Zepp Health (ZEPP) 2026 年第二季法說會：營收成長 6.9%，發布第三季財測指引

重點摘要

• Zepp Health Corporation (NYSE: ZEPP) 公布 2026 年第二季營收為 6,350 萬美元，年增 6.9%，符合管理層的指引區間。
• 儘管記憶體與零組件成本上漲，但在高階產品與更高平均售價 (ASP) 支持下，毛利率年增 120 個基點至 37.4%。
• 經調整營業費用從去年同期的 2,640 萬美元升至 3,480 萬美元，主因外匯影響以及新產品上市與品牌建設的支出增加。經調整營業虧損擴大至 1,110 萬美元。
• T-Rex、Active 和 Balance 產品系列持續朝高階化發展。在高階 T-Rex 機型的推動下，近期該系列啟動量約有 50% 來自高階款式；而售價 169 美元的 Active 產品截至 8 月 25 日的啟動量占比達到約 57%。
• 管理層預估 2026 年第三季營收為 6,800 萬至 7,300 萬美元，受去年同期高基期影響，隱含年減約 4% 至 10%。
• Bip 供應瓶頸已大幅化解。管理層預計 Helio Strap 的供應在第三季將部分恢復，並於第四季完全恢復。

主要財務數據

業務與營運表現

Zepp Health 表示，其產品組合持續向高單價裝置轉移。在美國售價分別約為 399 美元與 549 美元的 T-Rex 3 Pro 和 T-Rex Ultra 2，占近期全球 T-Rex 系列總啟動量約一半。

在 Active 系列中，售價皆為 169 美元的 Active 3 Premium 與 Active Max，占全球該系列啟動量的比重從第一季的約 22% 升至第二季的 40%。其份額在 7 月達到約 49%，截至 8 月 25 日更達 57%。7 月至 8 月至今，Active 系列的每月總啟動量已與入門級 Bip 系列大致相當。

新一代 Balance 系列也取得良好進展。Balance 3 與 Balance Ultra 占全球 Balance 系列啟動量的比重，從第二季的約 3% 成長至 7 月的 26%，截至 8 月 25 日達 30%。7 月 Balance 系列的總啟動量較第二季月平均成長超過三分之一，而早期機型的啟動量保持相對穩定。

管理層將 Balance 3、Balance Ultra 和 Helio Strap Pro 定位為主打混合訓練 (Hybrid Training)。公司正透過與 HYROX 及運動員合作，建立產品在混合運動與跑步領域的公信力。

供應恢復後，Bip 6 繼續支撐入門級出貨量。Bip Max 近期約占全球 Bip 系列啟動量的三分之一。為了因應零組件成本壓力並改善單元經濟效益，Zepp Health 計劃自 2027 年 1 月起對整個 Bip 系列調漲價格。

無螢幕的 Helio Strap 在第二季的需求超過現有供應。該產品在 Amazfit 與 Zepp App 生態系統內提供健身、睡眠與恢復追蹤功能，無需支付訂閱費用。

管理層展望

Zepp Health 預期 2026 年第三季營收為 6,800 萬至 7,300 萬美元。相較於 2025 年第三季營收 7,580 萬美元（當時年增 78.5%），這代表年減約 4% 至 10%。

管理層將此展望歸因於總體經濟對非必需支出的壓力、影響 Helio Strap 和 Balance 3 等產品的供應限制，以及產能提升與通路鋪貨的時間點安排。

公司預期 Bip 供應將大致恢復正常。Helio Strap 的供貨預計在第三季部分改善，並於第四季恢復全面供應。管理層亦表示，隨著下半年主要新品發布節奏放緩，銷售費用應會趨於緩和。

對於第四季，管理層表示目標是隨著產品供貨改善，實現營收恢復年成長。公司亦預期全年營收將保持成長軌跡，但並未提供具體的全年營收目標區間。

風險與關注事項

• 記憶體價格上漲對毛利率造成壓力，尤其是入門級產品。管理層將價格上漲歸因於產業轉型至 DDR5 和高頻寬記憶體 (HBM) 導致的記憶體供應偏緊。
• 人民幣升值及其他外匯波動對毛利率、營業費用及上半年淨虧損造成影響。
• Helio Strap 和 Balance 3 的供應限制可能會延緩將消費者需求轉化為帳面營收的時間。
• 管理層引述通膨、高油價以及消費者可支配所得承壓等因素，為影響消費電子產品需求的要因。
• 高階 Balance 系列、Cheetah 與 Helio Strap Pro 仍處於產能提升、專業用戶採納或市場開發的相對早期階段。

