Hello, ladies and gentlemen. Thank you for standing by for Zepp Health Corporation's Second Quarter 2025 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 Zhang, Director of Investor Relations for the company. Please go ahead, Grace. Hello, everyone, and welcome to Zepp Health Corporation's Second Quarter 2025 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 at ir.zepp.com. Participating in today's call are Mr. Wang Huang, our Chairman of the Board of Directors and Chief Executive Officer, and Mr. Leon Deng, our Chief Financial Officer. The company's management will begin with prepared remarks, and the call will conclude with a Q&A session. Mr. Mike Yeung, our Chief Operating Officer, will join us for the Q&A session. 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 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 is included in the company's annual report on Form 20-F for the fiscal year ending December 31, 2024, and other filings as filed with the U.S. 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 Zepp'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 the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. I'll now turn the call over to our CEO, Mr. Wang Huang. Please go ahead. Thank you, everyone, for joining us today. I'm excited to share that Zepp Health delivered an exceptional performance in the second quarter of 2025, achieving a remarkable 46% year-over-year increase in revenue to $59.4 million, all revenue contributed by Amazfit brand. This is impressive not only on its own merits, but also as it marks our first quarter of year-over-year revenue growth since the second quarter of 2021. A significant milestone in our business transformation, and this is just the beginning of our growth trajectory. We are confident these initiatives are forging a robust operational and financial foundation to support sustained long-term growth. After years of refining product competitiveness, building brand awareness, and fostering user trust, our strategic vision has never been clearer or more resolute. Our core product lines vividly embody our guiding philosophy: train, recover, evolve. In the second quarter, our adventure series, the T-Rex smartwatch, maintained its competitive edge with sustained volume growth. It is setting new standards in the premium outdoor smartwatch category with extreme durability, unmatched battery life, and advanced sports modes like HYROX race and training mode. Our adventure series is strengthening our credibility among endurance sports professionals and high-performance users, an audience pivotal to our long-term premiumization strategy. Moreover, we introduced a new integrated solution for training and recovery with the Balance 2 smartwatch and the Helio Strap. The Balance 2 is designed for multi-sport athletes, offering advanced tracking for various sports, heart rate variability, and recovery insights. Priced at $299, this flagship integrates 40,000-plus golf maps worldwide. This 1.5-inch high-brightness subdial crystal display for clear outdoor visibility. A 100-meter water resistance for scuba diving. Industry-leading GPS accuracy with patented circularly polarized antenna technology for urban canyons. An AI-powered Zepp Coach for runners. This all-in-one device consolidates capabilities typically requiring multiple watches from competing brands. As the most premium offering in Amazfit's mainstream lineup to date, the Balance 2 flagship expands our user base and sets a solid foundation for future growth. The Helio Strap, Amazfit's first screen-free fitness recovery and sleep tracker, has garnered extensive praise from KOLs and high-customer acclaim, helping us tap into a new and underserved market niche. It offers subscription-free 24/7 health monitoring and advanced AI-driven smart training and recovery metrics, and is an attractive alternative to competitors' products, which traditionally require premium subscriptions priced at above $200 per year. Helio Strap complements the Balance 2 with continuous heart rate monitoring and 27 workout modes. Both devices sync effortlessly through the Zepp app. Its 24/7 operation, data fusion, and integration into a complete ecosystem distinguish us from prominent competitors. Most recently, Helio Strap has been recognized by professional review influencers, the Quantified Scientist, as the most accurate heart rate monitoring device among all the watches and fitness trackers they have tested, surpassing industry well-known brands. At the same time, our entry-level Bip 6 and lifestyle-oriented Active 2 series continue to see steady growth across major global markets, earning strong support from retail and Amazon partners, including better sales placement, increased ordering volume, and deeper co-marketing efforts. This helps further expand brand awareness and reinforces the resilience of our tiered product strategy. Together with the new product launches in the second quarter, we also upgraded Zepp OS to Zepp OS 5.0, powered by AI. Zepp Flow 2.0 redefines training with voice-controlled workouts, real-time environmental data, and personalized fitness insights, delivering an intuitive, hands-free experience. Through deep integration with OpenAI and Google Gemini, Zepp OS 5.0 achieves substantial advancements in both functionality and performance at a lower cost. The system now operates faster with expanded capabilities. Most notably, our foot-locking feature recognizes more foots and auto-catch plays their calories