Huami Corporation Reports Fourth Quarter and Full Year 2019 Unaudited Financial Results

BEIJING, March 13, 2020 /PRNewswire/ -- Huami Corporation ("Huami" or the "Company") (NYSE: HMI), a cloud-based healthcare services provider with world-leading smart wearable technology, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2019.

Fourth Quarter 2019 Financial and Operating Highlights

    --  Revenues reached RMB2,111.4 million (US$303.3 million), representing an
        increase of 72.4% from the fourth quarter of 2018.
    --  Gross margin was 23.8%, compared with 25.2% for the fourth quarter of
        2018.
    --  Net income attributable to Huami Corporation was RMB207.2 million
        (US$29.8 million), compared with RMB126.0 million for the fourth quarter
        of 2018.
    --  Basic and diluted net income per American depositary share ("ADS")
        attributable to ordinary shareholders of Huami Corporation was RMB3.36
        (US$0.48) and RMB3.21 (US$0.46), respectively. Each ADS represents four
        (4) Class A ordinary shares.
    --  Adjusted net income attributable to Huami Corporation([1]) was RMB213.8
        million (US$30.7 million).
    --  Adjusted basic and diluted net income per ADS attributable to ordinary
        shareholders of Huami Corporation([2]) was RMB3.46 (US$0.50) and RMB3.31
        (US$0.48), respectively. Each ADS represents four (4) Class A ordinary
        shares.
    --  Total units shipped reached 14.7 million, compared with 9.2 million in
        the fourth quarter of 2018.

Full Year 2019 Financial and Operating Highlights

    --  Revenues reached RMB5,812.3 million (US$834.9 million), representing an
        increase of 59.4% from the full year 2018.
    --  Gross margin was 25.3%, compared with 25.8% for the full year 2018.
    --  Net income attributable to Huami Corporation was RMB575.2 million
        (US$82.6 million), compared with RMB340.0 million for the full year
        2018.
    --  Basic and diluted net income per ADS attributable to ordinary
        shareholders of Huami Corporation was RMB9.40 (US$1.35) and RMB8.95
        (US$1.29), respectively. Each ADS represents four (4) Class A ordinary
        shares.
    --  Adjusted net income attributable to Huami Corporation was RMB630.3
        million (US$90.5 million), up 32.8% from the full year 2018.
    --  Adjusted basic and diluted net income per ADS attributable to ordinary
        shareholders of Huami Corporation was RMB10.30 (US$1.48) and RMB9.81
        (US$1.41), respectively, compared with RMB8.39 and RMB7.59,
        respectively, for the full year 2018. Each ADS represents four (4) Class
        A ordinary shares.
    --  Total units shipped reached 42.3 million, compared with 27.5 million in
        the full year 2018.


                        [1] Adjusted net income is a non-
                         GAAP measure, which excludes share-
                         based compensation expenses. See
                         "Reconciliation of GAAP and Non-
                         GAAP Results" at the end of this
                         press release.


                        [2] Adjusted net income attributable
                         to ordinary shareholders of Huami
                         Corporation is a non-GAAP measure,
                         which excludes share-based
                         compensation expenses attributable
                         to ordinary shareholders of Huami
                         Corporation and deemed dividend for
                         preferred shares, and is used as
                         the numerator in computation of
                         adjusted basic and diluted net
                         income per ADS attributable to
                         ordinary shareholders of Huami
                         Corporation.

"2019 was an outstanding year for Huami marked by accelerated growth, strengthening brand recognition, and robust financial and operational results, as we solidified our leadership position in the global smart wearables industry," said Wang Huang, Chairman and CEO. "In the fourth quarter, we achieved healthy revenue and net income growth, driven by successful new product launches, effective sales and marketing outreach, and our successful efforts to expand internationally through a multi-channel strategy comprised of direct sales and third-party sales channels. In addition, we collaborated closely with Timex on product development, and the product has been launched into the market, while our partnership with Xiaomi continued, leading to the Mi-Band 5's expected release in 2020.