分析師問答亮點

管理層表示，Bip 的供應瓶頸已幾乎完全消除，而 Helio Strap 的限制在第三季仍會產生一定影響，預計第四季才會恢復全面供貨。

在營業費用方面，管理層指出，銷售費用年增額中約有 290 萬美元與第二季的新品發布相關。截至電話會議舉行時，Zepp Health 已推出約九至十款產品，另有一至兩款產品正在研發準備中。隨著新品發布活動減少，銷售費用預期將趨於緩和。

關於訂閱服務，管理層表示 Zepp App 已提供與睡眠、放鬆及壓力相關的若干付費服務。然而，公司目前不打算針對 Balance 3 的專業功能收取訂閱費，而是將免費功能視為一項競爭優勢。

電話會議完整逐字稿

完整財報電話會議逐字稿

管理層陳述

Operator

Hello, ladies and gentlemen. Thank you for standing by for Zepp Health Corporation's Second Quarter 2026 Earnings Conference Call.

[Operator Instructions]

Today's conference call is being recorded.

I will now turn the call over to your host, Ms. Grace Zhang, Director of Investor Relations for the company. Please go ahead, Grace.

Grace Yujia Zhang

Hello, everyone, and welcome to Zepp Health Corporation's Second Quarter 2026 Earnings Conference Call. The company's financial and operating results were issued in a press release via the Newswire services earlier today and are posted online. You can also view the earnings press release and slides referred to on this call by visiting the IR section of the company's website.

Presenting today are Huang Wang, our Founder and Chief Executive Officer; and Leon Deng, our Chief Financial Officer. Joining us today, we also have Mike Yeung, Chief Operating Officer and General Manager of North America; and Eric Fleming, Vice President of Capital Markets of North America.

Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. 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 ended December 31, 2025, and the other filings as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to forward-looking statements, except as required under applicable law.

Please also note that Zepp's earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial information. Zepp's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.

I will now turn the call over to our CEO, Mr. Wang Huang. Please go ahead.

Wang Huang

Hello, everyone, and thank you for joining Zepp Health's Second Quarter 2026 Earnings Call. In the second quarter, revenue reached USD 63.5 million, representing year-over-year growth of 6.9%. Gross margin was 37.4%, improving by 120 basis points from the same period last year. This was measured rather than explosive growth. However, the quality and direction of the improvement are important. Before all of our new products have fully completed their production ramp and channel expansion, we have already returned to year-over-year revenue growth while improving gross margin. This improvement was achieved despite higher memory and other components' costs.

During the first half of this year and partially -- particularly during the second quarter, we launched or expanded products across our major families with each family serving a distinct strategic role. I would therefore like to use this opportunity to explain how our major product families are developing and more importantly, how they are collectively changing the quality and the longer-term growth potential of our business. The first clear development is that our product mix is moving towards higher-value products. Within the T-Rex family, we have established a mature and stable higher-end product structure. T-Rex 3 Pro and the T-Rex Ultra 2 have U.S. suggested retail prices of approximately USD 399 and USD 549, respectively. These higher-end models have continued to account for approximately 50% of recent global T-Rex family activations.

The important point is that this higher-end mix has been sustained at approximately half of the family, demonstrating durable consumer acceptance of both our higher-end products and the broader T-Rex price ladders. The Active family demonstrates our ability to create and expand a new price tier. Using a strict definition that includes only Active 3 Premium and Active Max, both positioned at a U.S. suggested retail price of USD 169. This tier increased from approximately 22% of global Active family activations in the first quarter to approximately 40% in the second quarter. It reached approximately 49% in July and approximately 57% through August 25.