for users. In the meantime, our hardware and software ecosystem is expanding with integrations from third-party platforms like Strava and TrainingPeaks. We are actively working on integrating their sensors and solutions to provide more value to Amazfit users. Operationally, our flexible supply chain and multi-region sourcing strategy has effectively shielded us from the impact amidst trade uncertainties and shifting tariff policies, reinforcing our competitive edge. By strategically diversifying our manufacturing capacity across China and Vietnam and actively evaluating further expansion opportunities within the NAFTA region, our operational performance in the first half of this year demonstrates our ability to mitigate the majority of the tariff headwinds through greater product demands and global efficiency gains. In terms of branding and marketing positioning, our integrated region sports community strategy continues to deliver outstanding results by strategically leveraging the influence of globally celebrated athletes and collaborating closely with emerging sports communities like HYROX. We have significantly boosted our global brand recognition. These carefully curated partnerships have enhanced consumer trust, deepened emotional connections with diverse users' demographics, and amplified our market presence worldwide. In the recent HYROX event in Chicago and Hong Kong, our product made an extraordinary presence among the sports enthusiasts. We continue to cultivate a robust Amazfit athletes team, and to date, we have over 10 sports stars on board, including Gabby Thomas and Jasmine Paolini. This quarter, we are thrilled to welcome NFL first-tier athlete and Pro Bowler running back Derrick Henry and Ultra Runner, Rod Farvard to our athlete family. We are committed to continuously creating greater value for the entire Amazfit community, our users, athletes, and all stakeholders alike. Moreover, our targeted multi-layered global marketing campaigns across platforms like YouTube, TikTok, and Instagram have created a powerful marketing matrix. From authentic functionality tests by tech influencers to fitness scenario demonstrations by wellness creators and high-profile endorsements by professional athletes, this approach has successfully elevated Zepp Health's global brand perception, resonating deeply with our target audience. The recent Amazon Prime Day serves as a perfect showcase of the effectiveness of our marketing outreach. In U.S.A., Amazfit ranked as the second most improved wearable brand year-over-year. In the EMEA region, our Prime Day sales surged by approximately 60% compared to the 2024 event. In summary, this outstanding quarter represents a powerful validation of our strategic transformation. Our relentless focus on sports tech and premium high-end tech products has differentiated our brand in the highly competitive wearable technology market. Innovation, strategic partnerships, and operational excellence are fueling our momentum and shaping the future of connected sports experience. To capitalize on the industry's upcoming peak season, we are expanding our premium product portfolio with a flagship device designed to fortify our competitive edge and long-term business soon. Stay tuned. With all the things mentioned above, we are poised to capture additional market share, drive continued growth, creating sustainable value for all stakeholders. Thank you once again for your unwavering support and confidence in Zepp Health. We are incredibly excited about the future and look forward to delivering continued excellence as we progress through the second half of 2025 and beyond. I will now turn the floor over to Leon to go over the highlights of our second quarter financial results. Thank you, Wang. Greetings, everyone. Thank you again for joining our second quarter 2025 earnings call. Let me start by highlighting some key metrics from our financial results for the second quarter of 2025. I would like to start off by recapping the recent campaigns, such as the Helio Strap debut in HYROX Chicago, which led to a substantial increase in search activity and engagement. As Wang mentioned for Prime Day, we achieved significant year-over-year growth in both the U.S.A. and EMEA regions. In the U.S., Amazfit ranked as the second most improved wearable brand year-over-year. In Europe, we significantly outperformed the overall smartwatch category growth of 32%, with particularly strong sales in Germany, Italy, and France. Our growth in the mid-to-premium smartwatch segment was propelled by strategic pricing, positive customer feedback, and effective offsite brand awareness initiatives. This strong performance sets the stage for continued success, with momentum building ahead of key events, such as Black Friday for 2025. Now let's turn to the financials. We made impressive progress in the second quarter, with robust sales driving a 46% year-over-year revenue increase, reaching $59.4 million, exceeding the upper end of our previous guidance, primarily driven by the strong demand for our Bip 6 and Active 2 series, as well as the continued success of our T-Rex 3 series. These results highlight the effectiveness of our strategic shift to our Amazfit-branded product ecosystem, with the market recognizing our efforts and positioning the Amazfit brand for a new phase of value reevaluation. Our performance is even more impressive in the context of the quarter's dynamic market environment. Tariff policies and global wearable