"Most significantly, we started the initial phases of several exciting new business initiatives, including ear buds and interactive treadmills, marking a new chapter for our Company. By creating new product categories, we are further expanding our products and services offerings beyond current smart wearables, which will ultimately dovetail with our vision of a future centering around health and fitness services. Healthcare has always been a focus for the Company since Huami was founded in 2013. With our established corporate mission of 'Connect Health with Technology,' we will continue focusing on healthcare related functionalities through the development of our smart devices, proprietary AI-chip and healthcare services. Despite the COVID-19 virus outbreak that posted world-wide challenges and affected parts of our supply chain, we and our supply chain partners have gradually resumed normal operations since mid-February. We are confident that our growth initiatives coupled with our strong sales and marketing capabilities, will help us achieve another successful year in 2020."

David Cui, Chief Financial Officer, added, "In the fourth quarter of 2019, the Company continued its trend of strong growth momentum, driven by robust unit sales of both self-branded products and Mi-Band 4, most notably during the Double 11 shopping festival this year. We shipped 14.7 million units in the fourth quarter, representing a 59.8% growth from the same quarter last year. Our revenues and net income, attributed to Huami Corporation, increased by 72.4% and 64.5% year-over-year respectively, demonstrating growing brand awareness and adoption of our products by users.

"During the fourth quarter, we continued investing in R&D for innovative products and strengthened our sales and marketing strategy to promote our Amazfit brand. While we do anticipate some impact on first quarter results from the recent nationwide COVID-19 outbreak, we are confident we can sustain growth and profitability in 2020 and beyond through new product initiatives, collaborative opportunities, global expansion, and balanced operational expense control."

Fourth Quarter 2019 Financial Results

Revenues increased by 72.4% to RMB2,111.4 million (US$303.3 million) from RMB1,224.6 million for the fourth quarter of 2018, driven by continued sales growth of Xiaomi and self-branded wearable products, an increase in overall brand recognition and the global rise in the adoption of smart wearable products.

Cost of revenues increased by 75.7% to RMB1,608.3 million (US$231.0 million) from RMB915.6 million for the fourth quarter of 2018. The increase was in line with the sales growth of Xiaomi and self-branded wearable products.

Gross profit increased by 62.8% to RMB503.1 million (US$72.3 million) from RMB309.0 million for the fourth quarter of 2018. Gross margin of 23.8% for the fourth quarter of 2019, compared with 25.2% for the fourth quarter of 2018.

Total operating expenses increased to RMB285.5 million (US$41.0 million) from RMB177.8 million for the fourth quarter of 2018.

Research and development expenses increased by 64.8% to RMB140.2 million (US$20.1 million) from RMB85.1 million for the fourth quarter of 2018, primarily due to an increase in the number of R&D staff and a rise in testing costs associated with the pipeline products.

General and administrative expenses increased by 29.1% to RMB82.6 million (US$11.9 million) from RMB63.9 million for the fourth quarter of 2018, primarily due to an increase in professional fees related to improve operation management and business expansion, and personnel-related expenses, offsetting by a decrease in share-based compensation.

Selling and marketing expenses increased by 118.3% to RMB62.8 million (US$9.0 million) from RMB28.8 million for the fourth quarter of 2018, primarily due to an increase in advertising and promotional expenses for self-branded products during the holiday sales and promotional events and growth in personnel-related expenses.

Operating income was RMB217.7 million (US$31.3 million), compared with RMB131.2 million for the fourth quarter of 2018.

Income before income tax was RMB237.5 million (US$34.1 million), compared with RMB139.4 million for the fourth quarter of 2018.

Income tax expenses were RMB27.3 million (US$3.9 million), compared with RMB12.3 million for the fourth quarter of 2018.

