Zepp Health Corporation

Hello, ladies and gentlemen. Thank you for standing by. For ZEPP Health Corporation's fourth quarter and full year 2024 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 Zung, Director of Investor Relations for the company. Please go ahead, Grace.

Hello, everyone, and welcome to ZEPP Health Corporation's fourth quarter and full year 2024 earnings conference call. The company's financial and operating results were issued in a press release by the New South Services earlier today and are posted online. You can also view the earnings release and slides referred to on this call by visiting the IR section of the company's website at .ZEPP.com. Participating in today's call are Mr. Wang Huang, 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. 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-hopper 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 are included in the company's annual report on Form 20-F for the fiscal year and the December 31st, 2023, 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 release and this conference call include discussions of audited GAAP financial information as well as audited non-GAAP financial information. ZEPP's press release contains a reconciliation of the audited non-GAAP measures to the audited most directly comparable GAAP measures. I will now turn the call over to our CEO, Mr. Wen Wangfeng. Please go ahead.

Hello, everyone. Welcome and thank you for joining our fourth quarter 2024 earnings call. In 2024, we expedited the transition towards a brand-empowered high-magic business model for a massive brand product. We delved deeper into technological innovation and enhanced our global marketing strategy. In 2015, despite macroeconomic headwinds and supplied bottlenecks, our overall sales in the fourth quarter of 2024 rose by more than 40% quarter over quarter, aligning with our guidance. Our gross margin for the year 2024 reached 39% compared with .2% for the year 2023. At the same time, we finished the year with 112 million cash on hand, provides ample runway for us to invest in responding to market demands. Let's delve deeper into our remarkable product accomplishments. In 2024, ZEPP held experience remarkable breakthroughs in variable technology, AI powered health innovation and the expansion of its ecosystem. The successful launch of the -REX-3 was a significant turning point, generating a strong surge in market demand and leading to substantial sequential growth in sales. Our -REX-3 has been meticulously crafted with a strategic approach to de-electrically change the industry leading sports and outdoor watches offered by our competitors. This is medically great, durable durability extended battery lines of line mapping functionality and highly accurate GPS navigation. The -REX-3 has completely transformed the landscape of adventure focused smartwatches, establishing new benchmarks for performance. What makes the -REX-3 truly exceptional is its status as one of the pioneering smartwatches to fully incorporate AI technology. Powered by ZEPP OS 4.0 and OpenAI GPT-40, it further solidifies our dominant position in the AI driven variable market. Just six months following its introduction, we have seen a consistent rise in user activations accompanied by an overwhelming amount of positive feedback from both users and key opinion leaders. We are confident that the -REX-3 will continue to maintain its strong up trajectory, driving higher sales of amazing products with attractive profit margins and bringing us closer to achieving our goal of near term profitability. At CES 2025, we further diversified our fairness and lifestyle lineup with the launch of Amazfit Active 2, integrating health checking, advanced biosensing, AI driven coaching, multi-set line navigation and seamless smart interactions. Active 2 has received solid reviews from mainstream media in Europe and the United States. This is exquisite design and rich functions. It is held as a $100 product that challenges industry leaders. The product is extremely popular and the momentum is rising fast. It is expected to experience explosive growth in the second quarter. Additionally, the upcoming Amazfit BitSake series first introduced at the European launch of Active 2 will further expand our reach in the entry level segment by delivering exceptional price per performance value. We have started production in scale and shipment into the main online and offline channels in EMEA and USA. This view propels further our sales goals in the second quarter. Beyond smartwatches, we continue to expand the ZAP ecosystem into AI powered health solutions. At CES 2025, we introduced Amazfit Vito, an AI powered nutrition checking device that seamlessly integrates with our ecosystem. Unlike traditional food checking methods, Vito utilized AI powered image recognition to ultimately lock meals, check nutrition and provide real-time dietary insights. By analyzing eating behaviors and offering personalized recommendations, Vito expands that health AI driven approach beyond fairness into holistic lifestyle management. Additionally, we have launched a related foot log feature in the ZAP app, which provides users with nutritional analysis and dietary recommendations based on our bare foot intake using their phone cameras. This feature is currently available for free download to users in Europe and North America. We are also exploring the use of DeepSeq to further reduce the cost of processing foot image and videos to prepare for a large scale service deployment in the future. These functionalities and products add into our sports recovery and health monitoring ecosystem, establish a unique advantage in sports recovery and health management, enhancing the overall brand value. As we advance our global strategy, we continue to elevate brand recognition and expand our influence through strategic marketing and partnerships. This quarter, we welcomed five-time Olympic medallist, Gabby Thomas and Italian tennis star, Daphne Parlami as our global athlete partner. Their partnerships enhance our brand visibility on the global stage, while also showcasing how Amazfit's smart wearables empower top-tier athletes with data-driven insights to optimize training, recovery, and overall performance. Moreover, our strategic partnership is Hi-Rox, the rapid-growing sport in Europe and North America has brought unique features to Amazfit's smart watches. We are the only smart watch brand that supports Hi-Rox competition and training, providing valuable assistance to athletes in this sport. We continue to deepen our collaboration with Hi-Rox and are set to launch even more powerful -Rox-related products. At the same time, we are further differentiating ourselves from competitors, staying ahead by being the first to support various emerging sports. With these partnerships, the major key account partners of flying in the United States and Europe have greatly increased confidence in us. They have offered us more offline display space to replace competitors' contests. This will bring us significant new growth opportunities in the coming quarters. Lastly, CAP, our 2025 product strategy. By leveraging Active2 and Bit6 series, we are expanding our market share on a bigger scale, increasing the entry-level user base, and strengthening our brand influence in the value of for money segment, especially the emerging market. At the same time, in the mid to high-end segment, our Chulix series has successfully outperformed fresh products from competitors, achieving higher profitability and steady growth. This has also allowed us to convert more entry-level users into professional users and mid to high-end smartwatch users. Furthermore, by supporting rapidly emerging sports like high-end, enhancing the analysis of foot intake in relation to exercise, and offering ecosystem products and services such as Vido and Helio Ring, we provide a big differentiated value to compete with the industry leaders. This strengthens our brand positioning and creates a unique market positioning. Now, moving to the OS part of our business. We are continuing to develop ZAP OS and simultaneously impiling the advanced technologies of OpenAI Pro.5 within ZAP OS. Additionally, we are exploring the use of DeepSeq to significantly reduce costs on a larger scale. The main watch chips that we have successfully designed in the past few years have already served as the main chips in the Chulix 3, Active 2, and BIS6 models. The usage of these chips has reached a milestone of 1 million units. Through the close integration of ZAP OS with these chips, our watches have achieved better graphic performance and computing speed, as well as lower power consumption. This has enabled our watches to gain a more unique, competitive edge compared to competing products, achieve a faster time to market, and a guaranteed supply chain. Looking ahead, we remain confident in ZAP OS's long-term growth trajectory as we involve the young smartwatches. We are building a comprehensive smart wearable ecosystem that seamlessly integrates advanced AI-driven health solutions, performance checking, and holistic wellness management. This robust product portfolio continues technological advancements and strategic brand partnerships. We are well-positioned to expand our global customer base and drive sustained self-branded sales growth. To underscore our confidence in ZAP Health's long-term outlook, we will continue our share repurchase program in 2025, reflecting our dedication to delivering value for our shareholders. I will now turn the call over to Leon to go over the highlights of our fourth quarter financial results.

