Q1 2025 Zepp Health Corp Earnings Call
I will now turn the call over to your host MS Grace Zhang Director of Investor Relations for the company.
Operator: 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.
Speaker Change: Go ahead Greg.
Speaker Change: Hello, everyone and welcome to Black Hawk Corporation first quarter earnings Conference call.
Grace Zhang: Hello, everyone, and welcome to Zepp Health Corporation's first quarter 2025N conference call. The company's financial and operating results were issued in a press release while the newswire services earlier today and are posting on YouTube.
The company's promotional them operating results were issued in a press release wallboard Newswire services earlier today are posted online you can.
Can also view the earnings press release and slides referred to on this part of the routine. They all sections of the company's website at all of those up for Com.
Grace Zhang: You can also view the earnings press release and slides referred to on this talk by visiting the IR section of the company's website at ir.com.
Speaker Change: Participating in todays call are Mr. Wang landfall, our chairman of the board of directors.
Grace Zhang: Participating in today's call are Mr. Wang Fang, our Chairman of the Board of Directors. and the Chief Executive Officer and Mr. Leon Chen Deng, our Chief Financial Officer.
Leon Shenzen: And the Chief Executive Officer, and Mr. Leon Shenzen.
Speaker Change: Our Chief Financial Officer, the company's management will begin with prepared remarks, and the call will conclude with a Q&A session.
Grace Zhang: The company's management will begin with prepared remarks and the call will conclude with a Q&A session.
Speaker Change: Mr. Mike Yeung, our Chief operating officer will join us for the Q&A session. Before we continue. Please note that today's discussion will contain forward looking statements made under the safe Harbor provision.
Grace Zhang: Mr. Mike Young, our Chief Operating Officer, will join us for the Q&A. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provision . . The U.S. Private Securities Litigation Reform Act of 1995. forward-looking statements involving health and risk centers. As such, the company's actual results may be materially different from the view expressed for their information regarding this. And the Oggle group... are included in the company's annual report on Form 20-F, which fiscal year ended December 31, 2021. and other filings as filed with the U.S. Securities and Exchange The company does not assume any obligation to update any forward-looking statements, except as required under applicable law.
Speaker Change: Of the U S Private Securities Litigation Reform Act of Modularity fab.
Speaker Change: Forward looking statements involve inherent risks and uncertainties.
Speaker Change: As such the company's actual results may be materially different from the views expressed today.
Speaker Change: Further information regarding this and other risks of Occupancies are included in the company's annual report on form 20-F, which was.
Speaker Change: Full year ended December 30 start pumping Fannie four 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.
Speaker Change: Please also note that the earnings release and this conference call include discussions of August GAAP financial information as well as office and non-GAAP financial information.
Grace Zhang: Please also note that this conference call includes discussions of all this gap financial information as well as all this non-gap financial information. that partially contains a reconciliation of the RRT's non-gap measures to the RRT's most directly comparable gaps.
Speaker Change: <unk> press release contains a reconciliation of all non.
Speaker Change: non-GAAP measures to the AGA and most directly comparable GAAP measures.
Speaker Change: I'll now turn the call over to our CEO, Mr. Huang Wang song.
Wang Huang: I'll now turn the call over to our. and Dr. Wang Wen-Huang. Please go ahead.
Speaker Change: Please go ahead.
Speaker Change: Hello, everyone welcome and thank you for joining our first quarter <unk> earnings call.
Wang Huang: Hello, everyone. Welcome, and thank you for joining our first quarter 2025 earnings call. We are delighted to announce that this quarter, we see a 10% annual growth of May 3 revenue. Third time after two years of our transformation period.
Speaker Change: We have decided to allow that this quarter, we see a 10% low what are your goals of Amazes me Robin.
Speaker Change: First her after two years of our transformation period.
Speaker Change: Before delving into this quarters results are right emphasized the challenging macro terrain the thing that consumer electronics sector.
Wang Huang: Before delving into this quarter's results, I would like to emphasize the challenging macro terrain within the consumer electronics sector. hate friction. and fluctuating tariff policies have not only introduced uncertainty, also prompted us to make strategic enhancements to our operations. We proactively diversified our supply chain several years ago foreseeing geopolitical complexities. Although the recent U.S. tariff exemptions on specific product categories have alleviated some of the immediate pressure, our dual sourcing model from China and Vietnam remains pivotal. in ensuring operational agility. We have expanded our supply chain in Vietnam and actively exploring opportunities within NAFTA, NAFTA region.
Speaker Change: Trade frictions.
Speaker Change: <expletive> subs trading tariff policies have not only introduce uncertainty.
Speaker Change: Also prompted us.
Speaker Change: Extra cheesecake enhancements to our operations.
Speaker Change: We pro actively diversified our supply chain et cetera is ago, foreseeing, Joe Politico Kampala comp plus cities.
Speaker Change: Although the recent U S tariff exemptions on so but two six product categories.
Speaker Change: Hmm.
Speaker Change: Ted.
Speaker Change: Some of the immediate pressure.
Speaker Change: Our deal sourcing model from China, and Vietnam remains Piccolo too.
Speaker Change: Insuring.
Speaker Change: Gration no agility behalf.
Speaker Change: <unk> expanded our supply chain for Blaine in Vietnam.
Speaker Change: And are actively exploring opportunities with them.
Speaker Change: NASA nest or region.
Leon Shenzen: This initiative.
Leon Shenzen: <unk> two.
Wang Huang: with initiatives aimed to mitigate chain losses and optimize cost-efficient measurement. Our pricing strategy is tailored to each market and product line. In some instances, we have the flexibility to adjust prices, while in more competitive segments, price increases are challenging. Thus, we approach pricing on a case-by-case basis. Additionally, by offering a broader portfolio of products ranging from high-end to budget-friendly options, we are better equipped to offset potential tariff impacts.
Leon Shenzen: And then Mitch.
Leon Shenzen: Mitigates shrank lyricist and optimize cost.
Leon Shenzen: Measurement.
Leon Shenzen: Our pricing strategy is tailored.
Leon Shenzen: Each market and part of life.
Leon Shenzen: Is this is it.
Leon Shenzen: Half, though for us a flexibility to adjust prices while in more competitors.
Leon Shenzen: And those price increases are challenging thus we approach pricing on a case by case basis.
Leon Shenzen: Personally by offering a broader portfolio of part of lessons from.
Leon Shenzen: And shoe budget friendly option, we are better it could to upset potential tariff impacts.
Leon Shenzen: In summary, the blip.
Leon Shenzen: There's a significant growth market for our business.
Wang Huang: In summary, the U.S. represents a significant growth market for our business, accounting for about 15% of our revenue. currently tariff as a minimal impact on our operations.
Leon Shenzen: Accounting for about 15% of our revenue.
Leon Shenzen: Currently tired of S. A minimal impact on our operations, but.
Leon Shenzen: We remain.
Wang Huang: But Will you main? with religion.
