omniture

Huami Corporation Reports First Quarter 2019 Unaudited Financial Results

Quarterly Revenues up 36.5% Year-over-Year to RMB799.6 Million, Exceeding Guidance Range
2019-06-03 18:06 12647

BEIJING, June 3, 2019 /PRNewswire/ -- Huami Corporation ("Huami" or the "Company") (NYSE: HMI), a biometric and activity data-driven company with significant expertise in smart wearable technology, today announced its unaudited financial results for the first quarter ended March 31, 2019.

First Quarter 2019 Financial and Operating Highlights

  • Revenues reached RMB799.6 million (US$119.1 million), representing an increase of 36.5% from the first quarter of 2018.
  • Gross margin was 27.2%, compared with 25.0% for the first quarter of 2018.
  • Net income attributable to Huami Corporation was RMB75.3 million (US$11.2 million), compared with RMB14.8 million for the first quarter of 2018.
  • Basic and diluted net income per American depositary share ("ADS") attributable to ordinary shareholders of Huami Corporation was RMB1.25 (US$0.19) and RMB1.18 (US$0.18), respectively. Each ADS represents four (4) Class A ordinary shares.
  • Adjusted net income attributable to Huami Corporation[1] was RMB95.0 million (US$14.2 million).
  • Adjusted basic and diluted net income per ADS attributable to ordinary shareholders of Huami Corporation[2] was RMB1.57 (US$0.23) and RMB1.49 (US$0.22), respectively. Each ADS represents four (4) Class A ordinary shares.
  • Total units shipped reached 5.6 million, compared with 4.8 million in the first quarter of 2018.

 

[1] Adjusted net income is a non-GAAP measure, which excludes share-based compensation expenses. See "Reconciliation of GAAP and Non-GAAP Results" at the end of this press release.

[2] Adjusted net income attributable to ordinary shareholders of Huami Corporation is a non-GAAP measure, which excludes share-based compensation expenses attributable to ordinary shareholders of Huami Corporation and deemed dividend for preferred shares, and is used as the numerator in computation of adjusted basic and diluted net income per ADS attributable to ordinary shareholders of Huami Corporation.

"Strong revenue growth momentum continued in the first quarter, reflecting the effective leveraging of our rising global brand recognition, strategic relationships and consumer trust," said Wang Huang, Chairman and CEO "In the first quarter, with enhancements to and the expansion of, our overseas sales channels and strategies,  international version product shipments continued climbing. In particular, our smart watches, in the first quarter, ranked number five globally. We are happy to see that self-branded products and others showed robust growth, with a 62.0%  increase in revenue compared with the first quarter of 2018, and contributed 41.3% of total revenues in the first quarter of 2019."

"Our well-established strategic partnerships remain strong and stable. We will launch Mi-Band 4 very soon and continue to work with Xiaomi on future Mi Bands product development, including various band models targeting different global market segments. In the meantime, our team is diligently working closely with Timex Group to develop products as well as plan a global marketing strategy. Furthermore, our Amazfit products are riding the wave of the rapidly rising global smart watch market. In the next few months, we will launch multiple models of Amazfit watches covering different market demands and price ranges." Wang Huang continued, "We have also broadened our IoT life scenario capabilities, with Amazfit products now upgraded with full Amazon Alexa integration. In addition, all NFC version Huami products are now capable of accessing over 200 cities' public transportation networks in China. With all of our achievements in the first quarter, we are excited to continue developing and introducing new products and services, expanding our presence in global markets and further developing our strategic partnership initiatives."

David Cui, Chief Financial Officer, said, "Strong revenue growth continued in the first quarter, increasing 36.5% year-over-year, as the Company benefited from global market expansion and growing consumer recognition of our products. We continued the diversification of our product line, specifically with our self-branded products. Our self-branded products and others grew to 41.3% of total revenues. We shipped 5.6 million units in the quarter, up 17.9% from the first quarter of 2018, driven in large part by stronger international demand. Looking at how the year has started and then looking ahead, we feel confident that we are well-positioned to continue delivering on sustainable growth, through innovative new products and services, creative alliances, global expansion and operational efficiencies."

First Quarter 2019 Financial Results

Revenues increased by 36.5% to RMB799.6 million (US$119.1 million) from RMB585.9 million for the first quarter of 2018, due to an increase in the sales of Xiaomi wearable products and self-branded Amazfit products, both driven by increased brand recognition and the overall rise of the smartwatch market.

Cost of revenues increased by 32.5% to RMB582.1 million (US$86.7 million) from RMB439.2 million for the first quarter of 2018. The increase was in line with the rapid sales growth of both Xiaomi wearable products and self-branded Amazfit products.

Gross profit increased by 48.3% to RMB217.5 million (US$32.4 million) from RMB146.7 million for the first quarter of 2018. Gross margin of 27.2% in the first quarter compares with 25.0% in the first quarter 2018.