There were no USD 169 Active products in the comparable period last year. This, therefore, represents genuine adoption of a new higher price tier rather than a reclassification of existing products. The overall scale of Active is equally important. Following the recovery in Bip supply, total global monthly activations of the Active family remained broadly comparable with those of Bip in both July and August to date. This comparison is particularly meaningful because Bip itself has returned to a strong scale and continue to experience strong consumer demand. It demonstrates that Active family, centered largely in the USD 100 to USD 200 price range, can now sustain approximately the same global activation scale as Bip family. Our family anchored in the sub USD 100 segment, even after the supply constraint on Bip was removed. Together with the growing contribution of our $169 Active products, this provides strong evidence that our overall volume mix is moving towards higher-value product bands.

The Balance family provides more than another example of premiumization. It is also important evidence that our strategic focus on Hybrid Training is beginning to translate into product adoption and growth. Balance 3 was designed around the core needs of Hybrid Training users, athletes who combine strength, endurance and recovery within a single training system. Together with Balance Ultra and Helio Strap Pro, this supports our goal of building a differentiation position in Hybrid Training rather than competing only as another general purpose wearable brand. Our sustained engagement with the HYROX and Hybrid Training communities has given us a deeper understanding of these athletes and their training needs. Balance also entered this product cycle with the benefit of several generations of accumulated product credibility and user trust.

Another increasingly important source of the competitiveness is the product design language and the aesthetic capability we have established across our higher-end portfolio this year. The most direct way to understand this progress is to experience the products themselves to see, touch and wear them and to appreciate not only their performance, but also their materials, form and finish. Achieving both objectives at the same time requires significant engineering investment. The broader use of the metal, more refined materials and more sophisticated industry design can affect antenna performance, wireless connectivity, positioning signals and sensor sensitivity if they are not carefully engineered. Our ability to improve materials, craftsmanship and design while maintaining a higher level of GPS connectivity, sensor and sports performance is therefore not simple and aesthetic achievement.

We believe it is an important and increasingly differentiated technology capability. This capability is particularly visible in the new Balance generation. Balance 2 has a U.S. suggested retail price of USD 299.99. Balance 3 starts at USD 369.99. Balance 3 Titanium is priced at USD 499 and Balance Ultra at USD 599.9. Despite this meaningful step-up in price, adoption of the new generation has developed quickly. Balance 3 and Balance Ultra together increased from approximately 3% of global Balance family activations in the second quarter to approximately 26% in July and approximately 30% through August 25. This was not simply a mix shift caused by the replacement of the earlier generation products. In July, total global Balance family activations increased by more than 1/3 compared with the monthly average in the second quarter. While activations of the earlier generation Balance products remain relatively stable.

Balance 3 and Balance Ultra were announced in early June with production and channel deployment ramping through July and August. Initial supply of certain titanium models began only in August. The earlier momentum we have observed validates our product direction and Hybrid Training strategy. However, the new generation has not yet reached the scale or made the financial contribution that we believe it ultimately can. Taken together, these 3 families demonstrate different but complementary capabilities. T-Rex shows that we can sustain in a mature higher-end structure. Active shows that we can establish a new price tier and scale the overall family. Balance shows that our strategic investment in Hybrid Training, product design and engineering can support sustainably higher prices in incremental demand and a differentiated market position.

Bip provides the other side of our product strategy, a strong entry-level foundation combined with improving pricing discipline. Bip is our entry-level product family anchored by Bip 6 in the sub USD 100 segment at a U.S. suggested retail price USD 79.99. Bip 6 was launched 17 months ago. Although its availability was constrained during the second quarter, demand remained very strong after supply recovered. This reinforced our confidence in the product competitiveness and its ability to sustain a meaningful longer life cycle. The longevity of Bip 6 is also supported by our vertically integrated technology stack. Our in-house processor platform was designed with meaningful computational headroom for continued optimization while Zepp OS continues to become more capable and intelligent.

Together, these capabilities allowed us to continue improving Bip 6 through software after launch without relying solely on a new hardware cycle. This strengthens the product's long-term value proposition and supports our confidence in a longer product life cycle. At the same time, Bip Max, which began contributing during the second quarter, has recently represented approximately 1/3 of global Bip family activations. This creates a more complete internal price ladder while Bip 6 continues to provide a strong volume foundation. The recovery in supply, the sustained strength of Bip 6, its continued software evolution and growing contribution from Bip Max gives us confidence to move from rebuilding scale towards stronger pricing discipline and healthier unit economics.

