Earnings call transcript: Zepp Health sees stock surge after Q2 2025 results

Zepp Health Corp reported a significant 46% increase in revenue for Q2 2025, marking its first year-over-year growth since 2021. The company’s stock surged by 28.41% following the announcement, closing at $33.86, and has continued its upward trajectory to $43.48. According to InvestingPro data, the stock has delivered an impressive 1,369% return over the past year. This growth is attributed to new product launches and improved operational efficiencies. Despite an adjusted operating loss, the company showed a 42% improvement from the previous year. InvestingPro analysis suggests the stock is currently trading above its Fair Value.

Key Takeaways

• Revenue increased by 46% year-over-year, reaching $59.4 million.
• Stock price rose by 28.41% in aftermarket trading.
• New product launches, including the Balance Two Smartwatch, contributed to growth.
• Operating costs were reduced to approximately $25 million per quarter.
• The company projects Q3 revenue growth of 70-79% year-over-year.

Company Performance

Zepp Health’s Q2 2025 results indicate a positive turnaround, with revenue growth driven by successful product launches and strategic cost management. The company has diversified its supply chain and expanded its presence in the mid to premium smartwatch segment, contributing to strong sales performance, particularly in the EMEA region.

Financial Highlights

• Revenue: $59.4 million (46% increase YoY)
• Gross Margin: 36.2% (slightly down YoY)
• Adjusted Operating Loss: $4.9 million (42% improvement YoY)
• Cash Balance: $95 million as of June 30
• R&D Expenses: $10.3 million (4.2% increase YoY)
• Marketing Expenses: $12 million (15.1% increase YoY)

Market Reaction

Following the earnings announcement, Zepp Health’s stock experienced a notable increase of 28.41% in aftermarket trading, closing at $33.86. This surge reflects investor optimism about the company’s growth prospects and its ability to capitalize on the expanding wearable technology market.

Outlook & Guidance

Zepp Health projects Q3 2025 revenue to be between $72 million and $76 million, representing a 70-79% year-over-year growth. The company expects gross margins to exceed 40% in the medium term, supported by continued product innovation and strategic market positioning.

Executive Commentary

CEO Wang Huang expressed confidence in the company’s strategic direction, stating, "Our strategic vision has never been clearer or more resolute." CFO Liang Feng highlighted the company’s valuation, noting, "We are hugely undervalued," and emphasized the expectation for gross margin expansion above 40%.

Risks and Challenges

• Supply Chain Constraints: Potential disruptions could impact product availability.
• Market Competition: Increasing competition in the wearable tech space may pressure margins.
• Tariff Impacts: Ongoing trade tensions could affect manufacturing costs.
• Economic Conditions: Global economic uncertainties could influence consumer spending.
• Technological Advancements: Rapid tech changes require continuous innovation.

Q&A

During the earnings call, analysts inquired about Zepp Health’s tariff mitigation strategies, which the company addressed through manufacturing flexibility. Questions also focused on supply constraints for the HelioStripe tracker and strategies for product mix and margin improvement, highlighting the company’s proactive approach to operational challenges.

Full transcript - Zepp Health Corp (ZEPP) Q2 2025:

Conference Operator: Hello, ladies and gentlemen. Thank you for standing by for ZEP Health Corporation’s Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in listen only mode. Today’s conference call is being recorded. I will now turn the call over to your host, Ms.

Grace Zhang, Director of Investor Relations for the company. Please go ahead, Grace.

Grace Zhang, Director of Investor Relations, ZEP Health Corporation: Hello, everyone, and welcome to the Gap Health Corporation’s Second Quarter twenty twenty five Earnings Conference Call. The company’s financial and operating results were issued in a press release via the Newswire services earlier today and are posted online. You can also view the earnings press release and slides referred on this call by visiting the IR section of the company’s website at ir.zep.com. Participating in today’s call are Mr. Wang Huang, our Chairman of the Board of Directors and Chief Executive Officer and Mr.

Liang Feng, our Chief Financial Officer. The company’s management will begin with prepared remarks, and the call will conclude with a Q and A session. Mr. Mike Yang, our Chief Operating Officer, will join us for the Q and A session. Before we continue, please note that today’s discussion will contain forward looking statements made under the Safe Harbor provisions of The U.

S. Private Securities Litigation Reform Act of 1995. Forward looking statements involve inherent risks and uncertainties. As such, the company’s actual results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties are included in the company’s annual report on Form 20 F for the fiscal year ended 12/31/2024, and other filings as filed with the U.