Net income attributable to Huami Corporation totaled RMB207.2 million (US$29.8 million), compared with RMB126.0 million for the fourth quarter of 2018.

Net income attributable to ordinary shareholders of Huami Corporation increased to RMB207.2 million (US$29.8 million), compared with RMB122.4 million for the fourth quarter of 2018.

Basic and diluted net income per ADS attributable to ordinary shareholders of Huami Corporation was RMB3.36 (US$0.48) and RMB3.21 (US$0.46), respectively. Each ADS represents four (4) Class A ordinary shares.

Adjusted net income attributable to Huami Corporation, which excludes share-based compensation expenses, increased by 46.0% to RMB213.8 million (US$30.7 million) from RMB146.5 million for the fourth quarter of 2018.

Adjusted basic and diluted net income per ADS attributable to ordinary shareholders of Huami Corporation was RMB3.46 (US$0.50) and RMB3.31 (US$0.48), respectively. Each ADS represents four (4) Class A ordinary shares.

As of December 31, 2019, the Company had cash and cash equivalents of RMB1,803.1 million (US$259.0 million), compared with RMB1,441.8 million as of December 31, 2018.

Full Year 2019 Financial Results

Revenues increased by 59.4% to RMB5,812.3 million (US$834.9 million) from RMB3,645.3 million for the full year 2018, due to the growth of Xiaomi and self-branded wearable products, an increase in overall brand recognition and the global rise in the adoption of smart wearable products.

Cost of revenues increased by 60.6% to RMB4,344.5 million (US$624.1 million) from RMB2,705.9 million for the full year 2018. The increase was in line with accelerating sales growth of both Xiaomi and self-branded wearable products.

Gross profit increased by 56.2% to RMB1,467.7 million (US$210.8 million) from RMB939.5 million for the full year 2018. Gross margin decreased to 25.3% from 25.8% for the full year 2018.

Total operating expenses increased to RMB861.3 million (US$123.7 million) from RMB573.7 million for the full year 2018.

Research and development expenses increased by 63.7% to RMB430.8 million (US$61.9 million) from RMB263.2 million for the full year 2018, primarily due to an increase in personnel-related expenses and a rise in testing costs associated with the pipeline products, offsetting by the decrease of share-based compensation.

General and administrative expenses increased by 16.1% to RMB248.5 million (US$35.7 million) from RMB214.0 million for the full year 2018, primarily due to an increase in personnel-related expenses, professional fees related to improve management operation and business expansion, offsetting by the decrease of share-based compensation.

Selling and marketing expenses increased by 88.5% to RMB182.0 million (US$26.1 million) from RMB96.5 million for the full year 2018, primarily due to an increase in advertising and promotional expenses for self-branded products in domestic and overseas market as well as personnel-related expenses.

Operating income was RMB606.5 million (US$87.1 million), compared with RMB365.7 million for the full year 2018.

Income before income tax was RMB652.4 million (US$93.7 million), compared with RMB386.6 million for the full year 2018.

Income tax expenses were RMB77.9 million (US$11.2 million), compared with RMB52.0 million for the full year 2018.

Net income attributable to Huami Corporation totaled RMB575.2 million (US$82.6 million), compared with RMB340.0 million for the full year 2018.

Net income attributable to ordinary shareholders of Huami Corporation improved to RMB572.7 million (US$82.3 million), compared with RMB113.5 million for the full year of 2018, which included the impact of deemed dividend to preferred shareholders.

Basic and diluted net income per ADS attributable to ordinary shareholders of Huami Corporation was RMB9.40 (US$1.35) and RMB8.95 (US$1.29), respectively. Each ADS represents four (4) Class A ordinary shares.

Adjusted net income attributable to Huami Corporation, which excludes share-based compensation expenses, increased by 32.8% to RMB630.3 million (US$90.5 million) from RMB474.8 million for the full year 2018.