Leon Shenzen: Religion.
Leon Shenzen:
Leon Shenzen: Closely monitoring the macro economy environment and.
Wang Huang: Closely monitoring the macroeconomic environment and turning to our performance for the first quarter of Despite the first quarter traditionally being a low season for consumer electronics, our overall sales aligned with our guidance. Notably, a mainstay product sales increased by more than 10% compared to the same quarter last year. Underscoring the success of our strategic shift to a more self-reliant, brand-centered approach. and Sustainable Growth. However, due to the seasonal nature of the frost quarter, Fixed operating expenses were not fully absorbed, either increased sales, putting some pressure on our operating profit. However, the expectations to be imposed in the coming quarter.
Leon Shenzen: Sure.
Leon Shenzen: Turning to our performers for the first quarter of that size.
Leon Shenzen: Despite the fourth quarter traditionally being our most season for consumer electronics, our overall sales aligned with our guidance.
Leon Shenzen: Notably our misfit products sales increased by.
Leon Shenzen: By more than 10% compared to the same quarter last year.
Leon Shenzen: Underscoring the success of our strategic shift to a more separately land Brian centered approach.
Leon Shenzen: And sustainable growth.
Leon Shenzen: However, due to the seasonal may for the first quarter.
Leon Shenzen: Fixed operation operating expenses were not fully absorbed either increased stairs, putting some pressure on our operating profit. However.
Leon Shenzen: We expect <unk> to be imposed in the coming quarter.
Leon Shenzen: Now less high price last hour Pother achievements.
Wang Huang: Now let's highlight what our product achievement which continue to anchor our brand momentum. During the first quarter, we successfully launched the Amazfit Active 2 at CES 2025. We actually feel positive. reviews from major media outlets in both Europe and the United States. The New Orleans Active 2-Rung Lumium Line Expanded Profile, our strategic of combining cutting-edge technology with stylish design in a beaded band and plastic glass screen. catering to the growing demand in the lifestyle smartwatch market. It features 24-7 health and fitness monitoring, utilizing the latest advanced generation biosensor for enhanced precision in health tracking, includes improved ski algorithms and 160 sports modes, including support for new sports like skiing.
Leon Shenzen: Which continues to anchor our brand momentum during the first quarter the.
Leon Shenzen: SaaS breed launched the amaze with active two at CES <unk> Socs.
Leon Shenzen: This.
Leon Shenzen: You see this.
Speaker Change: Reviews from major media outlets in both Europe, and United States.
Leon Shenzen: The New Orleans active to wrong lithium a line.
Leon Shenzen: And it's been a pretty five hour.
Leon Shenzen: Sure.
Leon Shenzen: So cheap Jake of combining cutting edge technology. This stylish design.
Leon Shenzen: Easter band and.
Leon Shenzen: Pick a screw.
Leon Shenzen: Pes catering to either growing.
Leon Shenzen: Demand in the lifestyle smartwatch market.
Leon Shenzen: Features 24, seven health and fitness monitoring use.
Leon Shenzen: Utilizing the latest advanced generation biosensor.
Leon Shenzen: For enhanced precision in house tracking in cough and cold season albinism.
Leon Shenzen: 100 youth sports, most including support for news balls Lifescan.
Leon Shenzen: This adjuvant and coaching and satellite navigation.
Wang Huang: With AI-driven coaching and multi-satellite navigation, it offers seamless, smart interactions, automating the overall user experience. We broadened our market reach with the launch of the Fitbit 6 in March. The BIP-6 integrates advanced health biosensing technology. A-S-P-E-N-T-E-N-T-E-N-T-E-N-T-E-N-T-E Coaching and multi-satellite navigation for offline apps, offering consumers exceptional value at an accessible price point. This product further strengthens our presence in the entry-level sector. aligning with our strategy to cater to a wide range of consumer needs and increase market penetration. over the past four months. The successful launches of these smartwatches has a scale are positions in the global.
Leon Shenzen: I'll first seamless smart in the actions.
Leon Shenzen: Meeting the overall user experience.
Leon Shenzen: Both of them I'll be broadens our market reach this year.
Leon Shenzen: Fitbit six in March.
Leon Shenzen: The bid six integrates advanced house, King bio sensing technology.
Leon Shenzen: Yeah.
Leon Shenzen: Coaching and Marty satellite navigation for offline.
Leon Shenzen: Offering consumers expand exceptional value add to our SaaS Boe price points. These products further strengthens our presence in the entry level segment.
Leon Shenzen: Aligning with our strategy.
Leon Shenzen: Later to a wide range of consumer needs and increased market.
Leon Shenzen: N penetration.
Leon Shenzen: Over the past four months.
Leon Shenzen: SaaS for launches of these small watches has the skill.
Leon Shenzen: Top positions in the growth.
Leon Shenzen: Amazon's small banking.
Wang Huang: Amazon's a small bank. I think for a rating of 4.3 and with the extremely positive scores of 4.6 in the USA. They have consistently secured spots within the top 15, 15. and frequently ranks among the top 10. on Amazon's smartwatch adaptive in the markets of major countries. They also earned race reveals within the Reddit community. The initial sales momentum of F2 and Bit6 are much stronger than the previous version. They have gained wide recognition from mainstream offline channels, helped their mainstream brand keep gaining market share and in most competitive smartwatch markets such as Spain and Italy.
Leon Shenzen: Well, thanks for being a full point.
Leon Shenzen: And this the extremely positive skulls.
Leon Shenzen: 4.6 in the USA.
Leon Shenzen: They have caused system Z secure fast this thing.
Leon Shenzen: 15 15.
Leon Shenzen: And frequently ranked among the top 10.
Leon Shenzen: On Amazon Smartwatch at a b in the markets of mutual countries.
Leon Shenzen: They also.
Leon Shenzen:
Leon Shenzen: Rave reviews, and the thing that it really is community.
Leon Shenzen: In Nashville.
Speaker Change: Our mental of active too and beef steaks are much stronger.
Leon Shenzen: <unk> versions they.
Speaker Change: They have a wide recognition from mainstream offline channels helped the mainstay brand keep gaining market share and in most competitive smartwatch market, such as Spain and Italy.
Leon Shenzen: To name a few Italy according to GSK.
Wang Huang: To name a few, in Italy, according to GFK, our market share of no-sim smartwatch units sales stood at 23.3% in March 2025.
Leon Shenzen: Chair of no Sim smartwatch units sales stood at 23, 3% in March 25.
Speaker Change: And kids.
Speaker Change: As number two in the call valuable smartwatch market.
Wang Huang: Thank you. as number two in the core valuable smart watch market. right after 42% of app In Italy and Spain, 5,000 of us are among the CFK25 headless in March 25.
Speaker Change: Right after a 42% of Apple.
Speaker Change: Italy and Spain.
Speaker Change: Both of us.
Speaker Change: The <unk> 25 hit less in March 25.