S. Securities and Exchange Commission. The company does not assume any obligation to update any forward looking statements, except as required under applicable law. Please also note that ZEP’s earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non GAAP financial information. ZEPP’s press release contains a reconciliation of the unaudited non GAAP measures to the unaudited most directly comparable GAAP measures.

I’ll now turn the call over to our CEO, Mr. Wang Huang. Please go ahead.

Wang Huang, Chairman and CEO, ZEP Health Corporation: Thank you everyone for joining us today. I’m excited to share that ZAP Health delivered an exceptional performance in the 2025, achieving a remarkable 46 year over year increase in revenue to $59,400,000 all revenue contributed by Amazfit brand. This is impressive not only on its own merit, but also as it marks our first quarter of year over year revenue growth since the 2021, a significant milestone in our business transformation and this is just the beginning of our growth trajectory. We are confident these initiatives are forging a robust operational and financial foundation to support sustained long term growth. After years of refining product competitiveness, building brand awareness and fostering user trust, our strategic vision has never been clear or more resolute.

Our core product lines vividly embody our guiding philosophy, train, recover, evolve. In the second quarter, our adventure series, the T Rex smartwatch maintained its competitive edge with sustained volume growth. It is setting new standards in the premium outdoor smartwatch category with extreme durability, unmatched battery life and advanced sports modes like high rise race and training mode. Our adventure series is strengthening our credibility among endurance sports professionals and high performance users, an audience pivotal to our long term premiumization strategy. Moreover, we introduced a new integrated solution for training and recovery with Balance two smartwatch and the Helios Chef.

The Balance two is designed for multi sport athletes offering advanced tracking for various sports, heart rate variability and recovery insights Priced at $299 this flagship integrates 40,000 plus golf maps worldwide with a 1.5 inches high brightness sapphire crystal display for clear outdoor visibility, 100 meter water resistance for scuba diving, industrial leading GPS accuracy with patents circularly polarized attenor technology for urban canyons, an AI powered ZAP coach for runners. This all in one device consolidates capabilities typically requiring multiple watches from competing brands. As the most premium offering in Amazfit’s mainstream lineup to date, the Balance two flagship expands our user base and sets a solid foundation for future growth. The Healer Shop Amazfit’s first Scream Free Fantasy Recovery and Sleep Tracker have garnered expenses raised from KOLs and high customer acclaim, helping us tap into a new underserved market niche. It offers subscription free 20 fourseven health monitoring and advanced AI driven smart training and recovery metrics and is an attractive alternative to competitors’ products, which traditionally require premium subscriptions priced above $200 per year.

Helioshop complements the balance two with continuous heart rate monitoring and 27 workouts modes. Both devices sync, effect, effortlessly through the ZAP app. It’s 20 fourseven operation, data fusion and integration into a complete ecosystem distinguish us from prominent competitors. Most recently, HealioShaP has been recognized by professional review influencers to quantify scientists as the most accurate heart rate monitoring device among all the watches and fitness trackers they have tested, surpassing industry well known brands. At the same time, our entry level B6 and lifestyle oriented Active two Series continue to see steady growth across major global markets, earning strong support from retail and Amazon partners, including better sales placements, increased ordering volume and deeper co marketing efforts.

This helped further expand brand awareness and reinforce the resilience of our tiered product strategy. Together with the new product launches in the second quarter, we also upgraded ZAP OS to ZAP OS five point zero powered by AI, ZAP Flow two point zero redefines training with voice controlled workouts, real time environmental data and personalized fairness insights delivering intuitive hands free experience. Through deep integration with OpenAI and Google Gemini, ZabOS five point zero achieved substantial advancements in both functionality and performance at a lower cost. The system now operates faster with expanded capabilities, most notably our food logging feature recognizes more force and auto calculates their calories for users. In the meantime, our hardware and software ecosystem is expanding with integrations from third party platforms like Java and TrainingPeaks.

We are actively working on integrating their sensors and solutions to provide more value to Amazfit users. Operationally, our flexible supply chain and multi region sourcing strategy have effectively steered us from the impact amidst trade uncertainties and shifting tariff policies, reinforcing our competitive edge by strategically diversifying our manufacturing capacity across China and Vietnam and actively evaluating further expansion opportunities within the NAFTA region. Our operational performance in the first half of this year demonstrates our ability to mitigate majority of the tariffs had been through greater product demands and global efficiency gains. In terms of branding and marketing positioning, our integrated region sports community strategy continues to deliver outstanding results by strategically leveraging the influence of global celebrated athletes and collaborating closely with emerging sports communities like High Rock. We have significantly boosted our global brand recognition.

