Q4 2024 Zepp Health Corp Earnings Call
Please hold and operator will be with you shortly.
[music].
Mike: Chorus call. This is Mike I have your name please.
Speaker Change: Thank you Sir I was wondering if the ZIP called love it.
Speaker Change: Our strategic partnership with high rocks there.
Speaker Change: Rapid growing sports in Europe, and North America has brought unique features to our Macy's smart watches.
Speaker Change: We are the only smartwatch brand, that's pulse hi, Ralph competition and training, providing valuable assistance to athletes in this spot.
Speaker Change: We continue to deepen our collaboration with hydro and that too large even more powerful high loss and related products.
Speaker Change: At the same time, we are further differentiating ourselves from competitors, stating staying ahead by being the first to support various emerging sports.
Speaker Change: This these partnerships the major key account partners a fly in the United States and Europe.
Speaker Change: Has greatly.
Speaker Change: Greatly increased confidence in us.
Speaker Change: They have all sort of more offline display space.
Speaker Change: The price competitors contest.
Speaker Change: This will bring us significant new growth opportunities in the coming quarters.
Speaker Change: Let's recap our 2025 product sadly.
Speaker Change: Leveraging active two and basic series, we are expanding our market share on a bigger scale, increasing the entry level user base.
Speaker Change: Strengthening our brand influence in the value for money segment, especially the emerging market.
Speaker Change: At the same time in the mid to high end segment.
Speaker Change: Alex she likes Sears has successfully outperform and fresh products from competitors.
Speaker Change: Having higher profitability and steady growth.
Speaker Change: This has also allowed us to convert more entry level users into professional users.
Speaker Change: And mid to high end Smart watch users.
Speaker Change: Furthermore, by supporting laboratory emerging sports like Hydro.
Speaker Change: Enhancing the analysis of food intake in relation to exercise and offering ecosystem products and services, such as vital and Peter Reed.
Speaker Change: We provide a big.
Speaker Change: <unk> differentiated value to compete with the industry leaders.
Speaker Change: This strengthens our brand positioning and grew as a unique market positioning.
Speaker Change: Now moving to the OS part of our business.
Speaker Change: We are continuing to develop that OS and <unk>.
Speaker Change: <unk> payment fleet piling.
Paul Horne: The advanced technologies of overnight, Paul Horne, five the same snap OS.
Paul Horne: Additionally, we are exploring the use of deep seek to significantly reduce cost on a larger scale.
Paul Horne: The main watch their chips.
Paul Horne: That would be us succeed.
Paul Horne: <unk> SaaS free designed in the past few years.
Paul Horne: Already served as the main chips in the T. Rex three active chew and bid six models.
Paul Horne: The usage of these chips.
Paul Horne: <unk> reached a milestone of.
Paul Horne: 1 million units.
Paul Horne: Through the close integration of Def OS. This these chips.
Paul Horne: Our watches has achieved better graphic performance and computing speed.
Paul Horne: They'll have lower power consumption.
Paul Horne: This has enabled our watches to gain a more unique competitive edge compared to competing products.
Speaker Change: She is a faster time to market.
Paul Horne: And our balance sheet supply chain.
Paul Horne: Looking ahead.
Paul Horne: We remain confident in DAP house long term close to Jac tree.
Paul Horne: REIT involved.
Paul Horne: <unk> smart watches.
Paul Horne: Building, a comprehensive smart wearable ecosystem that's <unk>.
Paul Horne: Seamlessly integrates advanced AI, driven house solutions performance checking and holistic Val <unk> management.
Paul Horne: This are robust.
Paul Horne: Product portfolio.
Paul Horne: <unk> technological advancements and share T Jake brand partnerships.
Paul Horne: Well positioned to expand our global customer base and drive.
Paul Horne: Sustained self branded sales growth.
Paul Horne: To underscore our confidence.
Paul Horne: In the <unk> long term outlook, we will continue our share repurchase program in 2025.
Paul Horne: Reflecting our.
Paul Horne: Okay.
Paul Horne: The occasion to delivering value for our shareholders.
Paul Horne: I will now turn the call over to Leo to go over the highlights of our fourth quarter financial results.
