Zepp Health NYSE: ZEPP reported second-quarter 2026 revenue of $63.5 million, up 6.9% from a year earlier, as new product launches and a higher-priced product mix supported growth. Gross margin improved to 37.4% from 36.2% a year earlier despite higher memory and component costs, according to management.
Founder and Chief Executive Officer Wang Huang said the company’s results reflected “measured rather than explosive growth,” but said the improvement in revenue and gross margin demonstrated progress before newer products had fully ramped in production and distribution channels.
The company expects third-quarter revenue of $68 million to $73 million, which would represent a year-over-year decline of approximately 4% to 10% from a comparatively high base of $75.8 million in the prior-year quarter. Zepp said last year’s third-quarter revenue had risen 78.5% year over year.
Premium Product Mix Expands
Huang said Zepp’s product portfolio is increasingly shifting toward higher-value devices. Within its T-Rex line, the T-Rex Break Pro and T-Rex Orca Two, with U.S. suggested retail prices of about $399 and $549, respectively, represented about 50% of recent global T-Rex family activations.
The company also cited adoption of higher-priced Active products. Active 3 Premium and Active Max, both priced at $169 in the U.S., accounted for about 40% of global Active family activations in the second quarter, up from roughly 22% in the first quarter. Their contribution reached approximately 49% in July and 57% through Aug. 25, Huang said.
Zepp said total monthly activations for the Active family were broadly comparable with those of the Bip family in July and August, even as Bip supply recovered. The company characterized that comparison as evidence that products largely priced between $100 and $200 can reach a similar activation scale to the entry-level Bip line.
The Balance family is central to Zepp’s strategy in hybrid training, targeting athletes combining strength, endurance and recovery activities. Balance 3 starts at $369.99 in the U.S., while Balance 3 Titanium is priced at $499.99 and Balance Ultra at $599.99. Balance 3 and Balance Ultra represented about 26% of global Balance activations in July and about 30% through Aug. 25, compared with about 3% in the second quarter.
Huang said total global Balance activations in July increased by more than one-third from the second-quarter monthly average, while activations of older Balance models remained relatively stable. However, he said the newer Balance products had not yet reached their anticipated scale or financial contribution.
Supply Constraints and Bip Price Increase
Supply constraints affected the Bip family and Helio Strap during the quarter. Huang said demand for the sub-$100 Bip 6 remained strong after supply recovered, while Bip Max recently accounted for about one-third of global Bip family activations.
Beginning in January 2027, Zepp plans to raise prices across the Bip family. Huang said the move is intended to maintain the family’s consumer value proposition while improving unit economics over a longer product life cycle, particularly as higher memory and component prices pressure profitability for entry-level products.
Chief Financial Officer Leon Deng said Bip supply restrictions had been “almost” fully removed. Helio Strap supply is expected to improve partially in the third quarter and be fully restored in the fourth quarter. The screen-free Helio Strap experienced demand that exceeded available supply in the second quarter, according to the company.
Zepp also said it is building product credibility in professional running through its Cheetah line and in hybrid training through Helio Strap Pro. Huang highlighted performances by athletes using Amazfit products, while noting that credit for those results belonged to the athletes.
Expenses Rise as Marketing Investment Increases
Adjusted operating expenses totaled $34.8 million, compared with $26.4 million in the second quarter of 2025 and $35.7 million in the first quarter. The year-over-year increase included approximately $2.7 million in foreign-currency effects and $5.7 million primarily related to higher selling and marketing spending.
Adjusted selling and marketing expense rose to $18.2 million from $12 million a year earlier. Deng said the increase included $2.9 million for new-product launch campaigns, $1.6 million in e-commerce platform fees, $700,000 in athlete sponsorships, $500,000 related to the company’s HYROX partnership, and $500,000 for physical retail and event activations.
Deng said selling expense should moderate as launch activity slows. The company has launched approximately nine to 10 products so far this year and expects only one or two additional, relatively minor launches in the second half, he said.
Adjusted research and development expense was $10.8 million, compared with $10.3 million a year earlier. The company said it continues to invest selectively in products, emerging technologies and artificial intelligence while seeking to improve R&D efficiency.
Zepp posted an adjusted operating loss of $11.1 million, compared with a $4.9 million loss in the year-earlier period. First-half net loss was $31 million, versus $27.5 million a year earlier, including about $4.5 million in foreign-exchange headwinds associated primarily with the appreciation of the renminbi against the U.S. dollar.
Cash Position and Outlook
Inventory was $62.4 million at the end of the second quarter, flat sequentially and down $17.5 million from a year earlier. Cash and cash equivalents totaled $106.3 million, up $3 million from the first quarter and $11 million from the year-earlier period.
The company said it converted $13.3 million of short-term debt into long-term obligations during the quarter. Since the start of 2023, Zepp has retired $40.2 million of debt, Deng said. It had repurchased $17.6 million of stock under its $20 million repurchase authorization as of the end of the quarter.
In discussing the third-quarter outlook, Deng cited macroeconomic pressure on consumer discretionary spending, supply constraints affecting Helio Strap, Balance 3 and Bip products, and the timing of product launches and channel sell-through. He said Zepp expects a more favorable fourth quarter as product supply improves and management aims to return to revenue growth.
About Zepp Health (NYSE:ZEPP)
Zepp Health Corp is a technology company specializing in the design, development and sale of smart wearable devices and health management solutions. Through its flagship Amazfit brand and the Zepp software ecosystem, the company offers a range of products—including smartwatches, fitness bands, smart scales and health-oriented mobile applications—designed to track key biometric data such as heart rate, sleep patterns, blood oxygen levels and activity metrics. Zepp Health's integrated platform enables users to monitor wellness and fitness goals while leveraging cloud-based analytics for personalized insights.
At the core of Zepp Health's offering is its Zepp cloud platform, which aggregates and analyzes data collected from its hardware lineup.
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