These carefully curated partnerships has enhanced consumer trust, even emotional connections with diverse users demographics and amplified our market presence worldwide. In the recent high loss event in Chicago and Hong Kong, our product made an extraordinary presence among the sports enthusiasts. We continue to cultivate a robust Amazfit athletes team and to date we have over 10 sports stars on board, including Gabby Thomas and Jasmine Parini. This quarter, we are thrilled to welcome NFL first year athlete and pro bowler running back, Derrick Henry, and auto runner, Rob Fawad to our athlete family. We are committed to continuously creating greater value for the entire Amazfit community, our users, athletes, and all stakeholders alike.

Moreover, our targeted multi layered global marketing campaigns across platforms like YouTube, TikTok, and Instagram have created a powerful marketing matrix from authentic functionality tasked by tech influencers to fairness scenario demonstrations by wellness creators and high profile endorsements by professional athletes. This approach has successfully elevates Zeppel’s global brand perception, resonating deeply with our target audience. The recent Amazon Prime Day serves as a perfect showcase of the effectiveness of our marketing outreach. In USA, Amazfit ranked as the second most improved wearable brand year over year. In the EMEA region, our Prime Day sales surged by approximately 60% compared to the twenty twenty four events.

In summary, this outstanding quarter represents a powerful validation of our strategic transformation. Our relentless focus on sports tech and premium high impact products has differentiated our brand in the highly competitive, wearable technology market. Innovation, strategic partnerships and operational excellence are filling our momentum and shaping the future of connected sports experience. To capitalize on the industry’s upcoming peak season, we are expanding our premium product portfolio with our flagship device designed to fortify our competitive edge and long term business soon. So stay tuned.

With all the things mentioned above, we are poised to capture additional market share, drive continued growth, creating sustainable value for all stakeholders. Thank you once again for your unwavering support and confidence in ZEPP Health. We are incredibly excited about the future and look forward to delivering continued excellence as we progress through the 2025 and beyond. I will now turn the call over to Leon to go over the highlights of our second quarter financial results.

Liang Feng, Chief Financial Officer, ZEP Health Corporation: Thank you, William. Greetings, everyone. Thank you again for joining our second quarter twenty twenty five earnings call. Let me start by highlighting some key metrics from our financial results for the 2025. I would like to start off by recapping the recent campaigns, such as Hailiose Stripe Debut in Hirex Chicago led to a substantial increase in search activity and engagement.

As William mentioned for the Prime Day, we achieved significant year over year growth in both The USA and EMEA regions. In U. S, our main street ranked as the second most improved wearable brand year over year. In Europe, we significantly outperformed the overall smartwatch category growth of 32, with particularly strong sales in Germany, Italy and France. Our growth in the mid to premium smartwatch segment was propelled by strategic pricing, positive customer feedback and effective off-site brand awareness initiatives.

This strong performance sets the stage for continued success with momentum building ahead of the key events such as the Black Friday for 2025. Now let’s turn to the financials. We made an impressive progress in the second quarter with robust sales driving a 46% year over year revenue increase, reaching $59,400,000 exceeding the upper end of our previous guidance, primarily driven by the strong demand for our Big six and Active two series, as well as the continued success of our T Rex three series. These results highlight the effectiveness of our strategic shift to a misfit branded product ecosystem with the market recognizing our efforts and positioning the Amazfit brand for a new phase of value reevaluation. Our performance is even more impressive in the context of the quarter’s dynamic market environment.

Tariff promises and global wearable technology trends continue to evolve, presenting both challenges and opportunities. Our proactive supply chain management and diversified manufacturing process enhanced our operational resilience, while our value centered product approach allowed us to deliver advanced features and more accessible price points, reinforcing our competitive edge. Turning to gross margin, it was influenced by various factors, including product mix, product launch timing and product life cycles upgrade such as model upgrades. In Q2 twenty twenty five, we achieved a gross margin of 36.2%, on par with Q1 twenty twenty five, but down slightly year over year due to a higher revenue proportion of relatively lower margin entry level products, namely Amazfit BIP6 and Active2 smartwatches and the clearance of older mid range Balance one products to prepare for Balance two range launches. For the third quarter, with a full quarter of HALIO STRIBE and Ballast II sales, as well as several planned new products launches, we expect gross margin to expand.