Thank you <unk> and greetings to everyone. Thank you again for joining our fourth quarter 2024 earnings call.
Paul Horne: I would like to start by addressing recent U S tariff announcements on inbound goods to be sold in the U S.
Paul Horne: Which we do not expect to materially impact our U S consumer pricing, our gross margin due to our proactive supply chain management.
Paul Horne: This is thanks to the terrific job our team has done to diversify.
Paul Horne: Our manufacturing and sourcing over the past years.
Paul Horne: According to contemplate global sales of smart watches have fallen for the first time by 7% in 2024 on device shipment.
Paul Horne: In large part due to a sharp decline in the popularity of the market leader Apple.
Paul Horne: Shipments of Apple watches fell by 19% with North America as the biggest driver of the decline.
Paul Horne: The absence of Apple watch ultra three and minimal feature update in the series 10 lineup led consumers to hold back purchases.
Paul Horne: Despite the overall decline sales in China grew from 19% of the market to 25%.
This was the first time in recorded more smartwatch itself, the India North America According to counterpoint.
Paul Horne: And another large contributor to the global sales drop was India, which fell from 30% of the market to 23%.
Paul Horne: This was partly because of a bubble in ultra cheap devices from India manufacturers, which was now bust due to a lot of complaints about the quality of the devices.
Paul Horne: However, counterpoint expects a recovery in the global market.
Speaker Change: We're a single digit percentage growth in 2025, and it predicts the uptick in cells will be driven by the increasing adoption of AI features and a greater emphasis of providing a wider range of health data.
Paul Horne: Which plays to the core of our strategy.
Paul Horne: Now I will shift to our Q4 and full year 2020 for commentary.
Paul Horne: In Q4, the successful successful launch of the T. Rex three reinforced our leadership in performance driven smart watches.
Paul Horne: During the quarter, we maintained our strategic focus on building a sports oriented brand identity.
Paul Horne: <unk> ourselves as the premium yet accessible global brand and.
Paul Horne: And we're set to capitalize this ah in 2025.
Paul Horne: Our over ourselves coming within the guidance range, demonstrating a 40% plus quarter over quarter growth. This strong performance was primarily driven by the successful launch of the T Rex III.
Paul Horne: Compared with the fourth quarter of 2023, our revenue declined year over year due to three key factors. Firstly, a continued decline in xiaomi product sells <unk>.
Paul Horne: Currently the supply constraints of T Rex three series.
Paul Horne: And thirdly by consumer related macroeconomic issues, resulting in a softer global consumer market.
Paul Horne: However, as we look ahead to the first quarter of 2025, we expect our amazing fit brand itself to continue in their strong momentum propelling higher sales growth year over year.
Paul Horne: Looking at the full year 2024 of our revenue declined compared to 2023, primarily due to declining xiaomi products house as well as a limited new product launches for our May state branded products.
Paul Horne: With only the <unk> in the fourth quarter after a year.
Paul Horne: However, 2025 will be a different story.
Paul Horne: We are opposed to launch one to two new products every quarter, introducing I definitely seasonality pattern impacting demand.
Paul Horne: This shift has been evident from Q4 2024 into Q1 2025.
Paul Horne: Now moving onto gross margin, which can be influenced by various factors such as product mix product launch timing and product life cycles, including model upgrades.
Paul Horne: Our Q4 2020 for gross margin stood at 37%.
Paul Horne: <unk>, the marketing expense should trend, which we initiated in the second half of 2023.
Paul Horne: However, this was slightly lower than Q3, 2024 build due to somewhat promotional pricing.
Paul Horne: Which is customary for the holiday season.
Paul Horne: The gross margin for our self branded products remained strong driven primarily by the higher margin T Rex <unk> III.
Paul Horne: Looking ahead, we expect the positive trend to continue in 2025 supported by the launch of active two and <unk> six and many other new products in the pipeline.
Paul Horne: From a margin perspective, 2024 was a year of gross margin expansion gross margin percentage in 2024, or 38, 5% compared to 26, 2% in full year 2023.
Paul Horne: By better product mix and higher brand awareness.
Paul Horne: In 2025. This trend is expected to continue with the introduction of higher margin products further supporting our profitability.