technology trends continue to evolve, presenting both challenges and opportunities. Our proactive supply chain management and diversified manufacturing process enhanced our operational resilience, while our value-centered product approach allowed us to deliver advanced features at more accessible price points, reinforcing our competitive edge. Turning to gross margin, it was influenced by various factors, including product mix, product launch timing, and product life cycle upgrades, such as model upgrades. In Q2 2025, we achieved a gross margin of 36.2%, on par with Q1 2025, but down slightly year-over-year due to a higher revenue proportion of relatively lower margin entry-level products, namely Amazfit Bip 6 and Active 2 smartwatches, and the clearance of older mid-range Balance 1 products to prepare for Balance 2 range launches. For the third quarter, with a full quarter of Helio Strap and Balance 2 sales, as well as several planned new product launches, we expect gross margin to expand. Now let's turn to costs. We remain steadfast in our commitment to cost management, continuing with the program that we began in Q3 2020 on reducing overall operating costs. Our overall adjusted operating cost in the second quarter comes in at $26 million, compared to $25 million in the second quarter of 2024 and $32 million last quarter. By maintaining a cost-conscious approach, we're actively moving towards a run rate of approximately $25 million per quarter for operating costs. Currently, we remain committed to investing in R&D and marketing activities to ensure our long-term competitiveness. Research and development expenses in the second quarter of 2025 were $10.3 million, and they increased by 4.2% year-over-year. The increase was a result from our investment in new technologies, including AI, to maintain our competitive edge against our peers. We also have more new products in the pipeline, so stay tuned. At the same time, we focus on refined research and development approaches as we consistently evaluate resource efficiency to ensure maximum return on investment and productivity. Selling and marketing expenses in the second quarter of 2025 were $12 million. They increased by 15.1% year-over-year and decreased by 12.7% quarter-over-quarte r. The year-over-year increase was primarily due to the promotional campaigns to build brand recognition and drive sales growth. The quarter- over- quarter decrease was primarily due to the absence of large-scale physical product launch events, such as the CES held in the first quarter of 2025. However, we continue to invest in selling expenses and signed a few more renowned athletes to expand our Amazfit athletes team in order to build brand recognition. At the same time, we consistently pushed on retail profitability and channel mix improvement. We're committed to investing efficiently in marketing and branding to ensure our sustainable growth. G&A expenses were $4.1 million in the second quarter of 2025, compared to $4.4 million in the same quarter of 2024. As a result, we narrowed our adjusted operating loss to $4.9 million for the quarter, an improvement of 42% compared to last year. The first half of the year is typically the season with lower sales compared to the second half of the year, which resulted in an inability to fully cover our operating cost expenses. As of June 30, our overall cash balance stood at $95 million compared to $103 million in Q1 2025. Inventories increased slightly due to preparations for upcoming new product launches. Overall cash position saw a small quarter-on-quarter decrease, largely influenced by timing and operating performance factors, offset in part by solid working capital management that continues to deliver strong results. In Q3, we expect our overall cash balance to grow from its current levels. In terms of capital structure, our overall long-term and short-term debt levels remained consistent between the first and the second quarter of 2025, following the restructuring we completed during the first quarter. We refinanced a significant portion of our short-term debt into long-term instruments with a more favorable interest rate and a two-year duration, which significantly reduced near-term liquidity pressures and enhanced our overall capital structure. Since the first quarter of 2023, the company has accumulated a retired $68.0 million of debt. We'll continue to optimize the capital structure for the company. We're pleased to reconfirm our commitment to our share repurchase program in 2025, reflecting our confidence in Zepp's fundamentals and long-term trajectory. We believe our valuation continues to represent an attractive opportunity to return value to shareholders in the current market environment. Finally, our outlook for the third quarter of 2025, we expect revenue to be in the range of $72- $76 million, representing a 70%- 79% year-over-year growth compared to $42.5 million in the third quarter of 2024. Furthermore, our efforts to reduce operating expenses and improve gross margins are proving effective even as we invest in developing and launching new products. We're very excited to enter the next phase of our post-transformation development with strong momentum. Thank you all for your time today. I will now open the calls for questions. Operator, please go ahead. Thank you. We will now begin the question and answer session. To ask a question, you may press star and then one on your touch-tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Once