Now let’s turn to costs. We remain steadfast in our commitment to cost management, continuing with the program that we began in Q3 twenty twenty on reducing overall operating costs. Our overall adjusted operating cost in the second quarter coming at $26,000,000 compared to $25,000,000 in the 2024 and $32,000,000 last quarter. By maintaining a cost conscious approach, we’re actively moving towards a run rate of approximately $25,000,000 per quarter for operating costs. Currently, we remain committed to investing in R and D and marketing activities to ensure our long term competitiveness.

Research and development expenses in the 2025 were US10.3 million dollars that increased by 4.2% year over year. The increase was a result from our investment in new technologies, including AI to maintain our competitive edge against our peers. And we also have more new products in the pipeline, so stay tuned. At the same time, we focus on refined research and development approaches as we consistently evaluated resource efficiency to ensure maximum return on investment and productivity. Selling and marketing expenses in the 2025 were US12 million dollars an increase of 15.1% year over year and a decrease of 12.7% quarter over quarter.

The year over year increase was primarily due to the promotional campaigns to build brand recognition and drive sales growth. The quarter over quarter decrease was primarily due to the absence of large scale physical product launch events, such as the CES held in the 2025. However, we continue to invest in selling expenses and signed a few more renowned athletes to expand our Amazfit athletes team in order to build brand recognition. At the same time, we consistently pushed on retail profitability and channel mix improvement. We’re committed to investing efficiently in marketing and branding to ensure our sustainable growth.

G and A expenses were US4.1 dollars in 2025 compared to US4.4 million dollars in the same 2024. As a result, we narrowed our adjusted operating loss to $4,900,000 for the quarter, an improvement of 42% compared to last year. The first half of the year is typically the seasons with lower sales compared to the second half of the year, which resulted in inability to fully cover our operating expenses. As of June 30, our overall cash balance stood at $95,000,000 compared to $103,000,000 in Q1 twenty twenty five. Inventory increased slightly due to preparations for upcoming new product launches.

Overall cash position saw a small quarter on quarter decrease, largely influenced by timing and operating performance factors, offset in part by solid working capital management that continues to deliver strong results. In Q3, we expect our overall cash balance to grow from its current levels. In terms of capital structure, our overall long term and short term debt levels remained consistent between the first and the 2025, following the restructuring we completed during the first quarter. We refinanced a significant portion of our short term debt into long term instruments with a more favorable interest rates and a two year duration, which significantly reduced near term liquidity pressures and enhanced our overall capital structure. Since the 2023, the company has cumulatively retired 8,000,000 of debt.

We’ll continue to optimize the capital structure for the company. We’re pleased to reconfirm our commitment to our share repurchase program in 2025, reflecting our confidence in that fundamentals and long term trajectory. We believe our valuation continues to represent attractive opportunity to return value to shareholders in the current market environment. Finally, our outlook for the 2025, we expect revenue to be in the range of $72,000,000 to 76,000,000 representing 70% to 79% year over year growth compared to $42,500,000 in the third quarter of twenty twenty four. Furthermore, our efforts to reduce operating expenses and improve gross margins are proving effective even as we invest in developing and launching new products.

We’re very excited to enter the next phase of our post transformation development with strong momentum. Thank you all for your time today. I will now open the call for questions. Operator, please go ahead.

Conference Operator: Thank you. We will now begin the question and answer session. Our first question today will come from Sidrajeev of Fundamental Research. Please go ahead.

Sidrajeev, Analyst, Fundamental Research: Thank you. Congratulations to the entire team at ZEP on a strong quarter and your strong guidance for Q3. Firstly, could you please give more color on the recent spike in share price drivers?

Liang Feng, Chief Financial Officer, ZEP Health Corporation: Yes. I think if you ask me, there’s a few things which are happening. Number one, we continue to see that our products are well received by the markets. And our brand is getting noticed everywhere. And I just mentioned that we had the one of the best Amazon day we had in the company’s history, right?

The second thing I would say, probably it’s coming out of the value discovery journey, which is happening right now in the overall market. Because a lot of investors probably see that smart hardware companies like us are taking market share versus the competitors. And then we are, I think I mentioned this many times before, we are hugely undervalued. If you look at the fair value of our shareholder equity value, or if you look at our peers, right. So I’m not surprised by the beaten share price movement.

