Huami Technology (ZEPP.US) announced unaudited financial results for the second quarter of 2024 on August 21. The revenue for the second quarter of 2024 was $40.6 million, a 56.0% decrease year-on-year; the gross margin was 40.3%, compared to 22.0% for the same period in 2023; the net loss attributable to the company for the second quarter of 2024 was $10.8 million, compared to $10 million for the same period last year. The adjusted net loss (excluding stock-based compensation expenses attributable to the company) was $9.9 million, compared to $8.5 million for the same period last year. Basic and diluted net loss per share was $0.04; basic and diluted net loss per ADS was $0.17.
As of June 30, 2024, the company's cash and cash equivalents and restricted cash were $0.1287 billion, maintaining a similar level compared to the first quarter of 2024. Despite being in a loss state, this cash position provides the company with the runway for investment and seizing potential market opportunities.
Huang Wang, Chairman and CEO of Huami Technology, commented: "Our second-quarter performance aligns with our guidance, highlighting a sequential growth in sales of our self-owned brand products and achieving historically highest gross margin. Despite the year-on-year decline in revenue, we are confident that the most challenging transformation phase has been successfully overcome." Mr. Huang added, "We recently launched ZeppOS4, which is a major leap in wearable technology, integrating OpenAI's GPT-4 to make Amazfit smartwatches more effective as health companions. As we prepare for the Berlin IFA exhibition, we are excited to introduce the T-Rex3 outdoor smartwatch with our custom-designed chip and new open-ear stereo (OWS) earbuds. The integration of smartwatches, rings, and OWS earphones creates a seamless user experience loop, providing us with a competitive advantage and positioning us for growth. In addition, our R&D team has made significant AI breakthroughs, and we plan to launch new AI hardware in the next six months, marking a new chapter in wearable technology. These efforts are part of our broader strategy to increase the brand and product global visibility. Through partnerships with outstanding athletes and sports events, we continue to build a strong, recognizable brand image and establish meaningful connections with global consumers. Through these brand and market investments, we have solidified our presence in populous countries such as China, India, and Brazil. Additionally, we have made breakthroughs in Germany, deepened cooperation with France's Decathlon, and steadily improved our global gross margin. We believe that our growth momentum will continue into the second half of the year."
Huami Technology's CFO, Deng Cheng, added, "In the second quarter, our sales of self-owned brand products increased by 6% sequentially, and the gross margin reached 40%, continuing the quarterly expansion that began in the third quarter of 2023, marking the highest gross margin in the company's history. The improvement is primarily due to the higher gross margin of self-owned brand products, benefiting from an increased proportion of new products and a more selective inventory clearance method. We expect this positive gross margin trend to continue into the second half of the year. It is important to reiterate our strategy, which prioritizes profitability and utilizes self-owned brand revenue to sustain the overall performance of the company. Despite the decline in sales, our net loss for the first half of 2024 narrowed compared to the same period last year. With new products planned for the second half of 2024, we are confident in the recovery of profit growth. In addition, our cash balance remains stable at approximately $0.129 billion, and the inventory level has reached its lowest point since the first quarter of 2023. We will continue to execute our share repurchase program to demonstrate our confidence in Huami's strategic approach."
Looking ahead to the third quarter of 2024, the company's management currently expects net revenue to be between $45 million and $60 million, representing an 18% to 59% increase in revenue from self-owned brand products compared to the second quarter of 2024.