again, it is star and then one to ask a question. At this time, we will pause momentarily to assemble our roster. Our first question today will come from Sid Rajeev of Fundamental Research. Please go ahead. Thank you. Congratulations to the entire team at Zepp on a strong quarter and your strong guidance for Q3. Firstly, could you please give more color on the recent spike in share price and drivers? Sid, yeah. I think it's, if you ask me, there's a few things which are happening. Number one, we continue to see that our products are well received by the markets, and our brand is getting noticed everywhere. I just mentioned that we had one of the best Amazon days we had in the company's history, right? The second thing I would say, probably it's coming out of the value discovery journey, which is happening right now in the overall market, yeah, because a lot of investors probably see that smart hardware companies like us are taking market share versus competitors. I think I mentioned this many times before, we are hugely undervalued if you look at the fair value of our shareholder equity value or if you look at our peers, right? I'm not surprised by the recent share price movement. As a management, we believe if we continue to execute the strategy which we embarked upon, you will see continued growth and then the value reevaluation, as I mentioned in my script, in the upcoming quarters and years. Thank you. How many more product launches in the second half of the year versus how many did you launch in the first half? I think on the first half, we in Q1, we launched our entry-level new products. We refreshed the line, and it's actually well received by the customers. To name a few, it's Bip 6 and Active 2. In Q2, we actually managed to refresh our mid-tier line, the Balance 2, and also we coupled that with a new device, which is called Helio Strap. It's actually well received by the customers, and it has been ranked as the best heart rate sensors out of all the wearables which the KOL has ever tested. In the upcoming quarters, I think I'm sorry, I cannot tell you exactly what it is, but if you listen to Wayne's script and if you listen to my script, we have very exciting products in the pipeline for Q3 and Q4. I think it will be for sure on par with the new product launches we had in the second half of the previous year, if not more. We do have a lot of new products in the pipeline in the upcoming quarters. Got it So stay tuned. Got it. Thanks. In terms of gross margins, I know you said you expect gross margins to improve in the coming quarters. Do you think you can hit closer to 40% for the full year? Yeah, we don't guide on gross margins, but our business has a seasonal factor here. If you look at Q1 and Q2, we launched our entry-level, we refreshed our entry-level line, and then rightfully so, entry-level lines carry less than our premium or mid-tier product lines' gross margin. That actually has a small mix impact in the first and second quarters' gross margin you see. As we're heading into Q3, we have a full quarter of Balance 2 and Helio Strap and also the new products, which is on the horizon for us to push into the market. Those would definitely lift the product mix for the second half of the year for the company. I for sure would expect that our gross margin could expand in the second half of the year. That is how you should look at the gross margin for our company for the upcoming quarters and for the full year. Okay. Just one final question, if I may. Given a lot of back and forth on tariffs, are you able to tell us more about what percent of your imports to the U.S. comes from Vietnam? What are the current tariffs you are experiencing for your Chinese and Vietnam production? No. Okay. I think it's public information, right? If I'm shipping the products from China to the U.S., the tariff at this moment is just south of 25% at this moment, yeah, for our product category. If we're shipping the same thing out of Vietnam towards the U.S., the tariff impact on that is close to zero because on certain products between Vietnam and the U.S., there's a tariff waiver on it. The idea here is that if we can ship as much as a product out of Vietnam to the U.S., then we can mitigate the tariff impact in full. Rightfully so, if you look at our impact for the first and second quarter on the tariffs, it's almost, or I have to say, it's better than what we have expected. Yes, there's some impact on the tariffs, especially on the part from China to the U.S., but then we could offset the majority of that through productivity gains in the other parts of the bump. Thank you so much, Leon. Okay. Thank you, Sid. Our next question today will come from Dylan Chu of Point72, Hong Kong. Please go ahead with your question. Hey, good morning, management. Thanks for the opportunity to ask questions. Congratulations on the strength set of results. Maybe two questions, just following up on gross margin. Number one would be, what kind of sales contribution would you expect from the new Helio Strap launch? What kind of gross margin do you expect the product to carry? How would it sort of evolve as it scales? Anything else to wrap up? Number two, say in the medium term, in two to three years, as your sales product makers continue to improve, how should we think about our gross margin benchmarking against the Garmin's fitness lines? Because right now, at around 40%, we're sort of close to their opening margin. If we further