And as a management, we believe if we continue to execute the strategy, which we embarked upon, you will see continued growth and then the value revaluation, as I mentioned in my scripts in the upcoming quarters and years.

Sidrajeev, Analyst, Fundamental Research: Thank you. How many more product launches in the second half of the year versus how many did you launch in the first half?

Liang Feng, Chief Financial Officer, ZEP Health Corporation: I think on the first half, we in Q1, we launched our entry level new products. We refreshed the line and it’s actually well received by the customers. To name a few, it’s BIP six and active two. And then in Q2, we actually managed to refresh our mid tier line, the balance two and also we coupled that with a new device, which is called HelioStripe. It’s actually well received by the customers and it has been ranked as the best heart rate sensors out of all the wearables, which the KOL has ever tested.

So, and then in the upcoming quarters, I think I’m sorry, I cannot tell you exactly what it is. But if you listen to Wayne’s script and if you listen to my script, we have very exciting products in the pipeline for Q3 and Q4. And I think it will be for sure on par with the new product launches we had in the second half of previous year, if not more. So we do have a lot of new products in the pipeline in the upcoming quarters. It.

Thanks.

Sidrajeev, Analyst, Fundamental Research: And in terms of gross margins, I know you said you expect gross margins to improve in the coming quarters. Do you think you can hit closer to 40% for the full year?

Liang Feng, Chief Financial Officer, ZEP Health Corporation: Yes. We guide on gross margins, but our business has a seasonal factor here. So if you look at Q1 and Q2, we launched our entry level we refreshed our entry level line and then rightfully so entry level lines carries less than our premium or mid tier product lines gross margin. So that actually has a small mix impact in the first and second quarters gross margin you see. But then as we are heading into Q3, we have a full quarter of balance through at Heliostripe and also the new products, which is on the horizon for us to push into the market.

Those would definitely lift the product mix for the second half of the year for the company. So I for sure would expect that our gross margin is going to expand in the second half of the year. And that is how you should look at the gross margin for our company for the upcoming quarters and for the full year.

Sidrajeev, Analyst, Fundamental Research: Okay. Just one final question, if I may. Given the lot of back and forth on tariffs, are you able to tell us more about what percent of your imports to China U. S. Comes from Vietnam?

And what are the current tariffs you are experiencing for your Chinese and Vietnam production?

Liang Feng, Chief Financial Officer, ZEP Health Corporation: No. Okay. So I think it’s public information, right? So if I’m shipping the products from China to U. S, the tariff at this moment is just south of 25% at this moment for our product category.

If we’re shipping the same thing out of Vietnam towards US, the tariff impact on that is close to zero, because on certain products between Vietnam and U. S, there’s a tariff waiver on that. So the idea here is that if we can ship as much as the products out of Vietnam to U. S, then we can mitigate the tariff impact in full. Rightfully so, if you look at our impact for the first and second quarter on the tariff, it’s almost I have to say it’s better than what we have expected.

Yes, there’s some impact on the tariffs, especially on the part from China US, but then we could offset majority of that through productivity gains in the other parts of the bond.

Sidrajeev, Analyst, Fundamental Research: Thank you so much, Leo.

Liang Feng, Chief Financial Officer, ZEP Health Corporation: Okay. Thank you, Sid.

Conference Operator: Our next question today will come from Dylan Chu of Point72 Hong Kong. Please go ahead with your question.

Dylan Chu, Analyst, Point72 Hong Kong: Hey, good morning management. Thanks for the opportunity to ask questions. Congratulations on the strength set of results. Maybe two questions, just following up on gross margin. Number one would be, what kind of sales contribution would you expect from the new Healio strap launch?

And what kind of gross margin do you expect the product to carry? And how would it sort of evolve as the scale continues to ramp up? And number two, slightly medium term, in two to three years, as your sales product mix continue to improve, how should we think about your gross margin benchmarking against sort of Gartner’s finish lines? Because right now, at around 40%, we’re sort of close to their operating margin. If we further upgrade our product mix, I’m just wondering if you can give us little bit color on your medium term grocery buying results.

Thank you.

Liang Feng, Chief Financial Officer, ZEP Health Corporation: Hi. Yes. So let me comment on your first question first on the HELIOSTRIPE, right. The HELIOSTRIPE, we only launched it in June. And after we launched it in June, it actually received a very good popularity from the customers who bought it.

