Why Zepp Health Shares Are Trading Lower Today

Zepp Health Corp ZEPP reported a first-quarter FY22 revenue decline of 34% year-on-year to $119.4 million, missing the consensus of $142.4 million.
Drivers: Total units shipped decreased by 41.3% Y/Y to 3.7 million due to a 45.5% decrease in units of products built for Xiaomi Corp XIACY and a 31.6% decrease in unit shipments of Amazfit and Zepp branded products.
The decrease in Mi band shipments mostly drove the reduction. Lower consumer discretionary spending and COVID-19 affected the self-brand product sales.
Margin: The gross margin contracted 240 bps to 20.1% due to higher freight cost and product mix.
Adjusted loss per ADS of $(0.19) missed the consensus of $0.06.
Zepp held $161.2 million in cash and equivalents.
"We achieved RMB0.8 billion in revenue in the first quarter, meeting our guidance range despite the pandemic resurgence and a slowdown in consumer discretionary spending due to geopolitical and macroeconomic factors during the quarter," said Wang Huang, Chair and CEO.
Outlook: Zepp sees Q2 net revenue of $170.37 million - $205.07 million below the consensus of $270.61 million.
Price Action: ZEPP shares traded lower by 8.18% at $2.02 in premarket on the last check Tuesday.

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