Zepp Health Corporation

Ladies and gentlemen, thank you for standing by for the Zep Health Corporation Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. Today's conference call is being recorded. I will now turn the call over to your host, Ms. Grace Dunn, Director of Investor Relations for the company. Please go ahead, Grace.

Hello, everyone, and welcome to Zapp Health Corporation's third 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 in which we will refer on this call by visiting the IR section of the company's website at 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 Chen Deng, 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 under the safe harbor provision 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 20F 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 as required under applicable law. Please also note that ZEPP's earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial information. ZEPP's press release contains reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. I'll now turn the call over to our CEO, Mr. Huang Wang. Please go ahead.

Hello, everyone. Thank you for joining our call. The first quarter was marked by continued strong performance from our Amazfit and Zepp-branded smartwatches. While Mi Band series sales weakened due to an earlier launch of the new generation Mi Band this year compared with last year, these factors drove our total net revenues to RMB 1.6 billion in the first quarter. 28.1% lower year-over-year. We should highlight that our self-branded products have quickly emerged as powerful engines preparing our growth. Sheemans of our self-branded products grew by 88.9% compared with the same period last year and accounted for 38.6% of our total net revenues. Clearly, the strategic initiatives we have put in place to actively expand our portfolio of self-branded Amazfit products enhance our sales channels and grow the The influence of our brand are delivering concrete results and extending our reach. Product traction in international markets is strong and growing. Over 80% of the self-branded products are overseas, and our overseas expansion momentum is growing. I will highlight some of our recent progress. In Southeast Asia, Amazfit now ranks number two in SOCPE's C-list of best-selling smart variable brands. And in the U.S., our self-branded products' shipment volume more than doubled in the first quarter as we continue to expand our rich products. through large retail channels like Walmart, Target, QVC, and others. We have also made significant achievements in Europe. According to our internal sales data, our shipments in Germany increased 150% in the third quarter as we newly entered Expert Plus and Euronics more than 150 offline stores. In Italy, our brand ranked number one in the adult smartwatch market, according to the September Italy GFK report. To further heighten our brand awareness in China, we formally introduced a Chinese name for Amazfit on the brand's sixth anniversary on October 12. It is called YueWu, which means rise up and surpass ourselves. It came with a redesigned logo and a new brand tagline, Up Your Game, reflecting our vision for the brand to become a partner with our users in their life explorations. Consumers are increasingly calling for smart wearable devices with improved fundamentals such as easy of use, better user experience, and longer battery life. We have heeded this call, launching new universally popular, attractive products and an advanced OS that meets growing market demand. Most recently, In early October, we launched two brand new Amazfit GTR3 and GTS3 series. Fully equipped with our newest internally developed smartwatch operating system, ZappOS, Both series bring next-generation capabilities to our smartwatches with an industry-leading BioTracker 3 PBG sensor that monitors blood oxygen level, heart rate, stress level, and sleep quality, providing users with easy-to-use enhanced health and sports experience. initial adoption of both our new product series have been strong, showing increasing momentum in multiple geographies. We are also extremely proud of our new Zepp OS and its enriched capabilities, including exciting energy efficiency and open architecture for developers to work seamlessly with our OS. We believe ZAP OS will become the cornerstone of our comprehensive health management platform. Along with the increasing sales volume of GTR3 and GTS3, ZAP OS will bring more enriched displays and apps. we continue to enrich our pipeline to offer customers new products that complements our current offerings. Before the year's end, we will also be introducing a new sleeveless block pressure measurement algorithm called POMBIS. Working with our Amazfit GTR3 Pro, This algorithm can measure block pressure in 30 seconds, providing users with easy, convenient, accurate readings anytime and anywhere throughout their busy day. Separately, we received broad market enthusiasm for our newly launched eBus, Amazee PowerBus Pro, and we are extremely honored to be named as CES 2022 Innovation Awards Honorary. These earbuds are not only a wireless active noise cancellation headset, but also a biosensor device users can wear that supports smart running recognition, ear canal, heart rate monitoring, hearing protection, and cervical spine protection. Adding to our accomplishments in growing our own capabilities, we believe in the power of collaboration to amplify various strengths. Our strategic partnership with Xiaomi continues to be important for both parties. and we hold our collaboration in high esteem. As the Mi Band series, designed and manufactured by us, delivers steady performance, we are continuing to actively grow our own brand, namely Amazfit and Zapp, to deepen our portfolio of self-developed offerings. Furthering our mission to connect technology and health is a driving force behind our innovation, which we hope can bring potential advancement for society at large. By steadily growing our portfolio of amazing products and services, we continue to make progress towards this goal. We are dedicated to creating quality products that make people's lives easier, enrich their pursuit of healthy living, and advance their health and fitness goals. By leveraging rich technology to create fruitful products and services, we are pursuing global health, one step at a time. Lastly, I am pleased to announce that today our board approved a 20 million share repurchase program. The share repurchase program demonstrates our confidence to achieve substantial long-term growth as we execute our strategy, supported by our strong balance sheet and cash generation capability. We are confident such a program will benefit the growth of the company and create value for all of our shareholders. I will now turn the call over to Leo to go over highlights of our third quarter financial results.