Adjusted basic and diluted net income per ADS attributable to ordinary shareholders of Huami Corporation was RMB10.30 (US$1.48) and RMB9.81 (US$1.41), respectively, compared with RMB8.39 and RMB7.59, respectively, for the full year 2018. Each ADS represents four (4) Class A ordinary shares.

Outlook

For the first quarter of 2020, the management of the Company currently expects:

- Net revenues to be between RMB980.0 million and RMB1,010.0 million, which would represent an increase of approximately 22.6% to 26.3% from RMB799.6 million for the first quarter of 2019.

The above outlook is based on the current market conditions and reflects the Company management's current and preliminary estimates of market and operating conditions and customer demand, which are all subject to change.

Conference Call

The Company's management will hold a conference call at 8:00 a.m. Eastern Standard Time on Friday, March 13, 2020 (8:00 p.m. Beijing Time on March 13, 2020) to discuss financial results and answer questions from investors and analysts. Listeners may access the call by dialing:



              US (Toll Free):                           1-888-346-8982



              International:                            1-412-902-4272


               Mainland China (Toll Free):               400-120-1203



              Hong Kong (Toll Free):                    800-905-945



              Hong Kong:                                852-3018-4992

Participants should dial-in at least 10 minutes before the scheduled start time and ask to be connected to the call for "Huami Corporation."

Additionally, a live and archived webcast of the conference call will be available at http://www.huami.com/investor.

A telephone replay will be available two hours after the call until March 20, 2020 by dialing:



              US Toll Free:             
              1-877-344-7529



              International:            
              1-412-317-0088



              Replay Passcode:                             10139897

About Huami Corporation

Huami is a cloud-based healthcare services provider with world-leading smart wearable technology. Since its inception in 2013, Huami has quickly established its global market leadership and recognition by shipping millions of units of smart wearable devices. In 2019, Huami shipped 42.3 million units of smart wearable devices. Huami has one of the largest biometric and activity databases in the global smart wearables industry. Huami's mobile apps work hand in hand with its smart wearable devices and provide users with a comprehensive view and analysis of their biometric and activity data.

Use of Non-GAAP Measures

We use adjusted net income, a non-GAAP financial measure, in evaluating our operating results and for financial and operational decision-making purposes. Adjusted net income represents net income excluding share-based compensation expenses, and such adjustment has no impact on income tax. Adjusted net income attributable to ordinary shareholders of Huami Corporation is a non-GAAP measure, which excludes share-based compensation expenses attributable to ordinary shareholders of Huami Corporation and deemed dividend for preferred shares, and is used as the numerator in computation of adjusted net income per share attributable to ordinary shareholders of Huami Corporation .

We believe that adjusted net income and adjusted net income attributable to ordinary shareholders help identify underlying trends in our business that could otherwise be distorted by the effect of certain expenses and deemed dividend that we include in net income and net income attributable to ordinary shareholders. We believe that adjusted net income and adjusted net income attributable to ordinary shareholders provides useful information about our operating results, enhances the overall understanding of our past performance and future prospects and allows for greater visibility with respect to key metrics used by our management in its financial and operational decision-making.

Adjusted net income and adjusted net income attributable to ordinary shareholders, should not be considered in isolation or construed as an alternative to net income, basic and diluted net income per share attributable to ordinary shareholders of Huami Corporation or any other measure of performance or as an indicator of our operating performance. Investors are encouraged to review the historical non-GAAP financial measures to the most directly comparable GAAP measures. Adjusted net income and adjusted net income attributable to ordinary shareholders, presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.

Exchange Rate

The Company's business is primarily conducted in China and the significant majority of revenues generated are denominated in Renminbi ("RMB"). This announcement contains currency conversions of RMB amounts into U.S. dollars ("US$") solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ are made at a rate of RMB6.9618 to US$1.00, the effective noon buying rate for December 31, 2019 as set forth in the H.10 statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on December 31, 2019, or at any other rate.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the cooperation with Xiaomi, the recognition of the Company's self-branded products; the Company's growth strategies; trends and competition in global wearable technology market; changes in the Company's revenues and certain cost or expense accounting policies; governmental policies relating to the Company's industry and general economic conditions in China and the global. Further information regarding these and other risks is included in the Company's filings with the United States Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and the Company undertakes no obligation to update any forward-looking statement, except as required under applicable law.