Total operating expenses increased by 1.5% to RMB139.9 million (US$20.8 million) from RMB137.8 million for the first quarter of 2018.

Research and development expenses decreased by 2.0% to RMB72.4 million (US$10.8 million) from RMB73.8 million for the first quarter of 2018, primarily due to a decrease in share-based compensation (SBC) expenses, which were offset by an increase in personnel-related expenses.

General and administrative expenses decreased by 8.1% to RMB45.3 million (US$6.7 million) from RMB49.3 million for the first quarter of 2018, primarily due to a decrease in SBC expenses, which were offset by an increase in personnel-related expenses.

Selling and marketing expenses increased by 50.5% to RMB22.2 million (US$3.3 million) from RMB14.7 million for the first quarter of 2018, primarily due to an increase in personnel-related expenses and an increase in advertising and promotional expenses, specifically for self-branded products.

Operating income was RMB77.6 million (US$11.6 million), compared with RMB8.8 million for the first quarter of 2018.

Income before income tax was RMB85.6 million (US$12.7 million), compared with RMB16.5 million for the first quarter of 2018.

Income tax expenses were RMB10.7 million (US$1.6 million), compared with RMB2.7 million for the first quarter of 2018.

Net income attributable to Huami Corporation totaled RMB75.3 million (US$11.2 million), compared with RMB14.8 million for the first quarter of 2018.

Net income attributable to ordinary shareholders of Huami Corporation increased to RMB74.1 million (US$11.0 million), compared with net loss attributable to ordinary shareholders of Huami Corporation of RMB199.6 million for the first quarter of 2018.

Basic and diluted net income per ADS attributable to ordinary shareholders of Huami Corporation was RMB1.25 (US$0.19) and RMB1.18 (US$0.18), respectively. Each ADS represents four (4) Class A ordinary shares.

Adjusted net income attributable to Huami Corporation, which excludes share-based compensation expenses, increased by 2.7% to RMB95.0 million (US$14.2 million) from RMB92.5 million for the first quarter of 2018.

Adjusted basic and diluted net income per ADS attributable to ordinary shareholders of Huami Corporation was RMB1.57 (US$0.23) and RMB1.49 (US$0.22), respectively. Each ADS represents four (4) Class A ordinary shares.

As of March 31, 2019, the Company had cash and cash equivalents of RMB1,572.4 million (US$234.3 million), compared with RMB1,441.8 million as of December 31, 2018.

Outlook

For the second quarter of 2019, the management of the Company currently expects:

  • Net revenues to be between RMB990.0 million and RMB1,010.0 million, which would represent an increase of approximately 30.2% to 32.9% from RMB760.1 million for the second quarter of 2018.

The above outlook is based on the current market conditions and reflects the Company management's current and preliminary estimates of market and operating conditions and customer demand, which are all subject to change.

Conference Call

The Company's management will hold a conference call at 8:00 a.m. Eastern Time on Monday, June 3, 2019 (8:00 p.m. Beijing Time on June 3, 2019) to discuss financial results and answer questions from investors and analysts. Listeners may access the call by dialing:

US (Toll Free):

1-888-346-8982

International:

1-412-902-4272

Mainland China (Toll Free):

400-120-1203

Hong Kong (Toll Free):

800-905-945

Hong Kong:

852-3018-4992

Participants should dial-in at least 10 minutes before the scheduled start time and ask to be connected to the call for "Huami Corporation."

Additionally, a live and archived webcast of the conference call will be available at http://www.huami.com/investor.

A telephone replay will be available two hours after the call until June 10, 2019 by dialing:

US Toll Free:

+1-877-344-7529

International:

+1-412-317-0088

Replay Passcode:

10131883

About Huami Corporation

Huami is a biometric and activity data-driven company with significant expertise in smart wearable technology. Since its inception in 2013, Huami has quickly established its global market leadership and recognition by shipping millions of units of smart wearable devices. In 2018, Huami shipped 27.5 million units of smart wearable devices. Huami has one of the largest biometric and activity databases in the global smart wearables industry. Huami's mobile apps work hand in hand with its smart wearable devices and provide users with a comprehensive view and analysis of their biometric and activity data.

Use of Non-GAAP Measures

We use adjusted net income, a non-GAAP financial measure, in evaluating our operating results and for financial and operational decision-making purposes. Adjusted net income represents net income excluding share-based compensation expenses, and such adjustment has no impact on income tax. Adjusted net income attributable to ordinary shareholders of Huami Corporation is a non-GAAP measure, which excludes share-based compensation expenses attributable to ordinary shareholders of Huami Corporation and deemed dividend for preferred shares, and is used as the numerator in computation of adjusted net income per share attributable to ordinary shareholders of Huami Corporation .