Now, let's turn our attention to costs.
Paul Horne: We remained steadfast in our commitment to cost management.
Paul Horne: Continuing with the program that we began in Q3 2020 on reducing overall operating costs.
Paul Horne: In 2024 Q4 total adjusted operating expenses were U S dollars $29 3 million compared to U S dollars $25 9 million a year ago.
Paul Horne: The increase was primarily due to spend on promotional campaigns during the holiday seasons to build brand recognition and drive revenue growth.
Paul Horne: Adjusted operating cost was U S dollars $110 million in the full year 2024, compared to U S dollars $112 million in 2023, and U S dollars $171 million in 2022.
Paul Horne: We will maintain our cost conscious approach in the coming quarters concurrently we remain completely committed to invest in R&D and marketing activities to maintain our long term competitive edge.
Paul Horne: R&D expenses in the fourth quarter of 2024, where U S dollars $10 1 million nears.
Paul Horne: Nearly flat compared to last year as we consistently evaluated it resources efficiency to ensure maximum return on investment and productivity.
Paul Horne: We're committed to investing in new technologies, and AI to secure our long term technology leadership.
Paul Horne: Selling and marketing expenses in the fourth quarter of 2024 or U S dollars $13 2 million compared to U S. Dollars 11, 8 million a year ago the.
Paul Horne: The increase was primarily due to spend on promotional campaigns during the high season to build brand recognition and drive sales growth.
Paul Horne: At the same time, we consistently push on retail profitability and channel mix improvement.
Paul Horne: Which included my tissues refinement of our retail channels and strategic staffing arrangements across south regions.
Paul Horne: We're committed to investing efficiently in marketing and branding to ensure our sustainable growth.
Paul Horne: G&A expenses were <unk> dollars $6 1 million in the fourth quarter of 2024.
Paul Horne: Compared to U S dollars 4 million in fourth quarter of 2023.
Paul Horne: The increase was largely attributable to provisions for bad debt and foreign exchange rate fluctuations.
Paul Horne: We remain committed to strict cost control over discretionary spending insuring expenses are aligned with driving sustainable growth in 2025, we aim to keep operating costs at or below 2024 levels, maintaining a lean and.
Paul Horne: <unk> structure, while strategically investing in high impact areas.
Paul Horne: Our adjusted operating loss for Q4, 'twenty 'twenty four stood at <unk> seven 4 million.
Paul Horne: The loss was mainly driven by lower sales volume, resulting E ink sufficient coverage of operating expenses.
Paul Horne: It was the narrowest.
Paul Horne: In the past four quarters, demonstrating sequential improvement and path to profitability in near term.
Paul Horne: This reflects our ongoing efforts to enhance efficiency and then align expenditures with revenue growth.
Paul Horne: GAAP net loss for the first quarter of 2024 was U S dollars $36 9 million, which included operating loss of $9 million certain investment related impairments of $13 million and deferred tax asset.
Paul Horne: Uhm Lawrence of $14 million allowed.
Paul Horne: Allow me to further elaborate on this too.
Paul Horne: To optimize the operation of the company's core business. The company implemented a one time impairment at the end of this year for certain projects. It had invested in past years.
Paul Horne: By the end of this year. The company has comprehensively divested from these investments and completed liquidation procedures while possible.
Paul Horne: Going forward, there will be limited impairment concerns from these investment projects.
Paul Horne: This impairment measure is designed to streamline the business operations, allowing the company to focus on its main and core business and drive more efficient development.
Paul Horne: In addition, there's another 14 million technical accounting treatment on deferred tax asset booked in past years.
Paul Horne: Both are nonrecurring and noncash in nature.
Paul Horne: Let's now for shift our focus to the balance sheet.
Paul Horne: As Wayne has mentioned we continue to optimize our working capital are achieving our inventory level of U S dollars $57 million in Q4, which was the lowest since 2018.
Paul Horne: Inventory management remains as a top priority and we will continue to keep inventory levels tight to improve cash flow efficiency.
Paul Horne: By February 2025, we have successfully refinanced the majority of our short term debt maturing in 2025 into long term debt instruments with a lower coupon rate.
