Operator: Ladies and gentlemen. Thank you for standing by for Zepp Health Corporation's First Quarter 26 Earnings Conference Call. At this time, all participants are in listen-only mode. Today's conference call is being recorded. I will now turn the call over to your host, Ms. Grace Yujia Zhang. Director of Investor Relations for the company. Please go ahead, Grace.

Grace Yujia Zhang: Hello, everyone. And welcome to Zepp Health Corporation's First Quarter 26 Earnings Conference Call. The company's financial and operating results were issued in a press release about the Newswire services earlier today and are posted online. You can also view the earnings press release and the slides referred to on this call. By visiting the IR section of the company's website. Presenting today are Wang Huang, our founder and chief executive officer. And Leon Deng, our Chief Financial Officer. Joining us today we also have Mike Yan Yeung, chief operating officer and general manager of North America. And Eric Flemming, vice president of Capital Markets for 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. Private Securities litigation reform Act of 2000. 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 risk and uncertainties are included in the company's annual report on Form 20 F for the fiscal year ended 12/31/2025. And other filings as filed with the US Securities and Exchange Commission. The company does not assume any obligation to update any forward looking statements. Except as required under applicable law. Please also note that ZEP's earnings press release and this conference call include discussions of unaudited GAAP financial information, as well as unaudited non GAAP financial information. That press release contains a reconciliation of 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 us today. We are pleased to begin 2026 with a promising start delivering another solid quarter. In the first quarter, Amazfit branded revenue grew 33.8% year over year. Demonstrating exceptional resilience during what is traditionally a softer season for the consumer electronics industry. This strong performance was primarily driven by the successful launches of the Amazfit ActiveMax Active 3 premium. And our flagship T-Rex Ultra 2. Delivering this level of growth in a seasonally quieter quarter further enforces our conviction that the market opportunity we are capturing is structural rather than cyclical. More importantly, we do not view this quarter simply as a revenue growth story. We see it as another early validation of the structural changes we have been building. Stronger premium product mix, improving pricing power, expanding gross margin, and a clearer brand position in performance oriented training. During our last earnings call, I outlined how ZAP Health is evolving into a comprehensive hybrid training platform. Simultaneously, integrating Endurance strength and recovery through hardware AI driven training intelligence software, and data. Our 2026 ambition is clear. We aim to build a global leadership position in hybrid training. To advance this strategy, we further deepened our collaboration with HYROX, 1 of the world's fastest growing hybrid endurance sports organizations through a new exclusive 3-year global partnership This expanded partnership enhances the Tyros athlete experience across training, competition, and recovery. Leveraging a broader portfolio, of exclusive smart wearable categories, including smartwatches, smart rings, smart cameras, smart glasses, and smart-- alongside connected app experience, HYROX-specific training modes, and synaptic performance data integrations. This partnership represents more than a sponsorship; it is a strategic step for us to participate in and help shape the emerging hybrid training category. By engaging directly with HYROX global athlete community gym ecosystem, coaches, and race environments we can build a more authentic connection with users whose training behaviors span strength, endurance, recovery, nutrition, and performance readiness. This gives us a differentiated position in the market other than endurance and general smart lifestyle. While we have the opportunity to build authority around hybrid training. And a more complete training system. We believe 1 of the most important opportunities is the moment when a user moves from casual tracking to more serious training. At that point, the phone ecosystem becomes less important. And the training value becomes more important. HYROX and gym based hybrid training help create that moment. Allowing Amazfit to enter through app experiences training content, HYROX-specific modes, and lower friction products before users make a full device switch At the recent New York HYROX event, we introduced Balance 3 and the Balance Ultra in a real hybrid training environment. This launch setting was intentional These products are designed for users who balance strength, endurance, recovery, work, stress, and daily life. Powered by hybrid charge energy intelligence in the ZEP app. They bring together BioCharge live load, and the training load. Into 1 clear view of personal capacity helping users better understand when to push when to recover, and how to maintain consistency over the long term. These activities are important because premiumization is not only about higher price points. It is about building trust in the environments where serious users decide which brands they rely on By showing up in marathon preparation, trial, expedition environments, and hybrid training communities. Amazfit is strengthening the credibility required to support higher value products. Improved product mix, and long term pricing power. Our premiumization strategy is strongly supported by our hybrid training positioning. We are already seeing earlier evidence that users are