Huami Corporation (HMI) Tops Q2 EPS by 13c, Revenues Beat

Huami Corporation (NYSE: HMI) reported Q2 EPS of $0.26, $0.13 better than the analyst estimate of $0.13. Revenue for the quarter came in at $114.9 million versus the consensus estimate of $97.42 million.

• Revenues1 reached RMB760.1 million (US$114.9 million), representing an increase of 54.8% from the second quarter of 2017.
• Gross margin was 25.9%, no material change from the second quarter of 2017.
• Net income attributable to Huami Corporation was RMB85.5 million (US$12.9 million), compared to RMB49.7 million in the second quarter of 2017.
• Adjusted net income attributable to Huami Corporation2 was RMB101.6 million (US$15.3 million), up 57.8 % from the second quarter of 2017.
• Adjusted basic and diluted net income per American depositary share ("ADS") attributable to ordinary shareholders of Huami Corporation was RMB1.69 (US$0.26) and RMB1.61 (US$0.24), respectively, compared to RMB1.17 and RMB1.12, respectively, for the second quarter of 2017. Each ADS represents four (4) Class A ordinary shares.
• Total units shipped reached 5.4 million, compared to 4.5 million in the second quarter of 2017.

"We are pleased to deliver strong top and bottom line results in the second quarter that exceeded our expectations," said Wang Huang, Chairman and CEO. "Our performance was driven by robust sales of Amazfit branded products as well as the extremely successful launch of the Mi Band 3 during the quarter. In the first half of 2018, we sold approximately 1.4 million units Amazfit branded products, and revenue generated from Amazfit branded products and other value added services was RMB 523.0 million. This revenue amount is more than four times of that of first half of 2017. Our results reflect our strong competitive position and compelling product offering, and reinforce our proven track record of delivering products that meet market demands. Our recently announced acquisition of Zepp assets and strategic partnership with PAI Health will ensure our product development pipeline remains full and position us to further penetrate the healthcare and sports arenas. Furthermore, these alliances accelerate our efforts to monetize our vast datasets and expand into the global market."

David Cui, Chief Financial Officer, said, "Strong sales of higher margin self-branded products helped offset the anticipated margin drag of selling through older generation products and drove solid profitability for the quarter. The successful launch of the Mi Band 3 and effective management of the Mi Band 2 transition highlight our demonstrated ability to effectively manage the product lifecycle. Building on our momentum, we continue to make strategic investments in our research and development capabilities to ensure we remain on the leading edge of smart wearable technology. During the second quarter, we made incremental investments in R&D related to internet apps, AI and products to penetrate the healthcare sector. In addition, our marketing expense increased as we look to build broader awareness and adoption of our self-branded products. We are extremely pleased with our performance during the first half of the year, and these investments help ensure we are well positioned to continue to deliver strong results as we enter the second half of the year."

For earnings history and earnings-related data on Huami Corporation (HMI) click here.

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