Paul Horne: Following this adjustment longterm debt accounts for around 75% of the company's overall debt structure.
Paul Horne: And things Q1, 2023 $56 million of the total debt has been retired and the capital structure will be further optimized as operating cash flow strengthened.
Paul Horne: As of December 31st 2024, our cash balance stood at U S dollars $111 million compared to U S dollars $140 million in Q4 2023.
Paul Horne: The decline is mainly due to lower operating profit offset by a better working capital management.
Paul Horne: <unk> to Q3 2024, the shortfall was mainly due to operating activities.
Paul Horne: We remain committed to our share buyback program in 2025, reinforcing our confidence in the company's long term value and our commitment to delivering returns to shareholders.
Paul Horne: Looking ahead for Q1 2025, we expect revenue in the range of U S dollars $40 million to $45 million.
Paul Horne: This would mark a year over year growth of 14% to 29% in the self branded product sales.
Paul Horne: Highlighting the momentum of our brand expansion strategy.
Paul Horne: To conclude despite challenges in 2024, we've navigated the year effectively by focusing on disciplined cost management, while expanding our self branded product expansion.
Paul Horne: As we enter 2025, we are well positioned for sustained growth with a robust product pipeline margin expansion strategy and disciplined cost management.
Paul Horne: We remain confident that these strategic initiatives will drive long term value for the investors employees and customers.
Paul Horne: Thank you all for your time today I will now open the call for questions. Operator. Please go ahead.
Paul Horne: Thank you well now begin the question and answer session.
Speaker Change: I ask a question he riverstone are gonna want onto telephone keypad.
Paul Horne: If you're using a speaker phone we ask you. Please pickup your handset before pressing the keys.
Speaker Change: To withdraw your question. Please press Star then two.
Paul Horne: And as a reminder, if you wish to ask a question as to the company's management and Chinese.
Speaker Change: Can you repeat your question in English.
Speaker Change: The first question comes from the luggage where fundamental research Corp.
Speaker Change: Please go ahead.
Speaker Change: Regarding the new tariffs on Chinese smartwatch imports to the U S. Early on you mentioned there'll be minimal impact due to the supply chain management could you. Please expand on this point maybe give some color. Please.
Speaker Change: Hi, Thank you I I think it's a you know that.
Speaker Change: We have been working on your sourcing strategy for a long time at least for two to three years already right and then the U S. Tariff is very much the the goods, which has being manufactured in China and shipped to the United States. So.
Speaker Change: What we're trying to do is trying to mitigate that part of the shipments are through our manufacturing.
Speaker Change: Manufacturing base in southeast Asia. So that we can not will avoid the tariff impact which has been applied to the Chinese goods into the United States.
Speaker Change: Are you able to give or disclosed what percent of your own.
Speaker Change: Manufacturing comes from outside China.
Speaker Change: I think for now you can take them.
Speaker Change: All of the Ah products, which are coming to United States to satisfy our revenue in the United States are coming out of noncore.
Speaker Change: China regions, so from that perspective, I think 20.
Speaker Change: 225% of the overall portfolio is actually non China manufacturing base are related.
Speaker Change: Okay, so that means you're probably better off than Seattle.
Speaker Change: Given that most of their manufacturing is in China, So there'll be significantly impacted by this new titles, yes to some extent I think yeah.
Speaker Change: Yeah.
Speaker Change: About taxes and.
The loss on impairment loss of investments could you.
Speaker Change: Give more color on that as well why did taxes go up so much.
Speaker Change: And what was the primary driver of the 10 million impairment loss from investments.
Speaker Change: Yeah as I just mentioned the impairment losses is very much coming out of we have made some small investments our upstream and downstream are let's say technology companies are are similar.
Speaker Change: Our companies in our domain, which potentially have some synergies I think that applies to most of the multinational companies. They all have a kind of strategic investments department.
Speaker Change: Themselves. So in the past years. We also have made similar investments to some sort of the downstream and upstream companies, which is a place into the similar kind of industry or put the past potential synergies with us.
Speaker Change: And you you know that every year you need to do impairment assessment on whether or not these companies.