Higher memory and component costs have created pressure on the profitability of entry-level products. However, the pricing decision we are announcing today is supported by enduring consumer demand and continued competitiveness of the Bip family. Therefore, today, we are announcing that we will increase prices across the entire Bip family beginning in January 2027. Our objective is to preserve Bip's compelling consumer value proposition while supporting healthier and more sustainable unit economics over a longer product life cycle. We also see growing strategic relevance in screen-free wearables. Google's recent launch of Fitbit Air further validates the screen-free wearable category that Amazfit entered last year with Helio Strap.

Helio Strap provides screen-free, subscription-free fitness, sleep and recovery tracking within the broader Amazfit and Zepp App ecosystem. Demand exceeded our available supply during the second quarter. We expect supply to recover partially during the third quarter and to be fully restored during the fourth quarter. As availability improves, we expect Helio Strap to make a more meaningful contribution while continuing to strengthen our broader training and recovery ecosystem. Building on Helio Strap, Helio Strap Pro serves a more specialized role. It is designed specifically for HYROX and high-intensity Hybrid Training, with additional capabilities continuing to be developed through software updates. At this stage, its role is to serve as a professional and technological spearhead, allowing us to develop advanced training and recovery capabilities with highly demanding athletes and then expand mature capabilities across the broader Amazfit ecosystem.

We are also building professional credibility in running through Cheetah. Unlike Balance, Cheetah does not yet benefit from the same multigenerational product foundation. Its professional credibility must therefore be earned progressively through product development, athlete adoption and real-world performance. Over the past several months, we have begun to see increasingly visible evidence of this progress. After joining Amazfit as an athlete partner, Josh Kerr broke the world record for the 1 mile. Amazfit athlete Ben Dhiman won this year's UTMB Mont-Blanc. Yomif Kejelcha finished second in the London Marathon in under 2 hours and later wore Cheetah 2 Pro when he set the half marathon world record. Yomif is not a contracted Amazfit athlete, making his choice to use our product during a world record performance, a strong validation of our credibility among elite runners.

We recognize that the credit belongs to the athletes while their choice to compete with Amazfit reflects growing trust in our products at the highest level of sports. These positive product indicators should not be interpreted to mean that every family is already contributing all at full scale. T-Rex currently represents a story of sustained higher-end mix rather than rapid unit growth. Active has delivered clear growth in both scale and product mix, while the higher-priced Balance generation has only begun to establish initial momentum. Bip and Helio Strap were constrained by supply during the second quarter and Cheetah and Helio Strap Pro remain at the early stage of professional credibility and market development. As a result, the strategic progress across our portfolio has not yet translated into its full revenue potential.

The product direction is increasingly clear, but the financial contribution is developing at a different pace across the portfolio. At the same time, higher memory and component costs affected profitability across multiple product families with a greater relative impact on entry-level products. These cost pressures partially offset the benefit of our improving product mix. The fact that gross margin still improved by 120 basis points year-over-year despite these headwinds provides further evidence that the underlying mix improvement is real. Looking ahead to the third quarter, based on our current outlook, we expect revenue to be between USD 68 million and USD 73 million. This would represent a year-over-year decline of approximately 4% to 10%.

The comparison base is important. Revenue in the third quarter of last year grew by 78.5% year-over-year to USD 75.8 million. Against that high base, the activation trends we observed in July and August indicated continued improvement in both product mix and consumer demand. The normal production ramp and the channel deployment cycle means that these improvements will not all be reflected in reported revenue immediately and our guidance incorporated that timing. We will remain disciplined in how we manage pricing, product positioning and growth quality.

Our priorities are to expand the contribution of higher-value products, improve the unit economics of our entry-level portfolio, restore supply for products where demand remains strong and build deeper and more durable brand credibility through professional products, athletes and sports communities. We believe these changes are establishing a higher quality, more resilient and more sustainable foundation for Zepp Health's future growth.

With that, I will now turn the call over to our Chief Financial Officer, Leon Deng, to discuss our financial results and outlook in greater detail. Leon, please go ahead.

Leon Cheng Deng

Thank you, Wayne. Greetings all. Let me walk you through our financial performance for the second quarter. Starting with top line. Our revenue came in at $63.5 million, in line with the guidance we provided. Total revenue grew approximately 7% year-over-year, primarily driven by the new product launches we introduced during the first half of the year, including, among others, Active 3 Premium, Active Max and Bip Max. As Wayne mentioned, our revenue this quarter was impacted by the timing of product launches and product availability, namely the Balance 3 series and the Helio Strap. While underlying consumer demand remained healthy, the timing of product availability affected the quarterly revenue contribution from certain new products, resulting in a temporary impact on near-term revenue growth.

