Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2022 shares | |
Document Information | |
Document Type | 20-F |
Document Registration Statement | false |
Document Annual Report | true |
Document Period End Date | Dec. 31, 2022 |
Document Transition Report | false |
Document Shell Company Report | false |
Entity File Number | 001-38369 |
Entity Registrant Name | ZEPP HEALTH CORP |
Entity Incorporation, State or Country Code | E9 |
Entity Address, Address Line One | Building B2, Zhong’an Chuanggu Technology Park |
Entity Address, Address Line Two | No. 900 Wangjiang West Road |
Entity Address, City or Town | Hefei |
Entity Address, Postal Zip Code | 230088 |
Entity Address, Country | CN |
Title of 12(b) Security | American depositary shares (each representing four Class A ordinary shares, par value US$0.0001 per share) |
Trading Symbol | ZEPP |
Security Exchange Name | NYSE |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | true |
ICFR Auditor Attestation Flag | false |
Document Accounting Standard | U.S. GAAP |
Entity Shell Company | false |
Auditor Firm ID | 1113 |
Auditor Name | Deloitte Touche Tohmatsu Certified Public Accountants LLP |
Auditor Location | Shanghai, the People’s Republic of China |
Entity Central Index Key | 0001720446 |
Document Fiscal Year Focus | 2022 |
Document Fiscal Period Focus | FY |
Current Fiscal Year End Date | --12-31 |
Amendment Flag | false |
Business Contact | |
Document Information | |
Entity Address, Address Line One | Building B2, Zhong’an Chuanggu Technology Park |
Entity Address, Address Line Two | No. 900 Wangjiang West Road |
Entity Address, City or Town | Hefei |
Entity Address, Postal Zip Code | 230088 |
Entity Address, Country | CN |
City Area Code | +86 010 |
Local Phone Number | 5940 3251 |
Contact Personnel Email Address | ir@zepp.com |
Contact Personnel Name | Leon Cheng Deng |
Class A Ordinary Shares | |
Document Information | |
Entity Common Stock, Shares Outstanding | 128,130,440 |
Class B Ordinary Shares | |
Document Information | |
Entity Common Stock, Shares Outstanding | 117,208,247 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Current assets: | |||
Cash and cash equivalents | ¥ 886,632 | $ 128,550 | ¥ 1,468,499 |
Restricted cash | 86,708 | 12,571 | 41,040 |
Term deposit | 5,000 | ||
Accounts receivable (net of allowance of RMB814 and RMB1,466 as of December 31, 2021 and 2022, respectively) | 682,103 | 98,896 | 537,084 |
Amounts due from related parties (net of allowance of nil and nil as of December 31, 2021 and 2022, respectively) | 138,614 | 20,097 | 295,614 |
Inventories, net | 1,021,923 | 148,165 | 1,249,327 |
Short-term investments (including available-for-sale debt securities measured at fair value of RMB19,351 and RMB34,316 as of December 31, 2021 and 2022, respectively) | 34,316 | 4,975 | 19,351 |
Prepaid expenses and other current assets | 108,252 | 15,694 | 315,038 |
Total current assets | 2,958,548 | 428,948 | 3,930,953 |
Property, plant and equipment, net | 100,605 | 14,586 | 133,873 |
Intangible assets, net | 123,300 | 17,877 | 135,582 |
Long-term investments (including available-for-sale debt securities measured at fair value of RMB108,448 and RMB148,819 as of December 31, 2021 and 2022, respectively) | 1,686,628 | 244,538 | 1,552,591 |
Deferred tax assets | 210,186 | 30,474 | 143,419 |
Operating lease right-of-use assets | 65,573 | 9,507 | 108,435 |
Goodwill | 66,081 | 9,581 | 61,055 |
Amount due from a related party, non-current | 6,333 | 918 | |
Other non-current assets | 50,389 | 7,306 | 19,593 |
Total assets | 5,267,643 | 763,735 | 6,085,501 |
Current liabilities: | |||
Accounts payable (including accounts payable of the consolidated VIEs without recourse to the Group of RMB1,314,091 and RMB452,039 as of December 31, 2021 and 2022, respectively) | 456,585 | 66,198 | 1,317,306 |
Advance from customers (including advance from customers of the consolidated VIEs without recourse to the Group of RMB2,262 and RMB2,133 as of December 31, 2021 and 2022, respectively) | 2,133 | 309 | 4,230 |
Amounts due to related parties (including amount due to related parties of the consolidated VIEs without recourse to the Group of RMB48,561 and RMB38,913 as of December 31, 2021 and 2022,respectively) | 40,978 | 5,941 | 50,123 |
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated VIEs without recourse to the Group of RMB165,181 and RMB119,877 as of December 31, 2021 and 2022, respectively) | 197,819 | 28,681 | 316,083 |
Income tax payables (including income tax payables of the consolidated VIEs without recourse to the Group of RMB411 and RMB407 as of December 31, 2021 and 2022, respectively) | 2,715 | 394 | 2,595 |
Notes payable and others of the consolidated VIEs without recourse to the Group | 456,438 | 66,177 | 103,795 |
Short-term bank borrowings (including short-term bank borrowings of the consolidated VIEs without recourse to the Group of RMB303,000 and RMB452,000 as of December 31, 2021 and 2022, respectively) | 512,000 | 74,233 | 358,000 |
Total current liabilities | 1,668,668 | 241,933 | 2,152,132 |
Deferred tax liabilities (including deferred tax liabilities of the consolidated VIEs without recourse to the Group of RMB23,006 and RMB32,393 as of December 31, 2021 and 2022, respectively) | 35,552 | 5,155 | 26,909 |
Other non-current liabilities (including other non-current liabilities of the consolidated VIEs without recourse to the Group of RMB172,735 and RMB161,827 as of December 31, 2021 and 2022, respectively) | 162,602 | 23,575 | 175,053 |
Long-term borrowings (including long-term borrowings of the consolidated VIEs without recourse to the Group of RMB254,500and RMB280,000 as of December 31, 2021 and 2022, respectively) | 684,210 | 99,201 | 726,851 |
Non-current operating lease liabilities (including Noncurrent operating lease liabilities of the consolidated VIEs without recourse to the Group of RMB29,435 and RMB10,276 as of December 31, 2021 and 2022,respectively) | 31,690 | 4,595 | 71,117 |
Total liabilities | 2,582,722 | 374,459 | 3,152,062 |
Equity | |||
Additional paid-in capital | 1,690,879 | 245,154 | 1,641,544 |
Treasury shares | (67,163) | (9,738) | (21,798) |
Accumulated retained earnings | 942,848 | 136,700 | 1,271,171 |
Accumulated other comprehensive income | 105,796 | 15,339 | 29,271 |
Total Zepp Health Corporation shareholders' equity | 2,672,522 | 387,478 | 2,920,347 |
Noncontrolling interest | 12,399 | 1,798 | 13,092 |
Total equity | 2,684,921 | 389,276 | 2,933,439 |
Total liabilities and equity | 5,267,643 | 763,735 | 6,085,501 |
Class A Ordinary Shares | |||
Equity | |||
Ordinary shares | 85 | 12 | 85 |
Class B Ordinary Shares | |||
Equity | |||
Ordinary shares | ¥ 77 | $ 11 | ¥ 74 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) shares | Dec. 31, 2021 CNY (¥) shares |
Allowance for doubtful accounts | ¥ 1,466 | ¥ 814 |
Amounts due from related parties, allowance | 0 | 0 |
Short-term investments | 34,316 | 19,351 |
Long-term investments | 148,819 | 108,448 |
Accounts payable | 456,585 | 1,317,306 |
Advance from customers | 2,133 | 4,230 |
Amount due to related parties | 40,978 | 50,123 |
Accrued expense and other current liabilities | 197,819 | 316,083 |
Income tax payables | 2,715 | 2,595 |
Short-term bank borrowings | 512,000 | 358,000 |
Deferred tax liabilities | 35,552 | 26,909 |
Other non-current liabilities | 162,602 | 175,053 |
Long-term borrowing | 684,210 | 726,851 |
Non-current operating lease liabilities | ¥ 31,690 | ¥ 71,117 |
Ordinary shares, authorized | shares | 405,462,685 | |
Class A Ordinary Shares | ||
Ordinary shares, authorized | shares | 9,700,000,000 | 9,700,000,000 |
Ordinary shares, outstanding | shares | 128,130,440 | 133,992,912 |
Class B Ordinary Shares | ||
Ordinary shares, authorized | shares | 200,000,000 | 200,000,000 |
Ordinary shares, outstanding | shares | 117,208,247 | 117,208,247 |
Variable Interest Entities | ||
Accounts payable | ¥ 452,039 | ¥ 1,314,091 |
Advance from customers | 2,133 | 2,262 |
Amount due to related parties | 38,913 | 48,561 |
Accrued expense and other current liabilities | 119,877 | 165,181 |
Income tax payables | 407 | 411 |
Short-term bank borrowings | 452,000 | 303,000 |
Deferred tax liabilities | 32,393 | 23,006 |
Other non-current liabilities | 161,827 | 172,735 |
Long-term borrowing | 280,000 | 254,500 |
Non-current operating lease liabilities | ¥ 10,276 | ¥ 29,435 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) ¥ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 CNY (¥) ¥ / shares shares | Dec. 31, 2020 CNY (¥) ¥ / shares shares | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Revenues (including RMB4,449,757, RMB3,350,032 and RMB1,703,995 with related parties for the years ended December 31, 2020, 2021 and 2022, respectively) | ¥ 4,142,862 | $ 600,659 | ¥ 6,250,109 | ¥ 6,433,363 |
Cost of revenues (including RMB3,713,536, RMB2,759,980 and RMB1,403,773 resulting from related parties sales for the years ended December 31, 2020, 2021 and 2022, respectively) | 3,339,746 | 484,218 | 4,944,467 | 5,100,698 |
Gross profit | 803,116 | 116,441 | 1,305,642 | 1,332,665 |
Operating expenses | ||||
Selling and marketing | 460,304 | 66,738 | 438,273 | 358,655 |
General and administrative | 235,932 | 34,207 | 258,346 | 261,805 |
Research and development | 517,122 | 74,976 | 515,081 | 538,009 |
Total operating expenses | 1,213,358 | 175,921 | 1,211,700 | 1,158,469 |
Operating income/(loss) | (410,242) | (59,480) | 93,942 | 174,196 |
Other income and expenses | ||||
Interest income | 12,334 | 1,788 | 16,686 | 46,118 |
Interest expenses | (57,001) | (8,264) | (44,884) | (22,623) |
Realized gain from investments | 597 | 87 | 13,507 | |
Gain from deconsolidation of a subsidiary | ¥ | 56,522 | |||
Gain from fair value change of long-term investments | 51,817 | 7,513 | 12,325 | |
Impairment loss from a long-term investment | (13,858) | (2,009) | ||
Other (expenses)/ income, net | 43,820 | 6,353 | 27,418 | (929) |
Income/(Loss) before income tax and income from equity method investments | (372,533) | (54,012) | 106,669 | 265,609 |
Income taxes (provision)/benefit | 65,875 | 9,551 | (10,745) | (31,154) |
Income/(Loss) before income from equity method investments | (306,658) | (44,461) | 95,924 | 234,455 |
(Loss)/ Income from equity method investments | 17,657 | 2,560 | 41,028 | (4,749) |
Net income/(loss) | (289,001) | (41,901) | 136,952 | 229,706 |
Less: Net income/(loss) attributable to noncontrolling interest | (693) | (100) | (851) | 953 |
Net income/(loss) attributable to Zepp Health Corporation | (288,308) | (41,801) | 137,803 | 228,753 |
Net income/(loss) attributable to ordinary shareholders of Zepp Health Corporation | ¥ (288,308) | $ (41,801) | ¥ 137,803 | ¥ 228,753 |
Net income/(loss) per share attributable to ordinary shareholders of Zepp Health Corporation | ||||
Basic income/(loss) per ordinary share | (per share) | ¥ (1.17) | $ (0.17) | ¥ 0.55 | ¥ 0.92 |
Diluted income/(loss) per ordinary share | (per share) | ¥ (1.17) | $ (0.17) | ¥ 0.52 | ¥ 0.88 |
Weighted average number of shares used in computing net income/(loss) per share | ||||
Ordinary share - basic | 246,283,328 | 246,283,328 | 252,167,610 | 248,470,684 |
Ordinary share - diluted | 246,283,328 | 246,283,328 | 264,368,629 | 260,351,994 |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | |||
Revenue from related parties | ¥ 1,703,995 | ¥ 3,350,032 | ¥ 4,449,757 |
Cost of revenue related parties | ¥ 1,399,491 | ¥ 2,759,980 | ¥ 3,713,536 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/LOSS ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/LOSS | ||||
Net income/(loss) | ¥ (289,001) | $ (41,901) | ¥ 136,952 | ¥ 229,706 |
Other comprehensive income/(loss), net of tax | ||||
Foreign currency translation adjustment | 34,379 | 4,984 | (17,938) | (45,117) |
Unrealized (loss)/gain on available-for-sale investments and others, (net of tax effect of RMB4,017, nil and RMB7,096 for the years ended December 31, 2020, 2021 and 2022, respectively) | 42,146 | 6,111 | 2,585 | (21,340) |
Comprehensive income/(loss) | (212,476) | (30,806) | 121,599 | 163,249 |
Less: Net income /(loss) attributable to noncontrolling interest | (693) | (100) | (851) | 953 |
Comprehensive income/(loss) attributable to Zepp Health Corporation | ¥ (211,783) | $ (30,706) | ¥ 122,450 | ¥ 162,296 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/LOSS (Parenthetical) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/LOSS | |||
Unrealized gain on available-for-sale investments and others | ¥ 7,096 | ¥ 0 | ¥ 4,017 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY ¥ in Thousands, $ in Thousands | Ordinary Shares CNY (¥) shares | Treasury Shares CNY (¥) shares | Additional Paid-in Capital CNY (¥) | Accumulated Other Comprehensive Income CNY (¥) | Accumulated Retained Earnings CNY (¥) | Total Zepp Health Corporation Shareholders' Equity CNY (¥) | Noncontrolling Interest CNY (¥) | CNY (¥) | USD ($) |
Beginning Balance at Dec. 31, 2019 | ¥ 155 | ¥ 1,478,902 | ¥ 111,081 | ¥ 910,612 | ¥ 2,500,750 | ¥ (3,162) | ¥ 2,497,588 | ||
Beginning Balance, shares at Dec. 31, 2019 | shares | 247,519,987 | ||||||||
Treasury Shares, beginning at Dec. 31, 2019 | ¥ 0 | ||||||||
Treasury Shares, beginning (in shares) at Dec. 31, 2019 | shares | 0 | ||||||||
Exercise of option | ¥ 2 | (2) | |||||||
Exercise of option, shares | shares | 2,625,176 | ||||||||
Net income (loss) | 228,753 | 228,753 | 953 | 229,706 | |||||
Foreign currency translation adjustment | (45,117) | (45,117) | (45,117) | ||||||
Share-based compensation | 67,212 | 67,212 | 67,212 | ||||||
Unrealized gain/loss on available-for-sale investments, net of tax effect | (21,340) | (21,340) | (21,340) | ||||||
Statutory reserve | 5,997 | (5,997) | |||||||
Deconsolidation of a subsidiary | 2,209 | 2,209 | |||||||
Ending Balance at Dec. 31, 2020 | ¥ 157 | 1,552,109 | 44,624 | 1,133,368 | 2,730,258 | 2,730,258 | |||
Ending Balance, shares at Dec. 31, 2020 | shares | 250,145,163 | ||||||||
Exercise of option | ¥ 2 | 5,463 | 5,465 | 5,465 | |||||
Exercise of option, shares | shares | 3,712,160 | ||||||||
Repurchase of ordinary shares | ¥ 21,798 | 21,798 | 21,798 | ||||||
Repurchase of ordinary shares, shares | shares | (2,656,164) | ||||||||
Net income (loss) | 137,803 | 137,803 | (851) | 136,952 | |||||
Foreign currency translation adjustment | (17,938) | (17,938) | (17,938) | ||||||
Share-based compensation | 83,972 | 83,972 | 83,972 | ||||||
Unrealized gain/loss on available-for-sale investments, net of tax effect | 2,585 | 2,585 | 2,585 | ||||||
Capital contribution from non-controlling interest | 13,943 | 13,943 | |||||||
Ending Balance at Dec. 31, 2021 | ¥ 159 | 1,641,544 | 29,271 | 1,271,171 | 2,920,347 | 13,092 | 2,933,439 | ||
Ending Balance, shares at Dec. 31, 2021 | shares | 253,857,323 | ||||||||
Treasury Shares, ending at Dec. 31, 2021 | ¥ (21,798) | (21,798) | |||||||
Treasury Shares, ending (in shares) at Dec. 31, 2021 | shares | (2,656,164) | ||||||||
Exercise of option | ¥ 3 | (3) | |||||||
Exercise of option, shares | shares | 4,357,100 | ||||||||
Repurchase of ordinary shares | ¥ 45,365 | 45,365 | 45,365 | ||||||
Repurchase of ordinary shares, shares | shares | (10,219,572) | ||||||||
Net income (loss) | (288,308) | (288,308) | (693) | (289,001) | $ (41,901) | ||||
Foreign currency translation adjustment | 34,379 | 34,379 | 34,379 | 4,984 | |||||
Share-based compensation | 49,338 | 49,338 | 49,338 | ||||||
Unrealized gain/loss on available-for-sale investments, net of tax effect | 42,146 | 42,146 | 42,146 | 6,111 | |||||
Cash dividend | (40,015) | (40,015) | (40,015) | ||||||
Ending Balance at Dec. 31, 2022 | ¥ 162 | ¥ 1,690,879 | ¥ 105,796 | ¥ 942,848 | ¥ 2,672,522 | ¥ 12,399 | 2,684,921 | 389,276 | |
Ending Balance, shares at Dec. 31, 2022 | shares | 258,214,423 | ||||||||
Treasury Shares, ending at Dec. 31, 2022 | ¥ 67,163 | ¥ (67,163) | $ (9,738) | ||||||
Treasury Shares, ending (in shares) at Dec. 31, 2022 | shares | 12,875,736 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | |||
Unrealized gain on available-for-sale investments and others | ¥ 7,096 | ¥ 0 | ¥ 4,017 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Cash Flows from Operating Activities | ||||
Net income/(loss) | ¥ (289,001) | $ (41,901) | ¥ 136,952 | ¥ 229,706 |
Adjustment to reconcile net income to net cash provided by operating activities: | ||||
Non-cash lease expenses | 40,571 | 5,882 | 41,536 | 48,191 |
Depreciation and amortization | 58,618 | 8,498 | 51,884 | 27,129 |
Provision for excess and obsolete inventories | 39,551 | 5,734 | 51,336 | 64,223 |
Share-based compensation | 49,107 | 7,120 | 83,122 | 65,154 |
Share of results of equity method investment | (17,657) | (2,560) | (41,028) | 4,749 |
Gain/(Loss) on disposal of property, plant and equipment and others | (1,909) | (277) | (304) | 7,406 |
Gain from fair value change of long-term investments | (51,817) | (7,513) | (12,325) | |
Impairment loss from a long-term investment | 13,858 | 2,009 | ||
Deferred income taxes | (65,220) | (9,456) | (18,694) | (10,442) |
Gain from deconsolidation of a subsidiary | (56,522) | |||
Allowance for doubtful accounts | 652 | 95 | 814 | |
Impairment loss from short-term investments | 320 | |||
Realized gain from investments | (597) | (87) | (13,507) | |
Changes in operating assets and liabilities | ||||
Accounts receivable | (145,671) | (21,120) | (239,860) | (131,215) |
Inventories | 187,852 | 27,236 | (83,126) | (410,691) |
Prepaid expenses and other current assets | 210,814 | 30,565 | (158,829) | (79,957) |
Amounts due from related parties | 166,158 | 24,091 | 544,599 | 583,457 |
Other non-current assets | (30,795) | (4,465) | 8,572 | (33,049) |
Amount due to related parties | (9,145) | (1,326) | 38,938 | (3,584) |
Accounts payable | (910,679) | (132,036) | (673,224) | (9,761) |
Notes payable | 42,378 | 6,144 | 103,795 | (2,184) |
Advance from customers | (2,097) | (304) | (38,272) | (2,189) |
Income tax payable | 119 | 17 | (25,111) | (40,148) |
Accrued expenses and other current liabilities | (60,282) | (8,740) | 7,767 | (149,385) |
Other non-current liability | (12,451) | (1,805) | (10,115) | 68,739 |
Net Cash provided by/(used in) Operating Activities | (787,643) | (114,199) | (232,435) | 157,302 |
Cash Flows from Investing Activities | ||||
Purchase of property, plant and equipment | (8,138) | (1,180) | (46,055) | (83,554) |
Disposal of property, plant and equipment | 2,520 | |||
Purchase of intangible assets | (1,782) | (258) | (7,027) | (1,220) |
Purchase of term deposits | (5,000) | (212,065) | ||
Proceeds from maturity of term deposits | 5,000 | 725 | 5,000 | 207,065 |
Loans provided to third parties | (480) | |||
Loans provided to related parties | (15,491) | (2,246) | ||
Purchase of short-term investments | (16,339) | (2,369) | ||
Disposal of short-term investments | 3,981 | 577 | ||
Purchase of long-term investments | (12,733) | (1,846) | (1,072,783) | (82,221) |
Disposal of long-term investments | 2,841 | 412 | 20,000 | |
Dividend received from an equity method investment | 403 | 58 | 113 | |
Acquisition of businesses and assets, net of cash acquired of RMB7,497 | (26,713) | |||
Deconsolidation of a subsidiary | 20,000 | (7,701) | ||
Capital contribution from non-controlling interest | 13,943 | |||
Other investing activities | 9 | |||
Net Cash Used in Investing Activities | (42,258) | (6,127) | (1,069,289) | (206,880) |
Cash Flows from Financing Activities | ||||
Exercise of share options | 5,465 | |||
Bank borrowings received | 838,859 | 121,623 | 1,473,567 | 1,207,793 |
Repayment of bank borrowings | (727,500) | (105,478) | (953,387) | (643,122) |
Repurchase of ordinary shares | (53,216) | (7,716) | (13,763) | |
Proceeds from letter of credit factoring | 310,265 | 44,984 | ||
Reverse factoring | (39,195) | (5,683) | 39,195 | |
Dividend distribution | (40,015) | (5,802) | ||
Net Cash Provided by Financing Activities | 289,198 | 41,928 | 551,077 | 564,671 |
Net increase in cash and cash equivalents and restricted cash | (540,703) | (78,398) | (750,647) | 515,093 |
Effect of exchange rate changes | 4,504 | 656 | (15,564) | (43,334) |
Cash and cash equivalents and restricted cash at beginning of the year | 1,509,539 | 218,863 | 2,275,750 | 1,803,991 |
Cash and cash equivalents and restricted cash at end of the year | 973,340 | 141,121 | 1,509,539 | 2,275,750 |
Supplemental disclosure of cash flow information | ||||
Income tax paid | 3,443 | 499 | 74,377 | 82,406 |
Interest paid | 55,847 | 8,097 | 47,132 | 14,858 |
Non-cash investing and financing activity | ||||
Payable for Intangible asset | 1,031 | 1,641 | ||
Receivable from the disposal of a subsidiary | 2,500 | 362 | 2,500 | 22,500 |
Conversion from convertible bond to equity interest investment | 10,148 | 1,471 | 8,393 | |
Disposal of previous equity interest in exchange for acquisition | 87,716 | |||
Forgiveness of loan related to acquisition | 13,711 | |||
Payable for property, plant and equipment | 306 | ¥ 173 | ||
Payable for repurchasing of ordinary shares | ¥ 129 | $ 19 | ¥ 8,044 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) ¥ in Thousands | 12 Months Ended |
Dec. 31, 2022 CNY (¥) | |
CONSOLIDATED STATEMENTS OF CASH FLOWS | |
Purchase of business, cash acquired | ¥ 7,497 |
ORGANIZATION AND PRINCIPAL ACTI
ORGANIZATION AND PRINCIPAL ACTIVITIES | 12 Months Ended |
Dec. 31, 2022 | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | 1. ORGANAZATION AND PRINCIPAL ACTIVITIES Zepp Health Corporation (the “Company”) was incorporated in the Cayman Islands in December 2014. The Company, its wholly owned subsidiaries and its variable interest entities (“VIEs”), Anhui Huami Information Technology Co., Ltd. (“Anhui Huami”), Huami (Beijing) Information Technology Co., Ltd. (“Beijing Huami”), Anhui Huami’s subsidiaries and Beijing Huami’s subsidiaries, are collectively referred to as the “Group”. The Group primarily engages in the business of developing and manufacturing smart, wearable technological devices in the People’s Republic of China (“PRC”), and sells the products in PRC and overseas. During the years ended December 31, 2020, 2021 and 2022, the Group derived 69.0%, 53.5% and 41.0% of its revenue from sales of exclusively designed and manufactured smart wearable devices to one customer who is controlled by one of its shareholders. As of December 31, 2022, details of the Company’s major subsidiaries, VIEs and major VIE’s subsidiary were as follows: Date of Percentage Place of incorporation Incorporation/acquisition Of ownership Major subsidiaries of the Company: Hong Kong Zepp Holding Limited (“Zepp HK”) Hong Kong (“HK”) December 23, 2014 100% ZEPP, INC. (“Zepp Inc”) United States of America (“U.S.”) January 15, 2015 100% Beijing ShunYuan KaiHua Technology Co., Ltd. (“Shun Yuan”) PRC February 25, 2015 100% Huami (Shenzhen) Information Technology Co., Ltd. PRC December 7, 2015 100% Anhui Huami Health Technology Co., Ltd (“Anhui Health”) PRC December 28, 2015 100% Zepp North America Inc. (“Zepp NA”) U.S. June 16, 2016 100% Galaxy Trading Platform Limited (“Galaxy”) HK May 8, 2019 100% Zepp Europe Holding B.V. (“Zepp Europe”) Netherlands June 11, 2020 100% Zepp Netherlands Trading B.V. (“Netherland”) Netherlands April 20, 2021 100% Variable interest entities of the Company: Anhui Huami PRC December 27, 2013 Consolidated VIE Beijing Huami PRC July 11, 2014 Consolidated VIE Major subsidiary of Anhui Huami: Anhui Huami Healthcare Co., Ltd. (“Anhui Healthcare”) PRC December 5, 2016 VIE’s subsidiary The VIE arrangements The Company conducts substantially all of its smart, wearable and technological devices business in the PRC through contractual arrangements with its VIEs, Anhui Huami and Beijing Huami and the VIEs’ subsidiaries. Since the operations of the VIEs and the VIEs’ subsidiaries are closely interrelated and almost indistinguishable from one another, the risks and rewards associated with their operations are substantially the same. In addition, the Company consolidates the VIEs and the VIEs’ subsidiaries as disclosed. Therefore, the Company aggregates disclosures related to the VIEs and the VIEs’ subsidiaries as variable interest entities and referred to them as “the VIEs” in the Company’s consolidated financial statements. The VIEs hold the requisite licenses and permits necessary to conduct the Company’s business. In addition, the VIEs hold the assets necessary to operate the Company’s business and generate substantially all of the Company’s revenues. 1. ORGANAZATION AND PRINCIPAL ACTIVITIES - CONTINUED VIE Arrangements between the VIEs and the Company’s PRC subsidiary The Company, through Shun Yuan, a wholly-owned subsidiary of the Company in the PRC (the “WFOE”) has entered into the following contractual arrangements with Anhui Huami, Beijing Huami and their shareholders that enable the Company to (1) have power to direct the activities that most significantly affects the economic performance of the VIEs, and (2) receive the economic benefits of the VIEs that could be significant to the VIEs. Accordingly, the Company is considered the primary beneficiary of the VIEs and has consolidated the VIEs’ financial results of operations, assets and liabilities in the Company’s consolidated financial statements. In making the conclusion that the Company is the primary beneficiary of the VIEs, the Company believes the Company’s rights under the terms of the purchase option agreement provide it with a substantive kick-out right. More specifically, the Company believes the terms of the purchase option agreement are valid, binding and enforceable under PRC laws and regulations currently in effect. The Company also believes that the consideration which is the minimum amount permitted by the applicable PRC law to exercise the option does not represent a financial barrier or disincentive for the Company to currently exercise its rights under the purchase option agreement. A simple majority vote of the Company’s board of directors is required to pass a resolution to exercise the Company’s rights under the purchase option agreement, for which Mr. Wang Huang’s, the chief executive officer (“CEO”) of the Company (“Mr. Huang”), consent is not required. The Company’s rights under the purchase option agreement give the Company the power to control the shareholders of Anhui Huami and Beijing Huami. In addition, the Company’s rights under the power of attorney also reinforce the Company’s abilities to direct the activities that most significantly impact the VIEs’ economic performance. The Company also believes that this ability to exercise control ensures that the VIEs will continue to execute consulting and service agreements and also ensures that consulting and service agreements will be executed and renewed indefinitely unless a written agreement is signed by all parties to terminate it or a mandatory termination is requested by the local government. The Company has the rights to receive substantially all of the economic benefits from the VIEs. Exclusive consulting and service agreement On April 29, 2015, Shun Yuan entered into an exclusive consulting and service agreement with Anhui Huami and Beijing Huami to enable Shun Yuan to receive substantially all of the economic benefits of the VIEs and such agreement was amended on November 3, 2017. Under the exclusive consulting and service agreement, Shun Yuan has the exclusive right to provide or designate any entity affiliated with it to provide VIEs the technical and business support services, including information technology support, hardware management and updates, software development, maintenance and updates and other operating services. The exclusive consulting and service agreement could be indefinitely effective unless a written agreement is signed by all parties to terminate it or a mandatory termination is requested by the local government. The exclusive consulting and service agreement was effective on April 29, 2015. On March 20, 2020, due to the change of the nominee shareholders in the VIEs, the exclusive consultation and service agreement of Anhui Huami and Beijing Huami was amended and restated with terms substantially similar as before. Equity pledge agreement Pursuant to the equity pledge agreements dated April 29, 2015 and amended on November 3, 2017 among Anhui Huami, Beijing Huami, all their shareholders and Shun Yuan, all shareholders of Anhui Huami and Beijing Huami agreed to pledge their equity interests in Anhui Huami or Beijing Huami to Shun Yuan to secure the performance of the VIEs’ obligations under the existing purchase option agreement, power of attorney, exclusive consulting and service agreement and also the equity pledge agreement. 