Zepp Health Corporation

Hello, ladies and gentlemen. Thank you for standing by for ZEP Health Corporation's third quarter 2022 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 Zhang, Director of Investor Relations for the company. Please go ahead, Grace.

Hello, everyone, and welcome to ZEP Health Corporation's third quarter 2022 earnings conference call. The company's financial and operating results were issued in a press release via the mutual services earlier today and are posted online. You can also view the earnings press release and slides referred to on this call by visiting the IR section of the company's website at ir.zep.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 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 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 of the fiscal year ended December 31, 2021, and other filings filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except under applicable law. Please also note that ZEPP's earnings press release and this conference call include discussions of unaudited gap financial information as well as unaudited non-gap financial information. ZEPP's 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. First, I would like to provide some context by adjusting the microenvironment, which continued to worsen during Q3 and impacted our operations amid heightened geopolitical uncertainties and COVID-19 containment measures in China. Against this backdrop, our third quarter revenues came in within our expectation at RMB 1.2 billion, down 24.9% year-over-year, primarily due to decreased sales of new-band products. Despite these challenges, we continue to grow during the quarter, with top line up 8.8% quarter-over-quarter, a significant reflection of the resilience of our business. I would like to highlight that despite the micro headwinds we faced during the quarter, our self-branded products have returned to their growth trajectory with a 4.2% year-over-year and 35.6% quarter-over-quarter increase in revenue. This growth was underpinned by increased recognition from global consumers as we made progress in enhancing our product value and expanding our sales channels. In the North American market, as we have expanded into more retail channels, our revenues grew by 23% year-over-year and 34% quarter-over-quarter. In Europe, We also had several bright spots in Poland, for example, where our revenue growth rate was 222% year-over-year. We were also the official partner of the 44th Warsaw Marathon, which has further raised our brand value and recognition. In France and Spain, we enjoyed 36.4% and 26.2% revenue growth, respectively, against macro challenges. In September, we debuted our brand new Amazfit GDR4 and GDS4 at the EVA event. The Amazfit GT4 series is packed with premium features for both section and function. Over 190 media outlets in the EMBA region reported our launch event at IFA, and our GT4 series was named by three media sources as the best IFA product. Our new GTR4 and GTS4 are equipped with the industry's first fuel bank circularly polarized GPS antenna technology, enabling movement tracking, and positioning up to 99% as accurate as handheld GPS locators in open-air scenarios. This generation also features our new BioCheck 4.0 with a high-precision PDG optical sensor. and both models' heart rate checking performance is enhanced to match that of heart rate cells. We believe these upgraded product features will prove attractive to users worldwide, enabling more people to reach their fitness goals and better manage their health in their daily life. Furthermore, we are excited to team up with Adidas LearnTastic a well-established digital platform that serves 182 million athletics to empower users to synchronize workout data to Adidas learning via the Zap app. This function became available on our newly released Amazfit GT4 series in October and will gradually become accessible on our other smartwatches going forward. By partnering with global brands that share our passion for helping users achieve their fitness goals, we hope to further expand our user community and achieve continual growth. In October, we introduced our fresh premium multishareable GPS watch. The Amazfit Falcon. It features the new AI-powered ZEP coach, providing users with scientific and tailored fitness guidance through our self-developed smart coaching algorithm. Plastic with a top aircraft-grade titanium unit body and 20 ATM water resistance, a first for Amazfit smart watches, as well as 150 billion sports modes, accurate dual-band GPS checking, and six satellite positioning systems. Amazfit Falcon is devoted to sports companion built to breaking limits. Beyond smart wearables, we forged ahead with the expansion of our new healthcare solutions product line-up, this step priority. which features discrete invisible in-ear technology up to 18 hours of battery life and 12 unique settings to choose from for optimized effects. Apart from auditory health, we believe sleep is crucial to mental health and overall well-being. innovative AI-generated sleep aid soundscapes that adapt to users' biological states, our newly developed ZappAura solution can help users fall asleep faster and sleep more deeply. We are confident that these new innovations represent an important milestone in our expansion into the healthcare sector and will usher in a new growth stage for us. Additionally, we have always been passionate about technology innovation and fostering a more vibrant developer community while striving to reinforce our brand identity on the global stage. Accordingly, we were proud to join past sponsors such as Microsoft and Google Cloud in sponsoring the world's largest collegiate hack zone, CalHacks 9.0, held in October. During the event, we talked to more than 5,000 plus attendees and have successfully attracted more than 1,500 top talent students to visit our booth and learn more about who we are. We also awarded crash prizes and our amazing smartwatches to winners in their watch faces and apps categories in order to recognize their ingenuity and encourage their use of technology to creating solutions that improve our world. as we anticipate continuing microeconomic headings in Q4 and potentially beyond. Increasing organizational efficiency has also been a key focus of our management team this year. And our measures have delivered concrete results in cost efficiency in R&D and G&A expenses But we will take additional measures when needed to keep the fixed cost based in the check. All in all, our fruitful third quarter results, including new product launches and encouraging performance from our self-branded products, highlight our organization's resilience in the face of multiple external challenges. We will further expand our products and services offering while improve organizational efficiency to maximum the value of our shareholders as well as help more users to live a healthy life. Thank you again for joining us today. I will now turn the call over to Leo to go over the highlights of our third quarter financial results.