Zepp Health (ZEPP) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $42.5 million, down 48.9% year-over-year, with 0.7 million units shipped, mainly due to lower Xiaomi and self-branded product sales amid supply constraints and macroeconomic weakness.

• Achieved highest sequential growth in self-branded sales for 2024, up 9.9% quarter-over-quarter, contributing over 95% of total revenue, driven by new launches like the T-Rex 3 smartwatch.

• Gross margin reached a record 40.6%, up from 33.9% a year ago, marking the sixth consecutive quarter of expansion.

• Net loss attributable to Zepp was $13.3 million in Q3 2024; adjusted net loss was $12.6 million.

• Ongoing product innovation and ecosystem expansion with launches like Amazfit Helio Ring, Up earbuds, and new marketing partnerships.

Financial highlights

• Q3 2024 revenue was $42.5 million, down from $83.1 million in Q3 2023; units shipped fell to 0.7 million from 2.8 million.

• Gross margin: 40.6% in Q3 2024, the highest in company history.

• Operating costs for Q3 were $29 million, including a $1 million foreign exchange loss; excluding FX, costs were $28 million.

• R&D expenses: $10.9 million (25.6% of revenue), selling/marketing: $11.9 million (28.0% of revenue), G&A: $7.0 million (16.5% of revenue), all up year-over-year.

• Cash and cash equivalents stood at $127.7 million as of September 30, 2024, stable sequentially.

Outlook and guidance

• Q4 2024 net revenues expected between $55 million and $70 million, with self-branded products projected to contribute over 90% of revenue and grow 29%–65% sequentially.

• Anticipates higher Q4 sales due to resolved supply constraints, seasonal demand, and new product launches.

• Expects continued margin expansion and improved profitability as cost management and product mix improvements persist.

• Focus areas include international expansion, new product releases, and strict cost control.

• Plans for a more balanced product launch cadence in 2025, with major product line renewals each quarter.