Thank you, Leon, and greetings, everyone. Thank you again for joining our fourth quarter 2024 earnings call. I would like to start by addressing recent U.S. tariff announcements on inbound goods to be sold in the U.S., which we do not expect to materially impact our U.S. consumer pricing across margin due to our proactive supply chain management. This is thanks to the terrific job our team has done to diversify our manufacturing and sourcing over the past years. According to CounterPoint, global sales of smartwatches have fallen for the first time by 7% in 2024 on device shipment, in a large part due to a sharp decline in the popularity of the market leader, Apple. Shipments of Apple watches fell by 19%, with North America as the biggest driver of the decline, where the absence of Apple Watch Ultra 3 and minimal feature update in the Series 10 lineup led consumers to hold back purchases. Despite the overall decline, sales in China grew from 19% of the market to 25%. This was the first time it recorded more smartwatches than India or North America, according to CounterPoint. Another large contributor to the global sales drop was India, which fell from 30% of the market to 23%. This was partly because of a bubble in ultra-cheap devices from India manufacturers, which was now bust due to a lot of complaints about the quality of the devices. However, CounterPoint expects a recovery in the global market with single-digit percentage growth in 2025, and it predicts the uptick in sales will be driven by the increasing adoption of AI features and a greater emphasis of providing a wider range of health data, which plays to the core of our strategy. Now I will shift to our Q4 and full year 2024 commentary. In Q4, the successful launch of the T-Roc 3 reinforced our leadership in performance-driven smartwatches. During the quarter, we maintained our strategic focus on building a sports-oriented brand identity, positioning ourselves as a premium yet accessible global brand. And we're set to capitalize this in 2025. Our overall sales coming within the guidance range, demonstrating a 40% plus -over-quarter growth. This strong performance was primarily driven by the successful launch of the T-Roc 3. Compared with the fourth quarter of 2023, our revenue declined year over year due to three key factors. Firstly, a continued decline in Xiaomi product sales. Secondly, the supply constraints of T-Roc 3 series. And thirdly, by consumer-related macroeconomic issues resulting in a softer global consumer market. However, as we look ahead to the first quarter of 2025, we expect our Amazfit branded sales to continue in their strong momentum propelling higher sales growth year over year. Looking at the full year 2024, our revenue declined compared to 2023, primarily due to declining Xiaomi product sales, as well as a limited new product launches for Amazfit branded products, with only the T-Roc 3 debunking in the fourth quarter of the year. However, 2025 will be a different story. We are opposed to launch one to two new products every quarter, introducing a different similarity pattern impacting demand. This shift has been evident from Q4 2024 into Q1 2025. Now moving on to gross margin, which can be influenced by various factors, such as product mix, product launch timing, and product life cycles, including model upgrades. Our Q4 2024 gross margin stood at 37%, continuing the margin expensing Shenzhen, which we initiated in the second half of 2023. However, this was slightly lower than Q3 2024 due to somewhat promotional pricing, which is customary for the holiday season. The gross margin for our self-branded products remains strong, driven primarily by the higher margin T-Roc 3. Looking ahead, we expect the positive trend to continue in 2025, supported by the launch of Active 2 and Bip6, and many other new products in the pipeline. From a margin perspective, 2024 was the year of gross margin expansion. Gross margin percentage in 2024 was 38.5%, compared to .2% in full year 2023, helped by better product mix and higher brand awareness. In 2025, this trend is expected to continue with the introduction of higher margin products, further supporting our profitability. Now, let's turn our attention to costs. We remained steadfast in our commitment to cost management, continuing with the program that we began in Q3 2020 on reducing overall operating costs. In Q4 2020, total adjusted operating expenses were $29.3 million, compared to $25.9 million a year ago. The increase was primarily due to spend on promotional campaigns during the holiday seasons to build brand recognition and drive revenue growth. Adjusted operating cost was US$110 million in the full year 2024, compared to US$112 million in 2023, and US$171 million in 2022. We will maintain our cost-conscious approach in the coming quarters. Concurrently, we remain committed to invest in R&D and marketing