Speaker Change: Just this past weekend, a global brand Kim major international visibility then it may fit athlete Jazmine pelini, one the ROM Alban.
Wang Huang: Just this past weekend, a global brand gained major international visibility when a mainstreet athlete Jasmine Paulini won the Rome Open, becoming the first Italian woman in 40 years to claim the title. Her breakthrough moments generated strong global media attention and spotlighted our Amazfit Active 2 watch. which evolved during the chose ceremony and media interviews along with branded apparel prominently, featuring the amazing logo throughout the tournament. We will leverage this momentum to further accelerate growth in our already strong Italian market and expand our influence across the broader sports category. As we continue to grow, and Global Foot Clean.
Speaker Change: Becoming the Italian woman in sports you claim that.
Speaker Change: Her breakthrough moment generated strong global media attention and spotlighted, our amazement access to watch.
Speaker Change: You more during the.
Speaker Change: Chose SAP.
Speaker Change: Sarah money and the media interviews along this branded apparel.
Speaker Change: Problem problematic.
Speaker Change: Featuring the amazing logo throughout the tournament.
Speaker Change: Okay.
Speaker Change: We view lavage these loan momentum to further assess the rate growth in our already strong a talion markets and expand our employers across the broader <unk> category.
Speaker Change: As we continue to grow.
Speaker Change: Outgrowth over claims.
Speaker Change: Moments like these.
Speaker Change: Help build long term brand equity and emotional connection with our expanding user base.
Wang Huang: moments like these help build long-term brand equity and emotional connection with our expanding user base. Robustness of this budget-friendly and profound impact on our brand influence and market share not only pays the robust groundwork for the upcoming launch of our mid- to high-end products in the following quarters, but also bolsters the confidence of our channel partners. It has significantly broadened our user base and expanded the sales funnel. creating a more promising market landscape for our brand. Samara Our new product sales in Q1 demonstrated exceptional momentum. reaching the highest level in our product history. The performance not only surpasses previous records but also outpaces our historic best-selling models, including the BIP5 and the first-generation active series.
Speaker Change: Robust of these budgets friendly and profound impact on our brand influence.
Speaker Change: And market share not only pays the lobo.
Speaker Change: Ron walk for the upcoming launch of our mid to high <unk> in the all in cost.
Speaker Change: Also bolster the comp because of our channel partners.
Speaker Change: It has significantly broadened our user base and expanded the sales funnel.
Speaker Change: Grading a more promising market landscape for our brand.
Speaker Change: To summarize.
Speaker Change: Our new product sales in Q1 demonstrated.
Speaker Change: Exceptional moment.
Speaker Change: Reaching the highest level in our public history.
Speaker Change: Farmers not only some passes prevail rec cost also outpaces, our historic best selling models, including the big five and the first generation active serious.
Speaker Change: Mr production and the delivery challenge.
Wang Huang: Mr. Production and the delivery challenges on the verge of being fully resolved. We expect a higher sale in the upcoming quarter from our new product launch.
Speaker Change: Challenges on the verge of Alpha <unk>.
Speaker Change: Laurie dissolved the at their sales in the upcoming quarters from our new product launches.
Speaker Change: Turning to our technology, our technology innovation.
Wang Huang: Turning to our technology, technology innovation.
Speaker Change: While these attitude amongst the big six.
Wang Huang: Well, these are two amazing big mistakes that occurred with the latest ZAP OS 4.5 powered by OpenAI. Key features include advanced full voice control, enabling users to adjust settings and check progress hands-free. The messaging experience has also been improved. allowing users to reply using a full keyboard or speech-to-text input, with the system optimizing responses through suggestions or translations paired by large language models. Additionally, we have introduced the camera-powered foot lock. features in the Zepp app, which allows users to take photos of their meals directly in the app. The system automatically uploads nutrition data for seamless meal tracking.
Speaker Change: Okay. The Vista, ladies that OS four five powered by Ooma.
Speaker Change: <unk>.
Speaker Change: Key features include.
Speaker Change: Hello, Matt.
Speaker Change: <unk> voice control, enabling users at the jobs that teens and check progress hands free.
Speaker Change: The matching experience has also improved.
Speaker Change: Allowing users to reply using a full keyboard or speech to text input Vista system optimizing the sponsors shluh suggestions.
Speaker Change: Suggestions or cancellations pathway by larger language about idose.
Speaker Change: Additionally, <unk> introduced.
Speaker Change: The camera powder food lock.
Speaker Change: Featured in the Zap App.
Speaker Change: It allows the users to take photos tab news directly in the App the system.
Speaker Change: Magically utmost nutritious data for seamless milk checking.
Speaker Change: This feature is currently a little in Europe, the U S and Japan.
Wang Huang: This feature is currently available in Europe, the US, and Japan. We remain committed to leveraging open source technologies such as LAM. Recently, we enhanced the responsiveness of zero voice commands on our smartwatches, achieving a 17-fold improvement in speed. Additionally, by adopting a hybrid AI solution combining OpenAI and Google Gemini, we reduced the cost of foot recognition in our app's foot lock to just 10% of the original. This enables us to expand the service across a wider region in Europe and double the daily usage allowance for users. This agile and strategic technological integration has accelerated the scalability of our health and fitness service.
Speaker Change: We remain committed to leveraging open source technologies such as lumber.
Speaker Change: Recently, we enhanced the law.
Speaker Change: The sponsor.
Speaker Change: Lisp also Smith of <unk>.
Speaker Change: Though was commands.
Speaker Change: Our smart watches.
Speaker Change: Cheating, a 17 fold improvement in speed.
Speaker Change: Additionally by.
Speaker Change: <unk> hybrid AI solution combine <unk> and Google Jana.
Speaker Change: Reduced the cost of broad recognition in our apps for the lock to dust, 10% after our original.
Speaker Change: This enable us to expand the service across a wider lesion in Europe and double the daily usage allowance for users.
Speaker Change: This agile and that's.
Speaker Change: Strategic technological integration have a salary related.
Speaker Change: Their liability of our house and finish services.
Speaker Change: I mean, both innovation and cost efficiency.
Wang Huang: I think both innovation and cost is as part of our strategic effort to gain greater brand recognition and expand our influence.
Speaker Change: As part of our strategic effort to gain greater bond a recognition and expand our influence.
Speaker Change: We have been actively involved.
Wang Huang: We have been actively involved in the high-risk community. This year, we participate in high-growth events in Chicago, Taipei, and Shanghai. engaging with a global audience of fitness insurances. Our partnership with HIROS, where Amesiv serves as the official valuable and time-keeping partner, continues to strengthen our position in the competitive fitness sector. This collaboration allows us to support athletes with advanced wearable technology. which enhances their training and performance. Looking ahead, we plan to expand our presence at HIROX events. further integrating our path into the fitness community. to a comprehensive series of brand campaigns and community building initiatives.
Speaker Change: Hi, SASSA community.
Speaker Change: This year, we participate in Hi, Ross event in Chicago, Taipei and Shanghai.
