China's Zepp Health posts higher Q4 revenue, reaches upper end of forecast range

Overview

• Chinese smart wearable maker's Q4 revenue rose 43% yr/yr, reaching upper end of guidance range

• Gross margin hit record 40.4%, up from 36.8% a year earlier, driven by product mix

• Adjusted net loss narrowed to $6.4 mln from $22.5 mln in Q4 2024

Outlook

• Zepp Health expects Q1 2026 revenue between $50 mln and $55 mln, up 30%-43% year-over-year

• Company expects margin expansion trend to continue into 2026 as product mix and supply chain improve

• Zepp Health expects certain operating costs to normalize in 2026 after one-time provisions in 2025

Result Drivers

• SEASONAL SALES & NEW PRODUCTS - Q4 revenue growth was driven by strong sales during Black Friday and Christmas, as well as new product launches, per CFO Leon Deng

• PRODUCT MIX & PRICING - Record gross margin was primarily due to a favourable product mix and higher share of new product sales, with price integrity maintained during promotions

• OPERATING EXPENSES - Higher operating expenses reflected increased marketing and branding investments, e-commerce platform charges, and provisions for sales channel optimization and brand/IP protection; some costs are non-recurring

Company press release: ID:nPn9bKVPva

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "strong buy" and the breakdown of recommendations is 2 "strong buy" or "buy", no "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the phones & handheld devices peer group is "buy."

• Wall Street's median 12-month price target for Zepp Health Corp is $61.83, about 196.8% above its March 13 closing price of $20.83

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