activities to maintain our long-term competitive edge. R&D expenses in the first quarter of 2024 were $10.1 million, nearly flat compared to last year, as we consistently evaluated resources efficiency to ensure maximum return on investments and productivity. We're committed to investing in new technologies and AI to secure our long-term technology leadership. Selling and marketing expenses in the fourth quarter of 2024 were $13.2 million, compared to $11.8 million a year ago. The increase was primarily due to spend on promotional campaigns during the high season to build brand recognition and drive sales growth. At the same time, we consistently pushed on retail probability and channel mix improvement, which included meticulous refinement of our retail channels and strategic staffing arrangements across sales regions. We're committed to investing efficiently in marketing and branding to ensure our sustainable growth. G&A expenses were $6.1 million in the fourth quarter of 2024, compared to US$4 million in fourth quarter of 2023. The increase was largely attributable to provisions for bad debt and foreign exchange rate fluctuations. We remain committed to strict cost control over discretionary spending, ensuring expenses are aligned with striving sustainable growth. In 2025, we aim to keep operating costs at or below 2024 levels, maintaining a lean and efficient structure, while strategically investing in high-impact areas. Our adjusted operating loss for Q4 2024 stood at $7.4 million. The loss was mainly driven by lower sales volume, resulting in insufficient coverage of operating expenses. It was the narrowest in the past four quarters, demonstrating sequential improvement and path to profitability in near term. This reflects our ongoing efforts to enhance efficiency and then align expenditures with revenue growth. The gap net loss for the fourth quarter of 2024 was $36.9 million, which included operating loss of 9 million, certain investment-related impairments of 13 million, and deferred tax asset valuation allowance of 14 million. Allow me to further elaborate on this. To optimize the operation of the company's core business, the company implemented a one-time impairment at the end of this year for certain projects it had invested in past years. By the end of this year, the company has comprehensively divested from these investments and completed liquidation procedures while possible. Going forward, there will be limited impairment concerns from these investment projects. This impairment measure is designed to streamline the business operations, allowing the company to focus on its main and core business and drive more efficient development. In addition, there's another 14 million technical accounting treatment on deferred tax asset booked in past years. Both are non-recurring and non-cash in nature. Let's now shift our focus to the balance sheet. As Wei-Yin has mentioned, we continue to optimize our working capital, achieving an inventory level of US$57 million in Q4, which was the lowest since 2018. Inventory management remains at the top priority and will continue to keep inventory levels tight to improve cash flow efficiency. By February 2025, we have successfully refinanced the majority of our short-term debts maturing in 2025 into long-term debt instruments with a lower coupon rate. Following this adjustment, long-term debt accounts for around 75% of the company's overall debt structure. And since Q1 2023, 56 million of the total debt has been retired, and the capital structure will be further optimized as operating cash flow strengthens. As of December 31, 2024, our cash balance stood at US$111 million compared to US$114 million. The decline is mainly due to lower operating profit offset by a better working capital management. Compared to Q3 2024, the shortfall was mainly due to operating activities. We remain committed to our share buyback program in 2025, reinforcing our confidence in the company's long-term value and our commitment to delivering returns to the company. In the next few months, we will be able to deliver more returns to shareholders. Looking ahead, for Q1 2025, we expect revenue in the range of $40-45 million. This would mark a -over-year growth of 14% to 29% in the self-branded product sales, highlighting the momentum of our brand expansion strategy. To conclude, despite challenges in 2024, we navigated the year effectively by focusing on disciplined cost management while expanding our self-branded product expansion. As we enter 2025, we are well positioned for sustained growth with a robust product pipeline, margin expansion strategy, and disciplined cost management. We remain confident that these strategic initiatives will drive long-term value for the investors, employees, and customers. Thank you all for your time today. I will now open the call for questions. Operator, please go ahead.