1. ORGANAZATION AND PRINCIPAL ACTIVITIES CONTINUED Equity pledge agreement - continued On March 20, 2020, due to the change of the nominee shareholders in the VIEs, the Group updated the registration of its equity pledge for Anhui Huami and Beijing Huami. The equity pledge agreement for Anhui Huami and Beijing Huami was amended and restated with the same terms as before. Exclusive purchase option agreement Pursuant to the exclusive purchase option agreements entered into on April 29, 2015 and amended on November 3, 2017 among Shun Yuan, Anhui Huami, Beijing Huami and their shareholders, the shareholders of Anhui Huami and Beijing Huami are obligated to sell their equity interest or any assets to Shun Yuan. Shun Yuan has the exclusive and irrevocable right to purchase, or cause the shareholders of Anhui Huami and Beijing Huami to sell to the party designated by Shun Yuan, in Shun Yuan’s sole discretion, all of the shareholders’ equity interests or any assets in Anhui Huami and Beijing Huami when and to the extent that applicable PRC law permits the Company to own such equity interests and assets in Anhui Huami and Beijing Huami. The price to be paid by Shun Yuan or any party designated by Shun Yuan will be the minimum amount of consideration permitted by applicable PRC law at the time when such transaction occurs. All of the shareholders promised and agreed that they will refund the consideration once received to Shun Yuan or any party designated by Shun Yuan within 10 working days. Also, the shareholders of Anhui Huami and Beijing Huami should try their best to help Anhui Huami and Beijing Huami develop well and are prohibited from transferring, pledging, intentionally terminating significant contracts or otherwise disposing of any significant assets in Anhui Huami and Beijing Huami without the Shun Yuan’s prior written consent. On March 20, 2020, due to the change of the nominee shareholders in the VIEs, the exclusive purchase option agreement of Anhui Huami and Beijing Huami was amended and restated with the same terms as before. Power of Attorney On April 29, 2015 and amended on November 3, 2017, all of the shareholders of Anhui Huami and Beijing Huami have executed a power of attorney with Shun Yuan, Anhui Huami and Beijing Huami, whereby all of the shareholders irrevocably appoint and constitute the person designated by Shun Yuan as their attorney-in-fact to exercise on their behalf any and all rights that the shareholders have in respect of their equity interests in Anhui Huami and Beijing Huami. The power of attorney will be indefinitely effective unless all parties decide to terminate it by written agreement. On March 20, 2020, due to the change of the nominee shareholders in the VIEs, the power of attorney agreement of Anhui Huami and Beijing Huami was amended and restated with the same terms as before. 1. ORGANAZATION AND PRINCIPAL ACTIVITIES - CONTINUED Risks in relation to VIE structure The Company believes that the contractual arrangements with its VIEs and their respective shareholders are in compliance with PRC laws and regulations and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce the contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could: ● revoke the business and operating licenses of the Company’s PRC subsidiaries and VIEs; ● discontinue or restrict the operations of any related-party transactions between the Company’s PRC subsidiaries and VIEs; ● limit the Group’s business expansion in China by way of entering into contractual arrangements; ● impose fines, confiscating the income from the WFOE or the VIEs or imposing other requirements with which the Company’s PRC subsidiaries and VIEs may not be able to comply; ● impose additional conditions or requirements with which the Group may not be able to comply; ● take other regulatory or enforcement actions against the Group that could be harmful to the Group’s business or ● require the Company or the Company’s PRC subsidiaries or VIEs to restructure the relevant ownership structure or operations. ● Restrict or prohibit the use of the proceeds of any offerings to financing the business and operations in the PRC The Company’s ability to conduct its business may be negatively affected if the PRC government were to carry out any of the aforementioned actions. As a result, the Company may not be able to consolidate its VIEs in its consolidated financial statements as it may lose the ability to exert effective control over the VIEs and their respective shareholders and it may lose the ability to receive economic benefits from the VIEs. The Company, however, does not believe such actions would result in the liquidation or dissolution of the Company, its PRC subsidiaries or VIEs. The VIE agreements were amended on November 3, 2017 and March 20, 2020 with no significant differences. Mr. Huang is the largest shareholder of Anhui Huami and Beijing Huami, and Mr. Huang is also the largest beneficiary owner of the Company. The interests of Mr. Huang as the largest beneficiary owner of the VIEs may differ from the interests of the Company as a whole, since Mr. Huang is only one of the beneficiary shareholders of the Company, holding 28.4% of the total common shares as of December 31, 2022. The Company cannot assert that when conflicts of interest arise, Mr. Huang will act in the best interests of the Company or that conflicts of interests will be resolved in the Company’s favor. Currently, the Company does not have existing arrangements to address potential conflicts of interest Mr. Huang may encounter in his capacity as a beneficial owner and director of the VIEs, on the one hand, and as a beneficial owner and director of the Company, on the other hand. The Company believes Mr. Huang will not act contrary to any of the contractual arrangements and the exclusive option agreement provides the Company with a mechanism to remove Mr. Huang as a beneficiary shareholder of the VIEs should he act to the detriment of the Company. The Company relies on Mr. Huang, as a director and executive officer of the Company, to fulfill his fiduciary duties and abide by laws of the PRC and Cayman Islands and act in the best interest of the Company. If the Company cannot resolve any conflicts of interest or disputes between the Company and Mr. Huang, the Company would have to rely on legal proceedings, which could result in disruption of its business, and there is substantial uncertainty as to the outcome of any such legal proceedings. 1. ORGANAZATION AND PRINCIPAL ACTIVITIES - CONTINUED Risks in relation to VIE structure - continued In addition, most of the current shareholders of Anhui Huami and Beijing Huami are also beneficial owners of the Company and therefore have no current interest in seeking to act contrary to the contractual arrangements. However, to further protect the investors’ interest from any risk that the shareholders of Anhui Huami and Beijing Huami may act contrary to the contractual arrangements, the Company, through Shun Yuan, entered into an irrevocable power of attorney with all of the shareholders of Anhui Huami and Beijing Huami on April 29, 2015 and November 3, 2017. Through the power of attorney, all shareholders of Anhui Huami and Beijing Huami have entrusted the person designated by Shun Yuan as its proxy to exercise their rights as the shareholders of Anhui Huami and Beijing Huami with respect to an aggregate of 100% of the equity interests in Anhui Huami The following financial position, financial performance and cash flow of the VIEs and VIEs’ subsidiaries were included in the accompanying consolidated financial statements after the elimination of intercompany balances and transactions within the Group: As of December 31, 2021 2022 RMB RMB Total current assets 2,989,474 2,045,609 Total non-current assets 701,134 790,027 Total assets 3,690,608 2,835,636 Total current liabilities 1,937,301 1,521,807 Total non-current liabilities 479,676 484,496 Total liabilities 2,416,977 2,006,303 For the years ended December 31, 2020 2021 2022 RMB RMB RMB Revenues 6,297,534 5,219,560 2,536,863 Net income/(loss) 751,803 (61,184) (1,282) For the years ended December 31, 2020 2021 2022 RMB RMB RMB Net cash provided by/(used in) operating activities 770,935 (295,860) (226,419) Net cash used in investing activities (131,183) (71,916) (26,610) Net cash provided by financing activities 564,671 32,024 445,570 |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | 2. SIGNIFICANT ACCOUNTING POLICIES Basis of presentation and principle of consolidation The consolidated financial statements of the Group have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements of the Group include the financial statements of the Company, its wholly-owned subsidiaries, its VIEs and the VIEs’ subsidiaries. The Company believes that the disclosures are adequate to make the information presented not misleading. Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. Significant accounting estimates reflected in the Group’s consolidated financial statements include inventory valuation, the useful lives of long-lived assets, impairment of long-lived assets, incremental borrowing rate for leases, product warranties, fair value measurement of long-term available-for-sale investments and long-term investments of non-marketable equity securities with fair value change through profit or loss, the valuation allowance for deferred tax assets and income tax. Actual results could differ from those estimates, and such differences may be material to the consolidated financial statements. Fair value Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. Authoritative literature provides a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The level in the hierarchy within which the fair value measurement in its entirety falls is based upon the lowest level of input that is significant to the fair value measurement as follows: Level 1 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. 2. SIGNIFICANT ACCOUNTING POLICIES - Fair value - continued Level 3 Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. Measured fair value on a recurring basis The Group measured its financial assets primarily including available-for-sale investments at fair value on a recurring basis and equity securities with readily determinable fair value as of December 31, 2021 and 2022. Measured fair value on a nonrecurring basis The Group measured acquired intangible assets using the income approach-discounted cash flow method when events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. The fair values were determined using models with significant unobservable inputs (Level 3 inputs). The Group did not recognize any impairment loss related to acquired intangible assets arising from acquisitions during the years ended December 31, 2020, 2021 and 2022. The Group measured goodwill at fair value on a nonrecurring basis when it is evaluated annually or whenever events or changes in circumstances indicate that the carrying amount of a reporting unit exceeds its fair value as a result of the impairment assessments. The fair value of the reporting unit is determined using discounted cash flows. The Group did not recognize any impairment loss related to goodwill during the years ended December 31, 2020, 2021 and 2022. For equity investments without readily determinable fair values for which the Company elected to use the measurement alternative, the equity investment is measured at fair value on a nonrecurring basis when there is an orderly transaction for identical or similar investments of the same issuer. Fair value of financial instruments The Group’s financial instruments consist primarily of cash and cash equivalents, restricted cash, term deposit, accounts receivable, amounts due from related parties, available-for-sale investments, amount due from a related party, noncurrent, accounts payable, notes payable and others, short-term bank borrowings, amounts due to related parties and long-term bank borrowings. The Company carries its available-for-sales investments at fair value. The carrying amounts of cash and cash equivalents, restricted cash, term deposit, accounts receivable, amounts due from related parties, accounts payable, notes payable and others, amounts due to related parties and short-term bank borrowings approximate their fair values due to the short-term maturities of these instruments. The carrying amounts of amount due from a related party, noncurrent and long-term borrowings approximates its fair value as the interest rates are based on the prevailing interest rates in the market. 2. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Cash and cash equivalents Cash and cash equivalents consist of cash on-hand, demand deposits with financial institutions, term deposits with an original maturity of three months or less and highly liquid investments, which are unrestricted from withdrawal or use, or which have original maturities of three months or less when purchased. Restricted cash Restricted cash represents deposits made to the bank for bank acceptance notes (or notes payable) issued by the Group. When the Group issues the bank acceptance notes, the banks require the Group to make a deposit for 30% to 75% of the face value of the bank acceptance notes issued as collateral. The deposits for unsettled bank acceptance notes are recorded as restricted cash in the consolidated balance sheets as of December 31, 2021 and 2022. Term deposit Term deposits consist of deposits placed with financial institutions with original maturities of greater than three months and less than one year. Accounts receivable Accounts receivable represents those receivables derived in the ordinary course of business, net of allowance for doubtful accounts. Allowance for doubtful accounts The Group maintains an allowance for doubtful accounts for estimated losses on uncollected accounts receivable. Management considers the following factors when determining the collectability of specific accounts: creditworthiness of customers, aging of the receivables, past transaction history with customers and their current condition, changes in customer payment terms, specific facts and circumstances, and the overall economic climate in the industries the Group serves. The Group evaluates its accounts receivable for expected credit losses on a regular basis. The Group maintains an estimated allowance for credit loss to reduce its accounts receivable to the amount that it believes will be collected. The Group uses the creditworthiness of customers, aging of the receivables, past transaction history with customers and their current condition, changes in customer payment terms, specific facts and circumstances, and the overall economic climate in the industries the Group serves to monitor the Group’s receivables within the scope of expected credit losses model and use these as a basis to develop the Group’s expected loss estimates. As of December 31, 2021 and 2022, the Company recorded RMB814 and RMB1,466 allowance for doubtful account. Inventories, net Inventories of the Group consist of raw materials, finished goods and work in process. Inventories are stated at the lower of cost or net realizable value on a weighted average basis. Inventory costs include expenses that are directly or indirectly incurred in the purchase, including shipping and handling costs charged to the Group by suppliers, and production of manufactured product for sale, such as include the cost of materials and supplies used in production, direct labor costs and allocated overhead costs such as depreciation, insurance, employee benefits, and indirect labor. Cost is determined using the weighted average method. The Group assesses the valuation of inventory and periodically writes down and writes off the value for estimated excess and obsolete inventory based upon the product life cycle. 2. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Short-term investments Short-term investments are mainly consisting of investment in convertible bonds with a maturity of less than one year. These investments are accounted for as available-for-sale investments and measured at fair value. The Group recorded RMB1,243, RMB1,240, and RMB2,006 unrealized gains in accumulated other comprehensive income on such investments during the years ended December 31, 2020, 2021 and 2022, respectively. Prepaid expenses and other current assets Prepaid expenses and other current assets primarily consist of advance to suppliers, prepaid expenses, other receivables, rental deposits and value-added tax recoverable. Property, plant and equipment, net Property, plant and equipment are carried at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the following estimated useful lives: Software and electronic equipment 3-5 years Building 20 years Leasehold improvements Shorter of the lease term or estimated useful lives Intangible assets, net Acquired intangible assets other than goodwill consist of the domain name for the Company’s website www.zepp.com, an insurance brokerage license, trademark and patents. The domain name, insurance brokerage license and certain trademark are recognized as an intangible asset with indefinite life and evaluated for impairment at least annually or if events or changes in circumstances indicate that the asset might be impaired. Such impairment test compares the fair values of the asset with its carrying value amounts and an impairment loss is recognized if and when the carrying amounts exceed the fair value. The estimates of values of the intangible asset not subject to amortization are determined using discounted cash flow valuation approach. Significant assumptions are inherent in this process, including estimates of discount rates and cash flow. Some trademark and patents are recognized as intangible assets with finite lives and are amortized on a straight-line basis over their expected useful economic lives. Amortization is calculated on a straight-line basis over the estimated useful life of 5 to10 years. 2. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Leases The Group leases administrative office spaces in different cities in the PRC, and in the United States and Canada under operating leases. The Group determines whether an arrangement constitutes a lease and records lease liabilities and right-of-use assets on its consolidated balance sheets at the lease commencement. The Group measures its lease liabilities based on the present value of the total lease payments not yet paid discounted based on its incremental borrowing rate, which is the estimated rate the Group would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease. The Group estimates its incremental borrowing rate based on an analysis of publicly traded debt securities of companies with credit and financial profiles similar to its own. The Group measures right-of-use assets based on the corresponding lease liability adjusted for payments made to the lessor at or before the commencement date, and the initial direct costs it incurs under the lease. The Group begins recognizing operating lease expenses when the lessor makes the underlying asset available to the Group. The Group’s leases have remaining lease terms of up to four years, some of which include options to extend the leases for an additional period which has to be agreed with the lessors based on mutual negotiation. After considering the factors that create an economic incentive, the Group did not include renewal option periods in the lease term for which it is not reasonably certain to exercise. For all real estate leases, any non-lease components, including common area maintenance, have been separated from lease components and excluded from the associated right-of-use asset and lease liability calculations. For short-term leases with lease term less than one year, the Group records operating lease expenses in its consolidated statements of operations on a straight-line basis over the lease term and record variable lease payments as incurred. Goodwill Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combination. Goodwill is not amortized but is tested for impairment annually or more frequently if events on changes in circumstance indicate that it might be impaired. Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the stock prices, business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The estimation of fair value of each reporting unit using a discounted cash flow methodology also requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the Group’s business, estimation of the useful life over which cash flows will occur, determination of the Group’s weighted average cost of capital and consideration of the impact of COVID-19. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results and market conditions. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for the reporting unit. The Group uses the one-step method for its goodwill impairment assessment for the years ended December 31, 2020, 2021 and 2022. Goodwill impairment is calculated as the amount by which a reporting unit’s carrying value exceeds its fair value. During the years ended December 31, 2020, 2021 and 2022, the Group recognized nil impairment loss on goodwill. 2. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Long-term investments The Group’s long-term investments consist of equity securities with readily determinable fair value, equity securities without readily determinable fair value, equity method investments and available-for-sale investments. (a) Equity securities with readily determinable fair value Equity securities with readily determinable fair values are measured at fair value and any changes in fair value are recognized in the consolidated statements of operations. (b) Equity securities without readily determinable fair value The Group accounts for equity investments that do not have a readily determinable fair value under the measurement alternative prescribed within Accounting Standards Update (“ASU”) 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, to the extent such investments are not subject to consolidation or the equity method. Under the measurement alternative, these financial instruments are carried at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. The Group reviews its equity securities without readily determinable fair value for impairment at each reporting period by considering factors including, but not limited to, current economic and market conditions and the impact of COVID-19, the operating performance of the companies including current earning trends and other company specific information. (c) Equity method investments For an investee company over which the Group has the ability to exercise significant influence, but does not have a controlling interest, the Group accounts for the investment under the equity method. Significant influence is generally considered to exist when the Group has an ownership interest in the voting stock of the investee between 20% and 50%. Other factors, such as representation on the investee’s board of directors, voting rights and the impact of commercial arrangements are also considered in determining whether the equity method of accounting is appropriate. Under the equity method of accounting, the investee company’s accounts are not reflected within the Group’s consolidated balance sheets and statements of operations; however, the Group’s share of the earnings or losses of the investee company is reflected in the caption “(loss)/income from equity method investments” in the consolidated statements of operations. An impairment charge is recorded if the carrying amount of the investment exceeds its fair value and this condition is determined to be other-than-temporary. The Group estimated the fair value of the investee company based on comparable quoted price for similar investment in active market, if applicable, or discounted cash flow approach which requires significant judgments, including the estimation of future cash flows, which is dependent on internal forecasts, the estimation of long-term growth rate of a company’s business, the estimation of the useful life over which cash flows will occur, the determination of the weighted average cost of capital and the impact of COVID-19. The Group recorded nil impairment losses on its equity method investments during the years ended December 31, 2020, 2021 and 2022. 2. SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Long-term investments (d) Available-for-sale investments For investments which are determined to be debt securities, the Group accounts for them as long-term available-for-sale investments when they are not classified as either trading or held-to-maturity investments. Available-for-sale investment is carried at its fair value and the unrealized gains or losses from the changes in fair values are included in accumulated other comprehensive income. The Group recorded RMB(22,583), RMB1,345, and RMB40,140 unrealized (losses) /gains in accumulated other comprehensive income on its available-for-sale investments during the years ended December 31, 2020, 2021 and 2022, respectively. The Group evaluates each individual investment periodically for impairment. For investments where the Group does not intend to sell, the Company evaluates whether a decline in fair value is due to deterioration in credit risk. Credit-related impairment losses, not to exceed the amount that fair value is less than the amortized cost basis, are recognized through an allowance for credit losses on the consolidated balance sheet with corresponding adjustment in the consolidated statements of operations and comprehensive income. Subsequent increases in fair value due to credit improvement are recognized through reversal of the credit loss and corresponding reduction in the allowance for credit loss. Any decline in fair value that is non-credit related is recorded in accumulated other comprehensive income as a component of shareholder’s equity. As of December 31, 2021 and 2022, there were no investments held by the Group that had been in continuous unrealized loss position. Notes payable and others Notes payable and others include short-term bank acceptance notes issued by financial institutions that entitle the holder to receive the stated amount from the financial institutions at the maturity date of the notes. The Group has utilized notes payable to settle amounts owed to suppliers and contractors. Notes payable and others also includes a letter of credit, which is issued by the bank to facilitate the settlement of the transactions with service providers. Once issued, the bank endorses to pay to the service provider, who is also the letter of credit holder, when the letter of credit matures. The short-term bank acceptance notes and the letter of credit are normally settled within three months and twelve months, respectively. Revenue recognition Nature of Goods and Services The Group generates substantially all of its revenues from sales of smart wearable devices. The Group also generates a small amount of its revenues from its subscription-based services. For the years ended December 31, 2020, 2021 and 2022, the Group generated 69.0%, 53.5% and 41.0% of revenue from one customer for sales of exclusively designed and manufactured smart wearable devices, and generated 31.0%, 46.5% and 59.0% of revenue from sales of the Group’s self-branded products and others. Revenue is recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Group expects to be entitled to in exchange for the goods or services. The Group recognizes revenue, net of estimated sales returns and value-added taxes (“VAT”). 2. SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Revenue recognition The Group has determined that its contracts with its customers include multiple performance obligations that the Group accounts for separately as those are distinct from other items in the contract. The first performance obligation is the smart wearable device and embedded firmware that is essential to the functionality of the device, which the customer can benefit from it on its own or with other resources that are readily available to the customer. The second performance obligation is the software services included with the products, which are provided free of charge and enable users to sync, view, and access real-time data on the Group’s mobile apps. The third performance obligation is the embedded right included with the purchase of the device to receive, on a when-and-if-available basis, future unspecified firmware upgrades and features relating to the product’s essential firmware. The Group allocates the transaction price to all performance obligations based on their relative standalone selling prices. The standalone selling prices are determined based on the expected cost plus margin as the Group determined that no observable price is available for any of its performance obligation. The Group considered multiple factors in the process of determining its cost plus margin including consumer behaviors and the Group’s internal pricing model. The cost plus margin estimated selling price for the smart and wearable devices comprised the majority of the transaction. The Group recognizes revenue for the amounts allocated to the connected smart and wearable devices when the customer obtains control of the Group’s product, which occurs at a point of time, typically upon delivery to and acceptance by the reseller, who has been identified as the customer of the Group. Amounts allocated to the software services and unspecified upgrade rights are deferred and recognized over time as the customer simultaneously receives and consumes the benefit over an estimated nine-month period. Sales of self-branded products and others The Group’s revenue recognition for its self-branded products is consistent with that described in the preceding paragraphs. Cooperation agreement with one customer For the years ended December 31, 2020, 2021 and 2022, the Group generated 69.0%, 53.5% and 41.0% of revenue from one customer for sales of exclusively designed and manufactured smart wearable devices. That customer is also the sole distributor for such smart wearable devices and is controlled by one of the shareholders (see Note 22). Under the cooperation agreement with this customer, the Group produces and assembles final product for shipments of wearable devices to that customer, who are then responsible for commercial distribution and sale of the product. The arrangement includes two payment instalments. The first payment instalment is priced to recover the costs incurred by the Group in developing and shipping the devices to the customer and is due from the customer to the Group once the products have been delivered and accepted by the customer. The Group allocates the initial payment instalment between the hardware device, the software services, and the software upgrades based on their standalone selling price and recognizes revenue based on its recognition policy further described in the preceding paragraph. The Group is also entitled to receive a potential second instalment payment calculated as 50 percent of the future net profits from commercial sales made by the customer. The Group has determined that the second instalment consideration constitutes variable consideration and includes the amount in the transaction price to the extent it is not constrained and it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period (see below for further details). The second instalment is also allocated between the hardware device, the software services, and the software upgrades based on the relative standalone price and is recognized based on the Group’s recognition policy further described in the preceding paragraph. The Group’s revenue recognition policy of its products under its cooperation agreement is substantially consistent with that for its sales of self-branded products except that the instalment payments arrangement under the cooperation agreement is not available to the self-branded products. During the year ended December 31, 2022, the Group also sold one specific generation of Xiaomi Wearable Product, accounting for 26.1 % of consolidated revenue, which has a standard selling price and does not include installment payments described in the preceding paragraph. The revenue recognition for the sales of such specific generation of Xiaomi Wearable Product is consistent with the revenue recognition described for the self-branded products. 2. SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Revenue recognition Variable Consideration Revenues from product sales are recorded at the net sales price (transaction price), which includes estimate of variable consideration which result from the Group’s cooperation agreement with one customer (see above for more details). The amount of variable consideration is included in the transaction price to the extent it is not constrained and that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from the Group’s estimates. If actual results in the future vary from the Group’s estimates, the Group will adjust these estimates, which would affect revenue and earnings in the period such variances are known. Sales Incentive The Group periodically provides sales incentives to its customers for self-branded products, including reduced sales prices and volume-based discounts. Volume discounts are negotiated on a contract-by-contract basis with customers and the discount will increase depending upon the volume purchased over the period. The sales incentives are discounts to be applied to future sales to the customer which cannot be exchanged for cash. To the extent that the volume discount or sales incentive represents a material right or options to acquire additional goods or services at a discount in the future period, the material right is recognized as a separate performance obligation at the outset of the arrangement based on the most likely amount of incentive to be provided to the customer. Amounts allocated to a material right are recognized as revenue when those future goods are sold to the customers. Practical Expedients and Exemptions The Group generally expenses sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling and marketing expenses. In addition, the Group does not disclose the value of unsatisfied performance obligations as all of its contracts have an original expected length of one year or less. Value added taxes VAT on sales was previously calculated at 17% on revenue from products before May 1, 2018 and thereafter, in accordance with Cai Shui [2018] No.32, the VAT rate decreased to 16%. Since April 1, 2019, in accordance with Cai Shui [2019] No.39, the VAT rate further decreased to 13%. VAT was calculated at 6% on the revenue from the service provided. The Group reports revenue net of VAT. Subsidiaries that are VAT general taxpayers are allowed to offset qualified input VAT paid against their output VAT liabilities. Rights of return The Group offers certain sales returns for products sold directly to end users and to its resellers. The Group estimates the amount of its products sales that may be returned by its end users and resellers and records this estimate as a reduction of revenue in the period the related revenue is recognized. The Group currently estimates product return liabilities using its expectations and historical experience. 2. SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Cost of revenues Cost of revenues consists primarily of material costs, salaries and benefits for staff engaged in production activities and related expenses which are directly attributable to the production of products. The shipping and handling fees billed to the customers are presented as part of cost of revenues as well. Product warranty The Group offers standard product warranty to its customers, for a 12-month period starting from the sales of the goods to the end users. The Group has the obligation to either repair or replace the defect product for the customers if the product is still under warranty. At the time revenue is recognized, an estimate of future warranty costs is recorded as a component of cost of revenues. The reserves established are regularly monitored based upon historical experience and any actual claims charged against the reserve. Warranty reserves are recorded as a cost of revenues. Research and development expenses Research and development expenses primarily consist of salaries and benefits for research and development personnel, materials, office rental expenses, general expenses and depreciation expenses associated with research and development activities. Advertising expenses Advertising expenses are expensed as incurred and included in selling and marketing expenses. Total advertising expenses were RMB136,974, RMB151,744 and RMB172,577 for the years ended December 31, 2020, 2021 and 2022, respectively. Government subsidies Government subsidies represent government grants received from local government authorities to encourage the Group’s technology and innovations and also other subsidies for production. The Group records such government subsidies as other income or reduction of expenses or cost of revenues when it has fulfilled all of its obligation related to the subsidy. During the years ended December 31, 2020, 2021 and 2022, the Group recognized RMB13,461, RMB23,140 and RMB41,054 as subsidy income and recognized RMB10,408, RMB103,660 and RMB53,563 as reduction of expenses or cost of revenues, respectively. As of December 31, 2021 and 2022, subsidies of RMB3,129 and RMB1,745 were recorded as other current liabilities, RMB175,053 and RMB162,602 were recorded as other non-current liabilities as the Group has to meet certain performance conditions required by the government authorities. 2. SIGNIFICANT ACCOUNTING POLICIES – Income taxes Income taxes are provided for in accordance with the laws of the rel |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2022 | |
ACQUISITIONS | |
ACQUISITIONS | 3. ACQUISITIONS Business acquisition of PAI Health Inc. (“PAI”) On June 12, 2020, the Group acquired 100% equity interest in PAI from Global Technology and Innovation Ltd (“GTI”) to expand the business of health-related software and algorithms development. The purchase consideration included a previously held 40.49% equity interest held in GTI which was previously accounted as an equity method investment by the Group for which the fair value approximated RMB87,716, cash of RMB1,370 and RMB13,711 of loan deemed effectively settled as a result of the acquisition. The fair value of previously held equity interest held in GTI was estimated by the Group with the assistance of an independent valuation appraiser by applying the income approach, market multiple approach and recent investment price approach. The acquisition was recorded using the acquisition method of accounting. Accordingly, the acquired assets and liabilities assumed were recorded at their fair value at the date of acquisition. The purchase price allocation described below was determined by the Group with the assistance of an independent valuation appraiser. The acquired net assets were recorded at their estimated fair values on the acquisition date. The acquired goodwill is not deductible for tax purposes. PAI constituted less than 1% of revenue and total assets of the consolidated financial statement as of and during the year ended December 31, 2021 and 2022 and the results of operations attributable to PAI and pro forma results of operations for PAI have not been presented because they are not material to the consolidated statements of operations and comprehensive income for the years ended December 31, 2020, 2021 and 2022. The purchase price was allocated as of June 12, 2020, the date of acquisition, as follows: Amortization RMB period Cash 5,554 Other current assets 4,704 Property, plant and equipment 149 3 years Intangible assets Patents 42,495 5 years Goodwill 67,856 Other non-current assets 261 Other current liabilities 8,868 Deferred tax liabilities 6,374 Other non-current liabilities 2,980 Total 102,797 3. ACQUISITIONS – CONTINUED Business acquisition of PAI Health Inc. (“PAI”) The goodwill is mainly attributable to intangible assets that cannot be recognized separately as identifiable assets under US GAAP, and comprise of (a) the assembled work force and (b) the expected but unidentifiable business growth as a result of synergy effect from the acquisition. Goodwill is not allocated to the Company’s operating segments in the measure of segment assets regularly reported to and used by the chief operating decision maker. However, for the purpose of the annual goodwill impairment test, goodwill is allocated to the operating segments (goodwill reporting units). Asset acquisition of Guoxu Insurance Brokerage Co., Ltd. (“Guoxu”) In July 2020, the Group entered into a purchase agreement with shareholders of Guoxu to acquire 100% of Guoxu’s equity ownership for a gross consideration of RMB67,914, of which RMB35,075 was related to the effective settlement of the selling shareholder’s loan payable to Guoxu upon closing. This resulted in a net cash consideration of RMB32,839. Guoxu holds an insurance brokerage license. As of the acquisition day, the Group terminated all the labor relationship with the employees of Guoxu and did not buy any material contracts. The Group evaluated the acquisition of the purchased assets under ASC 805-Business Combination (ASC 805), and concluded that as substantially all of the fair value of the gross assets acquired is concentrated in the insurance brokerage license, the transaction did not meet the requirements to be accounted for as a business combination and therefore the transaction was accounted for as an asset acquisition. |
DISPOSAL OF SUBSIDIARIES
DISPOSAL OF SUBSIDIARIES | 12 Months Ended |
Dec. 31, 2022 | |
DISPOSAL OF SUBSIDIARIES | |
DISPOSAL OF SUBSIDIARIES | 4. DISPOSAL OF SUBSIDIARIES Disposal of Shenzhen Yunding Information Technology Co., Ltd. (“Yunding”) In December 2020, the Group sold 26.7% equity interest in Yunding to its founder for cash consideration of RMB22,500. The consideration also included a loan receivable from Yunding amounting to RMB24,514 to be repaid annually over three years for which the Group has a right to convert the unpaid balance into equity interest of Yunding after December 31, 2023. Yunding was previously part of the Group’s self-branded products and others segment. Subsequent to this disposal, the Group remeasured its remaining 24.3% investment in Yunding at fair value and accounted for it as equity method investment because the Group retained the ability to exercise significant influence. The fair value of its remaining investment in Yunding was estimated by using recent financing transaction of Yunding. The Group recognized RMB56,522 gain from deconsolidation of a subsidiary which was recorded as part of gain from deconsolidation of a subsidiary in the consolidated statements of operations for the year ended December 31, 2020. In 2021, the Group further sold 5% equity interest of Yunding for RMB20,000. The disposal of Yunding did not represent a strategic shift and did not have a major effect on the Group’s operation. |
INVENTORIES, NET
INVENTORIES, NET | 12 Months Ended |
Dec. 31, 2022 | |
INVENTORIES, NET | |
INVENTORIES, NET | 5. INVENTORIES, NET Inventories consisted of the following: As of December 31, 2021 2022 RMB RMB Raw materials 282,939 97,266 Work in process 224,013 130,536 Finished goods 742,375 794,121 Inventories, net 1,249,327 1,021,923 During the years ended December 31, 2020, 2021 and 2022, the Group recorded a provision for the excess and obsolete inventories amounting to RMB64,223, RMB51,336 and RMB39,551 respectively. |
SHORT-TERM INVESTMENTS
SHORT-TERM INVESTMENTS | 12 Months Ended |
Dec. 31, 2022 | |
SHORT-TERM INVESTMENTS | |
SHORT-TERM INVESTMENTS | 6. SHORT-TERM INVESTMENTS As of December 31, 2021 2022 RMB RMB Convertible bonds: 19,351 34,316 Total: 19,351 34,316 Short-term investments included convertible bonds with maturities less than 1 year, which were classified as available-for-sales investments and measured at fair value. The Group recognized RMB1,243, RMB1,240 and RMB2,006 unrealized gains from these investments in 2020, 2021 and 2022. |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 7. PREPAID EXPENSES AND OTHER CURRENT ASSETS As of December 31, 2021 2022 RMB RMB Value-added tax recoverable 198,189 4,648 Other receivables 57,039 44,951 Prepaid expenses 51,156 53,682 Advances to suppliers 7,838 1,758 Rental deposits 816 3,213 Total 315,038 108,252 |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY, PLANT AND EQUIPMENT, NET | |
PROPERTY, PLANT AND EQUIPMENT, NET | 8. PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consisted of the following: As of December 31, 2021 2022 RMB RMB Software and electronic equipment 78,854 77,693 Buildings 34,764 34,764 Leasehold improvements 81,759 90,720 Total 195,377 203,177 Less: accumulated depreciation (70,832) (112,238) Construction in progress 9,328 9,666 Property, plant and equipment, net 133,873 100,605 The Group has recorded depreciation expenses of RMB14,949, RMB35,109 and RMB41,406 during the years ended December 31, 2020, 2021 and 2022, respectively. No impairment was recorded during the years ended December 31, 2020, 2021 and 2022. |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 12 Months Ended |
Dec. 31, 2022 | |
INTANGIBLE ASSETS, NET | |
INTANGIBLE ASSETS, NET | 9. INTANGIBLE ASSETS, NET Intangible assets, net, consisted of the following: As of December 31, 2021 2022 RMB RMB Intangible assets with indefinite lives: Domain name 2,024 2,024 Insurance brokerage license, trademark and others 42,617 44,399 Intangible assets with finite lives: Patents and trademark 128,332 131,480 Less: accumulated amortization 37,391 54,603 Intangible assets, net 135,582 123,300 Amortization expenses for the intangible assets for the years ended December 31, 2020, 2021 and 2022, were RMB12,180, RMB16,775 and RMB17,212, respectively. Future amortization expenses relating to the existing intangible assets amounted to RMB17,374 per fifth |
LONG-TERM INVESTMENTS
LONG-TERM INVESTMENTS | 12 Months Ended |
Dec. 31, 2022 | |
LONG-TERM INVESTMENTS | |
LONG-TERM INVESTMENTS | 10. LONG-TERM INVESTMENTS Long-term investments consisted of the following: As of December 31, 2021 2022 RMB RMB Equity securities without readily determinable fair value Sifive, Inc. (“Sifive”) (a) 21,759 95,613 AliveCor, Inc., (“Alivecor”) (b) 14,988 24,582 Promaxo, Inc.(“Promaxo”) (c) 25,490 27,589 Other equity securities without readily determinable fair value (d) 81,775 91,141 Equity securities with readily determinable fair value Hyperfine Inc. (e) 31,669 4,413 Equity method investments: Jiangsu Yitong High-Tech Co, Ltd(“Jiangsu Yitong”) (f) 960,832 968,242 Hefei Huaying Xingzhi Fund Partnership (limited partnership) (“Huaying Fund I”) (g) 61,014 60,262 Anhui Huaying Zhihui Wulian Fund Parnership(limited partnership)(“Huaying Fund II”) (h) 200,067 212,803 Other equity method investments (i) 46,548 53,164 Available-for-sale investments Yunding (j) 50,431 74,912 Other available-for-sale investments (k) 58,018 73,907 Total 1,552,591 1,686,628 (a) In 2018, the Group invested RMB12,332 to acquire 1.01% equity interests in Sifive. Sifive is a private company engaging in the business of semiconductor. The equity interest is not considered in-substance common shares due to substantial liquidation preference rights. Accordingly, the investment in Sifive was accounted for as equity securities without readily determinable fair value. The Group recognized RMB3,304, nil and RMB66,322 gain from the fair value change of this investment during the years ended December 31, 2020, 2021 and 2022, respectively. 10. LONG-TERM INVESTMENTS - CONTINUED (b) In 2019, the Group invested USD1,000 in a convertible bond issued by Alivecor with 3% interest rate. In February 2020, the Group converted the bond to 0.56% equity interest and the equity interest is not considered in-substance common shares due to substantial liquidation rights owned by the Group. Accordingly, the investment in Alivecor was accounted for equity securities without readily determinable fair value. The Group recognized RMB7,728, nil and RMB8,620 gain from the fair value change of this investment during the years ended December 31, 2020, 2021 and 2022, respectively. (c) In 2020, the Group invested USD4,000 to acquire 4.05% equity interests in Promaxo. Promaxo is a private company engaging in the business of Magnetic Resonance (“MR”) technology. The equity interest is not considered in-substance common shares due to substantial liquidation preference rights. Accordingly, the investment in Promaxo was accounted for as equity securities without readily determinable fair value. For the year ended December 31, 2020, 2021 and 2022, no fair value change was observed and recognized. (d) These other investments represent certain insignificant investments in the third-party private companies, which the Group has no significant influence over the investees and accounted for these investments using the measurement alternative method. (e) In December 2021, Hyperfine was successfully listed in the US capital market through a special purpose acquisition and the investment in Hyperfine was converted from equity securities without readily determinable fair value to equity securities with readily determinable fair value. The Group recorded RMB194 and RMB28,466 realized loss from the fair value change of this investment during the years ended December 31, 2021 and 2022, respectively. (f) In February 2021, the Group acquired 29.99% equity interest of Jiangsu Yitong, a company listed on the Shenzhen stock exchange, for a total cash consideration of RMB959.68 million. The purpose of the investment is to expand the healthcare ecosystem in the domestic market. The investment of Jiangsu Yitong is accounted for using the equity method as the Group can exercise significant influence through its board representation without obtaining control. During 2022, the Group further acquired 0.01% equity interest of Jiangsu Yitong. The Group recorded RMB1,152 and RMB7,580 income from this equity method investment during the year ended December 31, 2021 and 2022, respectively. The total consideration of the investment in Jiangsu Yitong was RMB960,832 and the proportion of Jiangsu Yitong’s net assets that owned by the Group was RMB137,302 as of December 31, 2021. The difference between the total consideration and the proportion of net assets was RMB823,530, which has been allocated into goodwill, intangible assets and others assets with the amount of RMB636,672, RMB173,524 and RMB13,334, respectively. As of December 31, 2022, the carrying value of the investment in Jiangsu Yitong is RMB968,242 and the difference with the proportionate share of Jiangsu Yitong’s net assets was RMB813,101, which allocated into goodwill, intangible assets and others assets with the amount of RMB636,672, RMB172,940 and RMB3,489, respectively. The intangible assets are trademark with indefinite life and patents with definite life, which are amortized on a straight-line basis over the estimated useful life of 3 to 7 years. (g) In 2016, the Group invested RMB50,000 to acquire a 49.5% equity interests in a limited partnership, Huaying Fund I, which is a fund engaged in investing activities in small and middle scale High Tech private companies. The Group accounted for the investment under the equity method because the investments are common stock and the Group has significant influence through its board seat but does not control Huaying Fund I. The Group recorded RMB(2,452), RMB7,910 and RMB(752) of (loss)/income from equity method investment during the years ended December 31, 2020, 2021 and 2022, respectively. 10. LONG-TERM INVESTMENTS – CONTINUED (h) In 2019, the Group invested RMB102,000 to acquire a 34% equity interests in a limited partnership, Huaying Fund II, a fund engaged in investing activities in small and middle scale High Tech private companies. The Group accounted for the investment using the equity method as the Group has significant influence through its board seat but does not control Huaying Fund II. In March 2021, the Group paid the second installment of cash consideration in Huaying Fund II for an amount of RMB68 million. The Group recorded RMB5,297, RMB24,434 and RMB12,737 of income from equity method investment during the years ended December 31, 2020, 2021 and 2022, respectively. (i) The other equity method investments represent several insignificant investments classified as equity method investments as the Group has the ability to exercise significant influence but does not have control over the investees. (j) In 2020, the Group invested RMB22,000 in a convertible bond issued by Yunding with interest rates ranging from 4.35% to 8.7%. The Group also has some equity interests in Yuding and accounted them as available for sale investment due to the redemption feature included in the investment as of December 31, 2021 and 2022. During 2021, the Group disposed 5% equity interests in Yunding and recognized a realized gain with amount of RMB13,507 from the disposal. The Group also recorded an unrealized gain of nil, RMB903 and RMB20,943 in other comprehensive income/(loss) for the years ended December 31, 2020, 2021 and 2022, respectively. (k) Available-for-sale investments represent investments in debt securities and measured at fair value. Those investments mainly include investments in convertible bonds as well as investment with redemption features considered debt instruments. The Group summarizes the condensed financial information of the Group’s equity investments using equity method as a group below in accordance with Rule 4-08 of Regulation S-X: For the year ended December 31, 2020 2021 2022 RMB RMB RMB Revenue 28,087 330,685 412,975 Gross profit 15,114 198,495 147,434 Income from operations 3,011 140,006 68,663 Net income 3,042 137,681 66,039 Net income attributable to ordinary shareholders 3,042 137,681 66,039 As of December 31, 2021 2022 RMB RMB Current assets 941,812 825,465 Non-current assets 780,128 913,919 Current liabilities 122,430 88,454 Non-current liabilities 36,807 1,386 |