Turning to gross margin. Our performance continued to reflect a combination of factors, including product mix, launch timing and normal product life cycle dynamics such as model upgrades. In Q2, our gross margin was 37.4% compared with 36.2% in the same period last year and broadly in line with the first quarter of 2026. The year-over-year improvement continued to reflect the structural strengthening of the Amazfit brand, driven by a stronger contribution from new products with premium pricing and healthy margins as well as continued ASP expansion supported by growing brand recognition and consumer adoption. At the same time, we continue to navigate certain cost headwinds, including higher memory component prices and foreign exchange fluctuations, particularly the appreciation of RMB. These factors partially offset the benefits from our improved product mix and margin expansion.

Looking to the second half, we are managing the headwind of higher memory costs that are putting downward pressure on our gross margin. As you know, the semiconductor industry is in the middle of a transition from DDR4 to DDR5 and high bandwidth memory driven by AI and data center demand. That is tightening supply for the memory chips we use and increasing costs across consumer electronics industry. Our global operations team has been focused since 2025 on securing sufficient supply to support our manufacturing demands. This means pursuing supplies through multiple channels. We're also leveraging our engineering expertise to optimize memory requirements across different and future designs, all without compromising product performance or customer experience. With regard to the effect of higher memory prices, we have a variety of levers to mitigate the impact.

Our focus is on managing the headwind thoughtfully without losing sight of the large opportunities to drive top line growth alongside increased profitability. On the topic of tariffs, we have filed refund of prior duties paid. The benefit could be another meaningful offset to the higher memory costs. So while memory headwinds are real, we are managing them from a position of preparation and expertise. We remain confident in the long-term margin opportunities of our business as our product portfolio continues to shift towards premium products and our brand positioning strengthens, we expect to continue improving the quality of our gross margin over time.

Turning to operating expenses. We remain committed to the prudent cost management discipline we initiated in 2020 and invest on opportunities where we see fit. Total adjusted operating expenses for the second quarter were USD 34.8 million compared with USD 26.4 million in the second quarter of 2025 and USD 35.7 million in the first quarter of 2026. The year-over-year increase of USD 8.4 million was primarily attributable to 2 factors. Approximately USD 2.7 million was related to foreign currency impacts, while the remaining USD 5.7 million was mainly driven by higher selling and marketing investments. On a sequential basis, operating expenses decreased slightly. Looking ahead, we will cautiously manage the overall expense level, especially when the pace of the new product launches in the second half moderates.

Adjusted R&D expenses were USD 10.8 million compared with USD 10.3 million and USD 11.9 million in the second quarter of 2025 and first quarter of 2026, respectively. Excluding approximately $0.7 million of foreign currency headwinds, R&D expenses were slightly lower year-over-year. We continue to invest selectively in cutting-edge products and emerging technologies, including AI, to further strengthen our competitive position. At the same time, we maintained a disciplined approach to R&D resource allocation, continuously improving efficiency and optimizing returns on our investments. Adjusted selling and marketing expenses were $18.2 million compared with $12 million and $16.4 million in the second quarter of 2025 and first quarter of 2026, respectively. The $6.2 million year-over-year increase was primarily driven by investments supporting new product launches and brand building, including $2.9 million in launch campaigns as well as $1.6 million in e-commerce platform fees, which increased in line with the revenue growth.

The remaining increase reflected strategic brand-building initiatives, including $0.7 million in athlete sponsorships, $0.5 million related to our HYROX partnership and another $0.5 million in physical retail and event activations. These events are designed to further enhance brand awareness, strengthen consumer engagement and support our long-term growth. Adjusted G&A expenses were $5.8 million compared with $4.1 million and $7.4 million in the second quarter of 2025 and first quarter of 2026, respectively. The majority of the year-over-year increase were attributed to foreign currency impacts. In addition, we continue to make targeted investments to protect our intellectual property rights and support certain legal and regulatory matters.

