omniture

Huami Corporation Reports Fourth Quarter and Full Year 2017 Unaudited Financial Results

2018-03-26 17:15 485

BEIJING, March 26, 2018 /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 fourth quarter and full year ended December 31, 2017.

Fourth Quarter 2017 Financial and Operating Highlights

  • Revenues reached RMB752.6 million (US$115.7 million), representing an increase of 22.8% from the fourth quarter of 2016.
  • Gross margin reached 22.2%, increasing from 20.2% in the fourth quarter of 2016.
  • Net income attributable to Huami Corporation was RMB72.3 million (US$11.1 million), up 68.2% from the fourth quarter of 2016.
  • Basic and diluted net income per share attributable to ordinary shareholders of Huami Corporation was RMB0.33 (US$0.05) and RMB0.32 (US$0.05), respectively, compared with basic and diluted net income per share of RMB0.18 and RMB0.17, respectively, for the fourth quarter of 2016.
  • Pro forma basic and diluted net income per share attributable to ordinary shareholders of Huami Corporation was RMB0.39 (US$0.06) and RMB0.37 (US$0.06), respectively, for the fourth quarter of 2017.[1]
  • Adjusted net income attributable to Huami Corporation was RMB86.5 million (US$13.3 million), up 50.8% from the fourth quarter of 2016.
  • Total units shipped reached 6.5 million, compared with 6.0 million in the fourth quarter of 2016.
  • Mobile App MAUs reached 11.0 million as of December 31, 2017, increased from 8.5 million as of December 31, 2016.

Full Year 2017 Financial and Operating Highlights

  • Revenues reached RMB2,048.9 million (US$314.9 million), representing an increase of 31.6% from the full year of 2016.
  • Gross margin reached 24.1%, increasing from 17.7% for the full year of 2016.
  • Net income attributable to Huami Corporation was RMB167.7 million (US$25.8 million), up 600.3% from net income of RMB23.9 million for the full year of 2016.
  • Basic and diluted net income per share attributable to ordinary shareholders of Huami Corporation was RMB0.68 (US$0.10) and RMB0.65 (US$0.10), respectively, compared with basic and diluted net loss per share of RMB0.22 and RMB0.22, respectively, for the full year of 2016.
  • Pro forma basic and diluted net income per share attributable to ordinary shareholders of Huami Corporation was RMB0.90 (US$0.14) and RMB0.86 (US$0.13), respectively, for the full year of 2017.
  • Adjusted net income attributable to Huami Corporation was RMB230.5 million (US$35.4 million), up 182.2% from RMB81.7 million for the full year of 2016.
  • Total units shipped reached 18.1 million, compared with 17.8 million in the full year 2016.

 

[1] Adjusted net income is a non-GAAP measure. Please refer to the section "Use of Non-GAAP Measures" below for explanation of the calculation of these measures. Pro forma basic and diluted net income per share reflects the changes in our share capital that occurred subsequent to our balance sheet date upon our initial public offering. Refer to the section "Pro forma net income per share" for further details.

"We are pleased to report strong full year 2017 results in our first reporting quarter as an NYSE-listed company," said Wang Huang, Chairman and CEO. "Revenues grew by 31.6%  in 2017 year-over-year and were driven by strong sales of Xiaomi wearable products and the launch of new products in our own Amazfit-branded product line.  We sold over 1 million Amazfit products in 2017, which accounted for approximately 20% of our total revenue. 

"Our investments in research and development bore fruit in 2017, and more importantly position us well for the future," Mr. Huang continued. "As one example, our Amazfit Health Band was among the first commercially available ECG-enabled wearable products that was approved by the Chinese FDA, and allowed us to successfully enter the healthcare vertical. We continue to look for ways to further penetrate healthcare, public transportation, smart home and office, and mobile payment as part of our extensive product and service development.

