Zepp Health Corporation
Navigating Tariffs & Capitalizing on Affordability
Published: March 28, 2025
Author: FRC Analysts
View Complete Report*This report and research coverage is paid for and commissioned by Zepp Health Corporation – See the bottom of this report for other important disclosures rating, and risk definitions. All figures in C$ unless otherwise specified.
Sector: Technology | Industry: Consumer Electronics
Ticker Symbols: ZEPP – NYSE
️ Zepp Health is an FRC Top Pick ️
- ZEPP is up 28% since our previous report in November 2024.
- Q4-2024 revenue surged 40% QoQ, exceeding our estimate by 9%, primarily driven by a 29% increase in product shipments. Adjusted EPS remained negative, but improved sequentially (-$0.05 to -$0.04). However, it fell short of our -$0.02 forecast due to higher operating expenses.
- On a YoY basis, both shipments and revenue fell in Q4, and for the full year, following Zepp’s strategic decision to discontinue low-margin products.
- In Q4, Zepp maintained its position as the seventh-largest global smartwatch maker by unit sales, trailing Apple (NASDAQ: AAPL), Samsung (KOSE: A005930), Garmin (NYSE: GRMN), Fitbit (Google/NASDAQ: GOOGL), Xiaomi (SEHK: 1810), and Huawei. For comparison, Apple sells ∼25M units annually, while Zepp sells ∼4M units.
- Global smartwatch shipments declined 7% YoY in 2024, mainly due to fewer product upgrades. While Apple’s shipments dropped 19%, other key players experienced robust growth. Consensus estimates forecast 2% growth in 2025, fueled by more upgrades, rising health awareness, AI integration, and increased wearables popularity.
- Zepp’s Q4 revenue growth was primarily driven by the launch of the T-Rex 3, its latest addition to the rugged and affordable GPS smartwatch category. In Q1-2025, Zepp launched the Amazfit Active 2, targeting fashion-conscious, health-oriented consumers. The product has garnered positive reviews as an affordable alternative to premium brands like Apple, Samsung, and Garmin. Zepp plans to release one product per quarter this year, compared to just one last year.
- The company is ramping up its marketing efforts, signaling management’s focus on driving revenue growth this year. In February 2025, Zepp signed Olympic medalist Gabby Thomas, and World No. 4 tennis player Jasmine Paolini, as brand ambassadors.
- The new tariffs implemented by Trump on Chinese imports, including smartwatches, will have minimal impact on Zepp, as most of its U.S. exports are produced in South Asian countries outside China. With North America accounting for 25% of its shipments, Zepp is likely to benefit as higher tariffs may drive demand for affordable alternatives. Conversely, Apple’s reliance on Chinese manufacturing will likely expose it to greater adverse effects.
- At the end of Q4, working capital, and investments, net of long-term debt, totalled $207M vs Zepp’s MCAP of $51M, implying that the shares are trading well below liquid assets.