FAIR-VALUE MEASUREMENT
FAIR-VALUE MEASUREMENT | 12 Months Ended |
Dec. 31, 2022 | |
FAIR-VALUE MEASUREMENT | |
FAIR-VALUE MEASUREMENT | 11. FAIR-VALUE MEASUREMENT Fair-value measurement on a recurring basis As of December 31, 2021 and 2022, the financial assets measured at fair value on a recurring basis mainly consist of available-for-sale investments and equity securities with readily determinable fair value. Available-for-sale investment includes convertible bonds and redeemable preferred shares, which are recorded in short-term and long-term investments. The fair value hierarchy of these investments as of December 31, 2021 and 2022 are as follows: As of December 31, 2021 Quoted Prices in Significant Active Market for Significant Other Unobservable Identical Assets Observable Inputs Inputs Description Level 1 Level 2 Level 3 Total RMB RMB RMB RMB Short-term investments: Convertible bonds — 19,351 — 19,351 Long-term investments: Convertible bonds — 43,055 — 43,055 Redeemable preferred shares — — 65,393 65,393 Equity securities with readily determinable fair value — 31,669 — 31,669 Total: — 94,075 65,393 159,468 As of December 31, 2022 Quoted Prices in Significant Active Market for Significant Other Unobservable Identical Assets Observable Inputs Inputs Description Level 1 Level 2 Level 3 Total RMB RMB RMB RMB Short-term investments: Convertible bonds — — 34,316 34,316 Long-term investments: Convertible bonds — — 38,741 38,741 Redeemable preferred shares — 37,044 73,034 110,078 Equity securities with readily determinable fair value 4,413 — — 4,413 Total: 4,413 37,044 146,091 187,548 For equity securities with readily determinable fair value, the fair value of the investment is measured as the quoted market price with discounts for lack of marketability as of December 31, 2021, and classified as level 2 investments. The investment is classified as level 1 measurement as the investment has readily quoted market price as of December 31, 2022, due to the passage of the sale restricted period. The Group measured the fair value of the convertible bonds based on the respective principals, expected returns and the estimated conversion value. Those convertible bonds are classified in Level 2 or Level 3 depending on whether significant unobservable inputs are used in the fair value determination. 11. FAIR-VALUE MEASUREMENT - CONTINUED Fair-value measurement on a recurring basis The Group measured the fair value of the redeemable preferred shares based on the recent transactions or based on the market approach when no recent transactions are available. Recent transactions include the purchase price agreed by an independent third party for an investment with similar terms. These investments are classified as level 2 measurement. When no recent transactions are available, a market approach will be used by the Company to measure fair value. The market approach takes into consideration a number of factors including market multiple and discount rates from traded companies in the industry and requires the Company to make certain assumptions and estimates regarding industry factors. Specifically, some of the significant unobservable inputs included the investee’s historical earning, discount of lack of marketability, investee’s time to initial public offering as well as related volatility. The Company has classified these as level 3 measurement. The assumptions are inherently uncertain and subjective. Changes in any unobservable inputs may have a significant impact on the fair values. There are certain redeemable preferred shares and convertible bonds transferred from level 2 to level 3 during the years ended December 31, 2021 and 2022. The following table provides additional information about the reconciliation of the fair value measurements of assets using significant unobservable inputs (level 3). Level 3 investments RMB Balance as of January 1, 2021 1,934 Initial recognition 24,960 Transfer from level 2 38,499 Balance as of December 31, 2021 65,393 Unrealized gain 19,575 Transfer from level 2 73,057 Transfer to level 2 (11,934) Balance as of December 31, 2022 146,091 Fair-value measurement on a non-recurring basis Goodwill and acquired intangible assets are measured at fair value on a non-recurring basis when an impairment is recognized. The Group measures goodwill at fair value annually or whenever events or changes in circumstances indicate that the carrying amount of a reporting unit exceeds its fair value. The fair value of goodwill is determined using discounted cash flows, and an impairment loss is recognized for any excess in the carrying value of goodwill over the implied fair value of goodwill. The Group measures acquired intangible assets using the income approach—discounted cash flow method, when events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. During the years ended December 31, 2020, 2021 and 2022, no impairment loss was recognized for goodwill and intangible assets. The Group measures long-term investments (excluding the equity securities with readily determinable fair values and available-for-sale investments) at fair value on a nonrecurring basis only if an impairment indicator exist or an observable price adjustment is available in the current period. For equity securities without readily determinable fair value for which the Group elected to use the measurement alternative, the investment is measured at fair value on a nonrecurring basis whenever there is an impairment or any changes resulting from observable price changes in an orderly transaction for the identical or a similar investment of the same issuer. The fair value of the investment is categorized as level 2 in the fair value hierarchy when directly or indirectly observable inputs in the market place are identified. Whenever events or changes in circumstances indicate that the carrying value may no longer be recoverable, the fair value of aforementioned long-term investments is determined using models with significant unobservable inputs (Level 3 inputs), primarily the management projection of discounted future cash flow and the discount rate. During the years ended December 31, 2020, 2021 and 2022, the Group recognized an impairment loss of RMB nil, nil and 13,858 for the equity securities without readily determinable fair value. |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES As of December 31, 2021 2022 RMB RMB Deferred revenue 87,980 61,164 Current operating lease liabilities 50,092 42,320 Accrued payroll and welfare 41,948 25,875 Other tax payable 23,541 20,535 Product warranty 24,858 17,748 Accrued expenses 17,058 6,703 Refund liabilities 5,745 4,845 Government subsidies 3,129 1,745 Reverse factoring 39,195 — Other current liabilities 22,537 16,884 Total 316,083 197,819 Product warranty activities were as follows: RMB Balance as of January 1, 2020 49,527 Provided during the year 74,742 Utilized during the year (91,487) Balance as of December 31, 2020 32,782 Provided during the year 63,540 Utilized during the year (71,464) Balance as of December 31, 2021 24,858 Provided during the year 27,146 Utilized during the year (34,256) Balance as of December 31, 2022 17,748 The warranty costs recorded in cost of revenues were RMB74,742, RMB63,540 and RMB27,146 during the years ended December 31, 2020, 2021 and 2022, respectively. |
BANK BORROWINGS
BANK BORROWINGS | 12 Months Ended |
Dec. 31, 2022 | |
BANK BORROWINGS | |
BANK BORROWINGS | 13. BANK BORROWINGS The Group borrowed approximately RMB1,473,567 and RMB838,859 in different currencies from several commercial banks with weighted average interest rate of 3.83% and 3.13%, and repaid RMB953,387 and RMB727,500 in 2021 and 2022, respectively. These bank loans have maturities ranging from one As of December 31, 2022, RMB464 million bank borrowing was provided by the bank for the sole use of the investment in Jiangsu Yitong and the Group has pledged 20.48% equity interest in Jiangsu Yitong to the bank. For some of the long-term bank borrowings, there are certain customary covenants regarding limits on levels of indebtedness, mergers, asset dispositions, changes in business, advances, investments, loans, restricted payments and financial condition such as the profitability, debt ratio, liquidation ratio and etc. Failure to meet any of the above requirements would result in an event of default that would allow lenders to declare amounts outstanding immediately due and payable and would allow the lenders to enforce their interests against collateral pledged if we were unable to settle the amounts outstanding. We were in compliance with all financial debt covenants as of December 31, 2022. 13. BANK BORROWINGS - CONTINUED The principal repayment schedule of the bank borrowings in the following five years is listed as below: Repayment Amount RMB 2023 512,000 2024 140,000 2025 260,000 2026 65,000 2027 and thereafter 219,210 |
DIVIDEND
DIVIDEND | 12 Months Ended |
Dec. 31, 2022 | |
DIVIDEND | |
DIVIDEND | 14. DIVIDEND On March 17, 2022, the Company announced a special cash dividend of US$0.025 per ordinary share (US$0.1 per ADS) on its outstanding shares to shareholders of record as of the close of trading on March 28, 2022. The ex-dividend date is March 25, 2022 and the dividend was paid in April 2022. |
REVENUE AND DEFERRED REVENUE
REVENUE AND DEFERRED REVENUE | 12 Months Ended |
Dec. 31, 2022 | |
REVENUE AND DEFERRED REVENUES | |
REVENUE AND DEFERRED REVENUES | 15. REVENUE AND DEFERRED REVENUE Disaggregation of revenue All the revenues for the period were recognized from contracts with customers. For the years ended December 31, 2020, 2021 and 2022, the majority of the Group’s revenues result from sales of products which was recognized at a point of time. The following table provides information about disaggregated revenue by products, including a reconciliation of the disaggregated revenue with reportable segments: For the years ended December 31, 2020 2021 2022 RMB RMB RMB Xiaomi Wearable Products 4,438,081 3,340,857 1,697,053 Self-branded products and other 1,995,282 2,909,252 2,445,809 Total 6,433,363 6,250,109 4,142,862 During the years ended December 31, 2020, 2021 and 2022, the majority of the Group’s products are sold to resellers and distributors in the PRC. This includes products that have international versions which are first sold to the Group’s domestic distributors who subsequently distribute those products internationally. 15. REVENUE AND DEFERRED REVENUE - CONTINUED Contract balances The following table provides information about receivables, deferred revenue and refund liability from contracts with customers: As of December 31, 2021 2022 RMB RMB Accounts receivables 537,084 682,103 Amounts due from related parties 295,614 138,614 Deferred revenue 87,980 61,164 Refund liability (sales return) 5,745 6,932 Accounts receivables are recorded when the right to consideration is unconditional and payments terms on invoiced amounts are typically 30 to 90 days. Amounts due from related parties include both amounts billed and unbilled due from related party under the cooperation agreement. As of December 31, 2021 and 2022, the amount due from related parties include the billed amount of RMB231,485 and RMB136,001, and unbilled amounted to RMB64,129 and RMB2,613, respectively. The amount billed is recorded when the right to the consideration is unconditional and payment terms on invoiced amounts are typically 30 to 60 days. Unbilled amount due from related party relate to contractual right to consideration under cooperation agreement for the second instalment payment not yet invoiced. The Company recorded no impairment charges related to contract assets during the years ended December 31, 2020, 2021 and 2022. Deferred Revenue, recorded in accrued expenses in the consolidated balance sheet, include payment received in advance of performance under the contract related to software services which are realized over the estimated usage period and payment received related to a material right provided to a customer to acquire additional goods or services at a discount in a future period. Refund liability includes the Group’s estimated product sales that may be returned by the Group’s end users and resellers covered under the Group’s sale return policy. Refund liability is included in “Accrued expenses and other” and “Amounts due to related parties”. Additions to the allowance were RMB During the years ended December 31, 2020, 2021 and 2022, the Group recognized RMB59,585, RMB51,780 and RMB87,980 of revenue previously included in deferred revenue as of December 31, 2019, December 31, 2020 and 2021, which mainly consist of revenue recognized related to its subscription-based service. Additionally, during the years ended December 31, 2020, 2021 and 2022, the Group billed RMB102,687, RMB80,675 and RMB64,129 to a related party, which was initially recorded as unbilled amount, mainly due to the timing of invoicing for the goods related to its cooperation agreement. The difference between the opening and closing balances of the Group’s contract liabilities primarily results from the timing difference between the Group’s performance and the customer’s payment. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
INCOME TAXES | 16. INCOME TAXES The Company is incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, the Company is not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands. The Company’s subsidiaries, Zepp HK and Galaxy, are located in HK and are subject to a two-tiered income tax rates for taxable income earned in HK with effect from April 1, 2018. The first HK$2 million of profits earned by Zepp HK and Galaxy will be taxed at 8.25%, while the remaining profits will continue to be taxed at the existing 16.5% tax rate. In addition, to avoid abuse of the two-tiered income tax rate regime, each group of connected entities can nominate only one entity to benefit from the two-tiered income tax rate. Additionally, payments of dividends by the subsidiaries incorporated in HK to the Company are not subject to any HK withholding tax. Under the HK tax laws, the Company is exempted from the HK income tax on foreign-derived income. 16. INCOME TAXES - CONTINUED The Company’s subsidiaries Zepp Inc and Zepp NA are located in the U.S. and are subject to an income tax rate of 21% for taxable income earned as determined in accordance with relevant tax rules and regulations in the U.S. The Company’s subsidiary Zepp Netherlands is located in Netherland and is subject to an income tax rate of 15% for taxable income earned as determined in accordance with relevant tax rules and regulations in Netherland. The Company’s PRC subsidiaries, the VIEs and VIEs’ subsidiaries are subject to the 25% standard enterprise income tax rate except for Anhui Huami and Anhui Health and Shun Yuan that qualify as a high and new technology enterprise (“HNTE”), which are subject to a tax rate of 15%. Anhui Huami began to qualify as HNTE in 2015 and renewed the HNTE certificate in July 2018 and September 2021. Accordingly, Anhui Huami is subject to a tax rate of 15% during the years ended December 31, 2021, 2022 and 2023. Anhui Health qualifed as a HNTE in August 2020 and is subject to a tax rate of 15% during the year ended December 31, 2020, 2021 and 2022. In addition, Shun Yuan qualified as a HNTE since December 2021 and is subject to a tax rate of 15% during the years ended December 31, 2021, 2022 and 2023. The current and deferred components of income taxes appearing in the consolidated statements of operation are as follows: For the years ended December 31, 2020 2021 2022 RMB RMB RMB Current tax expenses 42,257 31,543 379 Deferred tax benefits (11,103) (20,798) (66,254) Income tax expenses/(benefit) 31,154 10,745 (65,875) The significant components of the Group’s deferred tax assets were as follows: As of December 31, 2021 2022 RMB RMB Accrued expenses and other current liabilities 47,005 46,958 Net operating loss carry forwards 75,100 178,689 Intra-entity transfer of certain intangible assets 28,290 26,726 Total deferred tax assets 150,395 252,373 Less: valuation allowance (6,976) (42,187) Deferred tax assets, net 143,419 210,186 As of December 31, 2022, the Group had RMB1,119,767 operating losses deriving from entities in the PRC, HK, U.S., Canada, and etc. The operating losses in the PRC amounted to RMB942,754 and can be carried forward for five years, or ten years if the Group qualifies as HNTE and operating losses are not utilized, some will begin to expire in 2023. The operating loss incurred in the U.S. before December 31, 2017 can be carried forward for 20 years to offset future taxable profit, while other losses incurred after December 31, 2017 may be carried forward indefinitely. The tax losses incurred in HK can be carried forward indefinitely. The operating loss incurred in the Canada can be carried back 3 years and forward 20 years for deduction against any form of income. 16. INCOME TAXES - CONTINUED Management assesses the available positive and negative evidence in certain entities in the PRC, HK, U.S. and Canada to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets and determines the valuation allowance on an entity by entity basis. In making such determination, the Group considers the following factors, among other matters, when determining whether some portion or all of the deferred tax assets will more likely than not be realized: the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carry-forward periods, the Group’s experience with tax attributes expiring unused and tax planning alternatives. The Group’s ability to realize deferred tax assets depends on its ability to generate sufficient taxable income within the carry-forward periods provided for in the tax law. On the basis of this evaluation, for the years ended December 31, 2021 and 2022, the Group recorded RMB6,976 and RMB42,187 valuation allowance for the deferred tax assets. Reconciliation between the tax expense computed by applying the PRC enterprise tax rate of 25% to income before income tax and the actual income tax expense were as follows: For the years ended December 31, 2020 2021 2022 RMB RMB RMB Income/(loss) before income tax 265,609 106,669 (372,533) Tax expense/(benefit) at PRC enterprise income tax rate of 25% 66,402 26,667 (93,133) Effect of preferential tax rates (41,869) (19,387) 29,784 Tax effect of permanence differences (20,001) (34,587) (53,808) Effect of income tax rate differences in other jurisdictions 21,625 23,666 16,071 Change in tax rate 3,460 9,549 — Changes in valuation allowances 1,537 4,837 35,211 Income tax benefits/(expenses) 31,154 10,745 (65,875) If Anhui Huami, Anhui Health and Shun Yuan did not enjoy the tax holidays, tax expense would have increased by RMB41,869 and RMB19,387 for the years ended December 31, 2020 and 2021, respectively, and the tax benefit would have decreased by RMB29,784 for the year ended December 31, 2022. The decrease in basic net income per ordinary share would be RMB0.17 and RMB0.08 and the decrease in diluted net income per ordinary share would be RMB0.16 and RMB0.07 for the years ended December 31, 2020 and 2021. The increase in basic and diluted net loss per ordinary share would be RMB0.12 for the year ended December Under the Income Tax Law effective from January 1, 2008, the rules for determining whether an entity is resident in the PRC for tax purposes have changed and the determination of residence depends among other things on the “place of actual management”. If the Group, or its non-PRC subsidiaries, were to be determined as a PRC resident for tax purposes, they would be subject to a 25% income tax rate on their worldwide income including the income arising in jurisdictions outside the PRC. The Group does not believe that its legal entities organized outside of the PRC are considered PRC residents. If the Company was to be a non-resident for PRC tax purposes, dividends paid to it out of profits earned after January 1, 2008 would be subject to a withholding tax. In the case of dividends paid by PRC entities to the entities organized outside of the PRC or any foreign investors, the withholding tax would be 10%, unless any entities organized outside of the PRC or any such foreign investors’ jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. 16. INCOME TAXES - CONTINUED Aggregate undistributed earnings of the Company’s PRC subsidiaries and VIEs that are available for distribution amounted to RMB2,228,550 and RMB1,993,460 as of December 31, 2021 and 2022, respectively. Upon distribution of such earnings, the Company will be subject to PRC EIT taxes, the amount of which is impractical to estimate. The Company did not record any tax on any of the aforementioned undistributed earnings because the relevant subsidiaries and VIEs do not intend to declare dividends and the Company intends to permanently reinvest it within the PRC. Additionally, no deferred tax liability was recorded for taxable temporary differences attributable to the undistributed earnings because the Company believes the undistributed earnings can be distributed in a manner that would not be subject to income tax. The Group did not identify any significant unrecognized tax benefits for the years ended December 31, 2020, 2021 and 2022, respectively. The Group did not incur any significant interest and penalties related to potential underpaid income tax expenses and also does not anticipate any significant increases or decreases in unrecognized tax benefits in the next twelve months. The Group has no material unrecognized tax benefits which would favorably affect the effective income tax rate in future periods. According to the PRC Tax Administration and Collection Law, the tax authority may require the taxpayer or the withholding agent to make delinquent tax payment within three years if the underpayment of taxes is resulted from the tax authority’s act or error. No late payment surcharge will be assessed under such circumstances. The statute of limitation will be three years if the underpayment of taxes is due to the computational errors made by the taxpayer or the withholding agent. Late payment surcharge will be assessed in such case. The statute of limitation will be extended to five years under special circumstances which are not clearly defined (but an underpayment of tax liability exceeding US$15 (RMB0.1 million) is specifically listed as a “special circumstance”). The statute of limitation for transfer pricing related issue is ten years. There is no statute of limitation in the case of tax evasion. Therefore, the Group’s PRC domiciled entities are subject to examination by the PRC tax authorities based on the above. |
ORDINARY SHARES
ORDINARY SHARES | 12 Months Ended |
Dec. 31, 2022 | |
ORDINARY SHARES | |
ORDINARY SHARES | 17. ORDINARY SHARES As of December 31, 2022, the Company had 405,462,685 ordinary shares authorized with a par value of US$0.0001 per share. There are two classes of ordinary shares which include the class A ordinary shares and class B ordinary shares. Holders of class A ordinary shares are entitled to one vote per share, while holders of class B ordinary shares are entitled to ten votes per share. The Company repurchased 2,656,164 and 10,219,572 class A shares from the market for a total consideration of US$ 3,411 (RMB21,798) and US$6,905 (RMB45,365), at a weighted average price of US$ 1.284 and US$0.671 per share during the years ended December 31, 2021 and 2022, respectively. The shares are reserved for the employees and non-employees in the share incentive plan. |
SHARE-BASED PAYMENT
SHARE-BASED PAYMENT | 12 Months Ended |
Dec. 31, 2022 | |
SHARE-BASED PAYMENT | |