For investor and media inquiries, please contact:

In China:
Huami Corporation
Grace Yujia Zhang
E-mail: ir@huami.com

The Piacente Group, Inc.
Ross Warner
Tel: +86-10-6508-0677
E-mail: huami@tpg-ir.com

In the United States:
Brandi Piacente
Tel: +1-212-481-2050
E-mail:??huami@tpg-ir.com


                                                               
              
                HUAMI CORPORATION


                                                        
       
               UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


                                                      
       
        (Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$")


                                                     
       
        except for number of shares and per share data, or otherwise noted)






                                                                            
              
                As of December 31,            As of December 31,



                                                                                                                     2018                        2019



                                                                                   
              
                RMB                            RMB           US$





     
                Assets



     
                Current assets:



     Cash and cash equivalents                                                                                 1,441,802                   1,803,117 259,002



     Restricted cash                                                                                              10,010                         874     126



     Term deposit                                                                                                 96,969



     Accounts receivable                                                                                          58,925                     188,940  27,140



     Amounts due from related parties, current                                                                   656,399                   1,421,170 204,138



     Inventories                                                                                                 484,622                     893,806 128,387



     Short-term investments                                                                                       50,482                      17,187   2,469



     Prepaid expenses and other current assets                                                                    58,247                      67,358   9,675




     
                Total current assets                                                                         2,857,456                   4,392,452 630,937






     Property, plant and equipment, net                                                                           40,042                      64,350   9,243



     Intangible asset, net                                                                                        63,722                      85,753  12,318



     Goodwill                                                                                                      5,930                       5,930     852



     Long-term investments                                                                                       208,949                     406,099  58,332



     Deferred tax assets                                                                                          75,032                     102,649  14,745



     Other non-current assets                                                                                      7,350                       8,828   1,268



     Noncurrent operating lease right-of-use assets                                                                                         108,682  15,611




     
                Total assets                                                                                 3,258,481                   5,174,743 743,306


                                                               
              
                HUAMI CORPORATION


                                                        
       
               UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


                                                      
       
        (Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$")


                                                     
       
        except for number of shares and per share data, or otherwise noted)






                                                                            
              
                As of December 31,                As of December 31,



                                                                                                                      2018                           2019



                                                                                    
              
                RMB                   
     
             RMB           US$





     
                Liabilities



     
                Current liabilities:



     Accounts payable                                                                                           1,064,106                      1,999,951 287,275



     Advance from customers                                                                                         5,943                         44,793   6,434



     Amount due to related parties, current                                                                        10,695                         14,769   2,121



     Accrued expenses and other current liabilities                                                               213,975                        319,450  45,887



     Income tax payables                                                                                           54,037                         67,854   9,747



     Notes payable                                                                                                 18,936                          2,184     314



     Bank borrowings                                                                                               20,000



     Current operating lease liabilities                                                                                                         32,799   4,711




     
                Total current liabilities                                                                     1,387,692                      2,481,800 356,489




     Deferred tax liabilities                                                                                       4,962                          5,399     776



     Other non-current liabilities                                                                                 56,249                        113,596  16,317



     Noncurrent operating lease liabilities                                                                                                      76,360  10,968




     
                Total liabilities                                                                             1,448,903                      2,677,155 384,550


                                                                        
              
                HUAMI CORPORATION


                                                                  
      
               UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


                                                                
      
       (Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$")


                                                                
      
       except for number of shares and per share data, or otherwise noted)






                                                                                       
              
                As of December 31,              As of December 31,



                                                                                                                                2018                          2019



                                                                                              
              