Speaker Change: The value of the investment is still though the value of which you have invested a few years ago and I think we all know that in the past years, given the macro headwinds are et cetera et cetera. Some of those startup companies are mature companies our chip companies.
Speaker Change: Some of that those companies are they just a note that the that their performance is not play in according to what we have invested a few years ago. So from that perspective I'm given the prudence.
Speaker Change: Principle, which the auditors want us to apply that you need to do our assessment on those investments you made in the past and and and impair them whenever possible to actually reflect the fair market value of those investments right.
Speaker Change: And that that was the reason for the AR 13 million are investment impairment, which we provide it.
Speaker Change: On the deferred tax asset I think it's a it's it's more technical.
Speaker Change: It's you know that there is the so called deferred tax asset.
Speaker Change: It happens to whereby if you reported in a certain year a loss, which unfortunately, we did report a loss in the past year and then.
Speaker Change: Then you can recognize some of that as attached showed going forward.
Speaker Change: But then.
Speaker Change: Again, a per the accounting principle, you'll have to apply a prudent principle. If you think some of those deferred tax asset because also the deferred tax asset has to be used within a certain period of time right and if you think a part.
Speaker Change: That may not be used.
Speaker Change: Used in the upcoming year, or so or is going to expire in the upcoming one year or two and then you have to apply in.
Speaker Change: Permanent or value of Lawrence a provision to those deferred tax asset, but as I said those are adjustments which were made.
Speaker Change: By Q4, 'twenty 'twenty four the investment impairment and also on the tax a deferred tax asset they are noncash and one off in nature. So it's not going to repeat again and then I think after we provisioned for those amount also there.
Speaker Change: Risk of a further provision on those topics in the year of 2025 would be limited.
Speaker Change: Thank you so much Leon just final one more question if I may.
Regarding the market in general I know Apple sales of Smart rewards was down significantly last year, Samsung reported modest growth, but the Chinese players.
Speaker Change: I've been growing rapidly now are you seeing internally.
Speaker Change: Shift in demand towards lower priced plans.
Speaker Change: Is that family and that is that it.
Speaker Change: Accurate assumption.
Speaker Change: No has said I mean on the country I think what we have seen and then what has been I also put it in my prepared notes is that although the market overall actually declined there are few bright spots.
Speaker Change: So I think in the outdoor and in the sports part of the smartwatch market, there's a bright star.
Speaker Change: I think you know, which Brent I'm talking about a gummy is actually performing very well.
Speaker Change: And and and and and and we all know that gaming smart watches are not cheap right. So I think from that perspective, what we see is that are you also.
Speaker Change: Ken can kind of see it from our Q4 result, we after we successfully launched the T. Rex three watch we actually gained share rapidly in Q4.
Speaker Change: In most of the developed countries, where we are operated in them. So we see yes.
Speaker Change: The there is a decline from the market, but that decline and I think to some extent is coming out of.
Speaker Change: There's not so many feature changes in the Apple watch and also people are waiting for Apple watch Ultra three which didn't arrive in a year and that actually drove the.
Speaker Change: The decline on the market leader Apple right on the other hand, I also mentioned that India market kind of collapsed Hum on the Super low end and Super cheap a smart watch our markets are front. So what is growing is China whereby we.
Speaker Change: We are a part of that and also what is growing is the sports watch segment, whereby we took a very good share growth in Q4 on that segment and also what is are.
Speaker Change: Going to grow in 'twenty try 25 years also AI driven right and then are you. You you you you heard from weighing and myself, we talk about we're actually one of if not the first was in adopting AI on the smartwatch and so we think given the that the.
The where the market growth and the potential is for 2025, we're actually quite optimistic about our growth trajectory in 2025.
Speaker Change: Thank you so much Leon congratulations on a strong Q4 revenue growth.
Speaker Change: Thank you for that.
Speaker Change: I don't know her personally.
Speaker Change: A private investor. Please go ahead.
Speaker Change: Thank you so much for having me on the call.
Speaker Change: I'm, a long term shareholder and that parents and Oh I've got a few questions on the long term strategy.
Speaker Change: To start off.
Speaker Change: Like to defer to Mr. Huang the CEO on the company's vision.
Speaker Change:
Speaker Change: 2019 open letter to the employees you spoke about building a global health ecosystem.