Speaker Change: Engaging with a global audience of fitness ensure citizens.
Speaker Change: Our partnership with the higher ups, they're amazing so as to the oarfish, so valuable and PON keeping partner.
Speaker Change: Teenagers to extension.
Speaker Change: In the compact fitness sector.
Speaker Change: Okay.
Speaker Change: Collaboration allow allows us to support athletes.
Speaker Change: The vast variable technology risk.
Speaker Change: <unk> enhances that Cheney and platforms.
Speaker Change: Looking ahead, we plan to expand our presence at high rocks events.
Speaker Change: Further integrating <unk> into the fitness community.
Speaker Change: Cool.
Speaker Change: Hence the F series.
Speaker Change: Brand campaigns and community building in Missouri test sure.
Speaker Change: Centered around high loss.
Speaker Change: B.
Wang Huang: centered around higher. The activation rate of our Chirox3 device has sustained robust growth, both year-over-year and month-over-month. even eight months post-launch. The product has successfully captured the acclaim of sports enthusiasts across an expanding number of regions.
Speaker Change: Attrition rates of our Chile excrete device.
Speaker Change: Sustained robust growth both year over year and month over month.
Speaker Change: Even eight months post launch.
Speaker Change: The powder.
Speaker Change: Asberry capture a claim of sports enthusiasts.
Speaker Change: Cost and expand the number of lesions.
Speaker Change: This remarkable achievement not only underscores the market appeal of our offering but also pave the way all of us.
Wang Huang: This remarkable achievement not only underscores the market appeal of our offering but also paves the way of a strong and promising launch of our upcoming lineup of flagship sport products. We continue to advance our sports and lifestyle strategy by building brand awareness through event sponsorships and partnerships with top athletes.
Speaker Change: Strong and promising launch of our upcoming lineup of flagship sports products.
Speaker Change: We continue to advance our sports and lifestyle strategy.
Speaker Change: Building brand awareness through event sponsorships and partnerships with top athletes.
Speaker Change: We ask route to Val come five time Olympic mandated GAAP, the Thomas and Italian tennis Star Jazmine Pelini S. A global athlete partners.
Wang Huang: We are thrilled to welcome five-time Olympic medalist Gavin Thomas and Italian tennis star Jasmin Pollini as our global athlete partners. These partnerships enhance our brand visibility on the world stage while showcasing how Amazfit smart wearables empower top-tier athletes with data-driven insights and to optimize their training, recovery, and overall performance.
Speaker Change: These partnerships enhance our brand.
Speaker Change: <unk> on the ward stage YSL casing.
Speaker Change: Now amazed based mark about it both empower top tier athletes with data driven insights.
Speaker Change: And to optimize that painting recovery and overall helpfulness.
Speaker Change: Pat.
Speaker Change: Through new product introductions.
Wang Huang: Through Pat. through new product introductions, innovations in our software and continuous investment on a brand awareness and recognition. we have set clear strategic objectives. to drive our next phase of growth. These include strengthening our presence in entry-level markets. deepening collaboration and investment with our offline channel partners. expanding brand, exposure, and community engagement. and ultimately guiding users towards upgrading our mid and high-end product offerings. from Angelo Bipp Active Series towards the Balance and T-Rex Series.
Speaker Change: Wages in Alexander and continuous.
Speaker Change: Men.
Speaker Change: Our brand awareness and recognition.
Speaker Change: We have set clear sure T J R chop tests.
Speaker Change: To drive our next phase of growth.
Speaker Change: These include strengthening our presence in entry level market.
Speaker Change: Deepening collaboration and investment with our offline channel partners.
Speaker Change: Expanding brand exposed for <unk>.
Speaker Change: And community engagement.
Speaker Change: And ultimately the I didnt users towards upgrading.
Speaker Change: Appointing our met.
Speaker Change: And product offerings.
Speaker Change: From Angela Bip active series.
Speaker Change: First the Adams and she likes serious.
Speaker Change: Looking ahead to the second quarter of <unk> 95.
Wang Huang: Looking ahead to the second quarter of 2025. We are optimistic about achieving our first year-over-year growth of overall sales since 2021, which will be a significant turning point of our company. The anticipated growth is driven by public innovation. and partnerships and an expanding global presence. at the same time.
Speaker Change: We are optimistic about achieving our first year over year growth.
Speaker Change: Overall sales is sales into 'twenty one.
Speaker Change: <unk> will be a significant funding point of our company.
Speaker Change: The anticipated growth is driven by.
Speaker Change: Innovation.
Speaker Change: Sure.
Speaker Change: The pocket.
Speaker Change: And an expanding global presence.
Speaker Change: At the same time.
Speaker Change: We remain vigilant of the macro economy challenges and uncertainties.
Wang Huang: We remain vigilant of the macroeconomic challenges and uncertainties. Our strategy to navigate these capacities includes further optimize our supply chain, strengthening broader brand positioning, and enhanced product differentiation. These efforts will ensure Zepp Health remains resilient and competitive in the evolving Smart, Valuable Market. and I believe 2025 will be a fruitful year of them.
Speaker Change: Our strategy to navigate these capacities in cruise further optimize our supply chain shares the main broader brand.
Speaker Change: Name and enhance product differentiation.
Speaker Change: These have proserv, you ensure zap health remain disciplined and competitive in the evolving.
Speaker Change: Smart variable market.
Speaker Change: I believe <unk> five will be a flawed full year of that.
Speaker Change: Okay.
Speaker Change: I will now turn the call over to Leah to go or the highlights of our first quarter financial results.
Grace Zhang: I will now turn the call over to Leon to go over the highlights of our first quarter financial results. Thank you. Thank you everyone.
Leah: Thank you Ware.
Leah: Everyone. Thank you again for joining our first quarter 2025 earnings call.
Leon Deng: Thank you again for joining our first quarter 2025 earnings.
Speaker Change: Let me start by highlighting some key metrics from our financial results for the first quarter of 2025.
Leon Deng: Let me start by highlighting some key metrics. from our financial results for the first quarter of 2025.
Speaker Change: I would like to share some of our supply chain strategy first we operate in a dynamic global environment influenced by macroeconomic factors and changing tariffs.
Leon Deng: I would like to share some of our supply chain strategy first. We operate in a dynamic global environment, influenced by macroeconomic factors and changing tariffs. However, we are well positioned due to past actions. Echo to what Wei-An just mentioned, we shifted most U.S.-bound productions from China to Vietnam in past years. limiting our exposure to China tariff. Our remaining China tariffs exposure is limited to a few accessories like packing boxes and chargers, which are a very small part of our business. These moves give us production flexibility and optionality as new tariff structures take shape. Currently, we're seizing the opportunity of the temporary Vietnam tariff halt by ramping up production, scenario planning with manufacturers for origin flexibility, collaborating with partners and retailers to show to consumers, and accessing pricing and promotion strategies to keep products more appealing while optimizing gross profit.