We believe that adjusted net income and adjusted net income attributable to ordinary shareholders help identify underlying trends in our business that could otherwise be distorted by the effect of certain expenses and deemed dividend that we include in net income and net income attributable to ordinary shareholders. We believe that adjusted net income and adjusted net income attributable to ordinary shareholders provides useful information about our operating results, enhances the overall understanding of our past performance and future prospects and allows for greater visibility with respect to key metrics used by our management in its financial and operational decision-making.

Adjusted net income and adjusted net income attributable to ordinary shareholders, should not be considered in isolation or construed as an alternative to net income, basic and diluted net income per share attributable to ordinary shareholders of Huami Corporation or any other measure of performance or as an indicator of our operating performance. Investors are encouraged to review the historical non-GAAP financial measures to the most directly comparable GAAP measures. Adjusted net income and adjusted net income attributable to ordinary shareholders, presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.

Exchange Rate

The Company's business is primarily conducted in China and the significant majority of revenues generated are denominated in Renminbi ("RMB"). This announcement contains currency conversions of RMB amounts into U.S. dollars ("US$") solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ are made at a rate of RMB 6.7112 to US$1.00, the effective noon buying rate for March 29, 2019 as set forth in the H.10 statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on March 29, 2019, or at any other rate.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the cooperation with Xiaomi, the recognition of the Company's self-branded products; the Company's growth strategies; trends and competition in global wearable technology market; changes in the Company's revenues and certain cost or expense accounting policies; governmental policies relating to the Company's industry and general economic conditions in China and the global. Further information regarding these and other risks is included in the Company's filings with the United States Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and the Company undertakes no obligation to update any forward-looking statement, except as required under applicable law.

For investor and media inquiries, please contact:

In China:
Huami Corporation
Grace Yujia Zhang
E-mail: ir@huami.com

The Piacente Group, Inc.
Ross Warner
Tel: +86-10-6508-0677
E-mail: huami@tpg-ir.com

In the United States:
Brandi Piacente
Tel: +1-212-481-2050
E-mail: huami@tpg-ir.com

 

HUAMI CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$")

except for number of shares and per share data, or otherwise noted)









As of December 31,


As of March 31,



2018


2019



RMB


RMB


US$















Assets







Current assets:







Cash and cash equivalents


1,441,802


1,572,377


234,291

Restricted cash


10,010


6,074


905

Term deposit


96,969


-


-

Accounts receivable


58,925


51,163


7,624

Amounts due from related parties, current


656,399


322,353


48,032

Inventories


484,622


372,569


55,515

Short-term investments


50,482


51,077


7,611

Prepaid expenses and other current assets


58,247


43,776


6,522

Total current assets


2,857,456


2,419,389


360,500








Property, plant and equipment, net


40,042


46,285


6,897

Intangible asset, net


63,722


62,171


9,264

Goodwill


5,930


5,930


884

Long-term investments


208,949


233,007


34,719

Deferred tax assets


75,032


94,292


14,050

Other non-current assets


7,350


5,155


768

Noncurrent operating lease right-of-use assets[3]


-


19,336


2,881

Total assets


3,258,481


2,885,565


429,963

 

 

HUAMI CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$")

except for number of shares and per share data, or otherwise noted)









As of December 31, 


As of March 31,



2018


2019



RMB


RMB


US$








Liabilities







Current liabilities:







Accounts payable


1,064,106


583,774


86,985

Advance from customers


5,943


3,151


470

Amount due to related parties, current


10,695


10,763


1,604

Accrued expenses and other current liabilities


213,975


214,390


31,946

Income tax payables


54,037


82,721


12,326

Notes payable


18,936


6,074


905

Bank borrowings


20,000


20,000


2,980

Current operating lease liabilities[3]


-


11,575


1,725

Total current liabilities


1,387,692


932,448


138,941

Deferred tax liabilities


4,962


4,938


736

Other non-current liabilities


56,249


56,249


8,381

Noncurrent operating lease liabilities[3]


-


5,761


858

Total liabilities


1,448,903


999,396


148,916


[3] The Company has adopted Accounting Standards Update No. 2016-02, Leases, beginning January 1, 2019
on a modified retrospective basis. As a result, the Company recognized approximately RMB19 million of
right-of-use assets, approximately RMB12 million current lease liabilities and RMB6 million noncurrent
lease liabilities on the consolidated balance sheet as of March 31, 2019. The Company elected not to
recognize lease assets and liabilities for leases with a term of 12 months or less. The adoption did not have
a material impact on the Company's consolidated statements of operations for the quarter ended March 31,
2019 or the opening balances of retained earnings as of January 1, 2019.