upgrade our product makers' time to fund you, if you can give us a bit of color on your medium-term gross margin of thought. Thank you. Hi. Yeah. Let me comment on your first question first on the Helio Strap, right? The Helio Strap, we only launched it in June. After we launched it in June, it actually received very good popularity from the customers who bought it. I think this product, if you ask us, it has a unique value to our company because we are being noticed, and it's the first time that serious performance users are actually buying our devices for the reason that we have the best HR and the hardware sensors in the market, and we also have the best insights which can be provided by our Zepp OS and our app towards the users who are using it. We also mentioned that if you benchmark this product against its competitors, it's much cheaper, it's much better from a performance perspective, and it's gaining popularity. I think if you ask me, we're having more supply constraint versus the demand. Helio Strap in itself, it carries a very healthy gross margin because on one hand, it's a relatively cheap product. It has been priced at $99, right? On the other hand, it has a quite healthy gross margin, which is on par with the overall company's gross margin we're currently having, right? The more we can sell on the Helio Strap in the future, it might become a separate line by itself. It's still very early to say. That's how you should look at the Helio Strap. If I come back to your second question, obviously, if you go back to the products we have, on a very ballpark, we have the outdoor series, which is represented by T-Rex. We have the Balance series, which is our mid-tier product, which is competing against the mainstream Apple and Samsung Watch. We have the Essential series, which is in the price range of around $100, which is representing the Bip 6 and Active 2 watches we're having. We're actually covering the full price range of different price ranges for the smartwatches and different ranges from the entry level all the way to the most high-end watches. Obviously, it carries different gross margin from low to high, right? On a mixed perspective, we think the proportion of the high-end and the mid-end products will continue to expand in a mid-term, over two years to three years' time frame or maybe shorter than that. We still want to have a good base and a funnel from the entry-level products because we also see that there's a growing demand and popularity on the products which we priced at $100. This is maybe a quite long answer to a question. I think in the upcoming two years or mid to long term, you should expect our gross margin to further expand above the 40%, which we set as a goal for now. Yeah, thank you. That's very clear. Could I please maybe follow up for one quick question? You mentioned the Helio Strap is running into a little supply constraint. I'm just wondering, when do you expect it to sort of improve? What kind of capacity or volume of fabrication can we possibly have over the next year? No, I think we're working day and night to improve on the supply issues as we speak. I think in Q3, we should be able to resolve it. That's why you should be able to see a full Q3 with the Helio Strap performance from a runway perspective. Got it. Thank you. That's all my question. Thank you. Thank you. Our next question today will come from Frank Dugan of Brooks Investments. Please go ahead. All right. Thank you. Congratulations for such a good quarter. I only have one question. You mentioned a very strong guidance for the third quarter. What is going to be the main driver for this? I think I just mentioned there's a few things. Number one, the Essential series, the Bip and Active 2, the entry-level products, continue to get traction, and we have a very strong Amazon Prime Day performance out of those two products. These two products will continue to perform for Q3. Also, from a seasonality perspective, Q3 and Q4 are typically the high seasons for smartwatch and electronics purchase, right? That's number one. Number two, we recently launched Balance 2 and the Helio Strap. Those are two products which we launched in June, and it's actually a big and major refresh of our mid-range products. It actually received very good reviews from the KOLs and also the consumers. These two products are going to continue to perform in the course of Q3, and it will be a full quarter performance. What you see in Q2 is only one month, right? That's number two. Number three is that our T-Rex 3, which is our flagship line, continued to perform. It actually performed, it was well received the moment it was launched last year, Q3, and then every quarter, it's just steadily growing in its popularity. These three lines, as we just mentioned, will continue to perform in Q3. Not to mention, we have something which Wang also hinted to, an interesting product which we're very proud of to be launched in Q3 as well. A factor of the four would drive the growth for Q3. Okay, thank you. Thank you. Ladies and gentlemen, at this time, we will conclude our question and answer session. I'd like to turn the conference back over to Grace Zhang for any closing remarks. Thank you once again for joining us today. If you have further questions, please feel free to contact Zepp's I nvestor Relations department through the contact information provided on our IR website. Thank you. The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect your lines.