Thank you. We'll now begin the question and answer session. To ask a question, you may press star and 1 on your telephone keypad. If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys. To withdraw your question, please press star and 2. And as a reminder, if you wish to ask your questions to the company's management in Chinese, please immediately repeat your question in English. Today's first question comes from Deb Laguille with Fundamental Research Corp. Please go ahead.

Hi. Regarding the new tariffs on Chinese smartwatch imports to the U.S., Leon, you mentioned there will be minimal impact due to supply chain management. Could you please expand on this point? Maybe give some color, please.

Hi, Sid. Thank you. I think it's, you know, that we have been working on your sourcing strategy for a long time, at least for two to three years already, right? And then the U.S. tariff is very much on the goods which have been manufactured in China and shipped to the United States. So what we're trying to do is mitigate that part of the shipment through our manufacturing base in Southeast Asia so that we avoid the tariff impact which has been applied to the Chinese goods into the United States.

Are you able to give or disclose what percent of your overall manufacturing comes from outside China?

I think for now you can take all of the products which are coming to the United States to satisfy our revenue in the United States are coming out of non-China regions. So from that perspective, I think 20 to 25 percent of the overall portfolio is actually non-China manufacturing-based related.

Okay, so that means you're probably better off than say Apple, given that most of their manufacturing is in China. So they'll be significantly impacted by this new tariff.

Yeah, to some extent, I think.

Yeah. Yeah. Now you talked about taxes and the loss on impairment loss and investments. Could you give more color on that as well? Why did taxes go up so much? And what was the primary driver of the 10 million impairment loss from investments?