Speaker Change: How do you think you are tracking against that vision.
Speaker Change: And especially you know when we put them through the perspective of the fact that most of the revenue still comes from the variables. How do you think youre doing against that we shouldn't five years down the line.
Speaker Change: Yeah.
Speaker Change: Thank you very much I mean am I I I I I. Thank you for the call I think I will ask our defer this question to Mike Yeung, Our CFO and then maybe where he is going to comment on that.
Speaker Change: If he has any other things to add to it.
Speaker Change: That's correct.
Speaker Change: Oh, Yes, Mike tried to answer that part yes.
Speaker Change: Can you hear me, Yeah, Oh, sorry go ahead.
Speaker Change: Yeah, I'll try to answer the question yeah. So oh, besides the smartwatch as you know you were also continuously diversifying our product portfolio we have.
Speaker Change: The other form factors now are.
Speaker Change: Covering rang.
Speaker Change: But you know are we even have hearing aid. So basically are you know our.
Speaker Change: Diversifying our.
Speaker Change: Product category.
Speaker Change: Can enable us to get into.
Speaker Change: All the other different segments of the customer base.
Speaker Change: And or at the same time, we're continuously Oh experiment.
Speaker Change: Experimenting and building out our services that might make sense.
Speaker Change: So we have.
Speaker Change: Keep monitoring service.
Speaker Change: Can you know that that is still growing over here very healthy.
Speaker Change: So that also helped create a.
Speaker Change: Subscription.
Speaker Change: Business for us.
Speaker Change: So it is a oh this is supportive of a more longer term you know so so as we diversify our product flow into the different sectors.
Speaker Change: Then oh I'll try to cover different customers, we can try to cross sell and up sell.
Speaker Change: At the same time I try to deliver.
Speaker Change: Deliver the services, where the margin would be much higher oh, when it makes sense in the even longer term. We will also look into more of the two P. M.
Speaker Change: Area Besides to see right now, we're just focusing on consumer but as we go into Oh in the longer term we can into partnerships.
Speaker Change: With Oh.
Speaker Change: Sure. It is in other enterprises, where we cannot get the.
Speaker Change: The whole ecosystem ought to be more a well developed.
Speaker Change: That's a very a longer term view.
Speaker Change: Does.
Speaker Change: Ask your question.
Speaker Change: Yeah that helps thank you so much.
Speaker Change: Sure.
Speaker Change: My second question would be around the relationship with Xiaomi, so while they still remain the shareholders and you know they have a board seat D. The disengagement from the product side also coincided with them getting their market share rapidly.
Speaker Change: What's what's the perspective on that what's the view or you don't have the ziff management on that.
Speaker Change: No. So I would take this one and I think so number one shout our relationship with Xiaomi is very strong. Okay is what you mentioned there hold 20% of the company. They have the board seat and we have a very close relationship with Xiaomi operating.
Speaker Change: Wise right.
Speaker Change: But on the other hand, I think I need to repeat on the transformation journey, which we have been going through in the past two or three years, maybe I would just put it in one simple word to it I think it boils down to our transformed our target.
Speaker Change: It's actually to transform ourselves from a Fox con alike, OEM ODM type of a company to a company, which has its own brand and then and so to say a new garmin type of a branded smart watch a type of company right.
Speaker Change: So that is actually the strategic shift, which we would like to do them and then.
Speaker Change: You know from a profitability perspective, where first wanted to shift the company too.
Speaker Change: The situation whereby our self branded products cells is actually sufficient enough to cover all of our operating expenses and we're going to be profitable on that and then from that moment onwards, as a second step we kind of looked at whether or not to expense that.
Speaker Change: Revenue a base with Xiaomi R I S.
Speaker Change: Mike just mentioned any big to be our customers to expand again because of the issue is.
Speaker Change: You have seen in the past in our financial.
Speaker Change: Report Xiaomi is actually very big from a revenue perspective, but then year over year. The margin on that business is actually decreasing rapidly and then also xiaomi has as a listed company. They have a made a very open announcement.
Speaker Change: Towards the market, saying that on the hardware frowned theyre not going to make any profit on that they are going to just do a cost plus 5% on it right and then if we continue on this path forward I think.