SHARE-BASED PAYMENT | 18. SHARE-BASED PAYMENT Share options 2015 Share Incentive Plan On October 21, 2015, the Group adopted the 2015 share incentive plan (“2015 Plan”) which consists of a share incentive plan for U.S. service providers (“U.S. Plan”) and a share incentive plan for PRC service providers (“PRC Plan”). The maximum aggregate number of ordinary shares that may be issued under the 2015 Plan is 14,328,358 ordinary shares to be allocated to employees, officers, directors or consultants of the Company. 18. SHARE-BASED PAYMENT – CONTINUED 2015 Share Incentive Plan During the years ended December 31, 2020, 2021 and 2022, the Group granted nil share options to personnel under the 2015 Plan. 2018 Share Incentive Plan In January 2018, The Company adopted the 2018 share incentive plan (“2018 Plan”), commencing on January 1, 2018, which provides additional incentives to employees, directors and consultants to promote the success of the Group’s business. Under the 2018 share incentive plan, the maximum aggregate number of shares which may be issued initially pursuant to all awards under the 2018 Plan is 9,559,607 ordinary shares. The number of shares reserved for future issuances under the 2018 Plan will be increased by (i) a number equal to 1.0% of the total number of outstanding shares immediately after IPO, or (ii) such number of shares as may be determined by the board of directors, on the first day of each calendar year during the term under 2018 Plan. During the years ended December 31, 2020, 2021 and 2022, the Group granted 4,030,108, 8,988,000 and 1,492,332 share options to certain personnel under the 2018 Plan. The weighted average exercise price of options granted during the years ended December 31, 2020, 2021 and 2022 was US$0 per share, US$0.01 per share and US$0 per share. The Group has recorded RMB42,316, RMB64,415 and RMB32,916 share-based compensation expenses related to options in 2015 plan and 2018 plan for the years ended December 31, 2020, 2021 and 2022, respectively. The Group calculated the estimated fair value of the options on the respective grant dates using the binomial option pricing model with assistance from independent valuation firms. Assumptions used to determine the fair value of share options granted during the years ended December 31, 2020, 2021 and 2022 are summarized in the following table: For the years ended December 31, 2020 2021 2022 Risk-free interest rate 0.67%-0.72 % 1.66 % 4.25 % Expected volatility 51.9%-52.0 % 52.2 % 52.4 % Expected life of option (years) 10 10 10 Expected dividend yield 0.0 % 0.0 % 0.0 % Fair value per ordinary share RMB21.60-23.10 RMB8.05-12.98 RMB1.96 (i) Risk-free interest rate Risk-free interest rate was estimated based on the yield to maturity of China international government bonds with a maturity period close to the contractual term of the options. (ii) Expected life of option (years) Expected life of option (years) represents the expected years to vest the options. (iii) Volatility The volatility of the underlying ordinary shares during the life of the options was estimated based on the historical stock price volatility of comparable listed companies over a period comparable to the contractual term of the options. 18. SHARE-BASED PAYMENT – CONTINUED 2018 Share Incentive Plan (iv) Dividend yield The dividend yield was estimated by the Group based on its expected dividend policy over the contractual term of the options. (v) Fair value of underlying ordinary shares During the year ended December 31, 2020, 2021 and 2022, the fair value of the underlying ordinary shares is determined based on the closing market price of the share. A summary of the stock option activity under the 2015 and 2018 Plan during the year ended December 31, 2022 is included in the table below. Weighted average exercise price Number of options per option US$ Outstanding at January 1, 2022 16,798,153 0.07 Granted 1,492,332 — Exercised (4,357,100) — Forfeited (1,105,682) 0.45 Outstanding at December 31, 2022 12,827,703 0.05 The following table summarizes information regarding the share options as of December 31, 2022: December 31, 2022 Weighted average remaining Weighted exercise average exercise contractual Aggregate Options Number price per option life (years) intrinsic value US$ US$ Options Outstanding 12,827,703 0.05 7.26 4,389 Exercisable 7,904,689 0.08 6.67 2,604 Expected to vest 4,923,014 — 8.21 1,784 The total intrinsic value of options exercised during the years ended December 31, 2020, 2021 and 2022 amounted RMB32,010, RMB14,094 and RMB10,894, respectively. The weighted average grant date fair value of options granted during the year ended December 31, 2020, 2021 and 2022 was RMB22.42, RMB12.95 and RMB1.96 per share, respectively. As of December 31, 2022, there was RMB47,616 of unrecognized compensation expenses related to the options. 18. SHARE-BASED PAYMENT – CONTINUED Restricted Stock Units During the years ended December 31, 2020, 2021 and 2022, the Company granted 2,216,120, 2,034,432 and 100,972 restricted stock units respectively to employees. Most of the shares have a vesting period of four or five years of employment services with the various vesting percentage in each year, or 20% on an annual basis over a five-year vesting period. The restricted stock units are not transferable and may not be sold or pledged and the holder has no voting or dividend right on the non-vested shares. In the event a non-vested shareholder’s employment for the Company is terminated for any reason prior to the fourth anniversary of the grant date, the holder’s right to the non-vested shares will terminate immediately. The outstanding restricted stock units shall be forfeited and automatically transferred to and reacquired by the Company at nil consideration. The Group recognized compensation expenses over the service period on a straight-line basis. The aggregate fair value of the restricted stock units at grant dates was RMB137,036 as of December 31, 2022.The weighted average grant-date fair value of non-vested shares was RMB22.00 for the year ended December 31, 2022. The fair value of the vested restricted stock units was RMB21,020, RMB11,648 and RMB26,079 during the years ended December 31, 2020, 2021 and 2022. During the years ended December 31, 2020, 2021 and 2022, the Group recorded compensation expenses of RMB22,838, RMB18,707 and RMB16,191 for the restricted stock units, respectively. As of December 31, 2022, there was RMB29,700 unrecognized compensation expenses related to restricted stock units which is expected to be recognized over a weighted average vesting period of 2.13 years. The weighted average granted fair value of restricted stock units granted during the years ended December 31, 2020, 2021 and 2022 were RMB 22.84 per RSU, RMB21.44 per RSU and RMB6.88 per RSU. A summary of the restricted stock units activity during the year ended December 31, 2022 is presented below: RSUs Unvested balance as of January 1, 2022 3,079,436 Granted 100,972 Forfeited (213,700) Vested (1,268,408) Unvested balance as of December 31, 2021 1,698,300 Total share-based compensation recognized during the years ended December 31, 2020, 2021 and 2022 was as follows: For the years ended December 31, 2020 2021 2022 RMB RMB RMB Cost of revenues — — — General and administrative 38,605 32,247 21,353 Research and development 23,978 42,677 23,585 Selling and marketing 2,571 8,198 4,169 Total share-based compensation expenses 65,154 83,122 49,107 |
MAINLAND CHINA CONTRIBUTION PLA
MAINLAND CHINA CONTRIBUTION PLAN | 12 Months Ended |
Dec. 31, 2022 | |
MAINLAND CHINA CONTRIBUTION PLAN | |
MAINLAND CHINA CONTRIBUTION PLAN | 19. MAINLAND CHINA CONTRIBUTION PLAN Full time employees of the Group in the PRC participate in a government-mandated multi-employer defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require the Group to accrue for these benefits based on certain percentages of the employees’ salaries. The total provisions for such employee benefits were RMB64,734, RMB104,650 and RMB101,345 during the years ended December 31, 2020, 2021 and 2022. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2022 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | 20. SEGMENT INFORMATION The Group is mainly engaged in the business of smart wearable technology development. The Group’s chief operating decision maker (“CODM”) has been identified as the Chief Executive Officer of the Group, who reviews financial information of operating segments when making decisions about allocating resources and assessing performance of the Group. An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, and is identified on the basis of the internal financial reports that are provided to and regularly reviewed by the Group’s CODM. During the years ended December 31, 2020, 2021 and 2022, the Group identified two operating segments. Those segments include Xiaomi wearable products and Self-branded products and others. The Xiaomi wearable products segment comprise of sales of Xiaomi-branded products. The self-branded products and others segment comprises of self-branded products. Both Xiaomi wearable product and Self-branded products and others have been identified as reportable segments. The Group primarily operates in the PRC and long-lived assets are mostly located in the PRC. The Group’s CODM evaluates performance based on each reporting segment’s revenue, costs of revenues and gross profit. Revenues, cost of revenues and gross profits by segment are presented below. Separate financial information of operating income by segment is not available. For the year ended December 31, 2020 Xiaomi Self-branded wearable products Products and others Total RMB RMB RMB Revenues 4,438,081 1,995,282 6,433,363 Cost of revenues 3,706,495 1,394,203 5,100,698 Gross Profit 731,586 601,079 1,332,665 For the year ended December 31, 2021 Xiaomi Self-branded wearable products Products and others Total RMB RMB RMB Revenues 3,340,857 2,909,252 6,250,109 Cost of revenues 2,754,086 2,190,381 4,944,467 Gross Profit 586,771 718,871 1,305,642 20. SEGMENT INFORMATION – CONTINUED For the year ended December 31, 2022 Xiaomi Self-branded wearable products Products and others Total RMB RMB RMB Revenues 1,697,053 2,445,809 4,142,862 Cost of revenues 1,394,460 1,945,286 3,339,746 Gross Profit 302,593 500,523 803,116 The Group does not evaluate its segment on a fully allocated cost basis nor does the Group keeps track of segment assets separately. |
STATUTORY RESERVES AND RESTRICT
STATUTORY RESERVES AND RESTRICTED NET ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
STATUTORY RESERVES AND RESTRICTED NET ASSETS | |
STATUTORY RESERVES AND RESTRICTED NET ASSETS | 21. STATUTORY RESERVES AND RESTRICTED NET ASSETS PRC legal restrictions permit payments of dividends by the Group’s PRC subsidiaries only out of their retained earnings, if any, determined in accordance with PRC regulations. Prior to payment of dividends, pursuant to the laws applicable to the PRC Domestic Enterprises and PRC Foreign Investment Enterprises, the PRC subsidiaries must make appropriations from after-tax profit to non-distributable statutory reserve funds as determined by the Board of Directors of the Group. Subject to certain cumulative limits including until the total amount set aside reaches 50% of its registered capital, the general reserve fund requires annual appropriations of not less than 10% of after-tax profit (as determined under accounting principles and financial regulations applicable to PRC enterprises at each year-end). These reserve funds can only be used for specific purposes and are not distributable as cash dividends and the maximum required amount is 50% of registered capital. During the years ended December 31, 2020, 2021 and 2022, the Group accrued an additional RMB5,997, nil and nil statutory reserve from the new appropriable profit earned by certain PRC entities in the Group. As a result of these PRC laws and regulations, the Group’s PRC subsidiaries are restricted in their ability to transfer a portion of their net assets to the Company either in the form of dividends, loans or advances. The balances of restricted net assets were RMB180,981, RMB252,220 and RMB252,220 as of December 31, 2020, 2021 and 2022, respectively. |
RELATED PARTY BALANCES AND TRAN
RELATED PARTY BALANCES AND TRANSACTIONS | 12 Months Ended |
Dec. 31, 2022 | |
RELATED PARTY BALANCES AND TRANSACTIONS | |
RELATED PARTY BALANCES AND TRANSACTIONS | 22. RELATED PARTY BALANCES AND TRANSACTIONS Name Relationship with the Group Xiaomi Communication Technology Co. Ltd.(“Xiaomi Communication”) Controlled by one of the Company’s shareholders Xiaomi Technology Co. Ltd. (“Xiaomi Technology”) Controlled by one of the Company’s shareholders Guangzhou Xiaomi Information Service Co. Ltd (“Xiaomi Information”) Controlled by one of the Company’s shareholders Youpin Information Technology Co. Ltd. (“Youpin Information”, together with Xiaomi Communication, Xiaomi Technology, Xiaomi Information as “Xiaomi”) Controlled by one of the Company’s shareholders Hefei Huaheng Electronic Technology Co. Ltd. (“Hefei Huaheng”) Controlled by one of the Company’s shareholders Shenzhen Yunding Information Technology Co., Ltd. (“Yunding”) Significant influence by the Group Hefei Jingyu Micro-electronics (“Hefei Jingyu”) Significant influence by the Group Gongqingcheng Yunding Ruiheng Investment Partnership (Limited Partnership). (“Gongqingcheng Yunding”) Controlled by the founder of a company that the Group can exercise significant influence Hefei Yizhi Electronic Technology Co., Ltd (“Hefei Yizhi”) Controlled by one of the Company’s shareholders Hefei Zepp Medical System Co., Ltd. (“Field Medical”) Controlled by one of the Company’s shareholders A vice president Key management 22. RELATED PARTY BALANCES AND TRANSACTIONS - CONTINUED (1) Balances : As of December 31, 2021 2022 RMB RMB Amount due from related parties: Current: Xiaomi Communication (a) 286,341 117,944 Field Medical (b) — 10,375 Hefei Jingyu 1,101 2,648 Hefei LianRui Microelectronics Technology Co. Ltd 2,452 2,452 Yunding (c) 2,330 2,330 Gongqingcheng Yunding (d) 2,500 2,500 Others (a) 890 365 Non-current A vice president (e) — 6,333 Total 295,614 144,947 As of December 31, 2021 2022 RMB RMB Amount due to related parties, current: Hefei Jingyu 48,052 36,864 Xiaomi Communication — 2,087 Xiaomi Technology(f) 1,562 1,965 Others 509 62 Total 50,123 40,978 22. RELATED PARTY BALANCES AND TRANSACTIONS - CONTINUED (2) Transactions: For the years ended December 31, 2020 2021 2022 RMB RMB RMB Sales to related parties: Xiaomi Communication 4,447,957 3,340,857 1,697,053 Xiaomi Youpin — 9,175 6,942 Others 1,800 — — Total 4,449,757 3,350,032 1,703,995 For the years ended December 31, 2020 2021 2022 RMB RMB RMB Purchase from related parties Hefei Jingyu (g) — 146,847 222,174 Others 12,000 — — (a) The amount due from Xiaomi represents receivables from the sales of products and services, which includes an unbilled amount of RMB64,129 and RMB2,613 as of December 31, 2021 and 2022, respectively. (b) The amount due from Field Medical represents borrowings the Group provided to Field Medical to support the daily operation. (c) The amount due from Yunding represents prepayment for the purchase of Yunding’ products which was collected in March 2023. (d) In December 2020, the Group sold 26.7% equity interest in Yunding for a cash consideration of RMB22,500 to Gongqingcheng Yunding, of which RMB20,000 has been received in January 2021. (e) The amount due from a vice president represents a loan provided to a key management. (f) The amounts due to Xiaomi Technology represent the payable for the cloud service received by the Group. (g) Hefei Jingyu is a subsidiary of Jiangsu Yitong, where the Group can exercise significant influence. During 2021 and 2022, the Group purchased some raw material from Hefei Jingyu with total transaction amount of RMB146,847 and RMB222,174. |
NET INCOME_(LOSS) PER SHARE
NET INCOME/(LOSS) PER SHARE | 12 Months Ended |
Dec. 31, 2022 | |
NET INCOME/(LOSS) PER SHARE | |
NET INCOME/(LOSS) PER SHARE | 23. NET INCOME/(LOSS) PER SHARE The computation of basic and diluted net income per share for the years ended December 31, 2020, 2021 and 2022 is as follows: For the years ended December 31, 2020 2021 2022 RMB RMB RMB Basic net income/(loss) per share calculation Numerator: Net income/(loss) for the year attributable to the Company: 228,753 137,803 (288,308) Net income/(loss) attributed to ordinary shareholders for computing net income per ordinary shares - basic 228,753 137,803 (288,308) Denominator: Weighted average ordinary shares outstanding used in computing net income/(loss) per ordinary shares – basic 248,470,684 252,167,610 246,283,328 Net income/(loss) per ordinary share attributable to ordinary shareholders—basic 0.92 0.55 (1.17) Diluted net income/(loss) per share calculation Net income/(loss) attributable to ordinary shareholders for computing net income per ordinary shares—basic and diluted 228,753 137,803 (288,308) Denominator: Weighted average ordinary shares outstanding used in computing net income per ordinary shares - basic 248,470,684 252,167,610 246,283,328 Effect of potentially diluted share options, restricted shares and RSUs 11,881,310 12,201,019 — Weighted average ordinary shares outstanding used in computing net income per ordinary shares—diluted 260,351,994 264,368,629 246,283,328 Net income/(loss) per ordinary share attributable to ordinary shareholders—diluted 0.88 0.52 (1.17) For the years ended December 31, 2020, 2021 and 2022, the following shares outstanding were excluded from the calculation of diluted net income per ordinary shares, as their inclusion would have been anti-dilutive for the years presented: For the years ended December 31, 2020 2021 2022 Shares issuable upon exercise of share options, restricted shares and RSUs 89,165 301,946 7,390,487 |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
LEASES | |
LEASES | 24. LEASES The Group’s leases consist of operating leases for administrative office spaces in different cities in the PRC and overseas and financial lease which is immaterial. The Group determines if an arrangement is a lease at inception. Some lease agreements contain lease and non-lease components, which the Group chooses to account for as separate components. The allocation of the consideration between the lease and the non-lease components is based on the relative stand-alone prices of lease components included in the lease contracts. The following table represents lease costs recognized in the Group’s consolidated statements of operation for the years ended December 31, 2020, 2021 and 2022. Lease costs are included in selling expenses, general and administrative expenses and research and development expenses on the Group’s consolidated statements of operations. For the years ended December 31, 2020 2021 2022 RMB RMB RMB Operating lease cost (1) 57,080 41,595 37,428 Sublease income (537) (3,591) (8,796) Total lease cost 56,543 38,004 28,632 (1) Operating lease cost includes short-term lease costs, which was not material in the period presented. The following table represents the components of leases that are recognized on the Group’s consolidated balance sheets as of December 31, 2021 and 2022. As of December 31, 2021 2022 RMB RMB Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases 49,644 50,357 Non-cash Right-of-use assets in exchange for new lease liabilities: Operating leases 2,157 1,674 Weighted average remaining lease term: Operating leases 2.80 years 2.03 years Weighted average discount rate: Operating leases 5.27 % 5.32 % The following is a maturity analysis of the annual undiscounted cash flows for the year ended December 31, 2022: Year ending December 31, RMB 2023 43,701 2024 26,291 2025 8,441 Total lease payments 78,433 Less: imputed interest (4,423) Present value of lease liabilities 74,010 |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 12 Months Ended |
Dec. 31, 2022 | |
SUBSEQUENT EVENT | |
SUBSEQUENT EVENT | 25. SUBSEQUENT EVENT 2023 Share Incentive Plan The Company adopted the 2023 Share Incentive Plan, approved and authorized by the board of directors of the Company, effective January 11, 2023. The maximum aggregate number of Class A ordinary shares of the Company available for grant as awards is 10,322,520 under the 2023 Share Incentive Plan. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Basis of presentation and principle of consolidation | Basis of presentation and principle of consolidation The consolidated financial statements of the Group have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements of the Group include the financial statements of the Company, its wholly-owned subsidiaries, its VIEs and the VIEs’ subsidiaries. The Company believes that the disclosures are adequate to make the information presented not misleading. |
Use of estimates | Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. Significant accounting estimates reflected in the Group’s consolidated financial statements include inventory valuation, the useful lives of long-lived assets, impairment of long-lived assets, incremental borrowing rate for leases, product warranties, fair value measurement of long-term available-for-sale investments and long-term investments of non-marketable equity securities with fair value change through profit or loss, the valuation allowance for deferred tax assets and income tax. Actual results could differ from those estimates, and such differences may be material to the consolidated financial statements. |
Fair value | Fair value Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. Authoritative literature provides a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The level in the hierarchy within which the fair value measurement in its entirety falls is based upon the lowest level of input that is significant to the fair value measurement as follows: Level 1 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. 2. SIGNIFICANT ACCOUNTING POLICIES - Fair value - continued Level 3 Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. Measured fair value on a recurring basis The Group measured its financial assets primarily including available-for-sale investments at fair value on a recurring basis and equity securities with readily determinable fair value as of December 31, 2021 and 2022. Measured fair value on a nonrecurring basis The Group measured acquired intangible assets using the income approach-discounted cash flow method when events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. The fair values were determined using models with significant unobservable inputs (Level 3 inputs). The Group did not recognize any impairment loss related to acquired intangible assets arising from acquisitions during the years ended December 31, 2020, 2021 and 2022. The Group measured goodwill at fair value on a nonrecurring basis when it is evaluated annually or whenever events or changes in circumstances indicate that the carrying amount of a reporting unit exceeds its fair value as a result of the impairment assessments. The fair value of the reporting unit is determined using discounted cash flows. The Group did not recognize any impairment loss related to goodwill during the years ended December 31, 2020, 2021 and 2022. For equity investments without readily determinable fair values for which the Company elected to use the measurement alternative, the equity investment is measured at fair value on a nonrecurring basis when there is an orderly transaction for identical or similar investments of the same issuer. |
Fair value of financial instruments | Fair value of financial instruments The Group’s financial instruments consist primarily of cash and cash equivalents, restricted cash, term deposit, accounts receivable, amounts due from related parties, available-for-sale investments, amount due from a related party, noncurrent, accounts payable, notes payable and others, short-term bank borrowings, amounts due to related parties and long-term bank borrowings. The Company carries its available-for-sales investments at fair value. The carrying amounts of cash and cash equivalents, restricted cash, term deposit, accounts receivable, amounts due from related parties, accounts payable, notes payable and others, amounts due to related parties and short-term bank borrowings approximate their fair values due to the short-term maturities of these instruments. The carrying amounts of amount due from a related party, noncurrent and long-term borrowings approximates its fair value as the interest rates are based on the prevailing interest rates in the market. |
Cash and cash equivalents | Cash and cash equivalents Cash and cash equivalents consist of cash on-hand, demand deposits with financial institutions, term deposits with an original maturity of three months or less and highly liquid investments, which are unrestricted from withdrawal or use, or which have original maturities of three months or less when purchased. |
Restricted cash | Restricted cash Restricted cash represents deposits made to the bank for bank acceptance notes (or notes payable) issued by the Group. When the Group issues the bank acceptance notes, the banks require the Group to make a deposit for 30% to 75% of the face value of the bank acceptance notes issued as collateral. The deposits for unsettled bank acceptance notes are recorded as restricted cash in the consolidated balance sheets as of December 31, 2021 and 2022. |
Term deposit | Term deposit Term deposits consist of deposits placed with financial institutions with original maturities of greater than three months and less than one year. |
Accounts receivable | Accounts receivable Accounts receivable represents those receivables derived in the ordinary course of business, net of allowance for doubtful accounts. |
Allowance for doubtful accounts | Allowance for doubtful accounts The Group maintains an allowance for doubtful accounts for estimated losses on uncollected accounts receivable. Management considers the following factors when determining the collectability of specific accounts: creditworthiness of customers, aging of the receivables, past transaction history with customers and their current condition, changes in customer payment terms, specific facts and circumstances, and the overall economic climate in the industries the Group serves. The Group evaluates its accounts receivable for expected credit losses on a regular basis. The Group maintains an estimated allowance for credit loss to reduce its accounts receivable to the amount that it believes will be collected. The Group uses the creditworthiness of customers, aging of the receivables, past transaction history with customers and their current condition, changes in customer payment terms, specific facts and circumstances, and the overall economic climate in the industries the Group serves to monitor the Group’s receivables within the scope of expected credit losses model and use these as a basis to develop the Group’s expected loss estimates. As of December 31, 2021 and 2022, the Company recorded RMB814 and RMB1,466 allowance for doubtful account. |
Inventories, net | Inventories, net Inventories of the Group consist of raw materials, finished goods and work in process. Inventories are stated at the lower of cost or net realizable value on a weighted average basis. Inventory costs include expenses that are directly or indirectly incurred in the purchase, including shipping and handling costs charged to the Group by suppliers, and production of manufactured product for sale, such as include the cost of materials and supplies used in production, direct labor costs and allocated overhead costs such as depreciation, insurance, employee benefits, and indirect labor. Cost is determined using the weighted average method. The Group assesses the valuation of inventory and periodically writes down and writes off the value for estimated excess and obsolete inventory based upon the product life cycle. |
Short-term investments | Short-term investments Short-term investments are mainly consisting of investment in convertible bonds with a maturity of less than one year. These investments are accounted for as available-for-sale investments and measured at fair value. The Group recorded RMB1,243, RMB1,240, and RMB2,006 unrealized gains in accumulated other comprehensive income on such investments during the years ended December 31, 2020, 2021 and 2022, respectively. |
Prepaid expenses and other current assets | Prepaid expenses and other current assets Prepaid expenses and other current assets primarily consist of advance to suppliers, prepaid expenses, other receivables, rental deposits and value-added tax recoverable. |
Property, plant and equipment, net | Property, plant and equipment, net Property, plant and equipment are carried at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the following estimated useful lives: Software and electronic equipment 3-5 years Building 20 years Leasehold improvements Shorter of the lease term or estimated useful lives |
