Huami Technology (ZEPP.US) announced today unaudited financial results for the second quarter of 2024. Revenue for the second quarter of 2024 was 40.6 million USD, a decrease of 56.0% year-on-year; gross margin was 40.3%, compared to 22.0% in the same period of 2023; the net loss attributable to the company for the second quarter of 2024 was 10.8 million USD, compared to 10 million USD in the same period last year. Adjusted net loss (excluding stock-based compensation expense attributable to the company) was 9.9 million USD, compared to 8.5 million USD in the same period last year. Basic and diluted net loss per share was 0.04 USD; basic and diluted net loss per ADS was 0.17 USD.

As of June 30, 2024, the company's cash and cash equivalents and restricted cash were 0.1287 billion USD, maintaining a similar level compared to the first quarter of 2024. Despite being in a loss state, this cash position provides the company with the runway to invest and seize potential market opportunities.

Huang Wang, Chairman and CEO of Huami Technology, commented, "Our second quarter performance is in line with our guidance, highlighted by sequential growth in sales of our proprietary branded products and achieving the highest gross margin in history. Although revenue declined year-on-year, we have confidence that the most difficult transformation phase has been successfully crossed." Mr. Huang added, "We recently launched ZeppOS4, a major leap in wearable technology, making the Amazfit smartwatch a more effective health companion by integrating OpenAI's GPT-4. As we prepare for the Berlin IFA exhibition, we are excited to launch the T-Rex3 outdoor smartwatch with our custom-designed chip and new open-ear stereo (OWS) earbuds. The integration of smartwatches, rings, and OWS headphones creates a seamless user experience loop, giving us a competitive advantage and positioning us for growth. In addition, our R&D team has made significant AI breakthroughs, and we plan to launch new AI hardware in the next six months, marking a new chapter in wearable technology. These efforts are part of a broader strategy to increase brand and product global awareness. Through partnerships with outstanding athletes and sporting events, we continue to build a strong, recognizable brand image and meaningful connections with global consumers. Through these brand and market investments, we have strengthened our presence in populous countries such as China, India, and Brazil. In addition, we have made breakthroughs in Germany, deepened cooperation with French retailer Decathlon, and steadily improved our global gross margin. We believe our growth momentum will continue into the second half of the year."

Deng Cheng, CFO of Huami Technology, added, "In the second quarter, our sales of proprietary branded products grew 6% sequentially, with a gross margin of 40%, continuing the quarterly expansion that began in the third quarter of 2023. This marks the highest gross margin in company history. This improvement is mainly due to the higher gross margin of our proprietary branded products, thanks to an increased proportion of new products and a more selective inventory clearing approach. We expect this positive gross margin trend to continue into the second half of the year. It is important to reiterate our strategy of prioritizing profitability and using the revenue from proprietary brands to maintain the overall performance of the company. Despite the decline in sales, our net loss for the first half of 2024 narrowed year-on-year. With new products planned for launch in the second half of 2024, we are confident in the recovery of our profitability momentum. In addition, our cash balance remains stable at approximately 0.129 billion USD, and inventory levels have reached the lowest point since the first quarter of 2023. We will continue to execute our share buyback program to demonstrate our confidence in Huami's strategic direction."

Looking ahead to the third quarter of 2024, the company's management currently expects net revenue to be between 45 million USD and 60 million USD, representing a growth of 18% to 59% in revenue from proprietary branded products compared to the second quarter of 2024.