Speaker Change: And New York, you will see a declining trend the xiaomi revenue and the profit, which we're going to China out of it right. So that's why we're trying to actually get to a first use our self branded product sales to sustain our.
Speaker Change: Our profitability and to expand again to this journey. So that is actually a well thought strategy, which we kind of embarked them two to three years ago, and then I think we're coming to the end of the turnover. So we see the light at the end of the tunnel.
Speaker Change: Now and so you see that yes over our revenue our year over year 24, compared with 23, there's a decline.
Speaker Change: But it's very much driven by the Xiaomi revenue decline, but then it does not impact too much on the bottom line and on the same time you saw the gross margin expansion of the company from 26% to close to 40 right and then.
Yes at a Q4 am I told you 24 are throughout the year of 2024, we do have a cost coverage issue whereby our revenue need to hit certain thresholds in order to get profitable.
Speaker Change: But that was very much related to a different product launch cadence, which was in 2024.
Speaker Change: You know our if you track us as what you said.
Speaker Change: Looking at 'twenty 'twenty four there's only one new product, which we have launched that is the T. Rex three and after we launched that we received an immediate traction and popularity on that product and then that drives the core down quarter run rate of.
Speaker Change: The of the revenue to grow by more than 40% and a Q4 versus Q3 right. So and weigh in also has eluded to it.
Speaker Change: And and and so do I in 2025, we're going to have a major product refreshment.
Speaker Change: Our new product introductions every single quarter.
Speaker Change: Which is going to be a different cadence than what we have experienced in 2024. So from that perspective, I think 2025 would be a totally different year, whereby we will see strong sales growth compare to 2024.
Speaker Change: I think I have to give you a very long answer to the question and coming back to Xiaomi I think after we have a finished a step to use our self branded products to sustain our profitability. Then the next step is to look at where they are.
Speaker Change: Not we can expand the revenue and the strike a win win on those to be deals and then things our relationship with Xiaomi has been very good and is very good and then you know the the Xiaomi ecosystem works in a way that every year, there's going to be.
Speaker Change: Our new sourcing plan and then you can bid for it and then you can get that Ah Ah Ah contract to produce for a different a xiaomi ecosystem kind of product right. So I think we would just.
Speaker Change: Embark on the plan, which we set out to do and then Ah Ah and hopefully that answers your question.
Speaker Change: No. Thank you and that was really a there wasn't really a clear answer.
My last question is about the stock itself.
Speaker Change: Tactical question, but I think it's important.
Speaker Change: <unk> continues to be very illiquid.
Speaker Change: What's not being done about it if if if anything is being you know if it's being taken.
Speaker Change: Interactions.
Speaker Change: So I can't I mean I think.
Speaker Change: It's.
Speaker Change: It's a good question and thank you for asking this question.
Speaker Change: There are a few things number one is if you look at our total asset and a net equity value of the company.
Speaker Change: It's actually north of $250 million.
Speaker Change: And so I think we are looking at the current market cap and the share price were hugely undervalued.
Speaker Change: That's number one number two I have mentioned.
Speaker Change: <unk> are in the in the in the press release that we recently refinanced.
Speaker Change: Our short term debt to long term debt, so actually push the tower to our 2000 22027 and beyond so there's no immediate a maturity.
Speaker Change: Coming due in 2025 and 2026 and then with the cash. We currently have on hand, I think we have ample runway to cater for anything and to invest on any opportunities once it emerged right.
Speaker Change: Number three I think you you you heard us talking we have and we are going to continue with the stock buyback program, which we kicked out a two years ago right and then we're actually prepared to upsize the stock.
Speaker Change: Bank program whenever need it right because we have we're very confident on our strategy and our our growth trajectory and I think last but not the least and what you see here is that it's a very much a self help story right I believe.
If that if we could prove to the market that their transformation journey of transforming from a folks kind of like company, two or kind of a new gardening company and then you can actually become profitable and and to be honest. If you look at the the the ranking globe.
Speaker Change: Really the value of share we're actually ranked number six or seven depends on the quarter. You are looking at so we're actually.