Intangible assets, net | Intangible assets, net Acquired intangible assets other than goodwill consist of the domain name for the Company’s website www.zepp.com, an insurance brokerage license, trademark and patents. The domain name, insurance brokerage license and certain trademark are recognized as an intangible asset with indefinite life and evaluated for impairment at least annually or if events or changes in circumstances indicate that the asset might be impaired. Such impairment test compares the fair values of the asset with its carrying value amounts and an impairment loss is recognized if and when the carrying amounts exceed the fair value. The estimates of values of the intangible asset not subject to amortization are determined using discounted cash flow valuation approach. Significant assumptions are inherent in this process, including estimates of discount rates and cash flow. Some trademark and patents are recognized as intangible assets with finite lives and are amortized on a straight-line basis over their expected useful economic lives. Amortization is calculated on a straight-line basis over the estimated useful life of 5 to10 years. |
Leases | Leases The Group leases administrative office spaces in different cities in the PRC, and in the United States and Canada under operating leases. The Group determines whether an arrangement constitutes a lease and records lease liabilities and right-of-use assets on its consolidated balance sheets at the lease commencement. The Group measures its lease liabilities based on the present value of the total lease payments not yet paid discounted based on its incremental borrowing rate, which is the estimated rate the Group would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease. The Group estimates its incremental borrowing rate based on an analysis of publicly traded debt securities of companies with credit and financial profiles similar to its own. The Group measures right-of-use assets based on the corresponding lease liability adjusted for payments made to the lessor at or before the commencement date, and the initial direct costs it incurs under the lease. The Group begins recognizing operating lease expenses when the lessor makes the underlying asset available to the Group. The Group’s leases have remaining lease terms of up to four years, some of which include options to extend the leases for an additional period which has to be agreed with the lessors based on mutual negotiation. After considering the factors that create an economic incentive, the Group did not include renewal option periods in the lease term for which it is not reasonably certain to exercise. For all real estate leases, any non-lease components, including common area maintenance, have been separated from lease components and excluded from the associated right-of-use asset and lease liability calculations. For short-term leases with lease term less than one year, the Group records operating lease expenses in its consolidated statements of operations on a straight-line basis over the lease term and record variable lease payments as incurred. |
Goodwill | Goodwill Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combination. Goodwill is not amortized but is tested for impairment annually or more frequently if events on changes in circumstance indicate that it might be impaired. Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the stock prices, business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The estimation of fair value of each reporting unit using a discounted cash flow methodology also requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the Group’s business, estimation of the useful life over which cash flows will occur, determination of the Group’s weighted average cost of capital and consideration of the impact of COVID-19. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results and market conditions. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for the reporting unit. The Group uses the one-step method for its goodwill impairment assessment for the years ended December 31, 2020, 2021 and 2022. Goodwill impairment is calculated as the amount by which a reporting unit’s carrying value exceeds its fair value. During the years ended December 31, 2020, 2021 and 2022, the Group recognized nil impairment loss on goodwill. 2. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED |
Long-term investments | Long-term investments The Group’s long-term investments consist of equity securities with readily determinable fair value, equity securities without readily determinable fair value, equity method investments and available-for-sale investments. (a) Equity securities with readily determinable fair value Equity securities with readily determinable fair values are measured at fair value and any changes in fair value are recognized in the consolidated statements of operations. (b) Equity securities without readily determinable fair value The Group accounts for equity investments that do not have a readily determinable fair value under the measurement alternative prescribed within Accounting Standards Update (“ASU”) 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, to the extent such investments are not subject to consolidation or the equity method. Under the measurement alternative, these financial instruments are carried at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. The Group reviews its equity securities without readily determinable fair value for impairment at each reporting period by considering factors including, but not limited to, current economic and market conditions and the impact of COVID-19, the operating performance of the companies including current earning trends and other company specific information. (c) Equity method investments For an investee company over which the Group has the ability to exercise significant influence, but does not have a controlling interest, the Group accounts for the investment under the equity method. Significant influence is generally considered to exist when the Group has an ownership interest in the voting stock of the investee between 20% and 50%. Other factors, such as representation on the investee’s board of directors, voting rights and the impact of commercial arrangements are also considered in determining whether the equity method of accounting is appropriate. Under the equity method of accounting, the investee company’s accounts are not reflected within the Group’s consolidated balance sheets and statements of operations; however, the Group’s share of the earnings or losses of the investee company is reflected in the caption “(loss)/income from equity method investments” in the consolidated statements of operations. An impairment charge is recorded if the carrying amount of the investment exceeds its fair value and this condition is determined to be other-than-temporary. The Group estimated the fair value of the investee company based on comparable quoted price for similar investment in active market, if applicable, or discounted cash flow approach which requires significant judgments, including the estimation of future cash flows, which is dependent on internal forecasts, the estimation of long-term growth rate of a company’s business, the estimation of the useful life over which cash flows will occur, the determination of the weighted average cost of capital and the impact of COVID-19. The Group recorded nil impairment losses on its equity method investments during the years ended December 31, 2020, 2021 and 2022. 2. SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Long-term investments (d) Available-for-sale investments For investments which are determined to be debt securities, the Group accounts for them as long-term available-for-sale investments when they are not classified as either trading or held-to-maturity investments. Available-for-sale investment is carried at its fair value and the unrealized gains or losses from the changes in fair values are included in accumulated other comprehensive income. The Group recorded RMB(22,583), RMB1,345, and RMB40,140 unrealized (losses) /gains in accumulated other comprehensive income on its available-for-sale investments during the years ended December 31, 2020, 2021 and 2022, respectively. The Group evaluates each individual investment periodically for impairment. For investments where the Group does not intend to sell, the Company evaluates whether a decline in fair value is due to deterioration in credit risk. Credit-related impairment losses, not to exceed the amount that fair value is less than the amortized cost basis, are recognized through an allowance for credit losses on the consolidated balance sheet with corresponding adjustment in the consolidated statements of operations and comprehensive income. Subsequent increases in fair value due to credit improvement are recognized through reversal of the credit loss and corresponding reduction in the allowance for credit loss. Any decline in fair value that is non-credit related is recorded in accumulated other comprehensive income as a component of shareholder’s equity. As of December 31, 2021 and 2022, there were no investments held by the Group that had been in continuous unrealized loss position. |
Notes payable | Notes payable and others Notes payable and others include short-term bank acceptance notes issued by financial institutions that entitle the holder to receive the stated amount from the financial institutions at the maturity date of the notes. The Group has utilized notes payable to settle amounts owed to suppliers and contractors. Notes payable and others also includes a letter of credit, which is issued by the bank to facilitate the settlement of the transactions with service providers. Once issued, the bank endorses to pay to the service provider, who is also the letter of credit holder, when the letter of credit matures. The short-term bank acceptance notes and the letter of credit are normally settled within three months and twelve months, respectively. |
Revenue recognition | Revenue recognition Nature of Goods and Services The Group generates substantially all of its revenues from sales of smart wearable devices. The Group also generates a small amount of its revenues from its subscription-based services. For the years ended December 31, 2020, 2021 and 2022, the Group generated 69.0%, 53.5% and 41.0% of revenue from one customer for sales of exclusively designed and manufactured smart wearable devices, and generated 31.0%, 46.5% and 59.0% of revenue from sales of the Group’s self-branded products and others. Revenue is recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Group expects to be entitled to in exchange for the goods or services. The Group recognizes revenue, net of estimated sales returns and value-added taxes (“VAT”). 2. SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Revenue recognition The Group has determined that its contracts with its customers include multiple performance obligations that the Group accounts for separately as those are distinct from other items in the contract. The first performance obligation is the smart wearable device and embedded firmware that is essential to the functionality of the device, which the customer can benefit from it on its own or with other resources that are readily available to the customer. The second performance obligation is the software services included with the products, which are provided free of charge and enable users to sync, view, and access real-time data on the Group’s mobile apps. The third performance obligation is the embedded right included with the purchase of the device to receive, on a when-and-if-available basis, future unspecified firmware upgrades and features relating to the product’s essential firmware. The Group allocates the transaction price to all performance obligations based on their relative standalone selling prices. The standalone selling prices are determined based on the expected cost plus margin as the Group determined that no observable price is available for any of its performance obligation. The Group considered multiple factors in the process of determining its cost plus margin including consumer behaviors and the Group’s internal pricing model. The cost plus margin estimated selling price for the smart and wearable devices comprised the majority of the transaction. The Group recognizes revenue for the amounts allocated to the connected smart and wearable devices when the customer obtains control of the Group’s product, which occurs at a point of time, typically upon delivery to and acceptance by the reseller, who has been identified as the customer of the Group. Amounts allocated to the software services and unspecified upgrade rights are deferred and recognized over time as the customer simultaneously receives and consumes the benefit over an estimated nine-month period. Sales of self-branded products and others The Group’s revenue recognition for its self-branded products is consistent with that described in the preceding paragraphs. |
Cooperation agreement with one customer | Cooperation agreement with one customer For the years ended December 31, 2020, 2021 and 2022, the Group generated 69.0%, 53.5% and 41.0% of revenue from one customer for sales of exclusively designed and manufactured smart wearable devices. That customer is also the sole distributor for such smart wearable devices and is controlled by one of the shareholders (see Note 22). Under the cooperation agreement with this customer, the Group produces and assembles final product for shipments of wearable devices to that customer, who are then responsible for commercial distribution and sale of the product. The arrangement includes two payment instalments. The first payment instalment is priced to recover the costs incurred by the Group in developing and shipping the devices to the customer and is due from the customer to the Group once the products have been delivered and accepted by the customer. The Group allocates the initial payment instalment between the hardware device, the software services, and the software upgrades based on their standalone selling price and recognizes revenue based on its recognition policy further described in the preceding paragraph. The Group is also entitled to receive a potential second instalment payment calculated as 50 percent of the future net profits from commercial sales made by the customer. The Group has determined that the second instalment consideration constitutes variable consideration and includes the amount in the transaction price to the extent it is not constrained and it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period (see below for further details). The second instalment is also allocated between the hardware device, the software services, and the software upgrades based on the relative standalone price and is recognized based on the Group’s recognition policy further described in the preceding paragraph. The Group’s revenue recognition policy of its products under its cooperation agreement is substantially consistent with that for its sales of self-branded products except that the instalment payments arrangement under the cooperation agreement is not available to the self-branded products. During the year ended December 31, 2022, the Group also sold one specific generation of Xiaomi Wearable Product, accounting for 26.1 % of consolidated revenue, which has a standard selling price and does not include installment payments described in the preceding paragraph. The revenue recognition for the sales of such specific generation of Xiaomi Wearable Product is consistent with the revenue recognition described for the self-branded products. 2. SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Revenue recognition Variable Consideration Revenues from product sales are recorded at the net sales price (transaction price), which includes estimate of variable consideration which result from the Group’s cooperation agreement with one customer (see above for more details). The amount of variable consideration is included in the transaction price to the extent it is not constrained and that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from the Group’s estimates. If actual results in the future vary from the Group’s estimates, the Group will adjust these estimates, which would affect revenue and earnings in the period such variances are known. Sales Incentive The Group periodically provides sales incentives to its customers for self-branded products, including reduced sales prices and volume-based discounts. Volume discounts are negotiated on a contract-by-contract basis with customers and the discount will increase depending upon the volume purchased over the period. The sales incentives are discounts to be applied to future sales to the customer which cannot be exchanged for cash. To the extent that the volume discount or sales incentive represents a material right or options to acquire additional goods or services at a discount in the future period, the material right is recognized as a separate performance obligation at the outset of the arrangement based on the most likely amount of incentive to be provided to the customer. Amounts allocated to a material right are recognized as revenue when those future goods are sold to the customers. Practical Expedients and Exemptions The Group generally expenses sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling and marketing expenses. In addition, the Group does not disclose the value of unsatisfied performance obligations as all of its contracts have an original expected length of one year or less. |
Value added taxes | Value added taxes VAT on sales was previously calculated at 17% on revenue from products before May 1, 2018 and thereafter, in accordance with Cai Shui [2018] No.32, the VAT rate decreased to 16%. Since April 1, 2019, in accordance with Cai Shui [2019] No.39, the VAT rate further decreased to 13%. VAT was calculated at 6% on the revenue from the service provided. The Group reports revenue net of VAT. Subsidiaries that are VAT general taxpayers are allowed to offset qualified input VAT paid against their output VAT liabilities. |
Rights of return | Rights of return The Group offers certain sales returns for products sold directly to end users and to its resellers. The Group estimates the amount of its products sales that may be returned by its end users and resellers and records this estimate as a reduction of revenue in the period the related revenue is recognized. The Group currently estimates product return liabilities using its expectations and historical experience. |
Cost of revenues | Cost of revenues Cost of revenues consists primarily of material costs, salaries and benefits for staff engaged in production activities and related expenses which are directly attributable to the production of products. The shipping and handling fees billed to the customers are presented as part of cost of revenues as well. |
Product warranty | Product warranty The Group offers standard product warranty to its customers, for a 12-month period starting from the sales of the goods to the end users. The Group has the obligation to either repair or replace the defect product for the customers if the product is still under warranty. At the time revenue is recognized, an estimate of future warranty costs is recorded as a component of cost of revenues. The reserves established are regularly monitored based upon historical experience and any actual claims charged against the reserve. Warranty reserves are recorded as a cost of revenues. |
Research and development expenses | Research and development expenses Research and development expenses primarily consist of salaries and benefits for research and development personnel, materials, office rental expenses, general expenses and depreciation expenses associated with research and development activities. |
Advertising expenses | Advertising expenses Advertising expenses are expensed as incurred and included in selling and marketing expenses. Total advertising expenses were RMB136,974, RMB151,744 and RMB172,577 for the years ended December 31, 2020, 2021 and 2022, respectively. |
Government subsidies | Government subsidies Government subsidies represent government grants received from local government authorities to encourage the Group’s technology and innovations and also other subsidies for production. The Group records such government subsidies as other income or reduction of expenses or cost of revenues when it has fulfilled all of its obligation related to the subsidy. During the years ended December 31, 2020, 2021 and 2022, the Group recognized RMB13,461, RMB23,140 and RMB41,054 as subsidy income and recognized RMB10,408, RMB103,660 and RMB53,563 as reduction of expenses or cost of revenues, respectively. As of December 31, 2021 and 2022, subsidies of RMB3,129 and RMB1,745 were recorded as other current liabilities, RMB175,053 and RMB162,602 were recorded as other non-current liabilities as the Group has to meet certain performance conditions required by the government authorities. |
Income taxes | Income taxes Income taxes are provided for in accordance with the laws of the relevant tax authorities. Deferred tax assets and liabilities are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. Net operating loss carry forwards and credits are applied using enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that a portion of or all of the deferred tax assets will not be realized. The Group accounts for uncertain tax positions by reporting a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. Tax benefits are recognized from uncertain tax positions when the Group believes that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The Group recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expenses. |
Share-based payment | Share-based payment Share-based payment transactions with employees, such as share options and restricted shares are measured based on the grant date fair value of the equity instrument. The Group has elected to recognize compensation expenses using the straight-line method. For all employee’s equity awards granted with graded vesting provided, the amount of compensation cost recognized at any date is at least equal to the portion of the grant-date value of the options that are vested at that date, over the requisite service period of the award. The requisite service period is generally the vesting period of the award. The Group elects to recognize forfeitures when they occur. |
Comprehensive income | Comprehensive income Comprehensive income consists of two components, net income and other comprehensive income, net of tax. Other comprehensive income refers to revenue, expenses, and gains and losses that are recorded as an element of shareholders’ equity but are excluded from net income. The Group’s other comprehensive income consists of foreign currency translation adjustments from its subsidiaries not using the RMB as their functional currency and the fair value change of available-for-sale investments of the Group. Comprehensive income is reported in the consolidated statements of comprehensive income. |
Foreign currencies | Foreign currencies The functional currency of the Company is the US$ and the reporting currency of the Company is the RMB. The Company’s subsidiaries, consolidated VIEs and VIEs’ subsidiaries with operations in the PRC, Hong Kong, the United States and other jurisdictions generally use their respective local currencies as their functional currencies. The financial statements of the Company’s subsidiaries, other than the subsidiaries and consolidated VIEs with the functional currency of RMB, are translated into RMB using the exchange rate as of the balance sheet date for assets and liabilities and the average daily exchange rate for each month for income and expense items. Translation gains and losses are recorded in accumulated other comprehensive income or loss as a component of shareholders’ equity. In the financial statements of the Company’s subsidiaries and consolidated VIEs and VIEs’ subsidiaries, transactions in currencies other than the functional currency are measured and recorded in the functional currency using the exchange rate in effect at the date of the transaction. At the balance sheet date, monetary assets and liabilities that are denominated in currencies other than the functional currency are translated into the functional currency using the exchange rate at the balance sheet date. All gains and losses arising from foreign currency transactions are recorded in the consolidated statements of operations during the year in which they occur. For the years ended December 31, 2020, 2021 and 2022, the transaction gains amounted to RMB27,451, RMB18,156 and RMB12,086 were recorded in general and administrative expenses. 2. SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Foreign currencies - continued RMB is not a freely convertible currency. The State Administration for Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of RMB into other currencies. The value of the RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. The Group’s cash and cash equivalents denominated in US$ and RMB amounted to RMB435,205 and RMB990,222 as of December 31, 2021, RMB263,400 and RMB565,721 as of December 31, 2022, respectively. |
Convenience translation | Convenience translation Translations of balances in the consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows from RMB into US$ as of and during the year ended December 31, 2022 is solely for the convenience of the reader and were calculated at the rate of US$1.00 = RMB6.8972, representing the rate as certified by the statistical release of the Federal Reserve Board of United States on December 30, 2022. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into U.S. dollar at that rate on December 31, 2022, or at any other rate. |
Net income per share | Net income per share Basic net income per ordinary share is computed by dividing net income attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted income per ordinary share reflect the potential dilution that would occur if securities were exercised or converted into ordinary shares. The Group had share options, restricted shares and restricted stock units (“RSU”) which could potentially dilute basic income per ordinary share in the future. To calculate the number of shares for diluted income per ordinary shares, the effect of the share options, restricted shares and RSU is computed using the treasury stock method. |
Concentration of credit risk | Concentration of credit risk Financial instruments that potentially expose the Group to concentrations of credit risk consist primarily of cash and cash equivalents, term deposits, accounts receivable. The Group places its cash and cash equivalents with financial institutions with high credit ratings and quality. The Group conducts credit evaluations of third-party customers and related parties, and generally does not require collateral or other security from its third-party customers and related parties. The Group establishes an allowance for doubtful accounts primarily based upon the age of the receivables and factors surrounding the credit risk of specific third-party customers and related parties. 2. SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Concentration of credit risk Accounts receivable concentration of credit risk is as below: As of December 31, 2021 2022 RMB RMB Company A 87,825 16.4 % 124,319 18.2 % Company B 269,460 50.1 % 287,160 42.1 % Total 357,285 66.5 % 411,479 60.3 % Amounts due from related parties concentration of credit risk is as below: As of December 31, 2021 2022 RMB RMB Company C 286,341 96.9 % 117,944 81.4 % Total 286,341 96.9 % 117,944 81.4 % Revenue generated from Company C accounted for 69.1%, 53.5% and 41.0% of total revenue during the years ended December 31, 2020, 2021 and 2022, respectively. Company C is a subsidiary of a company controlled by one of the Group’s shareholders (see Note 22). For the years ended December 31, 2020 2021 2022 RMB RMB RMB Company C 4,447,957 69.1 % 3,340,857 53.5 % 1,697,053 41.0 % Total 4,447,957 69.1 % 3,340,857 53.5 % 1,697,053 41.0 % |