Yeah, as I just mentioned, the impairment losses are very much coming out of we have made some small investments on our upstream and downstream, say, technology companies or similar companies in our domain, which potentially have some synergies. I think that applies to most of the multinational companies. They all have kind of strategic investment department themselves. So in the past years, we also have made similar investments to some sort of the upstream companies, which is placed into the similar kind of industry or have potential synergies with us. And you know that every year you need to do an impairment assessment on whether or not these companies, the value of the investment is still the value which you have invested a few years ago. And I think we all know that in the past years, given the macro headwinds, et cetera, et cetera, some of those startup companies or mature companies or chip companies, some of those companies, they just know that their performance is not playing according to what we have invested a few years ago. So from that perspective, given the prudence principle which the auditors want us to apply, then you need to do an assessment on those investments you made in the past and impair them whenever possible to actually reflect the fair market value of those investments. Right. And that was the reason for the 13 million investment impairment which we provided. On the deferred tax asset, I think it's more technical. You know that there is the so-called deferred tax asset. It happens whereby if you report it in a certain year loss, which unfortunately we did report a loss in the past year, then you can recognize some of that as a tax shield going forward. But then again, per the accounting principle, you have to apply a prudence principle. If you think some of those deferred tax assets, because also the deferred tax asset has to be used within a certain period of time, and if you think a part of that may not be used in the upcoming year or so or is going to expire in the upcoming one year or two, then you have to apply impairment or value allowance or provision to those deferred tax assets. But as I said, those adjustments which we made by Q4 2024 on the investment impairment and also on the tax deferred tax asset, they are non-cash and one-off in nature. So it's not going to repeat again. And then I think after we provisioned for those amount, also the risk of a further provision on those topics in the year of 2025 would be limited.

Thank you so much, Leon. Just one more question, if I may. This is regarding the market in general. Now, Apple sales of smartwatch was down significantly last year. Samsung reported modest growth, but the Chinese players have been growing rapidly. Now, are you seeing internally a big shift in demand towards lower priced players? Is that an accurate assumption?

No, on the contrary, I think what we have seen and what has been, I also put it in my prepared notes, is that although the market overall actually declined, there are a few bright spots. So I think in the outdoor and in the sports part of the smartwatch market, there's a bright star. I think you know which brand I'm talking about. GAMING is actually performing very well. We all know that GAMING smartwatches are not cheap. So I think from that perspective, what we see is that you also can see it from our Q4 result. After we successfully launched the T-Rex 3 watch, we actually gained share rapidly in Q4 in most of the developed countries where we are operating in. So we see, yes, there is a decline from the market, but that decline, I think to some extent, is coming out of there's not so many feature changes in the Apple Watch. Also, people are waiting for Apple Watch Ultra 3, which didn't arrive in a year, and that actually drove the decline on the market leader, Apple. On the other hand, I also mentioned that India market kind of collapsed on the super low end and super cheap smartwatch markets front. So what is growing is China, whereby we are a part of that. And also what is growing is the sports watch segment, whereby we took a very good share growth in Q4 on that segment. And also, what is going to grow in 2025 is also AI driven. And then you heard from Wei and myself, we talked about we're actually one off, if not the first one, in adopting AI on the smartwatch. So we think, given where the market growth and potential is for 2025, we're actually quite optimistic about our growth trajectory in 2025.

Thank you so much, Leon. Congratulations on a strong Q4 avenue growth.

Thank you, Sid.

Any other questions for the councilman? Keith Upadia, a private investor. Please go ahead.

Thank you so much for having me on the call. I'm a long term shareholder in Zep Health, and I will ask a few questions on the long term strategy. To start off, I'd like to defer to the CEO on the company's vision. In your 2019 open letter to the employees, you spoke about building a global health ecosystem. How do you think you are tracking against that vision? And especially, you know, when we put into the perspective, the fact that most of the revenue still comes from the variables, how do you think you're doing against that vision five years down the line?

Thank you very much. I mean, I thank you for the call. I think I will ask, I would defer this question to Mike Young, our CEO. And then maybe Wayne is going to comment on that, if he has any other things to add to it.