willing to move up the price ladder across certain product families. Within the T-Rex lineup our higher priced premium models are becoming an increasingly meaningful part of the overall sales mix. This reinforces an important point. Consumers are not choosing Amazfit solely for affordability. In March and April, our premium T Rex models priced at $3.99 USD and $549 accounted for nearly 50% of total T-Rex family unit sales. As we continue to strengthen our product differentiation and premium brand positioning users are showing a growing willingness to engage with Amazfit at more premium priced tiers. By embedding hybrid training more deeply into both our hardware and software ecosystem We are enhancing the value of the Amazfit brand and driving a consistent shift toward higher end product positioning. This remains 1 of our key strategic priorities as the move into 2026 In the first quarter, this strategy delivered tangible results. This average selling price points, with average selling price increasing more than 20%. Year over year. Notably, even amidst rising memory component costs and broader storage chip price inflection we were still able to achieve gross margin expansion. Reflecting the effectiveness of our product mix improvement and disciplined cost execution. In April, we expanded this philosophy into 1 of the world's largest performance community: running. By adapting our hybrid training methodology, to runners We are enabling them to train more intelligently improve endurance, and support long term health and durability. These strategy is embodied in our newly launched Cheetah 2 lineup. Including the Cheetah 2 Pro, a performance focused watch designed for marathon training, and the Cheetah 2 Ultra engineered for the most demanding mountain and trail environments. Both integrate seamlessly with Zepp Coach with a full suite of running metrics. Metrics. And personalized training plans. recovery insights, and the third party training platform integrations These devices deliver structure hybrid style training guidance directly to Endurance runners. Further strengthening our penetration in the dedicated running segment. Notably, our first quarter growth was broad based across both entry and premium tiers. At the high end, the T Rex Ultra 2 crafted from grade 5 titanium elevates our price ceiling to US$550. Marking the highest in Amazfit's history and further reinforcing our premium brand positioning. At the same time, in our core value segments, the Amazfit ActiveMax and Active3 Premium positions around the $169 price point. Expanding our reach among everyday fitness enthusiasts and entry level runners beginning their structured training journeys. Most recently, we also introduced deep MAX, the latest addition to our most popular entry level series. Our strategic progress is also reflected in continued market share gains In the first quarter, we achieved sequential value share expansion across EMEA. The US, and Asia Pacific supported by strong performance across our full product matrix. According to third party data sources. Amazfit now ranks among the top 6 smartwatch brands in both The United States and Europe by value share. Underscoring the growing global presence. And market change of the brand. Turning to software, we continue to strengthen our ecosystem through ZAP OS. Proprietary features such as ZAP Coach BioCharge, and our expanding suite of hybrid training and HYROX modes are being deployed across a growing range of device driving deeper user engagement and retention. As we increasingly tailor our training intelligence for running and other endurance disciplines. Our software ecosystem is becoming a key reason users choose and remain loyal to our brand. further widening the competitive moat around our platform. Across running outdoor, and hybrid training we are increasingly connecting Amazfit products with real performance environments. And elite athlete validation. In running, Cheetah 2 Pro was supported by major marathon moments in Paris London, and Boston. Including acid proof points from Yeman Crippa Mao Puhua, and Rory Linkletter. In outdoor, T-Rex Ultra continue to gain credibility through high-altitude alpinism and real expedition use cases. This grace period strengthens the aspirational outdoor positioning of the T-Rex series. We also continue to build credibility around early performance moments. During the HYROX virtual major Amazfit athlete Joanna Wietrzyk completed a clean sweep of all 4 HYROX majors this season, while setting a new HIROS world record. We are also supporting Josh Kerr's project 2. This attempt to break mile world record at the London Diamond League Together, these moments reflect how Amazfit is showing up at the highest level of both hybrid training and endurance performance. Against the macro-economic backdrop, Our premiumization strategy expanding pricing power, vertically integrated supply chain, and diversify manufacturing footprint across China and Vietnam provide us with multiple levels to mitigate these pressures. We remain confident that the alignment of our product mix channel strategy, and cost structure will support sustainable growth and a clear path toward long term profitability. Looking ahead, to the second quarter, we expect revenue to be in the range of $63 million to $68 million. This outlook reflects continued year over year growth supported by demand across our product portfolio. While also accounting for normal shipment timing and product launch phasing during the quarter. More importantly, we will continue to focus on the quality of growth product mix, pricing power, growing gross margin structure, and user engagement rather than only short term revenue volume. With that, I would now turn the call over to Leon to walk through the financial details. Leon, please go ahead.