Supplier Concentration | Supplier Concentration The Group relies on third parties for the supply and manufacturing of its products, as well as third-party logistics providers. In instances where these parties fail to perform their obligations, the Group may be unable to find alternative suppliers or satisfactorily deliver its products to its customers on time, if at all. For the year ended December 31, 2020, 15.1% of its raw materials and semi-manufactures were purchased through Company D, respectively, but numerous alternate sources of supply are readily available on comparable terms. No purchases from a single suppliers account for more than 10% of total purchases during the years ended December 31, 2021 and 2022. |
Newly adopted accounting pronouncements | Newly adopted accounting pronouncements In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832) — Disclosures by Business Entities about Government Assistance. The amendments in this ASU require disclosures about transactions with a government that have been accounted for by analogizing to a grant or contribution accounting model to increase transparency about (1) the types of transactions, (2) the accounting for the transactions, and (3) the effect of the transactions on an entity’s financial statements. The amendments in this ASU are effective for all entities within their scope for financial statements issued for annual periods beginning after December 15, 2021. Early application of the amendments is permitted. The Group adopted ASU 2021-10 in the year ended December 31, 2022 and the adoption did not have a material impact on the Group’s consolidated financial statements. |
Recent accounting pronouncements not yet adopted | Recent accounting pronouncements not yet adopted In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08), which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. The new amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments, with early adoption permitted. The Group is currently evaluating the impact of the new guidance on its consolidated financial statements. In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. This guidance also requires certain disclosures for equity securities subject to contractual sale restrictions. The new guidance is required to be applied prospectively with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption. This guidance is effective for the Group for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted. The Group does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations and cash flows. On September 29, 2022, the FASB issued ASU 2022-04 to enhance transparency about an entity’s use of supplier finance programs. ASU 2022-04 requires the buyer in a supplier finance program to disclose qualitative and quantitative information about the program, and at a minimum, the following information at least annually: 2. SIGNIFICANT ACCOUNTING POLICIES – CONTINUED The key terms of the program, including payment terms and assets pledged as security or other forms of guarantees. The amount of obligations outstanding at the end of the reporting period that the buyer has confirmed as valid and: - A description of where those obligations are presented in the balance sheet. - Rollforward information for the annual period showing the amount at the beginning of the period, the amount added during the period, the amount settled during the period, and the amount outstanding at the end of the period. The amendments in this Update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. The Group is currently evaluating the impact of the new guidance on its consolidated financial statements but does not expect the adoption of this standard to have a material impact on its financial position, results of operations and cash flows. |
ORGANIZATION AND PRINCIPAL AC_2
ORGANIZATION AND PRINCIPAL ACTIVITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | |
Schedule of Subsidiaries and VIEs | Date of Percentage Place of incorporation Incorporation/acquisition Of ownership Major subsidiaries of the Company: Hong Kong Zepp Holding Limited (“Zepp HK”) Hong Kong (“HK”) December 23, 2014 100% ZEPP, INC. (“Zepp Inc”) United States of America (“U.S.”) January 15, 2015 100% Beijing ShunYuan KaiHua Technology Co., Ltd. (“Shun Yuan”) PRC February 25, 2015 100% Huami (Shenzhen) Information Technology Co., Ltd. PRC December 7, 2015 100% Anhui Huami Health Technology Co., Ltd (“Anhui Health”) PRC December 28, 2015 100% Zepp North America Inc. (“Zepp NA”) U.S. June 16, 2016 100% Galaxy Trading Platform Limited (“Galaxy”) HK May 8, 2019 100% Zepp Europe Holding B.V. (“Zepp Europe”) Netherlands June 11, 2020 100% Zepp Netherlands Trading B.V. (“Netherland”) Netherlands April 20, 2021 100% Variable interest entities of the Company: Anhui Huami PRC December 27, 2013 Consolidated VIE Beijing Huami PRC July 11, 2014 Consolidated VIE Major subsidiary of Anhui Huami: Anhui Huami Healthcare Co., Ltd. (“Anhui Healthcare”) PRC December 5, 2016 VIE’s subsidiary |
Schedule of Financial Statement Amounts and Balances of VIEs | As of December 31, 2021 2022 RMB RMB Total current assets 2,989,474 2,045,609 Total non-current assets 701,134 790,027 Total assets 3,690,608 2,835,636 Total current liabilities 1,937,301 1,521,807 Total non-current liabilities 479,676 484,496 Total liabilities 2,416,977 2,006,303 For the years ended December 31, 2020 2021 2022 RMB RMB RMB Revenues 6,297,534 5,219,560 2,536,863 Net income/(loss) 751,803 (61,184) (1,282) For the years ended December 31, 2020 2021 2022 RMB RMB RMB Net cash provided by/(used in) operating activities 770,935 (295,860) (226,419) Net cash used in investing activities (131,183) (71,916) (26,610) Net cash provided by financing activities 564,671 32,024 445,570 |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Significant accounting policies | |
Schedule of estimated useful lives: | Software and electronic equipment 3-5 years Building 20 years Leasehold improvements Shorter of the lease term or estimated useful lives |
Concentration credit risk | |
Significant accounting policies | |
Schedule of concentration risk: | As of December 31, 2021 2022 RMB RMB Company A 87,825 16.4 % 124,319 18.2 % Company B 269,460 50.1 % 287,160 42.1 % Total 357,285 66.5 % 411,479 60.3 % |
Related parties concentration risk | |
Significant accounting policies | |
Schedule of concentration risk: | As of December 31, 2021 2022 RMB RMB Company C 286,341 96.9 % 117,944 81.4 % Total 286,341 96.9 % 117,944 81.4 % |
Customer concentration risk | |
Significant accounting policies | |
Schedule of concentration risk: | For the years ended December 31, 2020 2021 2022 RMB RMB RMB Company C 4,447,957 69.1 % 3,340,857 53.5 % 1,697,053 41.0 % Total 4,447,957 69.1 % 3,340,857 53.5 % 1,697,053 41.0 % |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ACQUISITIONS | |
Schedule of purchase price allocation | Amortization RMB period Cash 5,554 Other current assets 4,704 Property, plant and equipment 149 3 years Intangible assets Patents 42,495 5 years Goodwill 67,856 Other non-current assets 261 Other current liabilities 8,868 Deferred tax liabilities 6,374 Other non-current liabilities 2,980 Total 102,797 |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INVENTORIES, NET | |
Schedule of Inventories | As of December 31, 2021 2022 RMB RMB Raw materials 282,939 97,266 Work in process 224,013 130,536 Finished goods 742,375 794,121 Inventories, net 1,249,327 1,021,923 |
SHORT-TERM INVESTMENTS (Tables)
SHORT-TERM INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SHORT-TERM INVESTMENTS | |
Schedule of short-term investments | As of December 31, 2021 2022 RMB RMB Convertible bonds: 19,351 34,316 Total: 19,351 34,316 |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |
Schedule of prepaid expenses and other current assets | As of December 31, 2021 2022 RMB RMB Value-added tax recoverable 198,189 4,648 Other receivables 57,039 44,951 Prepaid expenses 51,156 53,682 Advances to suppliers 7,838 1,758 Rental deposits 816 3,213 Total 315,038 108,252 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY, PLANT AND EQUIPMENT, NET | |
Schedule of property, plant and equipment, net | As of December 31, 2021 2022 RMB RMB Software and electronic equipment 78,854 77,693 Buildings 34,764 34,764 Leasehold improvements 81,759 90,720 Total 195,377 203,177 Less: accumulated depreciation (70,832) (112,238) Construction in progress 9,328 9,666 Property, plant and equipment, net 133,873 100,605 |
INTANGIBLE ASSETS, NET (Tables)
INTANGIBLE ASSETS, NET (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INTANGIBLE ASSETS, NET | |
Schedule of intangible assets, net | As of December 31, 2021 2022 RMB RMB Intangible assets with indefinite lives: Domain name 2,024 2,024 Insurance brokerage license, trademark and others 42,617 44,399 Intangible assets with finite lives: Patents and trademark 128,332 131,480 Less: accumulated amortization 37,391 54,603 Intangible assets, net 135,582 123,300 |
LONG-TERM INVESTMENTS (Tables)
LONG-TERM INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
LONG-TERM INVESTMENTS | |
Schedule of long-term investments | As of December 31, 2021 2022 RMB RMB Equity securities without readily determinable fair value Sifive, Inc. (“Sifive”) (a) 21,759 95,613 AliveCor, Inc., (“Alivecor”) (b) 14,988 24,582 Promaxo, Inc.(“Promaxo”) (c) 25,490 27,589 Other equity securities without readily determinable fair value (d) 81,775 91,141 Equity securities with readily determinable fair value Hyperfine Inc. (e) 31,669 4,413 Equity method investments: Jiangsu Yitong High-Tech Co, Ltd(“Jiangsu Yitong”) (f) 960,832 968,242 Hefei Huaying Xingzhi Fund Partnership (limited partnership) (“Huaying Fund I”) (g) 61,014 60,262 Anhui Huaying Zhihui Wulian Fund Parnership(limited partnership)(“Huaying Fund II”) (h) 200,067 212,803 Other equity method investments (i) 46,548 53,164 Available-for-sale investments Yunding (j) 50,431 74,912 Other available-for-sale investments (k) 58,018 73,907 Total 1,552,591 1,686,628 (a) In 2018, the Group invested RMB12,332 to acquire 1.01% equity interests in Sifive. Sifive is a private company engaging in the business of semiconductor. The equity interest is not considered in-substance common shares due to substantial liquidation preference rights. Accordingly, the investment in Sifive was accounted for as equity securities without readily determinable fair value. The Group recognized RMB3,304, nil and RMB66,322 gain from the fair value change of this investment during the years ended December 31, 2020, 2021 and 2022, respectively. 10. LONG-TERM INVESTMENTS - CONTINUED (b) In 2019, the Group invested USD1,000 in a convertible bond issued by Alivecor with 3% interest rate. In February 2020, the Group converted the bond to 0.56% equity interest and the equity interest is not considered in-substance common shares due to substantial liquidation rights owned by the Group. Accordingly, the investment in Alivecor was accounted for equity securities without readily determinable fair value. The Group recognized RMB7,728, nil and RMB8,620 gain from the fair value change of this investment during the years ended December 31, 2020, 2021 and 2022, respectively. (c) In 2020, the Group invested USD4,000 to acquire 4.05% equity interests in Promaxo. Promaxo is a private company engaging in the business of Magnetic Resonance (“MR”) technology. The equity interest is not considered in-substance common shares due to substantial liquidation preference rights. Accordingly, the investment in Promaxo was accounted for as equity securities without readily determinable fair value. For the year ended December 31, 2020, 2021 and 2022, no fair value change was observed and recognized. (d) These other investments represent certain insignificant investments in the third-party private companies, which the Group has no significant influence over the investees and accounted for these investments using the measurement alternative method. (e) In December 2021, Hyperfine was successfully listed in the US capital market through a special purpose acquisition and the investment in Hyperfine was converted from equity securities without readily determinable fair value to equity securities with readily determinable fair value. The Group recorded RMB194 and RMB28,466 realized loss from the fair value change of this investment during the years ended December 31, 2021 and 2022, respectively. (f) In February 2021, the Group acquired 29.99% equity interest of Jiangsu Yitong, a company listed on the Shenzhen stock exchange, for a total cash consideration of RMB959.68 million. The purpose of the investment is to expand the healthcare ecosystem in the domestic market. The investment of Jiangsu Yitong is accounted for using the equity method as the Group can exercise significant influence through its board representation without obtaining control. During 2022, the Group further acquired 0.01% equity interest of Jiangsu Yitong. The Group recorded RMB1,152 and RMB7,580 income from this equity method investment during the year ended December 31, 2021 and 2022, respectively. The total consideration of the investment in Jiangsu Yitong was RMB960,832 and the proportion of Jiangsu Yitong’s net assets that owned by the Group was RMB137,302 as of December 31, 2021. The difference between the total consideration and the proportion of net assets was RMB823,530, which has been allocated into goodwill, intangible assets and others assets with the amount of RMB636,672, RMB173,524 and RMB13,334, respectively. As of December 31, 2022, the carrying value of the investment in Jiangsu Yitong is RMB968,242 and the difference with the proportionate share of Jiangsu Yitong’s net assets was RMB813,101, which allocated into goodwill, intangible assets and others assets with the amount of RMB636,672, RMB172,940 and RMB3,489, respectively. The intangible assets are trademark with indefinite life and patents with definite life, which are amortized on a straight-line basis over the estimated useful life of 3 to 7 years. (g) In 2016, the Group invested RMB50,000 to acquire a 49.5% equity interests in a limited partnership, Huaying Fund I, which is a fund engaged in investing activities in small and middle scale High Tech private companies. The Group accounted for the investment under the equity method because the investments are common stock and the Group has significant influence through its board seat but does not control Huaying Fund I. The Group recorded RMB(2,452), RMB7,910 and RMB(752) of (loss)/income from equity method investment during the years ended December 31, 2020, 2021 and 2022, respectively. 10. LONG-TERM INVESTMENTS – CONTINUED (h) In 2019, the Group invested RMB102,000 to acquire a 34% equity interests in a limited partnership, Huaying Fund II, a fund engaged in investing activities in small and middle scale High Tech private companies. The Group accounted for the investment using the equity method as the Group has significant influence through its board seat but does not control Huaying Fund II. In March 2021, the Group paid the second installment of cash consideration in Huaying Fund II for an amount of RMB68 million. The Group recorded RMB5,297, RMB24,434 and RMB12,737 of income from equity method investment during the years ended December 31, 2020, 2021 and 2022, respectively. (i) The other equity method investments represent several insignificant investments classified as equity method investments as the Group has the ability to exercise significant influence but does not have control over the investees. (j) In 2020, the Group invested RMB22,000 in a convertible bond issued by Yunding with interest rates ranging from 4.35% to 8.7%. The Group also has some equity interests in Yuding and accounted them as available for sale investment due to the redemption feature included in the investment as of December 31, 2021 and 2022. During 2021, the Group disposed 5% equity interests in Yunding and recognized a realized gain with amount of RMB13,507 from the disposal. The Group also recorded an unrealized gain of nil, RMB903 and RMB20,943 in other comprehensive income/(loss) for the years ended December 31, 2020, 2021 and 2022, respectively. (k) Available-for-sale investments represent investments in debt securities and measured at fair value. Those investments mainly include investments in convertible bonds as well as investment with redemption features considered debt instruments. |
Schedule of equity method investments | For the year ended December 31, 2020 2021 2022 RMB RMB RMB Revenue 28,087 330,685 412,975 Gross profit 15,114 198,495 147,434 Income from operations 3,011 140,006 68,663 Net income 3,042 137,681 66,039 Net income attributable to ordinary shareholders 3,042 137,681 66,039 As of December 31, 2021 2022 RMB RMB Current assets 941,812 825,465 Non-current assets 780,128 913,919 Current liabilities 122,430 88,454 Non-current liabilities 36,807 1,386 |
FAIR-VALUE MEASUREMENT (Tables)
FAIR-VALUE MEASUREMENT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
FAIR-VALUE MEASUREMENT | |
Schedule of fair-value measurement | As of December 31, 2021 Quoted Prices in Significant Active Market for Significant Other Unobservable Identical Assets Observable Inputs Inputs Description Level 1 Level 2 Level 3 Total RMB RMB RMB RMB Short-term investments: Convertible bonds — 19,351 — 19,351 Long-term investments: Convertible bonds — 43,055 — 43,055 Redeemable preferred shares — — 65,393 65,393 Equity securities with readily determinable fair value — 31,669 — 31,669 Total: — 94,075 65,393 159,468 As of December 31, 2022 Quoted Prices in Significant Active Market for Significant Other Unobservable Identical Assets Observable Inputs Inputs Description Level 1 Level 2 Level 3 Total RMB RMB RMB RMB Short-term investments: Convertible bonds — — 34,316 34,316 Long-term investments: Convertible bonds — — 38,741 38,741 Redeemable preferred shares — 37,044 73,034 110,078 Equity securities with readily determinable fair value 4,413 — — 4,413 Total: 4,413 37,044 146,091 187,548 |
Schedule of reconciliation of the fair value measurements of assets using significant unobservable inputs | Level 3 investments RMB Balance as of January 1, 2021 1,934 Initial recognition 24,960 Transfer from level 2 38,499 Balance as of December 31, 2021 65,393 Unrealized gain 19,575 Transfer from level 2 73,057 Transfer to level 2 (11,934) Balance as of December 31, 2022 146,091 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Schedule of accrued expenses and other current liabilities | As of December 31, 2021 2022 RMB RMB Deferred revenue 87,980 61,164 Current operating lease liabilities 50,092 42,320 Accrued payroll and welfare 41,948 25,875 Other tax payable 23,541 20,535 Product warranty 24,858 17,748 Accrued expenses 17,058 6,703 Refund liabilities 5,745 4,845 Government subsidies 3,129 1,745 Reverse factoring 39,195 — Other current liabilities 22,537 16,884 Total 316,083 197,819 |
Schedule of product warranty | RMB Balance as of January 1, 2020 49,527 Provided during the year 74,742 Utilized during the year (91,487) Balance as of December 31, 2020 32,782 Provided during the year 63,540 Utilized during the year (71,464) Balance as of December 31, 2021 24,858 Provided during the year 27,146 Utilized during the year (34,256) Balance as of December 31, 2022 17,748 |
BANK BORROWINGS (Tables)
BANK BORROWINGS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
BANK BORROWINGS | |
Schedule of principal repayment of bank borrowings | Repayment Amount RMB 2023 512,000 2024 140,000 2025 260,000 2026 65,000 2027 and thereafter 219,210 |
REVENUE AND DEFERRED REVENUES (
REVENUE AND DEFERRED REVENUES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
REVENUE AND DEFERRED REVENUES | |
Schedule of disaggregated revenue by segment | For the years ended December 31, 2020 2021 2022 RMB RMB RMB Xiaomi Wearable Products 4,438,081 3,340,857 1,697,053 Self-branded products and other 1,995,282 2,909,252 2,445,809 Total 6,433,363 6,250,109 4,142,862 |
Schedule of deferred revenue and refund liability | As of December 31, 2021 2022 RMB RMB Accounts receivables 537,084 682,103 Amounts due from related parties 295,614 138,614 Deferred revenue 87,980 61,164 Refund liability (sales return) 5,745 6,932 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
Schedule of current and deferred components of income taxes | For the years ended December 31, 2020 2021 2022 RMB RMB RMB Current tax expenses 42,257 31,543 379 Deferred tax benefits (11,103) (20,798) (66,254) Income tax expenses/(benefit) 31,154 10,745 (65,875) |
Schedule of deferred tax assets | As of December 31, 2021 2022 RMB RMB Accrued expenses and other current liabilities 47,005 46,958 Net operating loss carry forwards 75,100 178,689 Intra-entity transfer of certain intangible assets 28,290 26,726 Total deferred tax assets 150,395 252,373 Less: valuation allowance (6,976) (42,187) Deferred tax assets, net 143,419 210,186 |
Schedule of reconciliation between the income tax expense computed by applying the statutory rate and the actual income tax expense | For the years ended December 31, 2020 2021 2022 RMB RMB RMB Income/(loss) before income tax 265,609 106,669 (372,533) Tax expense/(benefit) at PRC enterprise income tax rate of 25% 66,402 26,667 (93,133) Effect of preferential tax rates (41,869) (19,387) 29,784 Tax effect of permanence differences (20,001) (34,587) (53,808) Effect of income tax rate differences in other jurisdictions 21,625 23,666 16,071 Change in tax rate 3,460 9,549 — Changes in valuation allowances 1,537 4,837 35,211 Income tax benefits/(expenses) 31,154 10,745 (65,875) |
SHARE-BASED PAYMENT (Tables)
SHARE-BASED PAYMENT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SHARE-BASED PAYMENT | |
Schedule of assumptions used to determine fair value of share options granted | For the years ended December 31, 2020 2021 2022 Risk-free interest rate 0.67%-0.72 % 1.66 % 4.25 % Expected volatility 51.9%-52.0 % 52.2 % 52.4 % Expected life of option (years) 10 10 10 Expected dividend yield 0.0 % 0.0 % 0.0 % Fair value per ordinary share RMB21.60-23.10 RMB8.05-12.98 RMB1.96 |
Schedule of stock option activity | Weighted average exercise price Number of options per option US$ Outstanding at January 1, 2022 16,798,153 0.07 Granted 1,492,332 — Exercised (4,357,100) — Forfeited (1,105,682) 0.45 Outstanding at December 31, 2022 12,827,703 0.05 |
Schedule of share options granted | December 31, 2022 Weighted average remaining Weighted exercise average exercise contractual Aggregate Options Number price per option life (years) intrinsic value US$ US$ Options Outstanding 12,827,703 0.05 7.26 4,389 Exercisable 7,904,689 0.08 6.67 2,604 Expected to vest 4,923,014 — 8.21 1,784 |
Schedule of restricted stock units activity | RSUs Unvested balance as of January 1, 2022 3,079,436 Granted 100,972 Forfeited (213,700) Vested (1,268,408) Unvested balance as of December 31, 2021 1,698,300 |
Schedule of total share-based compensation recognized | For the years ended December 31, 2020 2021 2022 RMB RMB RMB Cost of revenues — — — General and administrative 38,605 32,247 21,353 Research and development 23,978 42,677 23,585 Selling and marketing 2,571 8,198 4,169 Total share-based compensation expenses 65,154 83,122 49,107 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SEGMENT INFORMATION | |
Schedule of segment information | For the year ended December 31, 2020 Xiaomi Self-branded wearable products Products and others Total RMB RMB RMB Revenues 4,438,081 1,995,282 6,433,363 Cost of revenues 3,706,495 1,394,203 5,100,698 Gross Profit 731,586 601,079 1,332,665 For the year ended December 31, 2021 Xiaomi Self-branded wearable products Products and others Total RMB RMB RMB Revenues 3,340,857 2,909,252 6,250,109 Cost of revenues 2,754,086 2,190,381 4,944,467 Gross Profit 586,771 718,871 1,305,642 20. SEGMENT INFORMATION – CONTINUED For the year ended December 31, 2022 Xiaomi Self-branded wearable products Products and others Total RMB RMB RMB Revenues 1,697,053 2,445,809 4,142,862 Cost of revenues 1,394,460 1,945,286 3,339,746 Gross Profit 302,593 500,523 803,116 |
RELATED PARTY BALANCES AND TR_2
RELATED PARTY BALANCES AND TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
RELATED PARTY BALANCES AND TRANSACTIONS | |
Schedule of Amount due: | As of December 31, 2021 2022 RMB RMB Amount due from related parties: Current: Xiaomi Communication (a) 286,341 117,944 Field Medical (b) — 10,375 Hefei Jingyu 1,101 2,648 Hefei LianRui Microelectronics Technology Co. Ltd 2,452 2,452 Yunding (c) 2,330 2,330 Gongqingcheng Yunding (d) 2,500 2,500 Others (a) 890 365 Non-current A vice president (e) — 6,333 Total 295,614 144,947 As of December 31, 2021 2022 RMB RMB Amount due to related parties, current: Hefei Jingyu 48,052 36,864 Xiaomi Communication — 2,087 Xiaomi Technology(f) 1,562 1,965 Others 509 62 Total 50,123 40,978 |
Schedule of transactions: | For the years ended December 31, 2020 2021 2022 RMB RMB RMB Sales to related parties: Xiaomi Communication 4,447,957 3,340,857 1,697,053 Xiaomi Youpin — 9,175 6,942 Others 1,800 — — Total 4,449,757 3,350,032 1,703,995 |
Schedule of purchase from related parties | For the years ended December 31, 2020 2021 2022 RMB RMB RMB Sales to related parties: Xiaomi Communication 4,447,957 3,340,857 1,697,053 Xiaomi Youpin — 9,175 6,942 Others 1,800 — — Total 4,449,757 3,350,032 1,703,995 For the years ended December 31, 2020 2021 2022 RMB RMB RMB Purchase from related parties Hefei Jingyu (g) — 146,847 222,174 Others 12,000 — — (a) The amount due from Xiaomi represents receivables from the sales of products and services, which includes an unbilled amount of RMB64,129 and RMB2,613 as of December 31, 2021 and 2022, respectively. (b) The amount due from Field Medical represents borrowings the Group provided to Field Medical to support the daily operation. (c) The amount due from Yunding represents prepayment for the purchase of Yunding’ products which was collected in March 2023. (d) In December 2020, the Group sold 26.7% equity interest in Yunding for a cash consideration of RMB22,500 to Gongqingcheng Yunding, of which RMB20,000 has been received in January 2021. (e) The amount due from a vice president represents a loan provided to a key management. (f) The amounts due to Xiaomi Technology represent the payable for the cloud service received by the Group. (g) Hefei Jingyu is a subsidiary of Jiangsu Yitong, where the Group can exercise significant influence. During 2021 and 2022, the Group purchased some raw material from Hefei Jingyu with total transaction amount of RMB146,847 and RMB222,174. |