Speaker Change: Ranked very high just a few place from a programming and Samsung Alright, but then if we can further expand our brand.
Speaker Change: Awareness and brand recognition and also if we kind of actually grows our relatively sure in the key countries. We set out to do those are EMEA countries, and China and United States and then I think.
Speaker Change: The share price would start to recover and you will see a more liquid situation coming out of our company, but as I said I mean, one swallow does not make a summer right. So we need a but you have seen that from Q4 versus Q3.
Speaker Change: Our sales growth is more than a 40% and our guidance for Q1 is also a year on year more than a high teens growth rate.
Speaker Change: And then if we can continue on that I think give them two or three quarters, you should be able to see a recovery on the share price.
Speaker Change: Thank you. Thank you so much for that answer thank you Liana and my photos clear answers and I wish all the best with all the initiatives, while I check the time on like New York City market. Thank you.
Speaker Change: Thank you and good.
Speaker Change: And our next question comes from Nicholas Germs with most of those firms.
Nicholas Germs: Yeah. So thank you for taking my questions and I, just actually had one of them could you. Please provide a recap and provide some more information about the new product roadmap for 2025 and any impact on growth These new products.
Speaker Change: You may have.
Speaker Change: Mhm.
Speaker Change: Yeah.
Speaker Change: I'll do a quick recap of.
Speaker Change: Sorry, there's a there's echo on the line.
Speaker Change:
Speaker Change: You bet.
Speaker Change: You can hear me, Okay Ray operator.
So that's where I thought we were getting some background noise.
Speaker Change: Please proceed.
Speaker Change: Okay. Okay. Good so let me get back to the question I think briefly if you look at our strategy. We do have a basically different a smart watch lines playing on different price segment. So in January this year easy yes.
Speaker Change: We have launched active and Pip those are our entry level a value for our money Ah Ah the price segment products and as a way of just mentioned that are these two products fly things lie.
Speaker Change: At the moment, we launched them. It received a lot of popularity and then the activation keep on climbing so those two products would be our a gatekeeper for the entry level price segments and then it it's going to continue to grow.
Speaker Change: Throughout the year and if you look at what I. Just mentioned we have also the mid to high and priced here products are one of them is actually T Rex, which we launched in Q3 in September 'twenty 'twenty four and he's actually.
Speaker Change: In full swing right now the activation keep on climbing a both a lot of media and and and and and and and and Youtubers caught us a directory the gummy in Phoenix killer that type of reputation we received so.
Speaker Change: If we continue on this trend.
Speaker Change: In this year, and then obviously T Rex and the sports and outdoor are part of the business would continue to to grow and then it's going to also help our growth story for 2025, now last but not least.
Speaker Change: You know that we also have MIT a level type of price point.
Speaker Change: Product and that product.
Speaker Change: Our theory has caught a balanced theory and on the balance here. The target is more towards the urban consumers, who want to do light spots, but then we can actually give them. The ACH Oh. The functionality you could expect on the smartwatch, but then we are more accurate on the G. P.
Speaker Change: Yes on the sports functionalities et cetera, et cetera for the urban users. So with these three product lines and then I have eluded to it I think we are going to in 'twenty 'twenty four we only have one product introduction I think 2025.
Speaker Change: You will see that we will have new products coming out almost every quarter and then that will obviously change the demand pattern of our sales pattern as well so I think given that it would drive the 2025.
Speaker Change: Our revenue and growth of the company are.
Speaker Change: Two a new a high versus 'twenty 'twenty four and then you have already seen it in the our guidance for 2020 five Q1 and also in the Q4 2024 numbers.
Speaker Change: I hope that answers your question.
Speaker Change: Yeah.
Speaker Change: Thank you those are further questions at this time.
Speaker Change: I'll turn the call back over to the company as our director of group song for closing remarks.
Speaker Change: Thank you once again for joining us today, if you have further questions. Please feel free to contact.
Speaker Change: House Investor Relations Department through the contact information provided.
Speaker Change: That's fine.
Speaker Change: Thank you.
Speaker Change: Thank you. This concludes this conference call you may now disconnect your lines and have a wonderful day. Thank you.
Speaker Change: Yeah.
Speaker Change: [music].