Thanks, guys. Yes, Mike. Yes, can you hear me? Yeah, I'll try to answer a question. Yeah, so besides the smartwatch, as you know, you were also continuously diversifying our product portfolio. We have many other form factors now, you know, covering rain, you know, airbud, you know, we even have hearing aid. So basically, you know, our diversifying our product category can enable us to get into the different segments of the customer base. And at the same time, we're continuously experimenting and voting out services that might make sense. You know, so we have the sleep monitoring service that can, you know, that is still growing very, very healthy. So that also helped create a subscription of business for us. So it is, you know, this is pretty kind of a longer term, you know, so as we diversify our product portfolio into different sectors, and then try to cover different customers, we can try to cross sell and upsell, as well as at the same time, try to deliver the services where the margin would be much higher, where it makes sense. In the even longer term, you know, we will also look into more to be area besides to see right now we're just focusing on consumer. But as we go into in the longer term, we can do partnerships, you know, with, you know, insurance and other enterprises where we can get the whole ecosystem to be more well developed. So that's a very longer term view. Does that answer your question?

Yeah, that has. Thank you so much. My second question would be around the relationship with Xiaomi. So while they still remain the shareholders, and you know, they have a board seat, the D the disengagement on the product side also coincided with them getting their market share rapidly. What's what's the perspective on that? What's the view? You know, at the ZEP management on that?

No, so so I will take this and get I think so number one show our relationship with Xiaomi is very strong. Okay, as what you mentioned, they hold 20% of the company, they have the board seat, and we have a very close relationship with Xiaomi operating wise. Right. So, but on the other hand, I think I need to repeat on the transformation journey, which we have been going through in the past to three years. Maybe I would just put it in one simple word to it. I think, boys down to our transform, our target is actually to transform ourselves from Foxconn alike, OEM, ODM type of a company to a company which has its own brand, and then so to say, a new Garmin type of branded smartwatch type of company. Right. So that is actually the strategic shift, which we would like to do. And then, you know, from a profitability perspective, we first want to shift the company to the situation whereby our self branded product sales is actually sufficient enough to cover all our operating expenses, and we're going to be profitable on that. And then from that moment onwards, as a second step, we can look at whether or not to expand that revenue base with Xiaomi or Mike just mentioned any big to be customers to expand again, because the issue is, you have seen in the past in our financial reports, Xiaomi is actually very big from a revenue perspective, but then year over year, the margin on that business is actually decreasing rapidly. And then also Xiaomi has as a listed company, they have made a very open announcement towards the market saying that on the hardware front, they're not going to make any profit on it. They are going to just do a cost plus 5% on it. Right. And then if we continue on this path forward, I think, yeah, you will see a declining trend on the Xiaomi revenue and the profit, which we're going to churn out of it. Right. So that's why we're trying to actually get to first use our self branded product sales to sustain our profitability and to expand again to this journey. So that is actually a well thought strategy, which we kind of embarked two to three years ago. And then I think we're coming to the end of the tunnel. So we see the light at the end of the tunnel right now. So you see that, yes, over a revenue a year over year, 24 compared with 23, there's a decline, but it's very much driven by the Xiaomi revenue decline, but then it does not impact too much on the bottom line. And on the same time, you saw the gross margin expansion of the company from 26% to close to 40%. Right. And then, yes, at Q4 2024 or throughout the year of 2024, we do have a cost coverage issue whereby our revenue need to hit certain threshold in order to get profitable. But that was very much related to a different product launch cadence, which was in 2024. If you know, or if you track us as what you said, looking at 2024, there's only one new product which we have launched. That is the T-Rex 3. After we launched that, we received immediate traction and popularity on that product. And then that drives the quarter on quarter run rate of the revenue to grow by more than 40% in Q4 versus Q3. Right. So, and Wayne also has alluded to it, and so do I, in 2025, we're going to have major product refreshments and new product introductions every single quarter, which is going to be a different cadence than what we have experienced in 2024. So from that perspective, I think 2025 would be a totally different year whereby we will see strong self growth compared to 2024. I think I have to give you a very long answer to the question. And coming back to Xiaomi, I think after we have finished the step to use our self-branded products to sustain our profitability, then the next step is to look at whether or not we can expand the revenue and the strike a win-win on those two BDOs. And then our relationship with Xiaomi has been very good and is very good. And then, you know, the Xiaomi ecosystem works in a way that every year there's going to be a new sourcing plan, and then you can bid for it, and then you can get that contract to produce for different Xiaomi ecosystem kind of products. So I think we would just embark on the plan which we set out to do, and then hopefully that answers your question.

Yeah, no, thanks, Leon. That was really a clear answer. My last question is about the stock itself, you know, a pretty tactical question, I think it's important. The stock continues to be very illiquid. What's being done about it, if anything is being taken into action?

