-7 to produce as many T-Rex 3 as they can.
Speaker Change: So, I think that will be one of the key levers for the sales increase in Q4 for us.
Speaker Change: Okay, and you reported a 4x loss this year, this quarter, when historically you've been reporting gains. What really happened and how do you expect this 4x to play a role in the next quarter?
Thank you for watching!
Speaker Change: Yeah, we have a few currency pairs, all of which US and euros are one of the major currencies. And also the US dollars to RMB is another pair because we procure a lot in China. And so are the other consumer electronics companies.
Speaker Change: We, 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.
Speaker Change: No matter how you can hedge it, you can never hedge it in full.
way to go.
Speaker Change: But as we are navigating through it, and then with the recent currency movement, we're also expecting a tailwind in Q4.
Speaker Change: And so I think that if you strip out the effects, fluctuations, and you compare the numbers without effects number, or the effects impact,
Speaker Change: for every single quarter in this year. You will notice that our profitability, albeit the loss...
have narrowed to its lowest level in...
Speaker Change: Q3. So I think we're more having a coverage issue which we're working and we expected to resolve it very soon as we're heading into Q4.
Speaker Change: Just one more question if I may. You're a cash physician. You're sitting on a lot of cash, $128 million. Market cap is a third of that. So obviously, in terms of how are you planning to deploy this cash?
Speaker Change: M&A, or what can we think you might do in the coming 12 months, 24 months?
Thank you.
Thank you for watching!
Speaker Change: Now, I think I'm not going to rule out on small photon MNAs, but I think one of the bigger things, 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.
Secondly, we're going to look at
Speaker Change: how to deploy the cash and how to use that cash to drive and seize the marketing opportunities while it arises so that we are better positioned in this competition versus our competitors.
Got it. Thank you so much. I appreciate it.
Thank you, Sid.
Speaker Change: The next question comes from Nicolette Jones from Brooks Investments. Please go ahead.
Thank you for joining us. Thank you.
Thanks for taking my questions. I have several questions.
Speaker Change: but firstly I'd like to start off with some a better understanding on the Q3 net loss situation. Could you provide some more of the color around that and how does that compare to previous quarters as well as to last year?
Thank you.
Leon: Hi Nicholas, this is Leon, so I guess I will take this question again.
Leon: So, yeah, so as I said, and then I also kind of alluded to it, with SIP.
is that there are a few issues in Q3.
Leon: 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.
is already higher than the previous generation T-Rex.
for a quarter of steps.
Leon: So that actually gives you a feeling how popular this product is and how successful this product is. So I think that says a lot on our product innovation capabilities and our ability to develop and give the best functionality product to users.
Leon: But that also explains why we're confident on delivering a higher sales quarter for Q4.
Leon: So I think that's number one, which also impacts 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.
Leon: And the second thing I just mentioned is that we have experienced effects.
headwind in Q3.
Leon: for the other quarter 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.
Thank you for joining us.
Leon: And then the third one is that we also front-loaded some of the marketing expenses.
Speaker Change: Wei En mentioned Hyrox. 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.
Speaker Change: So I think all those three things, i.e. the supply constraints, the front load on the expenses, the negative FX impact, impact us in Q3.
Thank you very much.
Speaker Change: If you strip out the negative effects, the impact, what I just posted, and you do an apple-to-apple comparison, I think Q3, from a probability perspective, we are actually heading into the lowest loss situation in the year.
Speaker Change: 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 the upcoming on the horizon.
Thank you for watching!
Thank you for watching!
Speaker Change: Thank you very much, and also you've given... Hi, can you hear me?
Thank you for watching!
Yeah, now I can.
Thank you for watching!
and many more. Thank you. Thank you.
Speaker Change: Yeah, 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...
Speaker Change: stand out as a very successful product and actually it would account for a big part of our revenue for Q4 and going into Q1 and Q2.
Bye.
Speaker Change: And then apart from T-Rex, and we're 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 BEEP series, the Active series, and the Balance series for next year.
Speaker Change: So, and this year, I'm more referring to 2025, we're going to have a more balanced new product launch window and cadence.
Speaker Change: versus two years ago where everything is concentrated into Q4, and then you kind of have a spike, and then it dies down, right? So now we're going to have, for example, a product,
Speaker Change: significant product review of one of our big product line in a quarter, i.e. probably a renewal of the active series in Q1, the big series in Q2, or a balance in Q3, something like that.
Yeah, the sequence might change, but I think with that...
Speaker Change: 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.
Thank you. That's great. That's it for me. Thank you.
Speaker Change: 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.
Grace Zhang: Thank you once again for joining us today. If you have further questions, please feel free to contact GAPS Investor Relations Department through the contact information provided on our IR website.
This concludes the call. Thank you.
Speaker Change: The conference is now concluded. Thank you for attending. You can now disconnect your line.
Healthy Livingândromeda.com