Speaker Change: However, we are well positioned due to past actions.
Speaker Change: Echo to what way I, just mentioned, we shifted most U S bound production from China to Vietnam in past years.
Speaker Change: Limiting our exposure to China tariffs.
Speaker Change: Our remaining China tariffs exposure is limited to a few accessories like packing boxes, and Chargers, which are very small part of our business.
Speaker Change: These moves gave us production flexibility and optionality as new tariff structures take shape Carla.
Speaker Change: Currently we're seizing the opportunity of the temporary Vietnam tariff Hawk by ramping up production scenario planning with manufacturers for origin flexibility collaborating with partners and retailers to show to consumers and accessing pricing and promotional strategies.
Speaker Change: To keep products more appealing while optimizing gross profit.
Speaker Change: We believe these strategic arrangements or enhance our operational resilience.
Leon Deng: We believe these strategic arrangements will enhance our operational resilience.
Speaker Change: With a strong balance sheet, a nimble operational posture.
Leon Deng: with a strong balance sheet, a nimble operational posture, and an experienced team that is executing with a discipline, we're setting ourselves up for fruitful performance in 2025.
Speaker Change: And our experienced team that is executing with a display we're setting ourselves up for a fruitful performers in 2025.
Speaker Change: Now, let's turn to the financials in Q1, our selves coming in line with the guidance range, we provided notably we achieved 10, 2% year over year growth.
Leon Deng: Now, let's turn to the financials. In Q1, our sales come in line with the guidance range we provided. Notably, we achieved 10.2% year-over-year growth in our MaceFit branded products. which reflects the strong market reception of our newly launched models, ACTIV2 and BIB6. This marks the first year-over-year growth of our MaceFit branded products we have achieved since the start of our transformation journey. We consider it a significant milestone as we are confident this positive momentum will persist through the second quarter and expand well beyond as we have more new products lined up for the remainder of the year.
Speaker Change: <unk> branded products, which reflects the strong market reception of our newly launched Tomatoes active two and 56.
Speaker Change: This marks the first year over year growth of <unk> branded products, we have achieved since the start of our transformation journey.
Speaker Change: We considered it a significant milestone as we were confident this positive momentum will persist through the second quarter I expect well be out as we have more new products lined up for the remainder of the year.
Speaker Change: Turning to gross margin it was influenced by various factors, including product mix product launch timing and product lifecycle, such as motto upgrades.
Leon Deng: Turning to gross margin, it was influenced by various factors, including product mix, product launch timing, and product life cycle, such as model upgrade. In Q1 2025, we achieved a gross margin of 37.3%. which is higher than both Q4 2024 and Q1 2024. largely driven by new product launches. During the quarter, gross margin was negatively impacted by the additional 20% U.S. tariff on China-made products. which reduced our gross margin by approximately one percentage point. excluding the tariff impact, gross margin would have reached 38.4 percent. Looking ahead, we expect the gross margin expansion to continue into the rest of 2025.
Speaker Change: In Q1, 2025, we achieved a gross margin of 37, 3%.
Speaker Change: Which is higher than both Q4, 2024 and Q1 2024.
Speaker Change: Largely driven by new product launches.
Speaker Change: During the quarter gross margin was negatively impacted by the additional 20% U S tariffs on China made product.
Speaker Change: Which reduced our gross margin by approximately one percentage point ex.
Speaker Change: Excluding the tariff impact gross margin would have reached to 38, 4%.
Speaker Change: Looking ahead, we expect the gross margin expansion to continue into the rest of 2025.
Speaker Change: Now, let's turn our attention to costs.
Leon Deng: Now, let's turn our attention to cost. We remain steadfast in our commitment to cost management, continuing with the program that we began in 2020 Q3, on reducing over-operating costs. Operating expenses for the first quarter totaled U.S. $31.5 million compared to U.S. dollars $29.3 million in Q4-24 and then U.S. dollars $27.8 million in Q1-2024. The US$2.2 million quarter-on-quarter increase mainly reflects higher R&D expenses as we continue to invest in new product development, along with increased selling and marketing expenses to support our Q1 launch. Compared to Q1 2024 last year, operating expenses increased by U.S. dollars 4 million year over year.
Speaker Change: We remain steadfast in our commitment to cost management.
Speaker Change: Continuing with the program that we began in 2020 Q3 are reducing over operating costs.
Speaker Change: Operating expenses for the first quarter totaled.
Speaker Change: $31 5 million compared to U S dollars $29 3 million in Q4, 24, and then U S dollars $27 8 million in Q1 2024.
Speaker Change: The $2 2 million U S dollar a quarter on quarter increase mainly reflects higher R&D expenses as we continue to invest in new product development, along with increased selling and marketing expenses to support our Q1 launches.
Speaker Change: Compared to Q1 2024 last year operating expenses increased by <unk> dollars 4 million year over year. This increase includes approximately U S dollars 3 million a higher selling expenses driven by U S dollars $1 7 million spent on digital Mark.
Leon Deng: This increase includes approximately U.S. dollars 3 million in higher selling expenses driven by U.S. dollars 1.7 million spent on digital marketing campaigns. and New Product Launch Event. and U.S. dollars $1.4 million invested in strengthening our sales channel. Additionally, we faced around US$1.0 million in foreign exchange headwinds during the quarter.
Speaker Change: Getting campaigns and.
Speaker Change: New product launch events.
Speaker Change: In U S dollars $1 4 million invested in strengthening our sales channels. Additionally, we face around U S. Dollar 1.0 million a foreign exchange headwind during the quarter.
Speaker Change: We will maintain our cost conscious approach in the upcoming quarters to keep the over operating operating cost at the level between $25 million to $27 million per quarter.
Leon Deng: will maintain our cost-conscious approach in the upcoming quarters to keep the overall operating cost at the level between $25 to $27 million per quarter. Concurrently, we remain committed to investing in R&D and marketing activities to ensure our long-term competitiveness. R&D expenses in the first quarter of 2025 were U.S. dollars $11.5 million, a decrease by 3.4% year-over-year. The decrease was a result of our refined research and development approaches. As Wayne previously mentioned, we're committed in investing in new technologies and AI-like open-source technology. to secure our long-term technology leadership. Selling and marketing expenses in the first quarter of 2025 were US dollars $13.8 million.
Speaker Change: Currently we remain committed.
Speaker Change: Investing in R&D and marketing activities to ensure our long term competitiveness.
Speaker Change: R&D expenses in the first quarter of 2025, or <unk> dollars $11 5 million a decrease by three 4% year over year.
Speaker Change: The decrease was a result of our refined research and development approaches as well previously mentioned, we're committed to investing in new technologies and AI like open source technologies to secure our long term technology leadership.
Speaker Change: Selling and marketing expenses in the first quarter of 2025 or a U S. Dollar is $13 8 million they increased by 31% year over year.