 

 

HUAMI CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$")

except for number of shares and per share data, or otherwise noted)









As of December 31,


As of March 31,



2018


2019



RMB


RMB


US$








Equity







Ordinary shares


151


151


22

Additional paid-in capital


1,373,577


1,393,310


207,610

Accumulated retained earnings


340,046


415,330


61,886

Accumulated other comprehensive income


97,141


79,087


11,784

Total Huami Corporation shareholders' equity


1,810,915


1,887,878


281,302

Non-controlling interests


(1,337)


(1,709)


(255)

Total equity


1,809,578


1,886,169


281,047

Total liabilities, mezzanine equity and equity


3,258,481


2,885,565


429,963

 

 

HUAMI CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$")

except for number of shares and per share data, or otherwise noted)




For the Three Months Ended March 31,



2018


2019



RMB


RMB


US$








Revenues


585,920


799,596


119,144

Cost of revenues


439,246


582,133


86,741

Gross profit


146,674


217,463


32,403

Operating expenses:







Selling and marketing


14,740


22,183


3,305

General and administrative


49,270


45,292


6,749

Research and development


73,838


72,380


10,785

Total operating expenses


137,848


139,855


20,839

Operating income


8,826


77,608


11,564

Other income and expenses:







Interest income


1,394


7,490


1,116

Other income


6,237


462


69

Income before income tax


16,457


85,560


12,749

Income tax expenses


(2,744)


(10,682)


(1,592)

Income before income from equity method investments


13,713


74,878


11,157

Income from equity method investments


7


34


5

Net income


13,720


74,912


11,162

Less: Net loss attributable to non-controlling interest


(1,048)


(372)


(55)

Net income attributable to Huami Corporation


14,768


75,284


11,217

Less: Accretion of Series A Preferred Shares


177


-


-

Less: Accretion of Series B-1 Preferred Shares


368


-


-

Less: Accretion of Series B-2 Preferred Shares


4,049


-


-

Less: Deemed Dividend for Preferred Shares


209,752


-


-

Less: Undistributed earnings allocated to participating nonvested
restricted shares


-


1,153


172

Net income attributable to ordinary shareholders of Huami
Corporation


(199,578)


74,131


11,045

Net income per share attributable to ordinary 
shareholders of Huami Corporation







Basic (loss) income per ordinary share


(1.31)


0.31


0.05

Diluted (loss) income per ordinary share


(1.31)


0.29


0.04








Net (loss) income per ADS (4 ordinary shares equal to 1 ADS)







ADS – basic


(5.22)


1.25


0.19

ADS – diluted


(5.22)


1.18


0.18








Weighted average number of shares used in computing net
income
 per share

Ordinary share – basic


152,893,007


238,007,944


238,007,944








Ordinary share – diluted


152,893,007


252,131,378


252,131,378

 

 

HUAMI CORPORATION

Reconciliation of GAAP and Non-GAAP Results

(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$")

except for number of shares and per share data, or otherwise noted)




For the Three Months Ended March 31,



2018


2019



RMB


RMB


US$

Net income attributable to Huami
Corporation


14,768


75,284


11,217

Share-based compensation expenses


77,756


19,733


2,940

Adjusted net income attributable to Huami 
Corporation


92,524


95,017


14,157

















For the Three Months Ended March 31,



2018


2019



RMB


RMB


US$








Net income attributable to ordinary
shareholders of Huami Corporation


(199,578)


74,131


11,045

Share-based compensation expenses attributable

   to ordinary shareholders of Huami Corporation


62,341


19,431


2,895

Deemed Dividend for Preferred shares


209,752


-


-

Adjusted net income attributable to ordinary 
shareholders of Huami Corporation[4]


72,515


93,562


13,940








Adjusted net income per share attributable to 
ordinary shareholders of Huami Corporation







Adjusted basic income per ordinary share


0.47


0.39


0.06

Adjusted diluted income per ordinary share


0.39


0.37


0.06








Adjusted net income per ADS (4 ordinary
shares equal to 1 ADS)







ADS – basic


1.90


1.57


0.23

ADS – diluted


1.57


1.49


0.22








Weighted average number of shares used in 
computing net income per share







Ordinary share – basic


152,893,007


238,007,944


238,007,944

Ordinary share – diluted


162,243,568


252,131,378


252,131,378








Share-based compensation expenses included 
are follows:







Cost of revenues


332


2


-

Selling and marketing


4,062


331


49

General and administrative


37,010


17,436


2,598

Research and development


36,352


1,964


293

Total


77,756


19,733


2,940


[4] Adjusted net income attributable to ordinary shareholders of Huami Corporation is a non-GAAP measure, which
excludes share-based compensation expenses attributable to ordinary shareholders of Huami Corporation and deemed
dividend for preferred shares, and is used as the numerator in computation of adjusted net income per share attributable
to ordinary shareholders of Huami Corporation.

 

Cision View original content:http://www.prnewswire.com/news-releases/huami-corporation-reports-first-quarter-2019-unaudited-financial-results-300860490.html

Source: Huami Corporation
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