During the quarter, we also achieved a favorable income -- outcome with respect to the lifting of the Section 337 related exclusion order in the U.S. Beyond these strategic investments, we continue to streamline our overhead structure and maintain disciplined cost control while improving operating efficiency.

Turning to profitability. We remain focused on gradually improving operating leverage as we scale the Amazfit brand business while maintaining sufficient investment behind product innovations, software development and brand awareness. With higher revenue and improved year-over-year gross margin, partially offset by higher operating costs and unfavorable foreign exchange translation differences, our adjusted operating loss was $11.1 million compared with $4.9 million in the second quarter of 2025. Net loss was $31 million in the first half of 2026 compared with $27.5 million a year ago, including approximately $4.5 million in foreign exchange headwinds, primarily due to the appreciation of the RMB against the U.S. dollar.

Moving on to working capital. We continue to manage inventory carefully during the quarter. We recorded inventory of $62.4 million for Q2 2026, which was flat compared with Q1 2026 and decreased by $17.5 million compared with the same period last year. Inventory remained under tight control, reflecting our continued focus on improving inventory efficiency and aligning production and procurement more closely with actual market demand.

Turning to cash. We ended the quarter with a solid liquidity position. As of Q2 2026, cash and cash equivalents were $106.3 million, increased by $11 million and $3 million each compared with Q2 2025 and Q1 2026. The cash balance increase was primarily driven by enhanced working capital efficiency, which more than offset the net loss recorded during the period. The cash position provides ample runway for the company to invest and seize potential market opportunities in the future. We continue to actively manage our debt profile and overall financing structure. Long-term and short-term debt levels increased by $6.2 million as of Q2 compared with Q1 2026. The increase was entirely attributable to a rise in long-term debt with a corresponding decrease in short-term debt. We remain committed to prudently managing our debt profile. Our primary objective is to maintain overall debt levels broadly stable.

We're actively extending the maturity profile by replacing short-term borrowings with long-term debt. During the quarter, we successfully converted $13.3 million of short-term debt into long-term obligations, and we expect to continue this trajectory in the coming quarters, supported by sufficient financial headroom and liquidity capacity. Since the beginning of 2023, the company has cumulatively retired $40.2 million of debt, and we'll continue to optimize the capital structure going forward. We'll continue to take a disciplined approach to capital allocation, maintaining a healthy balance sheet and strong liquidity. Our first half performance demonstrates our ability to grow the Amazfit business while sustaining gross margins meaningfully above historical levels.

Looking ahead, we remain focused on strengthening our product portfolio, expanding our global brand presence, developing the Zepp ecosystem and Hybrid Training experiences and maintaining disciplined cost and working capital management. We also remain committed in our share repurchase program. As of Q2 2026, we had repurchased $17.6 million under the $20 million authorization. Overall, we remain focused on sustainable high-quality growth, supported by a healthier product mix, disciplined cost management and continued operational improvements.

With that, I will hand the call back to operator for Q&A. Operator, please go ahead.

Operator

[Operator Instructions]

And today's first question comes from Sid Rajeev with Fundamental Research Corp.

分析師問答

Siddharth Rajeev

I have 2 questions, if I may. First one, on the supply bottlenecks affecting Bip and Helio Strap, when do you expect these issues to be fully resolved? And how confident are you that supply will be sufficient to meet Q4 demand?

Leon Cheng Deng

On your question, I think we have explained earlier for Bip, we are almost -- we have almost removed all the restrictions of supply bottlenecks by now. But on Helio Strap, we are gradually working on fully restore the supply bottleneck. So in Q3, you will still see the impact of the supply constraint a little bit, but that has already been reflected in the guidance which we have provided. And in Q4, we're expecting the Helio Strap to be in full supply.

Siddharth Rajeev

Okay. And second question, selling expense increased significantly in Q2. Where do you see the biggest opportunities to reduce OpEx? And should we expect selling expenses to remain at similar levels in Q3?

Leon Cheng Deng

No, obviously not. I think if you look at my explanation towards selling expenses, you will see majority of the increase around $2.9 million are linked to the new product launches, which we have launched in Q2. Obviously, Q2, it was a busy quarter that we launched a lot of new products, if you can recall, right? I think to name a few, we probably have around 6 or 7 new product launches in Q2 in this quarter compared with 1 or 2 in the previous year. And you know each product are attached to certain amount on marketing efforts, activation, budgets, et cetera, et cetera. And you simply multiply by 7 or 6, that will be a sizable number.

