Zepp Health Corporation

Hello, ladies and gentlemen. Thank you for standing by for ZEPP Health Corps' first quarter 2021 earnings conference call. At this time, all participants are in listen-only mode. Today's conference call is being recorded. I will now turn the call over to your host, Ms. Grace Yang, Director of Investor Relations for the company. Please go ahead, Grace.

Hello, everyone, and welcome to ZEPP Health's first quarter earnings conference call. The company's financial and operating results were issued in a press release via Newswire Services earlier today and are posted online. You can also view the earnings press release and the slides to which we will refer on this call by visiting the IR section of the company's website, ir.com. Participating in today's call are Mr. Huang Wang, our Chairman of the Board of Directors and Chief Executive Officer. and Mr. Leon Teng, our chief financial officer. The company's management will begin with prepared remarks, and the call will conclude with a Q&A session. Mr. Mike Yang, 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 provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties is included in the company's annual report on Form 20-F for the fiscal year ended December 31, 2020, and other filings as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except required under applicable law. Please also note that ZAP's earnings release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial information. ZAP's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. I will now turn the call over to our CEO, Mr. Huang Wang. Please go ahead.

Hello, everyone. Thank you for joining our call. Our first quarter results demonstrate both the resilience of our strategy and the popularity of our brand while at the same time, we are challenged by supply chain and the multi-channel dynamics that were in play due to the global pandemic. The highlight of the first quarter was the performance of our self-branded products. Humans of self-branded products more than doubled in the first quarter compared with the same period a year ago. They also contribute to 64% of our total revenue. As the product acceptance on our key product lines, such as Amazfit Pop, Beep, and the GT series, as well as our newly launched T-Rex product line, continued to strengthen. These results were achieved amidst challenging market conditions. In the first quarter, our overseas market channels continued to be adversely impacted by COVID-19. Supported by the robust performance of our self-branded products, In Q1, we recorded 5.4% year-over-year growth in total revenues to IMB $1.1 billion, despite a decrease in shipments for Mi Band 5 ahead of the launch of Mi Band 6. As all of the pandemic-related issues continue to walk their way through and out of the market, I would like to bring the focus back to our partners, especially some new product launches as well as functionality and partnerships which we expect to push both our brand's popularity as well as revenues outwards. First, executing on our mission to connect health with technology. In the first quarter, we continued to build out our comprehensive health and fitness ecosystem by enriching our product portfolio. In March, we launched the Amazfit T-Legs Pro, which is the latest addition to our outdoor sports series of smart watches. It is built to last with 15 military grades certifications and 100-meter waterproof for extreme temperatures and conditions and has passed three additional performance endurance tests. In addition to exciting functionalities such as the blood oxygen saturation measurement system, four global navigation satellite systems, and more than 100 different sports mode settings, One of my favorite features is its ability to monitor sleep quality. We believe that quality rest and sleep are essential elements of good physical and mental health. Also in March, as we continuously seek new ways to create value for our users, we started to provide WeChat Pay functionality in Amazfit GTS2 and GTR2 smartwatches. Rolling this out to the majority of our smartwatch portfolio adds a desirable and convenient function to our products. We have also been working hard on strengthening our partnerships and expanding into new ones. remains as strong as ever. We successfully launched Mi Band 6, the sixth generation of its popular product line, in March and achieved over 1 million units in global treatments within one month of its launch date. The Mi Band 6 has, aside from its stylish design, some incredible health-related functionalities so that users pay measurements of their physical conditions anytime, anywhere. The newly introduced functions include blood oxygen saturation monitoring to measure breathing quality and cardio health monitoring to detect irregular heartbeats. These functions are powered by our self-developed AI-based algorithms, auction bits, and real-based tools, respectively. We are very encouraged by the great sales results from the Mi Band 6, and at the same time, we are also working with Xiaomi one more exciting and groundbreaking new product. Together, this continued strength in our self-branded products. We expect a very strong second quarter. Lyon will provide more details momentarily. We also continue to expand our collaboration with leading research institutes as well as healthcare companies. We partnered with leading hospitals and institutions globally. on a clinical study to examine the potential benefits of smart health monitoring equipment in improving the quality of life for outpatients with chronic heart failure and reducing their readmission rates. For example, one of our projects is collaborating with the Norwegian University of Science and Technology called Norlex. The Norlex project is a legislative-based, multi-center, and multi-regional randomized controlled trial for secondary prevention and rehabilitation of patients who have suffered myocardial infarction. The project will include 12,000 750 participants with myocardial infarction across Norway in the next four years. Our smartwatches, its heartbeat monitoring and overall health management platform are being used effectively as part of these clinical studies. A few comments on our data analytics business, which is an integral part in expanding our smart health ecosystem. Access to more than 42 million active users combined with our AI and big data analysis capabilities, as well as our powerful PI algorithms, allows us to establish a cloud-based system that can provide insurers, care providers, and employers with aggregate healthcare-related information to make better decisions that promote wellness and expand our business branches further in the healthcare industry. In closing, we're looking forward to delivering robust results in the second quarter, and powered by the rising demand for our products, our efforts to constantly innovate and enrich our product portfolio, as well as the change from Mi Band 6. I am confident that as we continue to execute on our strategy of connecting health with technology, we are well positioned to capture new and exciting opportunities and deliver long-term shareholder value. I will now turn the call over to Leon to go over highlights of our first quarter financial results.