"We are competitively well positioned and are excited about our prospects in 2018 as we further develop our Chinese presence and explore international market opportunities," Mr. Huang concluded. "Our relationship with Xiaomi as its sole partner for smart wearables is strong, and we remain committed to developing cutting edge, affordable products under both the Xiaomi and Amazfit brands including the expected launch of the Mi Band 3 in 2018. In addition, we continue to identify ways to leverage relationships with millions of active users through the increased functionality of our products which serves to strengthen our brand in all markets we serve." 

David Cui, Chief Financial Officer, said, "In addition to solid top-line results, we also reported robust growth in net income attributable to Huami Corporation for 2017, which reached RMB167.7 million, up 600.3% from 2016.  Our gross margin for the year also showed healthy improvement climbing to 24.1% from 17.7% in 2016.  Strong demand for the Mi Band 2 lengthened the product cycle, and benefits from supply chain efficiencies and economies of scale were the drivers for margin improvement. As we look to 2018 and expanding the products in our portfolio, we will do so with a keen eye on cost control and managing efficiencies." 

Fourth Quarter 2017 Financial Results

Revenues increased by 22.8% to RMB752.6 million (US$115.7 million) from RMB613.0 million in the fourth quarter of 2016, primarily due to an increase in the sales of self-branded products.

Cost of revenues increased by 19.8% to RMB585.8 million (US$90.0 million) from RMB489.1million in the fourth quarter of 2016. The increase was largely in line with the rapid sales growth of self-branded products.

Gross profit increased by 34.7% to RMB166.8 million (US$25.6 million) from RMB123.9 million in the fourth quarter of 2016. Gross margin increased to 22.2% from 20.2% in the fourth quarter of 2016.  The increase was driven by improved economies of scale as a result of the lengthened product cycle of the Mi Band 2 as well as supply chain efficiencies.

Total operating expenses increased by 13.7% to RMB92.0 million (US$14.1 million) from RMB80.9 million in the fourth quarter of 2016.

Research and development expenses increased by 31.9% to RMB45.2 million (US$7.0 million) from RMB34.3 million for the fourth quarter of 2016, primarily due to an increase in expenditures for mobile application development.

General and administrative expenses decreased by 3.6% to RMB32.5 million (US$4.9 million) from RMB33.6 million for the fourth quarter of 2016, primarily due to a decrease in foreign exchange loss.

Selling and marketing expenses increased by 10.2% to RMB14.3 million (US$2.2 million) from RMB13.0 million for the fourth quarter of 2016, primarily due to an increase in expenses to promote self-branded products through e-commerce platforms.

Operating income was RMB74.8 million (US$11.5 million), representing a 74.3% increase from RMB42.9 million for the fourth quarter of 2016.

Income before income tax increased by 58.3% to RMB79.9 million (US$12.3 million) from RMB50.5 million for the fourth quarter of 2016.

Income tax expenses was RMB12.1 million (US$1.9 million), compared with RMB6.8 million for the fourth quarter of 2016.

Net income attributable to Huami Corporation totaled RMB72.3 million (US$11.1 million), up 68.2% from RMB43.0 million for the fourth quarter of 2016.

Basic and diluted net income per share attributable to ordinary shareholders of Huami Corporation was RMB0.33 (US$0.05) and RMB0.32 (US$0.05), respectively, compared with basic and diluted net income per share of RMB0.18 and RMB0.17, respectively, for the fourth quarter of 2016.

Pro forma basic and diluted net income per share attributable to ordinary shareholders of Huami Corporation was RMB0.39 (US$0.06) and RMB0.37 (US$0.06), respectively, for the fourth quarter of 2017.

Adjusted net income attributable to Huami Corporation, which excludes share-based compensation expenses, increased by 50.8% to RMB86.5 million (US$13.3 million) from RMB57.4 million for the fourth quarter of 2016.

Full Year 2017 Financial Results

Revenues increased by 31.6% to RMB2,048.9 million (US$314.9 million) from RMB1,556.5 million in the full year of 2016, primarily due to an increase in the sales of both self-branded products and Xiaomi wearable products.

