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    Siddharth Rajeev • Fundamental Research Corp.

    Siddharth Rajeev's questions to Zepp Health Corp (ZEPP) leadership

    Siddharth Rajeev's questions to Zepp Health Corp (ZEPP) leadership • Q2 2025

    Question

    Siddharth Rajeev of Fundamental Research Corp. inquired about the drivers for the recent share price increase, the product launch cadence for H2 2025, the potential to reach 40% gross margin, and the specific tariff impacts from China versus Vietnam.

    Answer

    CFO Leon Cheng Deng attributed the share price movement to strong product reception, a market re-evaluation of undervalued hardware companies, and ZEPP's success in taking market share. He confirmed a robust pipeline of new products for the second half of 2025. Deng explained that while H1 gross margins were affected by entry-level product mix, he expects margins to expand in H2, driven by new, higher-margin products. Regarding tariffs, he detailed the ~25% rate from China versus near-zero from Vietnam, noting the company is mitigating this impact by shifting production and leveraging efficiency gains.

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    Siddharth Rajeev's questions to Zepp Health Corp (ZEPP) leadership • Q2 2025

    Question

    The analyst inquired about the drivers for the recent share price increase, the product launch pipeline for the second half of the year, gross margin targets, and details on tariffs for products imported to the U.S. from Vietnam versus China.

    Answer

    Management attributed the share price spike to strong product performance, brand recognition, and a market re-evaluation of the company's value. They confirmed a robust pipeline of new products for H2, which is expected to improve the product mix and expand gross margins. They also detailed their strategy of using Vietnamese manufacturing, which has near-zero tariffs, to mitigate the ~25% U.S. tariff on Chinese goods.

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    Siddharth Rajeev's questions to Zepp Health Corp (ZEPP) leadership • Q4 2024

    Question

    Siddharth Rajeev of Fundamental Research Corp. inquired about the impact of new U.S. tariffs on Chinese imports, seeking details on Zepp's supply chain diversification. He also asked for clarification on the significant increase in taxes and the nature of the $13 million impairment loss. Finally, he questioned whether the market was shifting towards lower-priced smartwatches given Apple's sales decline and the rise of Chinese players.

    Answer

    Chief Financial Officer Leon Cheng Deng explained that Zepp anticipates minimal impact from U.S. tariffs due to its proactive supply chain diversification, with products for the U.S. market now manufactured in Southeast Asia. He clarified that the impairment loss was a one-time, non-cash charge on underperforming past investments and the tax item was a technical, non-recurring deferred tax asset allowance. Regarding market trends, Leon countered that the premium sports segment is growing, citing Garmin's success and the strong performance of Zepp's own higher-margin T-Rex 3, attributing the overall market softness to Apple's lack of updates and a collapse in India's ultra-low-end segment.

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    Siddharth Rajeev's questions to Zepp Health Corp (ZEPP) leadership • Q3 2024

    Question

    Siddharth Rajeev from Fundamental Research Corp. questioned the drivers behind the expected Q4 revenue spike, the specifics of the T-Rex 3 supply constraints, the cause of the Q3 foreign exchange loss, and the company's plans for its significant cash balance.

    Answer

    CFO Leon Cheng Deng explained that the Q4 revenue surge is anticipated from resolving T-Rex 3 supply issues, new product ecosystem sales (OWS earbuds, Helio Ring), and strong seasonal demand. He clarified the T-Rex 3 constraint was due to unexpectedly high demand for the premium product, which is now being addressed. The Q3 forex loss was attributed to a sharp, unhedged RMB appreciation, which he expects to become a tailwind in Q4. Regarding the $128M cash position, Deng prioritized the extension of the share buyback program and strategic marketing investments over large-scale M&A, though small bolt-on acquisitions are not ruled out.

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