Leon Cheng Deng: Thank you, Wang. Greetings, everyone. Thank you again for joining our first quarter 26 earnings call. Let me start with revenue. In the first quarter of 26, our revenue was US$51.5 million. Up 33.8% year over year. In line with our guidance range. As Wang mentioned before, this growth was driven primarily by our new product launches, such as ActiveMax, Active 3 premium, and T Rex Ultra 2. Even as the first quarter is traditionally a low season for consumer electronics business. 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 the first quarter, gross margin was 37.7%, a net expansion of 0.4% compared with Q1 25. And moderated from the record high 40.4% achieved in Q4 25. There are 2 important points worth highlighting. First, the first quarter is traditionally the period where we refresh our entry level product portfolio. Which naturally carries a lower gross margin and therefore weighs on the sequential comparison. Second, during the quarter, we absorbed some higher memory component costs. As well as the impact of unfavorable foreign currency exchange fluctuation. Despite these headwinds, we still delivered year over year gross margin expansion, while gross profit increased 35.3% to US$19.4 million. This demonstrates the resilience of our operating model and the continued improvement in our brand positioning. Before turning to expenses, let me briefly address the macro backdrop. On memory, we expect higher memory costs to create near term pressure on gross margins. Driven by the industry-wide transition from DDR4 to DDR5 and high bandwidth memory. As AI and data center demand continue to tighten supply, We began preparing for this environment in early 2025 by securing supply through diversified sourcing channels to support manufacturing continuity. and we are also using our engineering expertise to optimize memory requirements across current and future products without compromising performance or customer experience. While this is a real headwind, we have multiple levers to help mitigate the impact including continued increases in average selling expenses, and a potential refund of previously paid PA-related tariffs. Which could provide some offsets. We believe we are managing this challenge from a position of preparation and discipline while staying focused on driving sustainable revenue growth and improved profitability. Now turning to expenses. We remain committed to prudent cost management program, which began in 2020 Total adjusted operating expenses for the first quarter were US$35.7 million compared with US$31.5 million in Q1 25 and US$37.1 million in Q4 25. Out of the year over year increase of US$4.2 million, there is a translation difference of approximately US$1.8 million operating expenses in the first quarter of 26. Due to euro and RMB appreciation to the dollars. Then US$1.4 million is directly attributable to certain e commerce platform charges. Which was a kind of fixed ratios sales channel charges. To drive revenue growth. Remaining The remaining US$0.6 million was primarily due to front loaded investments in marketing and branding activities such as CES and HYROX. Excluding US$6.2 million of 1-off provisions, first fourth quarter 25 operating expenses were approximately US$30.9 million The sequential increase of US$4.8 million was primarily driven by a US$1.8 million foreign exchange impact as mentioned above and a US$1.4 million increase in R&D investment to support new products launches in upcoming quarters. And a US$0.5 million of front loaded marketing and branding investments, and lastly, $200 thousand in severance costs related to targeted initiatives to enhance organizational efficiency. Going forward, we will maintain a cost conscious approach while continuing to invest in R&D marketing and branding activities that support our long term competitiveness. Let me break down the year over year and sequential comparison by line item. Adjusted R&D expenses were $11.9 million compared with US$11.5 million in the first quarter of 25 and US$10.2 million in the fourth quarter of 25. Out of the sequential increase of US$1.7 million $300 thousand was attributed to foreign currency translation differences. The remaining $1.4 million increase was due to investment in new products that will be launched in the coming quarters. We continue to invest in a series of cutting edge products and new technologies including AI, to maintain our competitive edge. While consistently evaluating resource efficiently to optimize our return on investment and productivity. Adjusted selling and marketing expenses were $16.4 million compared with $13.8 million in the first quarter of 25 and $15.6 million in the fourth quarter of 25. Of the year over year increase, approximately $800 thousand was attributed to foreign exchange translation differences Another $1.4 million was directly attributable to fixed channel costs that scale with our revenue growth. And the remaining $400 thousand was allocated to promotions and branding initiatives that fueled the adoption of our new products. Compared to Q4 25, selling and marketing expenses increased by $900 thousand out of which $400 thousand was attributable to the appreciation of foreign currencies against the dollar and the remaining $500 thousand was due to front loaded investments in marketing and branding activities. Such as CES and HYROX. At the same time, we continue to push retail profitability and channel mix improvement including meticulous refinement of our retail channels, and disciplined staffing arrangements, across our sales regions. Adjusted G&A expenses were US$7.4 million compared with $6.2 million in Q1 25, and $11.3 million in Q4 25. The year over year increase reflected approximately $300 thousand of foreign exchange translation differences, and $200 thousand in brand and intellectual property protection. Related fees. Excluding the US$200 thousand of non-recurring provisions in the fourth quarter, G&A expenses were $5.2 million in Q4 25, The sequential increase of US$2.1 million was mainly attributable to $1.1 million of negative foreign exchange impact as well as $200 thousand severance cost as part of the targeted initiatives to enhance organizational efficiency. We continue to streamline our G&A and drive operational efficiency. With higher revenue and improved year over year gross margin, partially offset by higher operating costs and unfavorable foreign exchange translation differences, our operating loss narrowed to $6.3 million compared with $17.2 million in the first quarter of 25. Adjusted net loss was $17.9 million or 34.8% of sales compared to $18.1 million or 41% of sales. In the first quarter of 25. Turning to the balance sheet and working capital. We continue to manage our inventory rigorously. Ending the quarter with inventory of $62.8 million, down from $72.8 million as of Q4 25. We ended the quarter with $103.2 million in cash, and cash equivalents. Nearly flat compared with $103.8 million a year ago. And lower than $112.9 million at the end of 2025. With the sequential decline driven primarily by our net operating losses net operating losses, and partially offset by improved working capital management. Turning to our capital structure, total debt including both short term and long term debt remained broadly stable both sequentially and year over year. We continue to actively manage our debt maturity profile and financing costs. As debt approaches maturity, we evaluate prevailing market interest rates, and available credit capacity to refinance or extend the duration of our borrowings where appropriate. The change in the mix between short term and long term debt in the first quarter of 26 was primarily driven by accounting classification at certain borrowing originally maturing in late 2026 or 2020 were reclassified from long term debt to short term debt due to their remaining maturity profile. Importantly, while the classification between short term and long term debt may fluctuate, from quarter to quarter, our long term focus remains on maintaining discipline control over total debt levels and optimizing our debt duration and interest expenses over time. Since the beginning of 2023, the company has cumulatively retired $46.7 million of debt and will continue to optimize the capital structure for the company. We also remain committed to our share repurchase program as of May as of March 31, 2026, We had repurchased $17 million out of the $20 million authorized program We view this program as an effective use of capital that aligns with our focus in delivering sustainable long term value to shareholders. Finally, our outlook. For the second quarter of 26 we expect revenue to be in the range of US$63 million to US$68 million representing year over year growth of approximately 6% to 14%. This outlook reflects continued year over year growth supported by demand across our product portfolio, while also accounting for normal shipment timing and product launch phasing during the quarter. More importantly, we will continue to focus on the quality of the growth rather than only short term revenue volume. With a healthy margin profile, disciplined cost control and continued operational improvement, We are well positioned to deliver sustainable growth and create long term value for our shareholders. Thank you all for your time today. I will now open the calls for questions Operator, please go ahead.