Cost of revenues increased by 21.4% to RMB1,554.2 million (US$238.9 million) from RMB1,280.3 million in full year of 2016. This increase was in line with the rapid growth of sales of products.

Gross profit increased by 79.1% to RMB494.7 million (US$76.0 million) from RMB276.2 million in the full year of 2016. Gross margin increased to 24.1% from 17.7% in the full year 2016.  The increase in gross margin was primarily attributable to improved economies of scale as a result of the lengthened product cycle of the Mi Band 2, improved supply chain efficiencies and a change in the product mix.

Total operating expenses increased by 19.0% to RMB312.7 million (US$48.1 million) from RMB262.8 million for the full year of 2016.

Research and development expenses increased by 16.3% to RMB153.8 million (US$23.6 million) for the full year of 2017 from RMB132.3 million for the full year of 2016.  The increase was primarily due to an increase in share-based compensation and personnel related costs expenses to retain the technology-related personnel as well as expenditures on application development.

General and administrative expenses increased by 11.9% to RMB114.9 million (US$17.7 million) from RMB102.6 million for the full year of 2016, primarily due to an increase in professional service fees, personnel-related costs and government fees and charges.

Selling and marketing expenses increased by 58.2% to RMB44.0 million (US$6.8 million) from RMB27.8 million for the full year of 2016, primarily due to an increase in personnel-related costs and an increase in expenses to promote self-branded products through e-commerce platforms.

Operating income was RMB182.0 million (US$28.0 million), representing a 1,259.7% increase from RMB13.4 million from the full year of 2016.

Income before income tax increased by 564.9% to RMB191.9 million (US$29.5 million) from RMB28.9 million for the full year of 2016.

Income tax expense was RMB27.6 million (US$4.2 million) compared with RMB3.1 million for the full year of 2016. The increase was attributable to an increase in taxable income.

Net income totaled RMB167.1 million (US$25.7 million), up 597.8% from RMB23.9 million for the full year of 2016.

Net income attributable to Huami Corporation was RMB167.7millon (US$25.8 million), compared with RMB23.9 million for the full year of 2016.

Basic and diluted net income per share attributable to ordinary shareholders of Huami Corporation was RMB0.68 (US$0.10) and RMB0.65 (US$0.10), respectively, compared with basic and diluted net loss per share of RMB0.22 and RMB0.22, respectively, for the full year of 2016.

Pro forma basic and diluted net income per share attributable to ordinary shareholders of Huami Corporation was RMB0.90 (US$0.14) and RMB0.86 (US$0.13), respectively, for the full year of 2017.

Adjusted net income attributable to Huami Corporation, which excludes share-based compensation expenses, increased by 182.2% to RMB230.5 million (US$35.4 million), from RMB81.7 million for the full year of 2016. 

As of December 31, 2017, the Company had cash and cash equivalents of RMB366.3 million (US$56.3 million), compared with RMB153.2 million as of December 31, 2016.

Outlook

For the first quarter of 2018, the Company currently expects:

  • Net revenues to be between RMB530.0 million to RMB550.0 million, which would represent an increase of approximately 60.1% to 66.1% from RMB331.1 million for the first quarter of 2017.

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

Conference Call

Management will hold a conference call at 8:00 a.m. Eastern Time on Monday, March 26, 2018 (8:00 p.m. Beijing Time on March 26, 2018) 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:

400-120-1203

Hong Kong (Toll Free):

800-905-945

Hong Kong:

+852-3018-4992

Passcode:

10118200

Participants should dial-in at least 5 minutes before the scheduled start time and ask to be connected to the call for "Huami Corporation."