                RMB                  
     
            RMB            US$





     
                Equity



     Ordinary shares                                                                                                            151                           155      22



     Additional paid-in capital                                                                                           1,373,577                     1,478,902 212,431



     Accumulated retained earnings                                                                                          340,046                       910,612 130,801



     Accumulated other comprehensive income                                                                                  97,141                       111,081  15,956




     
                Total Huami Corporation shareholders' equity                                                            1,810,915                     2,500,750 359,210




     Non-controlling interests                                                                                              (1,337)                      (3,162)  (454)




     
                Total equity                                                                                            1,809,578                     2,497,588 358,756




     
                Total liabilities and equity                                                                            3,258,481                     5,174,743 743,306


                                                                                             
              
                HUAMI CORPORATION


                                                                                      
       
          UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                                    
       
       (Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$")


                                                                                    
       
       except for number of shares and per share data, or otherwise noted)




                                                                                                                                                     For the Three Months Ended December 31,



                                                                                                                                                          2018                                      2019



                                                                                                                                
              
                RMB                     
              
         RMB     
     
        US$





              Revenues                                                                                                                              1,224,569                                 2,111,413         303,286



              Cost of revenues                                                                                                                        915,574                                 1,608,288         231,016




              
                Gross profit                                                                                                               308,995                                   503,125          72,270




              
                Operating expenses:



              Selling and marketing                                                                                                                    28,753                                    62,756           9,014



              General and administrative                                                                                                               63,929                                    82,562          11,859



              Research and development                                                                                                                 85,069                                   140,153          20,132




              
                Total operating expenses                                                                                                   177,751                                   285,471          41,005




              
                Operating income                                                                                                           131,244                                   217,654          31,265




              
                Other income and expenses:



              Realized gain from investment                                                                                                               261                                     1,822             262



              Interest income                                                                                                                           6,572                                    10,274           1,476



              Other income (expenses), net                                                                                                            (6,536)                                    7,744           1,112



              Gain from fair value change of long-term investment                                                                                       7,860




              
                Income before income tax                                                                                                   139,401                                   237,494          34,115



              Income tax expenses                                                                                                                    (12,323)                                 (27,335)        (3,926)




              
                Income before loss from equity method investments                                                                          127,078                                   210,159          30,189



              Loss from equity method investments                                                                                                     (1,920)                                  (3,759)          (540)




              
                Net income                                                                                                                 125,158                                   206,400          29,649




              Less: Net loss attributable to non-controlling interest                                                                                   (794)                                    (811)          (116)




              
                Net income attributable to Huami Corporation                                                                               125,952                                   207,211          29,765




              Less: Accretion of Series A Preferred Shares



              Less: Accretion of Series B-1 Preferred Shares



              Less: Accretion of Series B-2 Preferred Shares



              Less: Deemed Dividend for Preferred Shares



              Less: Undistributed earnings allocated to participating nonvested                                                                         3,573
    restricted shares




              
                Net income attributable to ordinary                                                                                        122,379                                   207,211          29,765
    shareholders of Huami Corporation




              
                Net income per share attributable to ordinary



              
                shareholders of Huami Corporation



              Basic income per ordinary share                                                                                                            0.52                                      0.84            0.12



              Diluted income per ordinary share                                                                                                          0.49                                      0.80            0.12





              
                Net income per ADS (4 ordinary shares equal to 1 ADS)



              ADS - basic                                                                                                                                2.08                                      3.36            0.48



              ADS - diluted                                                                                                                              1.97                                      3.21            0.46





              
                Weighted average number of shares used in computing net
    income per share



              Ordinary share - basic                                                                                                              234,818,943                               246,929,507     246,929,507



              Ordinary share - diluted                                                                                                            248,271,059                               258,484,867     258,484,867


                                                                                        
              
                HUAMI CORPORATION


                                                                                    
     
                Reconciliation of GAAP and Non-GAAP Results


                                                                                 
     