I think this product if you ask us, it has unique value to our company because we are being noticed and it’s the first time that serious performance users are actually buying our devices for the reason that we have the best HR, the hardware sensors in the market. And we also have the best insights, which can be provided by our ZAP OS and our app towards the users who are using it. And then we also mentioned that if you benchmark this product against its competitors, it’s much cheaper, it’s much better from a performance perspective and it’s gaining popularity and it’s actually, I think if you ask me, we’re having more supply constraint versus the demand. So, and Hailiostripe in itself, it carries a very healthy gross margin, because on one hand, it’s a relatively cheap product. It has been priced at $99 right?

But on the other hand, it has a quite healthy gross margin, which is on par with the overall company’s gross margin we’re currently having, right. So the more we can sell on the Helios Stripe in the future, it might become a separate line by itself, but then it’s still very early to say. That’s how you should look at Heliostripe. And then if I come back to your second question, obviously, you go back to the products we have on a very ballpark, we have the outdoor series, which is represented by T Rex. We have the balance series, which is our mid tier product, which competing against the mainstream Apple and Samsung watch.

And then we have the Essential series, which is in price range of around $100 which is representing the big six and active two watches we’re having. So we’re actually covering the full price range of different price ranges for the smart watches and different ranges from the entry level all the way to the most high end watches, obviously it carries different gross margin from low to high, right. And on a mix perspective, we think the proportion of the high end and the mid end products will continue to expand in a midterm. So over two years to three years time frame or maybe shorter than that. And we still want to have a good base and a funnel from the entry level products because we also see that there’s a growing demand and popularity on the products which we priced at $100 So, yeah, this is maybe a long answer to your question.

I think in the upcoming two years or mid to long term, you should expect our gross margin to further expand above the 40%, which we set as a goal for now.

Dylan Chu, Analyst, Point72 Hong Kong: Thank you. That’s very clear. Could I please maybe follow-up one quick question? You mentioned headostrap is running into a little supply constraint. I’m just wondering when do you expect it to sort of improve?

And what kind of capacity or volume expectation can we possibly have for next year?

Liang Feng, Chief Financial Officer, ZEP Health Corporation: No, I think we’re working day and night to improve on the supply issues as we speak. So I think in Q3, we should be able to resolve it. So that’s why I mean, you should be able to see a full Q3 with the Helios Stripe performance from a runway perspective.

Dylan Chu, Analyst, Point72 Hong Kong: Got it. Thank you. That’s all my questions. Thank you.

Liang Feng, Chief Financial Officer, ZEP Health Corporation: Thank you.

Conference Operator: Our next question today will come from Frank Dugan of Works Investments. Please go ahead.

Liang Feng, Chief Financial Officer, ZEP Health Corporation: All right. Thank you. Congratulations for such a good quarter. I only have one question. You mentioned a very strong guidance for the third quarter.

So what’s going to be the main driver for this? I think I just mentioned there’s a few things. So number one, our essential series that they’ve been active to the entry level products continue to get fractions and we have a very strong Amazon Prime Day performance out of those two products. So these two products will continue to perform for Q3 and also from a seasonality perspective, Q3, Q4 are typically the high seasons for smartwatch and electronics purchase, right. So that’s number one.

Number two, we recently launched Balance two and Heliostripe. Those are two products which we launched in June. And it’s actually a big and major refresh of our mid range products. And it actually received very good reviews from the KOLs and also the consumers. So these two products is going to continue to perform in the course of Q3 and it will be a full quarter performance.

So what you see in Q2 is only one month, okay. So that’s number two. Number three is that our T Rex three, which is our flagship line continue to perform. It actually performed, it was well received the moment it was launched last year Q3. And then every quarter, it just steadily growing in its popularity.

So these three lines, as we just mentioned, will continue to perform in Q3 and not to mention, we have something which we also hinted to interesting product, which we’re very proud of to be launched in Q3 as well. So a factor of the four would drive the growth for Q3. Okay. Thank you. Thank you.

Conference Operator: Ladies and gentlemen, at this time, we will conclude our question and answer session. I’d like to turn the conference back over to Grace Young for any closing remarks.

Grace Zhang, Director of Investor Relations, ZEP Health Corporation: Thank you once again for joining us today. If you have further questions, please feel free to contact ZEP’s Investor Relations department through the contact information provided on our IR website. Thank you.

Conference Operator: The conference has now concluded. Thank you for attending today’s presentation. And you may now disconnect your

Liang Feng, Chief Financial Officer, ZEP Health Corporation: lines.

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