A telephone replay will be available two hours after the call until April 2, 2018 by dialing:

US Toll Free:

+1-877-344-7529

International:

+1-412-317-0088

Canada Toll Free:

855-669-9658

Replay Passcode:

10118200

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

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 the first nine months of 2017, Huami shipped 11.6 million units of smart wearable devices, more than any other company in the world. 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.  In addition to designing, manufacturing and selling smart bands and watches under its own Amazfit brand, Huami is the sole partner of Xiaomi, a leading mobile internet company and global consumer electronics brand, to design and manufacture Xiaomi-branded smart bands, watches (excluding children watches and quartz watches), scales and associated accessories.

Pro forma net income per share

Our initial public offering and its accompanying restructuring of share capital were completed in Feburary 2018. We therefore separately present here the basic and diluted net income per share on a pro forma basis to reflect the changes in our share capital that occurred subsequent to the balance sheet date, specifically including (i) the automatic conversion of all of our preferred shares outstanding as of December 31, 2017 into class B ordinary shares on a one-for-one basis, (ii) the issuance of 12,064,825 class B ordinary shares to preferred shareholders immediately prior to our initial public offering, and (iii) the sale of 41,600,000 class A ordinary shares in the form of ADSs by us in our initial public offering

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 impacts on income tax.

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

Adjusted net income, 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, 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.

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 SEC. 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
Tel: +86-10-5940-3255
E-mail:  ir@huami.com

The Piacente Group, Inc.
Ross Warner |
Tel: +86-10-5730-6201
E-mail:  huami@tpg-ir.com

In the United States:
The Piacente Group, Inc.  
Alan Wang
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,



2016


2017


2017





Unaudited


Unaudited



 RMB


 RMB


 US$

Assets







Current assets:







Cash and cash equivalents


153,152


366,336


56,305

Restricted cash


-


3,185


489

Accounts receivable (net of allowance of nil and nil as of
December 31, 2016 and 2017, respectively)


19,707


32,867


5,052

Amounts due from related parties, current (net of
allowance of nil and nil as of December 31, 2016 and
2017, respectively)


476,698


578,454


88,907

Inventories


192,372


249,735


38,384

Short-term investments


9,236


13,721


2,109

Prepaid expenses and other current assets


8,678


51,062


7,847

Total current assets


859,843


1,295,360


199,093








Property, plant and equipment, net


10,801


28,755


4,420

Intangible asset, net


1,223


5,339


821

Goodwill


-


5,930


911

Long-term investments


78,057


74,875


11,508

Deferred tax assets


22,972


41,895


6,439

Other non-current assets


-


3,000


461

Total assets


972,896


1,455,154


223,653


 

 

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,




2016


2017


2017






Unaudited


Unaudited




 RMB


 RMB


 US$


Liabilities








Current liabilities:








Accounts payable


524,072


707,782


108,784


Advance from customers


5,885


10,683


1,642


Amount due to related parties, current


23,500


8,143


1,252


Accrued expenses and other current liabilities


47,623


93,798


14,416


Income tax payables


20,628


21,600


3,320


Notes payable


2,662


5,243


806


Bank borrowings


10,000


30,000


4,611


Total current liabilities


634,370


877,249


134,831










Deferred tax liabilities


-


916


141


Amount due to a related party , non-current


-


3,076


473


Other non-current liabilities


-


4,940


759


Total liabilities


634,370


886,181


136,204



 

 

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)



 December 31,




2016


2017


2017






 

Unaudited


Unaudited




 RMB


 RMB


 US$


Mezzanine equity








Series A convertible redeemable participating
preferred shares


23,008


26,770


4,114


Series B-1 convertible redeemable participating
preferred shares


23,779


26,906


4,135


Series B-2 convertible redeemable participating
preferred shares


261,560


295,942


45,485


Total mezzanine equity


308,347


349,618


53,734










(Deficit)/Equity








Ordinary shares


56


56


9


Additional paid-in capital


50,822


72,427


11,132


Accumulated (deficit) retained  earnings


(36,490)