       (Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$")


                                                                                 
     
       except for number of shares and per share data, or otherwise noted)




                                                                                                                                             For the Three Months Ended December 31,



                                                                                                                                                 2018                                       2019



                                                                                                                        
              
                RMB                  
              
             RMB    
     
         US$



              
                Net income attributable to Huami Corporation                                                                      125,952                                    207,211          29,765



              Share-based compensation expenses                                                                                               20,498                                      6,549             940




              
                Adjusted net income attributable to Huami                                                                         146,450                                    213,760          30,705
    Corporation







                                                                                                                                             For the Three Months Ended December 31,



                                                                                                                                                 2018                                       2019



                                                                                                                        
              
                RMB                  
              
             RMB    
     
         US$





              
                Net income attributable to ordinary shareholders                                                                  122,379                                    207,211          29,765
    of Huami Corporation



              Share-based compensation expenses attributable to                                                                               19,916                                      6,549             940
    ordinary shareholders of Huami Corporation




              
                Adjusted net income attributable to ordinary                                                                      142,295                                    213,760          30,705
    shareholders of Huami Corporation
                [2]






              
                Adjusted net income per share attributable to
    ordinary shareholders of Huami Corporation



              Adjusted basic income per ordinary share                                                                                          0.61                                       0.87            0.12



              Adjusted diluted income per ordinary share                                                                                        0.57                                       0.83            0.12





              
                Adjusted net income per ADS (4 ordinary shares equal
    to 1 ADS)



              ADS - basic                                                                                                                       2.42                                       3.46            0.50



              ADS - diluted                                                                                                                     2.30                                       3.31            0.48





              
                Weighted average number of shares used in
    computing net income per share



              Ordinary share - basic                                                                                                     234,818,943                                246,929,507     246,929,507



              Ordinary share - diluted                                                                                                   248,271,059                                258,484,867     258,484,867





              
                Share-based compensation expenses included
    are follows:



              Cost of revenues                                                                                                                                                               8               1



              Selling and marketing                                                                                                              100                                        641              92



              General and administrative                                                                                                      16,452                                      4,145             595



              Research and development                                                                                                         3,946                                      1,755             252




              
                Total                                                                                                              20,498                                      6,549             940


                                                                                             
              
                HUAMI CORPORATION


                                                                                      
       
          UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                                    
       
       (Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$")


                                                                                    
       
       except for number of shares and per share data, or otherwise noted)




                                                                                                                                                     Years Ended December 31,



                                                                                                                                                          2018                           2019



                                                                                                                                
              
                RMB                   
     
         RMB     
     
        US$





              Revenues                                                                                                                              3,645,335                      5,812,255         834,878



              Cost of revenues                                                                                                                      2,705,885                      4,344,512         624,050




              
                Gross profit                                                                                                               939,450                      1,467,743         210,828




              
                Operating expenses:



              Selling and marketing                                                                                                                    96,538                        181,975          26,139



              General and administrative                                                                                                              213,973                        248,462          35,689



              Research and development                                                                                                                263,220                        430,822          61,884




              
                Total operating expenses                                                                                                   573,731                        861,259         123,712




              
                Operating income                                                                                                           365,719                        606,484          87,116




              
                Other income and expenses:



              Realized gain from investment                                                                                                               261                          1,822             262



              Interest income                                                                                                                          11,595                         33,478           4,809



              Other income, net                                                                                                                         1,178                         10,586           1,521



              Gain from fair value change of long-term investment                                                                                       7,860




              
                Income before income tax                                                                                                   386,613                        652,370          93,708



              Income tax expenses                                                                                                                    (52,036)                      (77,887)       (11,188)




              
                Income before loss from equity method investments                                                                          334,577                        574,483          82,520



              Income (Loss) from equity method investments                                                                                              1,743                        (1,112)          (160)




              
                Net income                                                                                                                 336,320                        573,371          82,360




