Zepp Health Corp. (ZEPP) - Form 20-F Summary
Business Context and Reporting Period
Company: Zepp Health Corp.
Filing Type: Annual Report on Form 20-F
Reporting Period: Fiscal year ended December 31, 2025
Reporting Currency: U.S. Dollar (changed from Renminbi in Q2 2024)
Business Overview: Zepp is a global smart wearable and health technology leader operating under the Amazfit, Zepp Clarity, and Zepp Aura brands. The company designs, develops, and sells smartwatches, smart bands, and health monitoring devices. It operates as a Cayman Islands holding company with significant operations in China conducted through Variable Interest Entities (VIEs).
Key Financial Metrics (Year Ended Dec 31, 2025)
| Metric | 2025 (US$ in thousands) | 2024 (US$ in thousands) | 2023 (US$ in thousands) |
|---|---|---|---|
| Total Revenues | 258,897 | 182,603 | 352,860 |
| Gross Profit | 99,190 | 70,234 | 92,358 |
| Gross Margin | 38.3% | 38.5% | 26.2% |
| Operating Loss | (29,230) | (47,250) | (30,450) |
| Net Loss | (40,068) | (75,808) | (31,086) |
| Cash & Equivalents (End of Period) | 57,046 | 91,069 | 133,669 |
| Total Debt (Short & Long Term) | 115,203 | 117,094 | N/A |
Note: Debt figures include short-term bank borrowings, long-term borrowings, and notes payable/letters of credit.
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 41.8% to $258.9 million in 2025, driven by a 50.9% increase in sales of Amazfit-branded products. In 2025, Amazfit-branded products accounted for 100% of total revenue, compared to 94.0% in 2024.
- Profitability Improvement: The operating loss narrowed significantly from $47.3 million in 2024 to $29.2 million in 2025. Net loss improved from $75.8 million to $40.1 million.
- Expense Management: Research and development expenses decreased slightly (1.8%) to $45.3 million. General and administrative expenses increased 17.8% to $29.3 million, primarily due to a $5.7 million provision for terminating an old business model and sales channel, and $1.2 million for brand/IP protection. Selling and marketing expenses rose 15.8% to $53.8 million due to e-commerce platform charges and frontloaded marketing investments.
- Investment Activity: The company recorded an impairment loss from investments of $2.2 million in 2025, compared to $10.1 million in 2024.
- Related Party Transactions: Revenue from Xiaomi and affiliates dropped to nil in 2025, compared to $11.0 million in 2024 and $92.0 million in 2023.
Guidance, Outlook, and Risks
Management Commentary & Outlook:
- Management expects to continue expanding international markets and investing in AI and new technologies to maintain a competitive edge.
- The company plans to retain earnings to operate and expand the business; no dividends are planned in the near future.
- Strategic partnerships, such as the global partnership with HYROX, are being expanded to drive brand recognition.
Key Risks & Contingencies:
- VIE Structure: The company relies on contractual arrangements with VIEs in China for a portion of its operations (8.0% of 2025 revenue). There is uncertainty regarding the enforceability of these arrangements under PRC law, which could impact the ability to consolidate financial results or control operations.
- Regulatory Environment: Risks include potential changes in PRC regulations regarding foreign investment, data security, and overseas listings. The company is subject to the Holding Foreign Companies Accountable Act (HFCAA), though it is not currently identified as a Commission-Identified Issuer.
- Supply Chain: Dependence on a limited number of suppliers for key components (chips, sensors) creates risks of shortages or price increases.
- Competition: The smart wearable market is highly competitive with major players like Apple, Huawei, and Samsung.
- PFIC Status: The company believes it was a Passive Foreign Investment Company (PFIC) for 2025, which may have adverse U.S. tax consequences for U.S. investors.
Investor Verification Checklist
- VIE Revenue Contribution: Verify the declining trend of revenue contribution from VIEs (40.1% in 2023, 18.0% in 2024, 8.0% in 2025) and assess the risk exposure to the Chinese legal structure.
- Xiaomi Dependency: Confirm the complete cessation of revenue from Xiaomi-related sales in 2025 and evaluate the sustainability of the 100% Amazfit-branded revenue mix.
- Cash Position vs. Debt: Review the liquidity position given the decrease in cash equivalents to $57.0 million against total debt obligations of approximately $115.2 million.
- Inventory Levels: Monitor inventory levels, which increased to $72.8 million in 2025, and the associated provision for excess/obsolete inventory ($7.8 million).
- PFIC Implications: Consult tax advisors regarding the tax implications of the company's PFIC status for U.S. holders.