But as I mentioned, we are almost done with new product launches for the year by now. So maybe there's only 1 or 2 in the second half of this year, but those are minor product launches compared with the ones we had in the first half of the year. So you will see the selling expenses moderate when the activity kind of moderates.

Siddharth Rajeev

In total, how many products are launched this year, to be exact?

Leon Cheng Deng

I think if I'm correct, in so far, we probably launched 9 to 10 products and there's still 1 to 2 in the pipeline. So there's going to be -- yes, it's a lot of new products.

Siddharth Rajeev

So 10 to 12 products this year. Last year, I remember it's 9. So is that a fair assumption?

Leon Cheng Deng

I think last year, it's less, but I can come back to this number later on.

Operator

And our next question comes from Frank Dugan at Brooks Investments.

Unknown Analyst

Leon, congratulations on the second quarter performance. So my first question is around your outlook for the third quarter of 2026. Can you walk us through the main reasons for expected revenue decline in Q3? And also, how do your profitability and cash flow look against current guidance?

Leon Cheng Deng

Yes. So I think as I have explained and also Wayne explained before, the Q3 outlook actually incorporates a few things. Number one, I would say you're looking at the macroeconomic situations around the world, there's inflation. Everybody is pressed on the discretionary income and the consumers are kind of squeezed because of the higher oil price, et cetera, et cetera, right? So naturally, the macro and on the demand side, people are more -- are less keen to buy new things. But that is the macro situation for consumer electronics. Number one -- that's number one.

Number two, we have explained that a lot of the impact, which goes into the Q3 guidance are linking to supply issues or supply constraints, which I just answered the question from Sid, namely Helio Strap, Balance 3 and Bip series. And then we're working towards resolving them and some of them will be resolved fully in Q3. Some of them will be resolved in Q4. So holiday season for Q4 would be a good quarter with full supply compared with what we have experienced in Q1 and Q2 to some extent.

Number three, I think it's linking to the new product launch windows and also on the process and the speed we can actually get the trade in selling them. For example, Balance 3, that's the situation. Number one, it's a beautiful piece of -- it's a piece of art of watch, which we developed for the Hybrid Training, but we just couldn't manufacture them good enough. It has a lot of difficulties in building them, which we believe that we are resolving them as we speak. So linking to the supply constraints, linking to the new product launch windows and linking to the bigger macroeconomy situation, we have come up with the Q3 number as you see right now. And mind you, last year, Q3, the base was $75.8 million, and that was a year-on-year growth over 2024, if I remember correctly, of more than 75%, right? So obviously, yes, we're doing our best, but it's -- a few of those factors, which I just mentioned has been taken into account in the guidance of Q3, which we put forward.

Unknown Analyst

Yes. And for the longer-term period, do you have any long-term strategy to get the business back to growing year-over-year?

Leon Cheng Deng

I think if my calculation is correct, I mean, first half of the year, we are still growing by more than 17%, 18% year-over-year. And if you account for even the low end of the guidance for Q3, we are still growing. And then if you heard us correctly, Q4, we are pointing or we're aiming to deliver a growth or at least go back to the growth trajectory. So altogether, if you add it all up, I think on a full year basis, we're still working or you're still looking at a growth trajectory for the top line.

Unknown Analyst

And lastly, my question would be around the market performance, especially Balance 3. And do you have plans to develop a subscription model for the business?

Leon Cheng Deng

Yes and no. I think we are having in our current Zepp App a subscription functionality, but it's more towards your sleep quality on how to get to relax better, changing your stress levels, et cetera, et cetera. But we are -- we believe that by providing all those professional functionalities for free to the user at this moment of time, it's also one of our key competitive edge against the competitors. So for now, I think except for the services, which I just mentioned, in short term, we don't have any subscription charges ideas on Balance 3 at this moment.

Operator

As there are no further questions, now I'd like to turn the call back over to the company's IR Director, Grace Zhang, for closing remarks.

Grace Yujia Zhang

Thank you once again for joining us today. If you have further questions, please feel free to contact Zepp Health's Investor Relations department. Thank you.

Operator

Thank you. This concludes the conference call. You may now disconnect your lines. Thank you.