Operator: Thank you. If you would like to ask a question, please press * then 1 on your telephone keypad. And today's first question comes from Siddharth Rajeev with Fundamental Research Corp.

Sid Rajeev: Thank you. Congratulations on the strong Q1 revenue growth. In the last earnings call, Leon, you guided potentially 9 product launches this year, same as last year. With 4 announced so far, should we expect about 5 more this year? Am I in the correct ballpark?

Leon Cheng Deng: Yes. That I think in the end, we probably would have more than 9, but yeah, there are many new product launches are still on the way. Okay. Where do you see opportunities to reduce cost? Because it seems like it is difficult to cut R&D or marketing or branding expenses at point? No. that is not entirely right. So you see that the R&D expenses year over year actually increased a bit, It is because of the, new product launches we have to prepare for it. And I think towards the end of Q2, you will see that R&D expenses more going down because I think by the end of the first half, we will probably go through majority of the newer product launches, which we have scheduled for the year. Although there is going to be a bit left for the second half of the year, But I think you have witnessed that there is a lot of new product which has been launched already. Including the active max active premium, T-Rex Ultra 2, And now with the balance and Cheetah, And I think first half of the year is actually from a product launch perspective, a launch heavy first half. Therefore, R&D expenses is actually a little bit higher than before. But it should trim towards the norm starting from, the second half of the year and going forward. On the other hand, we are also, investing a bit or we front loaded some of the marketing expenses into Q1 and Q2. For example, we are hosting the Balance 3 product release in HYROX New York. Which is a high profile event Right? And that is all tied into the event timing so to say. And I guess we because of that, we spent some of the marketing expenses and branding related expenses more towards and skewed towards the first half of the year. And that should also average down in the second half of the year. So and not to mention G&A expenses, I think you will see A step down already in Q2 and going towards Q3 and Q4. So I guess we still stand behind the run rate of around $30 million a quarter or even lower than that. Which you kind of witnessed for, for the rest of the of the last year, as we as we go.