No, so I think it's a good question. And thank you for asking this question. There are a few things. Number one is if you look at our total asset and net equity value of the company, it's actually north of 250 million. So I think we are looking at the current market cap and the share price were hugely undervalued. That's number one. Number two, I have mentioned in the press release that we recently refinanced our short-term debts to long-term debts. So we actually pushed the tower to 2027 and beyond. So there's no immediate maturity coming due in 2025 and 2026. And then with the cash we currently have on hand, I think we have ample runway to cater for anything and to invest on any opportunities once it emerged. Number three, I think you heard us talking, we have and we are going to continue with the stock buyback program, which we kicked out two years ago. And then we're actually prepared to upsize the stock buyback program whenever needed. Because we're very confident on our strategy and our growth trajectory. And I think last but not the least, what you see here is that it's very much a self-help story. I believe that if we could prove to the market that the transformation journey of transforming from a Foxconn-like company to a new gardening company, and then you can become profitable. And to be honest, if you look at the ranking globally, the value share, we're actually ranked number six or seven, depends on the quarter you're looking at. So we're actually ranked very high, just a few place from Apple, Garmin, and Samsung. But then if we can further expand our brand awareness and brand recognition, and also if we can actually growth our relatively share in the key countries we set out to do, those are in the countries and China and United States. Then I think the share price would start to recover, and you will see a more liquid situation coming out of our company. But as I said, one swallow does not make a summer, right? So we need, but you have seen that from Q4 versus Q3, our sales growth is more than 40%. And our guidance for Q1 is also a year on year, more than high teens growth rate. And if we can continue on that, I think given two or three quarters, you should be able to see a recovery on the share price.

Thank you so much for that answer. So thank you, Leon and Mike, for those clear answers. And I wish all the best with all the initiatives while I check the time on my T-Rex 3 watch. Thank you.

Thank you, Ankit.

And our next question comes from Nicola Jones with Books and Investments. Please go ahead.

Thank you for taking my questions. And I just actually have one of them. Could you please provide or recap and provide some more information about the new product road map for 2025 and any impact on growth these new products may have?

Yeah, I can do a quick recap of the... Sorry, there's an echo on the line. You can hear me okay, right, operator?

That is correct. We were getting some background noise and I muted Nicola's line. Please proceed.

Okay, good. So let me get back to the question. I think briefly, if you look at our strategy, we do have basically different smart watch lines playing on different price segments. So in January this year in CES, we have launched Active and BIP. Those are our entry level value for money, the price segment products. And as Wayan just mentioned that these two products line, since launch, the moment we launched them, it received a lot of popularity and then the activation keep on climbing. So those two products would be our gatekeeper for the entry level price segments. And then it's going to continue to grow throughout the year. And if you look at what I just mentioned, we have also the mid to high end price tier products. One of them is actually T-Rex, which we launched in Q3 in September 2024. And it's actually in full swing right now. The activation keep on climbing. A lot of media and YouTubers call us the T-Rex 3, the Garmin Phoenix Killer. That type of reputation we received. So if we continue on this trend in this year, and then obviously T-Rex and the sports and outdoor part of the business would continue to grow. And then it's going to also help our growth story for 2025. Last but not least, you know that we also have a mid-level type of price point product. And that product series is called the balance series. And on the balance series, the target is more towards the urban consumers who want to do light sports. But then we can actually give them the edge on all the functionalities you could expect on the smartwatch. But then we are more accurate on the GPS, on the sports functionalities, et cetera, et cetera, for the urban users. So with these three product lines, and then I have alluded to it, I think we are going to in 2024, we only have one product reduction. But in 2025, you will see that we will have new products coming out almost every quarter. And then that will obviously change the demand pattern of our sales pattern as well. So I think given that, it would drive the 2025 revenue and growth of the company to a new high versus 2024. And then you have already seen it in our guidance for 2025 Q1 and also in the Q4 2024 numbers. I hope that answers your question.

Yes. Thank you. As there are no further questions at this time, I'd like to turn the call back over to the company's IR director, Grace Owen, for closing remarks.

Thank you once again for joining us today. If you have further questions, please feel free to contact the Health Investor Relations Department through the contact information provided on our IR website. Thank you.

Thank you. This concludes this conference call. You may not have switched lines and have a wonderful day. Thank you.