Huami Corporation (NYSE: HMI) reported Q3 EPS of $0.48, $0.10 better than the analyst estimate of $0.38. Revenue for the quarter came in at $260.6 million versus the consensus estimate of $231.56 million.

Third Quarter 2019 Financial and Operating Highlights

• Revenues reached RMB1,862.5 million (US$260.6 million), representing an increase of 73.3% from the third quarter of 2018.
• Gross margin was 25.2%, compared with 26.7% for the third quarter of 2018.
• Net income attributable to Huami Corporation was RMB203.3 million (US$28.4 million), compared with RMB113.8 million for the third quarter of 2018.
• Basic and diluted net income per American depositary share ("ADS") attributable to ordinary shareholders of Huami Corporation was RMB3.31 (US$0.46) and RMB3.15 (US$0.44), respectively. Each ADS represents four (4) Class A ordinary shares.
• Adjusted net income attributable to Huami Corporation[1] was RMB209.8 million (US$29.4 million).
• Adjusted basic and diluted net income per ADS attributable to ordinary shareholders of Huami Corporation[2] was RMB3.41 (US$0.48) and RMB3.25 (US$0.45), respectively. Each ADS represents four (4) Class A ordinary shares.
• Total units shipped reached 13.7 million, compared with 8.2 million in the third quarter of 2018.

"Our persistent execution of strategic initiatives focused on product diversification, brand elevation, and international expansion, continues to pay off, driving outstanding top-line and bottom-line growth in the third quarter," said Wang Huang, Chairman and CEO. "Our revenue performance was primarily the result of the strong sales of both the Mi-Band 4 and our newly released Amazfit products, as both brand categories become increasingly recognized by consumers. Our international shipments keep on climbing, underpinned by our first international product launch event in Berlin, Germany and numerous global product design awards we received. We view the overseas marketing campaign as an essential strategy for our growth with additional global product launches being planned for future dates.

"In the third quarter, we leveraged our expertise in smart wearable hardware and big data analytics to further optimize algorithms for our cloud-based healthcare services. The accuracy and effectiveness of our healthcare service offering has been testified by top physicians in China. A recent research published at the 2019 Asia Pacific Heart Rhythm Society by Peking University First Hospital, showed that Huami smart wearables manage to detect atrial fibrillation at an accuracy rate of approximately 94%, similar to the accuracy of professional physicians. Looking ahead, we will continue investing in and improving our R&D capabilities as well as seek new strategic partnerships, all while maintaining our close relationship with Xiaomi. With all of these efforts, we strive to provide users a better experience in sports and healthcare services, as they integrate our smart products and services into their daily lives."

David Cui, Chief Financial Officer, said, "We are very pleased with the robust financial results in the third quarter, with revenues growing 73.3% year-over-year and net income attributed to Huami Corporation also increasing strongly year-over-year at 78.7%, as we benefited from strong unit sales, particularly with increasing global demand for both Mi-Band 4 and our newly launched Amazfit products. During this quarter, we shipped 13.7 million total units, up 67.1% from the same period last year.

"Along with revenue expansion, our operating efficiency also improved in the quarter, with operating expense as a percentage of revenues at 13.5% during the quarter, declining 4.3 and 1.4 percentage points respectively from the second quarter 2019 and the third quarter last year, despite our increasing investment in R&D capabilities and brand equity during the quarter. As we further diversify our product lines, strengthen our service offerings, form and solidify strategic alliances, and grow our global footprint, we are confident in our ability to continue delivering healthy financial and operating performance going forward."

Outlook

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

- Net revenues to be between RMB1.93 billion and RMB1.95 billion, which would represent an increase of approximately 57.6% to 59.2% from RMB1,224.6 million for the fourth quarter of 2018.

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