Sid Rajeev: that is good to hear. Just 1 more question, if I may. Is that for other industry players raising product prices to offset some of these higher memory cost.

Leon Cheng Deng: Yes. To some extent. Because we noticed that our competitors are also raising price. And not to mention Garmin. Right? But we compare with a lot of our competitors our pricing at this point of time is still relatively low. So I think we have more room to raise the price compared with our competitors. But, nevertheless, I think the we were we are focusing on the product itself. Right? So raising the price is definitely not the final goal. In the end, we wanna actually present to the user the best product with the best user experience and best features at the best price which they can get out of the market. So I think that is the goal that we want to strive for.

Sid Rajeev: Perfect. Thank you so much.

Leon Cheng Deng: Thank you, Siddharth.

Operator: Thank you. And our next question today comes from Frank Duggan at Brooks Investments. Please go ahead.

Frank Dugan: Thank Leon. Congratulations on the first quarter performance. My first question would be around the Q2 revenue guidance. And if you can talk more about that and how do you view the profitability outlook for the full year?

Leon Cheng Deng: Yes, Frank, thank you. We do not give the guidance on the full year. But hopefully, can give you some color to it later on. But with regard to Q2, you we just mentioned it is actually between 63 to 68 million which is, roughly a growth of 6% to 14%. But, however, you see this number is actually accounting for the normal shipment timing and product launch phasing during the quarter. So if we let's say, if we have certain products which we initially wanted to produce. And sell in Q2. And for some reasons, we could not manufacture those in time. And meet the time window, for, the cells. It might slip into Q3. And I think we have 1 or 2 examples of that. Which happens in Q2, which kind of impact our revenue Forecast for Q2. But, however, we, actually our long term strategy and our target for the for the year remains still on the profitable growth path because we see given Q1 and Q2, we see a continued year over year growth. And also, the this year over year growth, is supported by the demand across our product portfolio on a board base. We believe that heading into the second half of the year, we should be able to continue number 1, the growth path and number 2, if and for the 2026, full year, for sure, we are looking at a profitable growth over 2025. I hope that gives you some color for the for the future.

Frank Dugan: Yes. Thanks, Leon. And Yes, 1 more question around the new 3-year global HYROX partnership. How do you plan to leverage that to drive long term monetization?

Leon Cheng Deng: The HYROX, as you know, is actually part of or-- it is 1 of the bigger trend on hybrid training. Right? We kind of explained just now that we would like to establish, our authority in hybrid training through working very closely with HYROX. Right? It actually comes in 2 folds. Number 1 is as the participants of HYROX increase I mean, they increase by a lot over the past years. And we believe that it is going to continue to increase in the future. And looking at the New York HYROX is actually the participants is as many as the participants of New York Marathon. Right? So I think number 1 is we would definitely wanna deepen our relationship with HYROX and try to, make the features working better with HYROX, for example, helping the HYROX athletes to track their timing and then to deliver a better timing every time they race. and that is-- and hopefully, that would, also, make us and then establish the authority of our brand in HYROX. And also as Wang just mentioned, we by doing that, we would like to become users choice when they look beyond their current watch because for a normal user consumer, there is a moment in time that they start considering serious sports. Be it running, be it hybrid training, be it whatever it is. We want to actually by establishing the authority in HYROX, to become user's choice once they become serious on a specific sports in their journey, right? that is actually what we wanna do. through HYROX.

Frank Dugan: Right. Thanks again.

Leon Cheng Deng: Yeah. Thank you.

Operator: As there are no further questions, I would like to turn the call back over 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 this conference call. You may now disconnect your line. You and have a pleasant day.