131,192


20,164


Accumulated other comprehensive income


15,791


13,291


2,043


Total Huami Corporation shareholders' equity


30,179


216,966


33,348


Non-controlling interests


-


2,389


367


Total equity


30,179


219,355


33,715


Total liabilities, mezzanine equity and equity


972,896


1,455,154


223,653


 

 

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 December 31,


 For the year ended December 31,



2016


2017


2017


2016


2017


2017





Unaudited


Unaudited




Unaudited


Unaudited



 RMB


 RMB


 US$


 RMB


 RMB


 US$

 Revenues


612,965


752,648


115,680


1,556,476


2,048,896


314,910

 Cost of revenues 


489,112


585,825


90,040


1,280,324


1,554,194


238,875

 Gross profit


123,853


166,823


25,640


276,152


494,702


76,035

 Operating expenses:













 Selling and marketing


13,020


14,346


2,205


27,821


44,026


6,767

 General and administrative


33,601


32,406


4,981


102,644


114,880


17,657

 Research and development


34,296


45,237


6,953


132,304


153,827


23,643

 Total operating expenses 


80,917


91,989


14,139


262,769


312,733


48,067

 Operating income


42,936


74,834


11,501


13,383


181,969


27,968














 Other income and expenses:













 Realized gain from investments 


-


38


6


-


2,373


365

 Interest income


108


1,540


237


754


3,003


462

 Other income


7,439


3,489


536


14,726


4,555


699

 Income before income tax


50,483


79,901


12,280


28,863


191,900


29,494

 Income tax expense


6,819


12,149


1,867


3,088


27,611


4,244

Income before loss from
equity method investments


43,664


67,752


10,413


25,775


164,289


25,250

 (Loss)/income from equity
method investments


(673)


4,228


650


(1,829)


2,806


431

 Net Income


42,991


71,980


11,063


23,946


167,095


25,681

Less: Net loss attributable to
          non-controlling interest


-


(324)


(50)


-


(587)


(90)

 Net income attributable to
Huami Corporation


42,991


72,304


11,113


23,946


167,682


25,771

 Less: Accretion of Series A
Preferred Shares


842


976


150


3,209


3,762


578

 Less: Accretion of Series B-1
Preferred Shares


712


803


123


2,738


3,127


481

 Less: Accretion of Series B-2
Preferred Shares


7,831


8,831


1,357


30,121


34,382


5,284

 Less: Undistributed earnings
allocated to participating
preferred shares and nonvested
restricted shares


23,354


37,832


5,815


-


80,291


12,341

 Net income/(loss) attributable
to ordinary shareholders of
Huami Corporation


10,252


23,862


3,668


(12,122)


46,120


7,087

 Net income/(loss) per share
attributable to ordinary
shareholders of Huami
Corporation













 Basic income/(loss) per
ordinary share


0.18


0.33


0.05


(0.22)


0.68


0.10

 Diluted income/(loss) per
ordinary share


0.17


0.32


0.05


(0.22)


0.65


0.10














 Weighted average number of
shares used in computing net
(loss)/ income per share













 Ordinary share - basic


56,640,889


71,920,852


71,920,852


55,612,626


67,777,592


67,777,592

 Ordinary share – diluted


64,750,677


80,507,984


80,507,984


55,612,626


76,291,901


76,291,901


 

 

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 December 31,


 For the year ended December 31,



2016


2017


2017


2016


2017


2017





Unaudited


Unaudited




Unaudited


Unaudited



 RMB


 RMB


 US$


 RMB


 RMB


 US$



























 Net income attributable to Huami
Corporation


42,991


72,304


11,113


23,946


167,682


25,771

 Share-based compensation
expenses


14,372


14,212


2,184


57,735


62,787


9,650

 Adjusted net income attributable
to Huami Corporation


57,363


86,516


13,297


81,681


230,469


35,421

 

 

Cision View original content:http://www.prnewswire.com/news-releases/huami-corporation-reports-fourth-quarter-and-full-year-2017-unaudited-financial-results-300619231.html

Source: Huami Corporation
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