Leon Deng: They increased by 31% year over year. This increase was primarily driven by the US dollars $1.7 million spent on digital marketing campaigns and new product launch events. and then U.S. dollars $1.4 million invested in strengthening our sales channel. We also engaged with rising sports stars like Gabby Thomas and Jasmine Paolini to improve our brand awareness. At the same time, we consistently pushed our retail profitability and channel mix improvement. We're committed to investing efficiently in marketing and branding expenses to ensure our sustainable growth. GNA expenses were U.S. dollars $6.2 million in the first quarter of 2025, compared with U.S.
Speaker Change: This increase was primarily driven by the U S. Dollar $1 7 million spent on digital marketing campaigns and new product launch events and.
Speaker Change: In U S dollars $1 4 million invested in strengthening our sales channels.
Speaker Change: We're also engaged with rising sports stars like Gabby, Thomas and Jasmine Pardini to improve our brand awareness.
Speaker Change: At the same time, we're consistently pushed our retail profitability and channel mix improvement.
Speaker Change: We're committed to investing effectively efficiently a marketing and branding expenses to ensure our sustainable growth.
Speaker Change: G&A expenses were $6 2 million in the first quarter of 2025 compare with U S dollars $5 4 million in the first quarter of 2024.
Leon Deng: dollars $5.4 million in the first quarter of 2024. The increase was largely attributed to foreign exchange headwinds. Adjusted operating loss for the first quarter of 2025 was U.S. dollars $17.2 million compared to adjusted operating loss of U.S. dollars $13.1 million for the same period of 2024.
Speaker Change: The increase was largely attributed to foreign exchange headwinds.
Speaker Change: Adjusted operating loss for the first quarter of 2025 U S dollars $17 2 million compared to adjusted operating loss of U S dollars $13 1 million for the same period of 2024.
Speaker Change: The first quarter is typically the season with the lowest cells.
Leon Deng: The first quarter is typically the season with the lowest sales. which resulted in an inability to fully cover the operating cost. As of March 31st, our cash balance stood at U.S. dollars 104 million compared to U.S. dollars 110 million in Q4 2024. Despite a net loss in the quarter, our cash balance only declined by roughly U.S. dollars $6 million thanks to our enhanced working capital management and improved cash conversion cycle, offsetting the cash burden. We also made solid progress in our capital structure. During the quarter, we successfully refinanced a significant portion of our short-term debt into long-term instruments with a more favorable interest rate and a two-year duration.
Speaker Change: Which resulted in our inability to fully cover the operating cost.
Speaker Change: As of March 31st our cash balance stood at USD $104 million compared to U S dollars $110 million in Q4, but it's early for it.
Speaker Change: Despite our net loss in the quarter, our cash balance only declined by roughly <unk> dollars 6 million. Thanks to our <unk> has to working capital management and improved cash conversion cycle offsetting the cash burn.
Speaker Change: We also made solid progress in our capital structure during the quarter, we successfully refinanced a significant portion of our short term debt into long term instruments with a more favorable interest rate and a two year duration.
Speaker Change: This move significantly reduced our near term liquidity pressure and improves our overall balance sheet flexibility.
Leon Deng: This move significantly reduced our near-term liquidity pressure and improves our overall balance sheet flexibility.
Speaker Change: During Q1 2023, we have initiated the retirement of our short slash long term debt portfolio.
Leon Deng: During Q1 2023, we have initiated the retirement of our short-slash-long-term debt portfolio. As of Q1 2025, the company has retired a total of U.S. dollars 67.8 million of debt cumulative. with another US dollars 11.5% repaid in Q1 2025. as the capital structure would be further optimized as our operating cash flow strength We're pleased to reconfirm our commitment to the Share Repurchase Program for 2025. We believe our current valuation continues to represent an attractive opportunity and reflects our confidence in the company's long-term fundamentals.
Speaker Change: As of Q1 'twenty five the company has retired a total of U S dollars 67 $8 million of deck accumulatively waste.
Speaker Change: Another U S dollars 11, 5% repay it in Q1 2025.
Speaker Change: As the capital structure would be further optimized our.
Speaker Change: Operating cash flow strengthened.
Speaker Change: We're pleased to reconfirm our commitment to the share repurchase program for 2025, we believe our current valuation continues to represent now attractive opportunity I reflects our confidence in the company's long term fundamentals.
Speaker Change: Turning to our outlook for the second quarter, we expect revenue to be in the range of U S. Dollars 50 to 55 million showing significant year over year revenue growth of 23% to 35%.
Leon Deng: Turning to our outlook, for the second quarter, we expect revenue to be in the range of U.S. dollars 50 to 55 million, showing significant year-over-year revenue growth of 23 percent to 35 percent, along with the efforts we have made over the past years to cut operating expenses, diversify our supply chain, and reduce costs. We anticipate a boost in profitability during the second quarter. Additionally, we remain focused on driving operational efficiencies and expanding our supply chain beyond China to reduce costs and mitigate external risks. At current tariff rates, we estimate the tariff impact in 2025 full year would be approximately U.S.
Speaker Change: Along with the efforts we have made over the past years to cut operating expenses diversify our supply chain and reduced costs.
Speaker Change: We anticipate a boost in profitability during the second quarter.
Speaker Change: Additionally, we remain focused on driving operational efficiencies and expanding our supply chain beyond China to reduce costs and mitigate external risks.
Speaker Change: As current at current tariff rates, we estimate that the tariff impact in 2025 full year would be approximately U S dollars $2 3 million. However, this impact is expected to be fully offset by global operating efficiency gains.
Leon Deng: dollars 2 to 3 million. However, this impact is expected to be fully offset by global operating efficiency gains. To provide some color on expectations for the balance of 2025, we have many exciting products lined up for the remainder of the year, which will continue to drive our revenue growth for the rest of the year. witnessed by our strong sales performance guided for Q2 2025. We expect our full year 2025 operating expenses to be at or below its level versus 2024. We expect to offset tariff costs headwinds with operating efficiency gains. Continued supply chain diversifications outside China.
Speaker Change: To provide some color or expectations for the balance of 2025, we have many exciting products lined up for the remainder of the year, which will continue to drive our revenue growth for the rest of the year.
Speaker Change: Witnessed by our strong sales performance guided for Q2 2025.
Speaker Change: We expect our full year 2025 operating expenses to be at or below its level versus 2024.
Speaker Change: We expect to offset tariff costs headwinds with operating efficiency gains continue to supply chain drive diversification outside China.
Speaker Change: The initiatives, we undertook in 2024 to reduce operating expenses and improve our gross margins are bearing fruit.
Leon Deng: The initiatives we undertook in 2024 to reduce operating expenses and improve gross margins are bearing fruit.
Speaker Change: We're focused on launching a significant number of new products in 2025, and 2026 to restore growth and profitability to our business.
Leon Deng: We're focused on launching a significant number of new products in 2025 and 2026 to restore growth and profitability to our business.
Speaker Change: Thank you all for your time today.
