Zepp Health (ZEPP) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $40.6 million, meeting guidance but down 56% year-over-year, with 1.3 million units shipped, driven by self-branded product sales and a record gross margin.

• Net loss attributable to Zepp was $10.8 million in Q2 2024; adjusted net loss was $9.9 million, with first half net loss narrowing by 15% year-over-year.

• Strategic transformation focused on AI integration, product innovation, and global brand visibility, with several new products set for launch in the second half.

• Company changed reporting currency to USD to better reflect operations and reduce RMB volatility impact.

Financial highlights

• Gross margin reached a record 40.3% in Q2 2024, up from 22.0% a year ago, driven by improved product mix and reduced clearance activities.

• Operating costs for Q2 were $25.3 million, the lowest in the past year.

• R&D expenses were $10.4 million (25.6% of revenue), down 13.8% year-over-year.

• Selling and marketing expenses rose 3.9% year-over-year to $10.5 million (25.8% of revenue).

• G&A expenses dropped 36.3% year-over-year to $4.4 million (10.9% of revenue).

• Cash and cash equivalents stood at $128.7 million as of June 30, 2024, stable from Q1.

• Inventory at the lowest level in company history.

Outlook and guidance

• Q3 2024 net revenues expected between $45 million and $60 million, with self-branded product revenue projected to grow 18%–59% sequentially.

• Full-year gross margin expected to remain at similar record levels.

• Management expects positive gross margin trends and profitability momentum to continue in H2 2024, supported by new product launches.