Zepp Health Corporation

Hello, ladies and gentlemen. Thank you for standing by for ZEPP Health Corporation's fourth quarter and full year 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 Zhang, Director of Investor Relations for the company. Please go ahead, Grace.

Hello, everyone, and welcome to Zapp Health Corporation's fourth quarter and four-year 2021 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 which we will refer on this call by visiting the IR section of the company's website at ir.zapp.com. Participating in today's call are Mr. Huang Wang, our Chairman of the Board of Directors and Chief Executive Officer, and Ms. Liang 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. 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 20-F for the fiscal year ended December 31, 2020, and other filings as filed with 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 ZAP's earnings press release and this conference call include discussions of unaudited gap financial information as well as unaudited non-gap financial information. ZEPPS press release contains reconciliation of the unaudited non-gap measures to the unaudited most directly comparable gap 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. In 2021, we made significant strides Despite the challenging market environment, our full year revenue reached 6.25 billion RMB as we diligently executed our core growth strategies in the smart consumer health and fitness sector. We maintained our profitability and at the same time, grew our self-branded product treatments by 60% during the past year in the face of worldwide chip shortages, as well as the Delta and Omicron COVID variants in the second half of 2021. We are very proud that as of the fourth quarter of 2021, we have cumulatively shipped over 200 million health management devices since our inception. These achievements reflect our increasing global appeal and our dedication to improving our users' lives through technological advancement. Let me expand on our global progress. The momentum of our overseas expansion remains robust, with over 80% of our self-branded products sold internationally. Notably, our self-branded products shipment volume for the North American region increased by approximately 200% year-over-year, as we entered major retail sales channels, including more than 1,000 offline target stores, as well as QVC. As for European markets, our shipments to Italy and France increased by more than 100% in the fourth quarter, thanks to our country-specific strategy. We are now ranked number five in the adult smartwatch market. according to the fourth quarter 2021 IDC market data. We have been among the top five in the global market, top for several quarters, demonstrating our enhanced product capability and flourishing branded recognition in the growing smartwatch industry. As we work to enlarge our global footprint, we remain steadfast in our mission to connect health with technology. To the end, we continue to develop priority technologies, including AI chips, biometric sensors, and data algorithms to improve user experience and create new usage scenarios as we grow our portfolio of smart health devices for consumers. For example, to further optimize user experience, we will soon launch an AI sleep service to help users with sleeping disorders. Based on our powerful AI algorithms, our ZEPP app will compose and recommend high quality music design to enhance sleep quality, improving users' sleep hygiene and overall health and wellness. In addition, these algorithms-based user services are playing an integral role in expanding our smart health ecosystem. as ZEP Health user base continues to grow, surpassing 40 million active users by the end of 2021. We are also exploring opportunities in the industrial health segment, including investments in Promaxil and Neuro42, which has bolstered our foothold In imaging technology, we enter the portable MI business to advance the same mission that drives our smart wearable business, to empower our users to quantify their health data, which can assist them in managing health conditions and potentially to help detect earlier warning signs for certain disease. In the future, we plan to integrate these investments along with our data analytics and smart wearable business into our extensive healthcare services, fulfilling a critical need and creating value for our users. Now, turning to our smart wearable business, our newly launched GT3 series smartwatches which are our first products incorporating blood pressure measuring functionality, which is currently under review by the NMPA, National Medical Products Administration of China, and we already achieved initial results in this process. They have exceeded our expectation in terms of market recognition and product reviews and have sold exceptionally well. Ranking number one in both JD and Tmall smartwatch category immediately after we commenced sales. In addition, the GT3 was named Editor's Recommended Smartwatch by Germany's Bridget magazine. Not only are our smart watches attracting some consumer attention and acclaim, our other products are also rapidly gaining popularity and industry recognition. For example, our wireless active noise cancellation headset, Amazfit PowerBuds Pro, received an honorary award in the health and wellness category at the CES 2022 Innovation Awards. Our progress in 2021 went far beyond our hardware products. In terms of technology achievements, we unveiled our WangSan 2S chip in July, the first wearable artificial intelligence processor. with dual core RISC-V architecture. Its super power core computing performance can support high load calculations such as graphics and UI operations with low power consumption. We also released our ZAP OS in the fourth quarter, one of the industry's most compact and energy efficient smartwatch operating system. at 55 megabytes, about 1 28th the size of Apple's watch OS 8. Furthermore, ZapOS serves as the foundation for our open mini program framework, which we envision will comprise thousands of developers and countless mini smartwatch applications. Our goal is to form a comprehensive ZapOS ecosystem that will empower our users to manage their health more efficiently and enjoy their lives to the fullest. Our strategic partnership with Xiaomi has been fruitful. achieving many impressive milestones over the years. As you may have seen, rename the Mi Fit app to Zap Live to optimize the user experience. The Zap Live app will inherit tens of millions of the Mi Band users, and often more comprehensive services, such as the sleep service we mentioned earlier. Going forward, the Zap Live app and CellMe Health and Sports app will both serve Mi Band users. Moreover, the Mi Band 7 will be launched this year as expected. And we will further expand our cooperation with CellMe from smart band and smart scale products to future chips and sensors. Together with Xiaomi, we look forward to bringing more innovation to all of our users. I would like to conclude by saying that I am incredibly proud of our team, which has persevered and excelled against the backdrop of a very challenging two-year period. This obstacle, however, has made us stronger. Today, our brand recognition along with our sales and distribution outreach has expanded considerably compared with two years ago. In 2022, we will continue to build our own brands and enhance our product experience as we pursue a path of vertical integration. relentlessly working to strengthen our capabilities in chips, cloud services, algorithms, operating systems, and products. In the meantime, we also extend our reach to other health and medical-related hardware and introduce our brand new health subscription service, which altogether will let us to a new stage as a company offering comprehensive healthcare solutions and services. I remain confident in ZEV's future as we continue to lead the industry in technology and product innovation and bring better health through technology to all of our users. Lastly, we are pleased to announce a special cash dividends of USD 0.025 per ordinary share or USD 0.1 per ADS to thank our shareholders for their ongoing support as well as the continuation of our share buyback program. We are convinced that as we strive to execute our strategy, we will maximize our shareholders' value in the long term. Thank you all. With that, I will now turn the call over to Leon, who will reveal the highlights of our fourth quarter financial results.