Speaker Change: I will now open the call for questions.
Leon Deng: Thank you all for your time today.
Speaker Change: Operator, Please go ahead.
Operator: I will now open the call for questions. Operator, please go ahead. Thank you.
Speaker Change: Thank you.
Speaker Change: We will now begin the question and answer session.
Operator: We will now begin the question and answer session. Please press star, then 1. To all your questions, please press star and 2.
Speaker Change: To ask a question. Please press Star then one.
Speaker Change: So let's go to your question. Please press Star then two.
Speaker Change: If you are using a speakerphone please pick up your handset before pressing the keys.
Operator: If you are using a speakerphone, please pick up your handset before.
Speaker Change: The first question today comes from Andrew Ritchie from fundamental Research Corp.
Siddharth Rajeev: The first question today comes from Siddharth Rajeev from Fundamental Research. Please go ahead. Hi, thank you. I was wondering if we could get more color on the impact of tariff as U.S. exports are produced in Vietnam. Is it fair to say your products are currently subject to a 10% tariff? And also, given the 90-day pause, what happens if the tariff is increased to 46% in July? How are you planning that? Yes, it's a very good question. So as I just mentioned, we are expecting the full year tariff impact would be around $2 to $3 million in total.
Speaker Change: Please go ahead.
Speaker Change: Hi, Thank you I was wondering if we could get more color on the impact of tariffs of the U S. Exports are produced in Vietnam is it fair to say our products are currently subject to a 10% tariff.
Speaker Change: Or given the 90 day pass what happens if the tariff was increased to 46% in July.
Speaker Change: How are you planning that impact.
Speaker Change: Yes, its very good question.
Speaker Change: So as I just mentioned we are expecting the full year tariff in fact.
Speaker Change: Would be around $2 3 million in total.
Speaker Change: However, this impact is to be offset fully by our global operating efficiency gains.
Leon Deng: However, this impact is to be offset fully by our global operating efficiency gain. So if you look at it, there are two folds. Number one is, even at the environment whereby China-US tariff is sky high, I think at the height of it, it was more than 145 percent, our category as a smart watch is exempt from such a tariff impact. So certain electronics products are exempt from the tariff impact between China and US, even at the height of the tariff situation between China and US. So, and our second scenario is to use Vietnam as the backup of the dual sourcing to provide goods for our US business, right?
Speaker Change: So if you look at it there are two fold number one is even as the environment, whereby China U S. Tariffs is sky high I think at the height of it it was 100 more than 145%.
Speaker Change: The our category as a smart watch is exempt from such a tariff impact.
Speaker Change: So certain electronics products are exempt from the tariff impact between China and U S. Even be true even at the height of the.
Speaker Change: Tariff situation between China and U S.
Speaker Change: So and then our second scenario is to use the Vietnam accident backup of the doer sourcing to.
Speaker Change: Provide goods for our U S business so.
Speaker Change: If you take a step back we're actually supply U S with Vietnam and the rest of the world from China.
Leon Deng: So if you take a step back, we're actually supplying US with Vietnam and the rest of the world from China. And so number one, we are expecting after the 90 days pause, the situation between US and Vietnam will be coming back to a normal level, maybe at 10 percent, right? Number two, even if it doesn't come back, I think given the recent truth between China and US and our product category is exempt from the tariff impact, I think our tariff situation for the US business for the rest of the year would be in a controllable manner.
Speaker Change: And as so number one we are expecting after the 90 days past the situation between U S and Vietnam will be coming.
Speaker Change: Coming back to a normal level, maybe at 10% right number two even if.
Speaker Change: It doesn't come back I think given the recent choose between China and U S and our product category is exempt from the.
Speaker Change: Tariff impact I think our tariff situation for the U S business for the rest of the year would be in our controllable manner. However were also going to use the upcoming 90 days or so to frontload some of the no inventories.
Leon Deng: However, we're also going to use the upcoming 90 days or so to front load some of the inventories into our US warehouse to prepare for the Q4 sales. so that we can actually lock down this number, which I just mentioned to you, on tariff.
Speaker Change: Into our U S warehouse to prepare for the Q4 cells.
Speaker Change: So that we can actually lock down this number which I just mentioned to you on tariff. So overall I don't think it's going to be a big impact for us.
Leon Deng: So overall, I don't think it's going to be a big impact for us if you look at what is going on for today, but yes, the uncertainty remains, and we're also looking at over mid to long term to do a triple sourcing, for example, in the NAFTA region, which has been mentioned by Wayne. That's a little bit over mid to long term. So the $2-$3 million, your estimate, that is based on a 10% tariff, not the 4-6%? That is based on roughly a 10% tariff, yes. Okay, thank you. And what are you seeing in the market these days?
Speaker Change: If you look at what it is going out for today, but yes.
Speaker Change: Yes. They are certainly remains and we're also looking at over mid to long term to do a triple sourcing for example in the NAFTA region.
Speaker Change: Which has been mentioned by way of I guess, a little bit over a mid to long term.
Speaker Change: Got it.
Speaker Change: $2 million to $3 million your estimate that is based on a 10% not the four to six varies based on around roughly a 10% tariff yes.
Speaker Change: Okay.
Speaker Change: And what are you seeing in the market.
Speaker Change: Are you and your competitors planning or raising prices passing cost to consumers.
Leon Deng: Are you and your competitors planning or raising prices, passing costs to consumers? What are your thoughts on that? Now, we're not going to rule out all the possibilities, but I think we're not going to be the first mover in this. If we look at and we'll definitely monitor the situation, for example, Apple or Garmin and all the competitors of us. And if they make a move on pricing, for example, we probably would consider that. But again, since the impact would be relatively limited for us, I don't think we're going to make big adjustments on our pricing strategy.
Speaker Change: What are your thoughts on that.
Speaker Change: Now, we're not going to rule out or the possibilities, but I think we're now going to be the first mover in this.
Speaker Change: If we look at and I know, we'll definitely monitor the situation on for example, Apple Garmin and all of the our competitors all of us and if they make a move on pricing. For example, we property would consider that but again since the impact would be relatively limited for us.
Speaker Change: I don't think we're going to make big adjustments on our pricing.
Speaker Change: Strategy, but as I said, we're going to evaluate our pricing strategies on a region by region and country by country basis.
Leon Deng: But as I said, we are going to evaluate our pricing strategies on a region by region and country by country basis, and we're going to make the adjustment where needed. Okay.
Speaker Change: And we're going to make the adjustments where needed.
Speaker Change: Okay and in terms of Opex your goal to get to $25 million to $27 million a quarter rent plenty realistically achievable and what would you cut to get to that number.
Leon Deng: And in terms of OPEX, your goal to get to $25 to $27 million a quarter, when can you realistically achieve this and what areas would you cut to get to that number? I think realistically, you will see a big reduction in Q2 already. I think in Q2, we're quite confident that we're heading back to a normalized manner. Why you see such a high amount or relatively high amount in Q1 is because of some of the contract launch events which took place in Q1 in a big manner, which is not going to happen in our recurring manner, if you want.
