Zepp Health released its financial report for the third quarter of 2021 on Tuesday. The company’s revenue was 1.6 billion yuan ($249.3 million), down 28.1% compared with the same period of last year, and total units shipped in the third quarter decreased by 37.7% year-over-year to 9.9 million, compared with 15.9 million in the third quarter of 2020. Net profit decreased from 81.1 million yuan in the same period last year to 49.3 million yuan, down 39.2% year-on-year.
According to the company’s financial report, the R&D expenses of Zepp Health in the third quarter of 2021 were 108.7 million yuan, a decrease of 37.1% year-over year. Sales and Marketing expenses in the third quarter of 2021 was 90.7 million yuan, decreasing 21.5% year-over-year. Gross margins in the third quarter of 2021 was 20.2%, compared with 20.6% in the same period of 2020.
Zepp Health’s main business is smart wearable products but is also a well-known OEM manufacturer of Xiaomi‘s Mi Band. Regarding the sharp decline in revenue and product shipments in the third quarter, Leon Deng, its Chief Financial Officer, said: “The third quarter topline performance reflected the different timing for the launch of Xiaomi‘s new Mi Band in the second quarter this year, as well as impacts of supply chain slowdowns and chip shortages.”
Because Zepp Health’s revenue heavily depends on Xiaomi‘s products, the company has been trying to promote OBM in recent years. In 2015, Zepp Health launched its own OBM Amazfit. In 2018, Zepp Health acquired the core assets of Zepp, a smart wearable products brand, and established it as another OBM.
In this quarter, Zepp Health’s OBM performed well. “Despite global supply chain and chip shortage challenges affecting many companies, we are pleased to meet our guidance range for the third quarter of 2021,” said Wang Huang, Chairman and CEO of Zepp Health. “Even without any new product launches, unit shipment volumes of Amazfit and Zepp branded products increased 89% year-over-year.”
Recently, Zepp Health have launched a new generation of products – the GT3 series equipped with a new and self-developed operating system, Zepp OS.
Zepp Health’s board of directors has approved a share repurchase program whereby the company is authorized to repurchase up to $20 million worth of its shares over the next 12 months.
In addition, for the fourth quarter of 2021, the management of the company currently expects net revenues to be between 1.75 billion yuan and 2 billion yuan.