              Less: Net loss attributable to non-controlling interest                                                                                 (3,726)                       (1,825)          (262)




              
                Net income attributable to Huami Corporation                                                                               340,046                        575,196          82,622




              Less: Accretion of Series A Preferred Shares                                                                                                177



              Less: Accretion of Series B-1 Preferred Shares                                                                                              368



              Less: Accretion of Series B-2 Preferred Shares                                                                                            4,049



              Less: Deemed Dividend for Preferred Shares                                                                                              209,752



              Less: Undistributed earnings allocated to participating nonvested                                                                        12,210                          2,450             352
    restricted shares




              
                Net income attributable to ordinary                                                                                        113,490                        572,746          82,270
    shareholders of Huami Corporation




              
                Net income per share attributable to ordinary



              
                shareholders of Huami Corporation



              Basic income per ordinary share                                                                                                            0.54                           2.35            0.34



              Diluted income per ordinary share                                                                                                          0.51                           2.24            0.32





              
                Net income per ADS (4 ordinary shares equal to 1 ADS)



              ADS - basic                                                                                                                                2.14                           9.40            1.35



              ADS - diluted                                                                                                                              2.03                           8.95            1.29





              
                Weighted average number of shares used in computing net
    income per share



              Ordinary share - basic                                                                                                              211,873,704                    243,648,186     243,648,186



              Ordinary share - diluted                                                                                                            225,034,650                    255,959,172     255,959,172


                                                                                        
              
                HUAMI CORPORATION


                                                                                    
     
                Reconciliation of GAAP and Non-GAAP Results


                                                                                 
     
       (Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$")


                                                                                 
     
       except for number of shares and per share data, or otherwise noted)




                                                                                                                                             Years Ended December 31,



                                                                                                                                                 2018                           2019



                                                                                                                        
              
                RMB                  
     
          RMB    
     
         US$



              
                Net income attributable to Huami Corporation                                                                      340,046                        575,196          82,622



              Share-based compensation expenses                                                                                              134,709                         55,128           7,918




              
                Adjusted net income attributable to Huami                                                                         474,755                        630,324          90,540
    Corporation







                                                                                                                                             Years Ended December 31,



                                                                                                                                                 2018                           2019



                                                                                                                        
              
                RMB                  
     
          RMB    
     
         US$





              
                Net income attributable to ordinary shareholders                                                                  113,490                        572,746          82,270
    of Huami Corporation



              Share-based compensation expenses attributable                                                                                 120,934                         54,893           7,884


              to ordinary shareholders of Huami Corporation



              Deemed Dividend for Preferred shares                                                                                           209,752




              
                Adjusted net income attributable to ordinary                                                                      444,176                        627,639          90,154
    shareholders of Huami Corporation
                
                  [2]






              
                Adjusted net income per share attributable to
    ordinary shareholders of Huami Corporation



              Adjusted basic income per ordinary share                                                                                          2.10                           2.58            0.37



              Adjusted diluted income per ordinary share                                                                                        1.90                           2.45            0.35





              
                Adjusted net income per ADS (4 ordinary shares equal
    to 1 ADS)



              ADS - basic                                                                                                                       8.39                          10.30            1.48



              ADS - diluted                                                                                                                     7.59                           9.81            1.41





              
                Weighted average number of shares used in
    computing net income per share



              Ordinary share - basic                                                                                                     211,873,704                    243,648,186     243,648,186



              Ordinary share - diluted                                                                                                   225,034,650                    255,959,172     255,959,172





              
                Share-based compensation expenses included
    are follows:



              Cost of revenues                                                                                                                   414                             55               8



              Selling and marketing                                                                                                            4,271                          3,198             459



              General and administrative                                                                                                      87,857                         40,684           5,844



              Research and development                                                                                                        42,167                         11,191           1,607




              
                Total                                                                                                             134,709                         55,128           7,918

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SOURCE Huami Corporation