Speaker Change: I think realistically, we'll probably see a bigger reduction in Q2 already and I think in Q2, we're quite confident that we're heading back to a normalized manner.
Speaker Change: Why you see such a high amount a relatively high amount in Q1 is because of some of the product launch events, which took place in Q1 in a big manner.
Speaker Change: It's not a.
Speaker Change: Are going to happen are recurring manner. If you. If you want so ultra were impacted by 1 million of currency FX headwind, which we are also hedging so that hedge contract in Q2 is actually turning into a profit. So I think overall Uh huh.
Leon Deng: And also we're impacted by 1 million of currency FX headwind, which we are also hedging. So that hedge contract in Q2 is actually turning into a profit. So I think overall, I think you will see a first good sign of the cost going down in Q2 already.
Speaker Change: I think you will see our first good sign off the cost are going down in Q2 already.
Speaker Change: Okay. Just one final question Liana pardon me last year, you had one product release and then this year from now to end of the year, how many new.
Leon Deng: Okay, just one final question, Leon, if I may. Last year, you had one product release. And then this year, from now to end of the year, how many new products or upgrades are you planning? I couldn't tell you an exact number, but I think I have alluded to it in the previous call as well. This year, we're aiming to refresh all our major product lines in the different quarters ahead of us. So if you look at Q1, we have already launched Active and Balance. And if you look at May, we're actually preparing for some new product launches in China.
Speaker Change: Our products are upgrades are they planning.
Speaker Change: I couldn't tell you exact number but I think I have alluded to you to it in the previous call as well. This year, we're aiming to refresh all of our major product lines are in the different quarters ahead of US right. So if you look at Q1, we have already.
Speaker Change: We launched our active and balance and if you look at our May we're actually preparing for some new product launches in China.
Speaker Change: And we have many exciting products and that many it's definitely more than two.
Leon Deng: And we have many exciting products, and that many is definitely more than two in the upcoming quarters to come. Thank you so much, Leon. Thank you, Sid.
Speaker Change: Uh huh.
Speaker Change: In the upcoming quarters to come.
Speaker Change: Thank you so much Neil.
Speaker Change: That is it.
Speaker Change: As a reminder, if you would like to ask a question. Please press Star then one to join the question queue.
Operator: As a reminder, if you would like to ask a question, please press star, then 1 to join the call.
Speaker Change: The next question comes from Nicholas Jones from Brooks investment. Please go ahead.
Nicolette Jones: The next question comes from Nicolette Jones from Brooklyn. Please go ahead. Thanks for taking my questions. Sid has actually asked most of them but I just wanted to sort of get in more detail into the full year 2025 performance. If you could just give us some sort of further sort of colour on how you see the full year panning out.
Speaker Change: Yeah.
Speaker Change: Thanks for taking my questions since it's actually off nice to them, but I just wanted to sort of guessing.
Speaker Change: More detail into the full year 2025 performance. If you could just give us some color on how you see the full year.
Speaker Change: Panning out.
Speaker Change: Yeah.
Speaker Change: So yes normally we don't guide for a full year number but at this time I can definitely say a few things about it so I think.
Leon Deng: Yeah, so yes, normally we don't guide for a full year number, but this time I can definitely say a few things about it. So I think we have explained to, and as Sid just asked, we have many exciting new products lined up for the remainder of the year, which from a sales perspective will continue to drive our revenue growth for the remainder of the year. And as you can see, our due to guidance, the sales growth is already up by 23% to 35%, if not more than that, right? So that's from a sales perspective. And I think as we're heading into the second half of this year, and traditionally for consumer electronics business, also the second half of the year is the high seasons as we're heading into Black Friday, Christmas, Double 11, whatever you name it.
Speaker Change: We have explained to NSA just ask we have many exciting new products lined up for the remainder of the year, which from a sales perspective perspective, we'll continue to drive our revenue growth for the remainder of the year and as you can see our Q2 guidance.
Speaker Change: <unk> growth is already up by 23% to 35% if or if not more than that right.
Speaker Change: So so that's from a sales perspective, and I think as we head into the second half of this year and traditionally for consumer electronics business also the second half of the year is the high season as we're heading into a black Friday Christmas double 11, or whatever you name it.
Speaker Change: We think the.
Speaker Change: Revenue growth trend will definitely go up.
Leon Deng: So we think the revenue growth trend will definitely go up for the remainder of the year. And you also notice that our gross margin expansion journey has been growing, and we will continue that journey as well. So I'm expecting the gross margin will be hovering around the target level and higher as we head into the remainder of the year.
Speaker Change: For the remainder of the year and.
Speaker Change: You'll also notice that our gross margin expansion. Our journey has been growing and we will continue that journey as well so I'm expecting that gross margin will be hoover around at the car level and higher as we had into the remainder of the year.
Speaker Change: And the last day of the puzzle is definitely the costs as I can.
Leon Deng: And the last thing of the puzzle is definitely the costs. As I explained just now, I think Q1 is a little bit of an outlier in the whole cost story, which we have communicated before, but as a full year perspective, we're expecting the full year cost for GNA plus R&D plus marketing expenses to be in line or lower than the 2024 full year cost. And with that, I think we are going to try to offset the tariff cost headwinds with operating efficiency gains. So hopefully that will not have any negative impact on our gross margin.
Speaker Change: Blaine just now I think Q1 is a little bit of outlier in the whole Costa story, which we have communicated before but as a full year perspective, we're expecting the full year cost for G&A, plus R&D plus our marketing expenses.
Speaker Change: To be in line or lower than the 2020 for full year cost right.
Speaker Change: And with that I think we're going to try to offset the tariff cost had waves with operating efficiency gains. So hopefully that would not have any negative impact on our gross margin and two we are quite confident that 2025 would be as well.
Leon Deng: And we are quite confident that 2025 would be, as William mentioned, a fruitful year for us. if we execute as we planned. Many thanks.
Speaker Change: <unk> a fruitful year for us.
Speaker Change: If we execute as we planned.
Speaker Change: Yeah.
Speaker Change: Many thanks.
Speaker Change: Okay.
Speaker Change: There are no further questions now I'd like to turn the call back over to the company's IR director, Chris Young for closing remarks.
Operator: And there are no further questions.
Grace Zhang: Now I'd like to turn the call back over to the company's IR director, Grace Zhang, for closing remarks. Thank you once again for joining us. If you have further questions, please feel free to contact Zepp Health's Veterans Relations Department through the contact information provided on our IR website. Thank you.
Speaker Change: Thank you once again for joining us today.
Speaker Change: Do you have another question.
Speaker Change: Alright.
Speaker Change: That's a really nice department through the contact.
Speaker Change: Jim Hawaii.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: This concludes the conference call you May now disconnect. Your line. Thank you.
Operator: This concludes the conference call. You may now disconnect your line.