Zepp Health Corporation

Hello, ladies and gentlemen. Thank you for standing by for ZEPP Health Corps' first quarter 2022 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 Zong, Director of Investor Relations for the company. Please go ahead, Grace.

Hello, everyone, and welcome to ZEPP Health Corporation's first quarter 2022 earnings conference call. The company's financial and operating results were issued in a press release by 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 session of the company's website at ir.zap.com. Participating in today's call are Mr. Huang Wang, our Chairman of the Board of Directors and Chief Executive Officer. and Mr. Liang Zheng, 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 the call 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 20-F for the fiscal year ended December 31, 2021. 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 discussion of unaudited gap financial information as well as unaudited non-gap 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 last several months have been challenging given the ongoing COVID-19 pandemic, compounded by geopolitical unrest. Against these backdrops, we are pleased that our first quarter revenue came in, aligned with our guidance. We achieved $0.8 billion in revenue, representing a decrease of 34% year-over-year. Our revenue was affected by the decrease in Mi Band 6 treatment, as consumers are waiting for the new generation Mi Band launch. as well as reduce discretionary spending as consumers cut back amidst the inflationary environment. Supply chain and logistic interruptions due to lockdowns and other restrictions as part of the pandemic prevention and control measures in China also impacted our first quarter. We should highlight, however, that the first quarter has also typically been a slow quarter for sales due to seasonality. Despite all these headwinds, we were also pleased to see that our revenue mix continued to shift towards our self-branded products, which now contributes more than 65% of our total revenue. demonstrates once again the broad appeal of our products as we focus on connecting health with technology to enhance users' lifestyles and help them effectively manage their health conditions. To further build out our sales channels, we continue to expand and deepen our partnerships with large retail outlets in the overseas markets. As a result, we showed particularly strong performance in North American region, where our self-branded product revenue surged by more than 110% year over year. These achievements are a testament not only to our own successful operations despite challenges and uncertainties, but also to the lifestyle evolution we are part of. with healthcare services supported by smart wearable devices, transforming people's daily lives. We expect the undeniable benefits of smart wearable devices coupled with innovations in software, sensors, and other hardware to provide continued tailwinds to our future growth. As we strive to be a leader in this megatrend. We have been working relentlessly to harness the power of technology to enhance our products and have established a comprehensive AI algorithm system encompassing sensors plus health big data, which we incorporate into our product designs to help our users realize their health and fitness goals. To that end, we are preparing to unveil our next-generation smartwatches. Today, we launched our upgraded outdoor watch, T-Leg 2, this enhanced dual-frequency GPS. Later this year, we will also upgrade our most popular GTS and GTR and BIP series as newcomers to our basic and sport product lines. These devices both meaningful multi-dimensional enhancements in health-related functionalities, style, and algorithms, among others. Additionally, we continuously upgrade and add new features to our existing products to enhance user experience. For example, we wrote out a firmware update for Amazfit GTR3 and GTS3 series devices in late April and added a text response function for incoming calls, as well as optimization for the alarm clock feature, music downloads, and system stability. We also recently made meaningful inroads in our exploration of the medical grade healthcare industry. and launched the first product in our smart hearing aid product line, ZAP Clarity One, an adjustable, comfortable, invisible, and discreet device for those with hearing loss, and especially for those who don't want others to notice. Notably, ZAP Clarity One offers more than just a device. It also comes with a customer-first, best-in-class support team guided by audiology professionals to ensure the best possible experience for users. Last but not least, our collaboration with Xiaomi continues to be fruitful. Just today, we launched Mi Band 7, and we look forward to building on the previous processes of the past generations of this powerful product line and taking its journey one step further. As we remain committed to connecting health with technology, we continue to drive technological innovation through collaboration with universities and by engaging our user community. with the University of Science and Technology of China, we launched our first ZAP OS Technology and Health Campus Innovation Contest, inspiring students to develop apps for smart wearables devices that can improve people's health management habits. We also collaborate with UC Berkeley on their Caltech events, to encourage users worldwide to join our ZapOS ecosystem. The core values that we hold dearly here at Zap will continue to help our users better manage their health and wellness and design their lives by healthy choices. Our inclusive and innovative ZapOS ecosystem has drawn, developed, globally to design apps and watch faces on our platform, contributing to a flourishing user community that is more vibrant than ever. To conclude, we are making progress amidst the macro economy uncertainties. Going forward, we will continue to invest in and capture the enormous opportunities in the healthcare services industry by focusing on technological innovations in AI chips, health big data, and algorithms, as well as our product portfolio expansion. Despite the short-term impact from geopolitical conflicts, the pandemic resurgence, and the associated supply chain and logistic challenges, We are very excited about ZAP's long-term prospects as we remain dedicated to shaping the technologies of tomorrow while meeting the needs of our users today. With that, I will now turn the call over to Leon to go over highlights of our first quarter financial results.