NEWS WRAP: Zepp returns to revenue growth as its shares continue to rally

The company’s revenue rose 46% in the second quarter, and it forecast the rate would jump to more than 70% in the third quarter

By Doug Young

Shares of Zepp Health Corp. (ZEPP.US) rose more than 30% on Monday, extending gains that have seen the stock rise about sevenfold since June, as the wearable fitness device maker returned to revenue growth and said it expected the rate to sharply accelerate.

Zepp’s shares finished up 34% on the day at $17.42, reaching a three-year high, after trading most of this year in the $2 to $3 range. The company formerly derived most of its revenue from making products under a licensing agreement with smart device maker Xiaomi (1810.HK). But in the last few years it has shifted to developing its own brands that carry higher margins.

Zepp has found growing success by focusing on the lower end of the wearables market, offering generally well-reviewed products under the Amazfit and Zepp brands that often sell for $100 or less. As those products gain traction, the company posted its first year-on-year revenue growth in the second quarter for the first time in four years.

The company said its revenue rose 46.2% year-on-year in the quarter to $59.4 million, and forecast even stronger growth of 70% to 80% in the third quarter to between $72 million and $76 million. It attributed the strong gains to growing popularity for its Amazfit Bip 6, Active 2, and T-Rex 3 products.

Its second-quarter gross margin came in at 36.2%, down from 37.3% in the first quarter, as the company blamed the decline on growing sales for its lower-end products that typically carry lower margins. As it launches more expensive products, it said it expects its gross margin to resume a “positive trend” in the third quarter.

“This quarter is just the beginning of our upward trajectory,” said Chairman Huang Wang. “With a robust pipeline of innovations, we’re well-equipped to build on this momentum, driving sustained growth and value through the second half of 2025 and beyond.”  

The company has lost money every year since 2021, and continued to post more losses in the latest reporting period. But the figure narrowed in the second quarter as Zepp’s revenue growth far outpaced its 5.2% rise in operating expenses. The company reported a second-quarter net loss of $7.7 million, down from its $10.8 million loss a year earlier.

The company said it refinanced a “significant portion” of its short-term debt to long-term instruments during the quarter with more favorable interest rates, which will reduce its near-term liquidity pressures. It had $95 million in cash at the end of June, down from $104 million three months earlier.

Zepp has traveled down a difficult road since its U.S. listing in 2018. Back then it was known as Huami and its fate was closely linked to Xiaomi, whose brand accounted for about two-thirds of its sales at that time. But it quickly discovered the Xiaomi relationship was limiting both its growth prospects and its profits, and shifted its focus to its own Amazfit brand around 2021, the year it changed its name to Zepp.

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