NET INCOME_(LOSS) PER SHARE (Ta
NET INCOME/(LOSS) PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
NET INCOME/(LOSS) PER SHARE | |
Schedule of profit attributable to owners | For the years ended December 31, 2020 2021 2022 RMB RMB RMB Basic net income/(loss) per share calculation Numerator: Net income/(loss) for the year attributable to the Company: 228,753 137,803 (288,308) Net income/(loss) attributed to ordinary shareholders for computing net income per ordinary shares - basic 228,753 137,803 (288,308) Denominator: Weighted average ordinary shares outstanding used in computing net income/(loss) per ordinary shares – basic 248,470,684 252,167,610 246,283,328 Net income/(loss) per ordinary share attributable to ordinary shareholders—basic 0.92 0.55 (1.17) Diluted net income/(loss) per share calculation Net income/(loss) attributable to ordinary shareholders for computing net income per ordinary shares—basic and diluted 228,753 137,803 (288,308) Denominator: Weighted average ordinary shares outstanding used in computing net income per ordinary shares - basic 248,470,684 252,167,610 246,283,328 Effect of potentially diluted share options, restricted shares and RSUs 11,881,310 12,201,019 — Weighted average ordinary shares outstanding used in computing net income per ordinary shares—diluted 260,351,994 264,368,629 246,283,328 Net income/(loss) per ordinary share attributable to ordinary shareholders—diluted 0.88 0.52 (1.17) |
Schedule of shares excluded from calculation of net income per share | For the years ended December 31, 2020 2021 2022 Shares issuable upon exercise of share options, restricted shares and RSUs 89,165 301,946 7,390,487 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
LEASES | |
Schedule of components of lease cost | For the years ended December 31, 2020 2021 2022 RMB RMB RMB Operating lease cost (1) 57,080 41,595 37,428 Sublease income (537) (3,591) (8,796) Total lease cost 56,543 38,004 28,632 (1) Operating lease cost includes short-term lease costs, which was not material in the period presented. |
Schedule of components of leases that are recognized on the Balance Sheets | As of December 31, 2021 2022 RMB RMB Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases 49,644 50,357 Non-cash Right-of-use assets in exchange for new lease liabilities: Operating leases 2,157 1,674 Weighted average remaining lease term: Operating leases 2.80 years 2.03 years Weighted average discount rate: Operating leases 5.27 % 5.32 % |
Schedule of maturities of lease liabilities under operating leases, after adoption of ASU 2016-02 | The following is a maturity analysis of the annual undiscounted cash flows for the year ended December 31, 2022: Year ending December 31, RMB 2023 43,701 2024 26,291 2025 8,441 Total lease payments 78,433 Less: imputed interest (4,423) Present value of lease liabilities 74,010 |
ORGANIZATION AND PRINCIPAL AC_3
ORGANIZATION AND PRINCIPAL ACTIVITIES (Details) - customer | 12 Months Ended | ||||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Nov. 03, 2017 | Apr. 29, 2015 | |
Anhui Huami | |||||
ORGANIZATION AND PRINCIPAL ACTIVITIES | |||||
Ownership percentage | 100% | ||||
Beijing Huami | |||||
ORGANIZATION AND PRINCIPAL ACTIVITIES | |||||
Ownership percentage | 100% | ||||
Beneficiary shareholder | |||||
ORGANIZATION AND PRINCIPAL ACTIVITIES | |||||
Common shares held (as percentage of total shares) | 28.40% | ||||
Customer concentration risk | |||||
ORGANIZATION AND PRINCIPAL ACTIVITIES | |||||
Number of customers | 1 | 1 | 1 | ||
Exclusively designed and manufactured smart wearable devices | Customer concentration risk | Sales revenue net | |||||
ORGANIZATION AND PRINCIPAL ACTIVITIES | |||||
Concentration risk, percentage | 41% | 53.50% | 69% |
ORGANIZATION AND PRINCIPAL AC_4
ORGANIZATION AND PRINCIPAL ACTIVITIES - Subsidiaries and VIEs (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Anhui Huami | |
Major subsidiaries and major VIEs | |
Date of incorporation/acquisition | Dec. 27, 2013 |
Variable interest entity, nature of VIE | Consolidated VIE |
Beijing Huami | |
Major subsidiaries and major VIEs | |
Date of incorporation/acquisition | Jul. 11, 2014 |
Variable interest entity, nature of VIE | Consolidated VIE |
Anhui Huami Healthcare Co., Ltd. ("Huami Healthcare") | |
Major subsidiaries and major VIEs | |
Date of incorporation/acquisition | Dec. 05, 2016 |
Variable interest entity, nature of VIE | VIE’s subsidiary |
Hong Kong Zepp Holding Limited ("Zepp HK") | |
Major subsidiaries and major VIEs | |
Date of incorporation/acquisition | Dec. 23, 2014 |
Percentage of ownership | 100% |
ZEPP, INC. ("Zepp Inc") | |
Major subsidiaries and major VIEs | |
Date of incorporation/acquisition | Jan. 15, 2015 |
Percentage of ownership | 100% |
Beijing ShunYuan KaiHua Technology Co., Ltd. ("Shun Yuan") | |
Major subsidiaries and major VIEs | |
Date of incorporation/acquisition | Feb. 25, 2015 |
Percentage of ownership | 100% |
Huami (Shenzhen) Information Technology Co., Ltd. | |
Major subsidiaries and major VIEs | |
Date of incorporation/acquisition | Dec. 07, 2015 |
Percentage of ownership | 100% |
Anhui Huami Health Technology Co., Ltd ("Anhui Health") | |
Major subsidiaries and major VIEs | |
Date of incorporation/acquisition | Dec. 28, 2015 |
Percentage of ownership | 100% |
Zepp North America Inc. ("Zepp NA") | |
Major subsidiaries and major VIEs | |
Date of incorporation/acquisition | Jun. 16, 2016 |
Percentage of ownership | 100% |
Galaxy Trading Platform Limited ("Galaxy") | |
Major subsidiaries and major VIEs | |
Date of incorporation/acquisition | May 08, 2019 |
Percentage of ownership | 100% |
Zepp Europe Holding B.V. ("Zepp Europe") | |
Major subsidiaries and major VIEs | |
Date of incorporation/acquisition | Jun. 11, 2020 |
Percentage of ownership | 100% |
Zepp Netherlands Trading B.V. ("Netherland") | |
Major subsidiaries and major VIEs | |
Date of incorporation/acquisition | Apr. 20, 2021 |
Percentage of ownership | 100% |
ORGANIZATION AND PRINCIPAL AC_5
ORGANIZATION AND PRINCIPAL ACTIVITIES - Risks in relation to VIE structure (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2022 USD ($) | |
Variable Interest Entity | |||||
Total current assets | ¥ 2,958,548 | ¥ 3,930,953 | $ 428,948 | ||
Total assets | 5,267,643 | 6,085,501 | 763,735 | ||
Total current liabilities | 1,668,668 | 2,152,132 | 241,933 | ||
Total liabilities | 2,582,722 | 3,152,062 | $ 374,459 | ||
Revenues | 4,142,862 | 6,250,109 | ¥ 6,433,363 | ||
Net income/(loss) | (288,308) | $ (41,801) | 137,803 | 228,753 | |
Net cash provided by/(used in) operating activities | (787,643) | (114,199) | (232,435) | 157,302 | |
Net cash used in investing activities | (42,258) | (6,127) | (1,069,289) | (206,880) | |
Net cash provided by/(used in) financing activities | 289,198 | $ 41,928 | 551,077 | 564,671 | |
Variable Interest Entities | |||||
Variable Interest Entity | |||||
Total current assets | 2,045,609 | 2,989,474 | |||
Total non-current assets | 790,027 | 701,134 | |||
Total assets | 2,835,636 | 3,690,608 | |||
Total current liabilities | 1,521,807 | 1,937,301 | |||
Total non-current liabilities | 484,496 | 479,676 | |||
Total liabilities | 2,006,303 | 2,416,977 | |||
Revenues | 2,536,863 | 5,219,560 | 6,297,534 | ||
Net income/(loss) | (1,282) | (61,184) | 751,803 | ||
Variable Interest Entities | Correction of error | |||||
Variable Interest Entity | |||||
Net cash provided by/(used in) operating activities | (226,419) | (295,860) | 770,935 | ||
Net cash used in investing activities | (26,610) | (71,916) | (131,183) | ||
Net cash provided by/(used in) financing activities | ¥ 445,570 | ¥ 32,024 | ¥ 564,671 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES (Details) ¥ in Thousands | 12 Months Ended | |||||||||||
Apr. 01, 2019 | May 01, 2018 | Apr. 30, 2018 | Dec. 31, 2022 CNY (¥) $ / ¥ | Dec. 31, 2022 CNY (¥) $ / ¥ | Dec. 31, 2022 CNY (¥) USD ($) $ / ¥ | Dec. 31, 2022 CNY (¥) customer $ / ¥ | Dec. 31, 2022 CNY (¥) $ / ¥ | Dec. 31, 2022 CNY (¥) installment $ / ¥ | Dec. 31, 2021 CNY (¥) customer | Dec. 31, 2020 CNY (¥) customer | Dec. 31, 2022 USD ($) $ / ¥ | |
SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||
Impairment loss related to acquired intangible assets | ¥ 0 | ¥ 0 | ¥ 0 | |||||||||
Goodwill impairment | 0 | 0 | 0 | |||||||||
Allowance for doubtful accounts | ¥ 1,466 | 1,466 | ¥ 1,466 | ¥ 1,466 | ¥ 1,466 | ¥ 1,466 | 814 | |||||
Unrealized gains on available-for-sale investments | ¥ 2,006 | 1,240 | 1,243 | |||||||||
Lease term | 4 years | 4 years | 4 years | 4 years | 4 years | 4 years | 4 years | |||||
Impairment losses on equity method investments | ¥ 0 | 0 | 0 | |||||||||
Unrealized (losses) / gains on available-for-sale investments | 40,140 | 1,345 | (22,583) | |||||||||
Investment held | 0 | 0 | ||||||||||
Percentage of total revenues | 26.10% | |||||||||||
Value added tax rate | 13% | 16% | 17% | 6% | ||||||||
Advertising expenses | 172,577 | 151,744 | 136,974 | |||||||||
Government subsidy recognized as income | 41,054 | 23,140 | 13,461 | |||||||||
Government subsidy, cost of revenue | 53,563 | 103,660 | 10,408 | |||||||||
Government subsidies other current liabilities | ¥ 1,745 | 1,745 | ¥ 1,745 | ¥ 1,745 | ¥ 1,745 | ¥ 1,745 | 3,129 | |||||
Government subsidies other non-current liabilities | 162,602 | 162,602 | 162,602 | 162,602 | 162,602 | 162,602 | 175,053 | |||||
Cash and cash equivalents | ¥ 886,632 | ¥ 886,632 | ¥ 886,632 | ¥ 886,632 | ¥ 886,632 | ¥ 886,632 | 1,468,499 | $ 128,550,000 | ||||
Foreign currency exchange rate | $ / ¥ | 6.8972 | 6.8972 | 6.8972 | 6.8972 | 6.8972 | 6.8972 | 6.8972 | |||||
Product warranty term for one customer | 12 months | |||||||||||
U.S. Dollar Denominated | ||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||
Cash and cash equivalents | ¥ 263,400 | ¥ 263,400 | ¥ 263,400 | ¥ 263,400 | ¥ 263,400 | ¥ 263,400 | 435,205 | |||||
RMB | ||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||
Cash and cash equivalents | ¥ 565,721 | 565,721 | ¥ 565,721 | ¥ 565,721 | ¥ 565,721 | ¥ 565,721 | 990,222 | |||||
General and administrative expenses | ||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||
Transaction gains | ¥ 12,086 | ¥ 18,156 | ¥ 27,451 | |||||||||
Smart wearable devices | ||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||
Percentage of sales revenue | 41% | 53.50% | 69% | |||||||||
Number of customers | 1 | 1 | 1 | 1 | ||||||||
Number of payment installments from customer | installment | 2 | |||||||||||
Percentage of second installment payment receivable | 50% | |||||||||||
Self-branded products and others | ||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||
Percentage of sales revenue | 59% | 46.50% | 31% | |||||||||
Minimum | ||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||
Deposit | 30% | |||||||||||
Minimum | Trademark and patents | ||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||
Useful lives | 5 years | |||||||||||
Maximum | ||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||
Deposit | 75% | |||||||||||
Maximum | Trademark and patents | ||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||
Useful lives | 10 years |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Property, plant and equipment, net (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Software and electronic equipment | Maximum | |
Property, plant and equipment, net | |
Estimated useful lives | 5 years |
Software and electronic equipment | Minimum | |
Property, plant and equipment, net | |
Estimated useful lives | 3 years |
Buildings | |
Property, plant and equipment, net | |
Estimated useful lives | 20 years |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - Account receivable concentration of credit risk (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2022 USD ($) | |
Concentration of credit risk | |||
Accounts receivables | ¥ 682,103 | ¥ 537,084 | $ 98,896 |
Customer concentration risk | Major Customers | Accounts Receivable | |||
Concentration of credit risk | |||
Accounts receivables | ¥ 411,479 | ¥ 357,285 | |
Concentration risk, percentage | 60.30% | 66.50% | |
Customer concentration risk | Company A | Accounts Receivable | |||
Concentration of credit risk | |||
Accounts receivables | ¥ 124,319 | ¥ 87,825 | |
Concentration risk, percentage | 18.20% | 16.40% | |
Customer concentration risk | Company B | Accounts Receivable | |||
Concentration of credit risk | |||
Accounts receivables | ¥ 287,160 | ¥ 269,460 | |
Concentration risk, percentage | 42.10% | 50.10% |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES - Related parties concentration of credit risk (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2022 USD ($) | |
Concentration of credit risk | |||
Amounts due from related parties | ¥ 138,614 | ¥ 295,614 | $ 20,097 |
Concentration credit risk | Related parties concentration risk | Major Customers | |||
Concentration of credit risk | |||
Amounts due from related parties | ¥ 117,944 | ¥ 286,341 | |
Concentration risk, percentage | 81.40% | 96.90% | |
Concentration credit risk | Related parties concentration risk | Company C | |||
Concentration of credit risk | |||
Amounts due from related parties | ¥ 117,944 | ¥ 286,341 | |
Concentration risk, percentage | 81.40% | 96.90% |
SIGNIFICANT ACCOUNTING POLICI_8
SIGNIFICANT ACCOUNTING POLICIES - Revenue generated from related parties (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Concentration of credit risk | |||
Revenues | ¥ 4,142,862 | ¥ 6,250,109 | ¥ 6,433,363 |
Sales revenue net | Customer concentration risk | Major Customers | |||
Concentration of credit risk | |||
Revenues | ¥ 1,697,053 | ¥ 3,340,857 | ¥ 4,447,957 |
Concentration risk, percentage | 41% | 53.50% | 69.10% |
Sales revenue net | Customer concentration risk | Company C | |||
Concentration of credit risk | |||
Revenues | ¥ 1,697,053 | ¥ 3,340,857 | ¥ 4,447,957 |
Concentration risk, percentage | 41% | 53.50% | 69.10% |
SIGNIFICANT ACCOUNTING POLICI_9
SIGNIFICANT ACCOUNTING POLICIES - Supplier concentration (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Supplier concentration risk | Raw materials and semi-manufactures | Customer D | |
Concentration of credit risk | |
Concentration risk, percentage | 15.10% |
ACQUISITIONS (Details)
ACQUISITIONS (Details) ¥ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Jun. 12, 2020 CNY (¥) | Jul. 31, 2020 CNY (¥) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2022 USD ($) | |
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||
Goodwill | ¥ 66,081 | ¥ 61,055 | $ 9,581 | ||
Guoxu | |||||
Asset Acquisition, Consideration Transferred [Abstract] | |||||
Percentage of equity interest | 100% | ||||
Gross consideration | ¥ 67,914 | ||||
Loan deemed effectively settled as a result of the acquisition | 35,075 | ||||
Cash consideration | ¥ 32,839 | ||||
Acquisition of PAI | |||||
Business Combination | |||||
Voting interest (as a percent) | 100% | ||||
Cash consideration | ¥ 1,370 | ||||
Loan deemed effectively settled as a result of the acquisition | 13,711 | ||||
Fair value of PAI acquired amount | ¥ 87,716 | ||||
Percentage of revenue | 1% | 1% | |||
Previously held equity interest | 40.49% | ||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||
Cash | ¥ 5,554 | ||||
Other current assets | 4,704 | ||||
Property, plant and equipment | ¥ 149 | ||||
Property, plant and equipment, amortization period | 3 years | ||||
Patents | ¥ 42,495 | ||||
Goodwill | 67,856 | ||||
Other non-current assets | 261 | ||||
Other current liabilities | 8,868 | ||||
Deferred tax liabilities | 6,374 | ||||
Total identifiable assets | 102,797 | ||||
Other non-current liabilities | ¥ 2,980 | ||||
Patents | 5 years |
DISPOSAL OF SUBSIDIARIES (Detai
DISPOSAL OF SUBSIDIARIES (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2022 | |
DISPOSAL OF SUBSIDIARIES | |||
Gain from deconsolidation of a subsidiary | ¥ 56,522 | ||
Shenzhen Yunding Information Technology Co., Ltd. ("Yunding") | |||
DISPOSAL OF SUBSIDIARIES | |||
Gain from deconsolidation of a subsidiary | ¥ 56,522 | ||
Shenzhen Yunding Information Technology Co., Ltd. ("Yunding") | Disposal by sale | |||
DISPOSAL OF SUBSIDIARIES | |||
Ownership interest sold (as a percent) | 5% | 26.70% | |
Cash consideration | ¥ 20,000 | ¥ 22,500 | |
Previous intercompany loan, outstanding principal | ¥ 24,514 | ||
Shenzhen Yunding Information Technology Co., Ltd. ("Yunding") | Disposal by sale | Shenzhen Yunding Information Technology Co., Ltd. ("Yunding") | |||
DISPOSAL OF SUBSIDIARIES | |||
Ownership interest (as a percent) | 24.30% |
INVENTORIES, NET (Details)
INVENTORIES, NET (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
INVENTORIES, NET | |||
Raw materials | ¥ 97,266 | ¥ 282,939 | |
Work in process | 130,536 | 224,013 | |
Finished goods | 794,121 | 742,375 | |
Inventories, net | ¥ 1,021,923 | $ 148,165 | ¥ 1,249,327 |
INVENTORIES, NET - Write downs
INVENTORIES, NET - Write downs (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
INVENTORIES, NET | |||
Provision for excess and obsolete inventories | ¥ 39,551 | ¥ 51,336 | ¥ 64,223 |
SHORT-TERM INVESTMENTS (Details
SHORT-TERM INVESTMENTS (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Schedule Of Investments [Abstract] | |||
Short-term investments (including available-for-sale debt securities measured at fair value of RMB19,351 and RMB34,316 as of December 31, 2021 and 2022, respectively) | ¥ 34,316 | $ 4,975 | ¥ 19,351 |
SHORT-TERM INVESTMENTS - Additi
SHORT-TERM INVESTMENTS - Additional information (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
LONG-TERM INVESTMENTS | ||||
Payments to acquire investment | ¥ 16,339 | $ 2,369 | ||
Unrealized gain on available-for-sale investments and others | 7,096 | ¥ 0 | ¥ 4,017 | |
Others | ||||
LONG-TERM INVESTMENTS | ||||
Unrealized gain on available-for-sale investments and others | ¥ 2,006 | ¥ 1,240 | ¥ 1,243 |
PREPAID EXPENSES AND OTHER CU_3
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |||
Value-added tax recoverable | ¥ 4,648 | ¥ 198,189 | |
Other receivables | 44,951 | 57,039 | |
Prepaid expenses | 53,682 | 51,156 | |
Advances to suppliers | 1,758 | 7,838 | |
Rental deposits | 3,213 | 816 | |
Total | ¥ 108,252 | $ 15,694 | ¥ 315,038 |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT, NET (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
PROPERTY, PLANT AND EQUIPMENT, NET | |||
Property, plant and equipment, gross | ¥ 203,177 | ¥ 195,377 | |
Less: accumulated depreciation | (112,238) | (70,832) | |
Property, plant and equipment, net | 100,605 | $ 14,586 | 133,873 |
Software and electronic equipment | |||
PROPERTY, PLANT AND EQUIPMENT, NET | |||
Property, plant and equipment, gross | 77,693 | 78,854 | |
Buildings | |||
PROPERTY, PLANT AND EQUIPMENT, NET | |||
Property, plant and equipment, gross | 34,764 | 34,764 | |
Leasehold improvements | |||
PROPERTY, PLANT AND EQUIPMENT, NET | |||
Property, plant and equipment, gross | 90,720 | 81,759 | |
Construction in progress | |||
PROPERTY, PLANT AND EQUIPMENT, NET | |||
Property, plant and equipment, gross | ¥ 9,666 | ¥ 9,328 |
PROPERTY, PLANT AND EQUIPMENT_4
PROPERTY, PLANT AND EQUIPMENT, NET - Additional Information (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
PROPERTY, PLANT AND EQUIPMENT, NET | |||
Depreciation expense | ¥ 41,406 | ¥ 35,109 | ¥ 14,949 |
Impairment charges | ¥ 0 | ¥ 0 | ¥ 0 |
INTANGIBLE ASSETS, NET (Details
INTANGIBLE ASSETS, NET (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Intangible assets with finite lives: | |||
Patents and trademark | ¥ 131,480 | ¥ 128,332 | |
Less: accumulated amortization | 54,603 | 37,391 | |
Intangible assets, net | 123,300 | $ 17,877 | 135,582 |
Domain name | |||
Intangible assets with indefinite lives: | |||
Intangible assets with indefinite lives | 2,024 | 2,024 | |
Insurance brokerage license, trademark and others | |||
Intangible assets with indefinite lives: | |||
Intangible assets with indefinite lives | ¥ 44,399 | ¥ 42,617 |
INTANGIBLE ASSETS, NET - Additi
INTANGIBLE ASSETS, NET - Additional information (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
INTANGIBLE ASSETS, NET | |||
Amortization of intangible assets | ¥ 17,212 | ¥ 16,775 | ¥ 12,180 |
2023 | 17,374 | ||
2024 | 17,374 | ||
2025 | 13,600 | ||
2026 | 9,097 | ||
2027 | 9,097 | ||
Thereafter | ¥ 10,335 |
LONG-TERM INVESTMENTS (Details)
LONG-TERM INVESTMENTS (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
LONG-TERM INVESTMENTS | |||
Long-term investments | ¥ 1,686,628 | $ 244,538 | ¥ 1,552,591 |
Jiangsu Yitong | |||
LONG-TERM INVESTMENTS | |||
Equity method investments | 968,242 | 960,832 | |
Huaying Fund I | |||
LONG-TERM INVESTMENTS | |||
Equity method investments | 60,262 | 61,014 | |
Huaying Fund II | |||
LONG-TERM INVESTMENTS | |||
Equity method investments | 212,803 | 200,067 | |
Yunding | |||
LONG-TERM INVESTMENTS | |||
Available-for-sale investments | 74,912 | 50,431 | |
Others | |||
LONG-TERM INVESTMENTS | |||
Available-for-sale investments | 73,907 | 58,018 | |
Sifive, Inc. ("Sifive") | |||
LONG-TERM INVESTMENTS | |||
Equity securities without readily determinable fair value | 95,613 | 21,759 | |
AliveCor, Inc. ("Alivecor") | |||
LONG-TERM INVESTMENTS | |||
Equity securities without readily determinable fair value | 24,582 | 14,988 | |
Promaxo, Inc. | |||
LONG-TERM INVESTMENTS | |||
Equity securities without readily determinable fair value | 27,589 | 25,490 | |
Others | |||
LONG-TERM INVESTMENTS | |||
Equity securities without readily determinable fair value | 91,141 | 81,775 | |
Equity method investments | 53,164 | 46,548 | |
Hyperfine Inc. | |||
LONG-TERM INVESTMENTS | |||
Equity securities with readily determinable fair value Hyperfine Inc. | ¥ 4,413 | ¥ 31,669 |
LONG-TERM INVESTMENTS - Additio
LONG-TERM INVESTMENTS - Additional information (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | ||||||||||
Mar. 31, 2021 CNY (¥) | Feb. 28, 2021 CNY (¥) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2019 CNY (¥) | Dec. 31, 2019 USD ($) | Dec. 31, 2018 CNY (¥) | Dec. 31, 2016 CNY (¥) | Feb. 29, 2020 | |
LONG-TERM INVESTMENTS | ||||||||||||
Purchase of long term investments | ¥ 12,733,000 | $ 1,846 | ¥ 1,072,783,000 | ¥ 82,221,000 | ||||||||
Gain from fair value change of long-term investments | 51,817,000 | 7,513 | 12,325,000 | |||||||||
(Loss)/ Income from equity method investments | 17,657,000 | $ 2,560 | ¥ 41,028,000 | (4,749,000) | ||||||||
Disposal by sale | Shenzhen Yunding Information Technology Co., Ltd. ("Yunding") | ||||||||||||
LONG-TERM INVESTMENTS | ||||||||||||
Percentage of sale of investments | 5% | |||||||||||
Unrealized gain in other comprehensive income/(loss) | ¥ 20,943,000 | ¥ 903,000 | 0 | |||||||||
Realized gain on disposal | 13,507,000 | |||||||||||
Patents | Minimum | ||||||||||||
LONG-TERM INVESTMENTS | ||||||||||||
Estimated useful life | 3 years | 3 years | ||||||||||
Patents | Maximum | ||||||||||||
LONG-TERM INVESTMENTS | ||||||||||||
Estimated useful life | 7 years | 7 years | ||||||||||
Jiangsu Yitong | ||||||||||||
LONG-TERM INVESTMENTS | ||||||||||||
Purchase of long term investments | ¥ 959,680,000 | |||||||||||
Equity interests (as a percent) | 29.99% | 0.01% | ||||||||||
(Loss)/ Income from equity method investments | ¥ 7,580,000 | 1,152,000 | ||||||||||
Equity method investments | 968,242,000 | 960,832,000 | ||||||||||
Share of net assets | 137,302,000 | |||||||||||
Difference between the total consideration and the proportion of net assets | 813,101,000 | 823,530,000 | ||||||||||
Jiangsu Yitong | Goodwill | ||||||||||||
LONG-TERM INVESTMENTS | ||||||||||||
Positive basis difference | 636,672,000 | 636,672,000 | ||||||||||
Jiangsu Yitong | Intangible assets | ||||||||||||
LONG-TERM INVESTMENTS | ||||||||||||
Positive basis difference | 172,940,000 | 173,524,000 | ||||||||||
Jiangsu Yitong | Other assets | ||||||||||||
LONG-TERM INVESTMENTS | ||||||||||||
Positive basis difference | 3,489,000 | 13,334,000 | ||||||||||
Huaying Fund I | ||||||||||||
LONG-TERM INVESTMENTS | ||||||||||||
Purchase of long term investments | ¥ 50,000,000 | |||||||||||
(Loss)/ Income from equity method investments | (752,000) | 7,910,000 | (2,452,000) | |||||||||
Equity method investments | 60,262,000 | 61,014,000 | ||||||||||
Huaying Fund II | ||||||||||||
LONG-TERM INVESTMENTS | ||||||||||||
Purchase of long term investments | ¥ 68,000,000 | ¥ 102,000,000 | ||||||||||
(Loss)/ Income from equity method investments | 12,737,000 | 24,434,000 | 5,297,000 | |||||||||
Equity method investments | 212,803,000 | 200,067,000 | ||||||||||
Sifive | ||||||||||||
LONG-TERM INVESTMENTS | ||||||||||||
Purchase of long term investments | ¥ 12,332,000 | |||||||||||
Equity interests (as a percent) | 1.01% | |||||||||||
Equity securities with readily determinable fair value Hyperfine Inc. | 66,322,000 | 0 | 3,304,000 | |||||||||
Alivecor | ||||||||||||
LONG-TERM INVESTMENTS | ||||||||||||
Purchase of long term investments | $ | $ 1,000 | |||||||||||
Equity interests (as a percent) | 0.56% | |||||||||||
Equity securities with readily determinable fair value Hyperfine Inc. | 8,620,000 | 0 | ¥ 7,728,000 | |||||||||
Interest rate (as a percent) | 3% | 3% | ||||||||||
Promaxo | ||||||||||||
LONG-TERM INVESTMENTS | ||||||||||||
Purchase of long term investments | $ | $ 4,000 | |||||||||||
Equity interests (as a percent) | 4.05% | |||||||||||
Gain from fair value change of long-term investments | 0 | 0 | ¥ 0 | |||||||||
Hyperfine | ||||||||||||
LONG-TERM INVESTMENTS | ||||||||||||
Equity securities with readily determinable fair value Hyperfine Inc. | ¥ 28,466,000 | ¥ 194,000 | ||||||||||
Huaying Fund II | Huaying Fund I | ||||||||||||
LONG-TERM INVESTMENTS | ||||||||||||
Equity method investment, ownership percentage | 49.50% | |||||||||||
Huaying Fund II | Huaying Fund II | ||||||||||||
LONG-TERM INVESTMENTS | ||||||||||||
Equity method investment, ownership percentage | 34% | 34% | ||||||||||
Shenzhen Yunding Information Technology Co., Ltd. ("Yunding") | ||||||||||||
LONG-TERM INVESTMENTS | ||||||||||||
Purchase of long term investments | ¥ 22,000,000 | |||||||||||
Shenzhen Yunding Information Technology Co., Ltd. ("Yunding") | Minimum | ||||||||||||
LONG-TERM INVESTMENTS | ||||||||||||
Interest rate | 4.35% | |||||||||||
Shenzhen Yunding Information Technology Co., Ltd. ("Yunding") | Maximum | ||||||||||||
LONG-TERM INVESTMENTS | ||||||||||||
Interest rate | 8.70% | |||||||||||
Shenzhen Yunding Information Technology Co., Ltd. ("Yunding") | Disposal by sale | Shenzhen Yunding Information Technology Co., Ltd. ("Yunding") | ||||||||||||
LONG-TERM INVESTMENTS | ||||||||||||
Equity method investment, ownership percentage | 24.30% |
LONG-TERM INVESTMENTS - Equity
LONG-TERM INVESTMENTS - Equity method investments (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2022 USD ($) | |
LONG-TERM INVESTMENTS | |||||
Revenue | ¥ 4,142,862 | $ 600,659 | ¥ 6,250,109 | ¥ 6,433,363 | |
Gross profit | 803,116 | 116,441 | 1,305,642 | 1,332,665 | |
Net income (loss) | (289,001) | (41,901) | 136,952 | 229,706 | |
Net income attributable to ordinary shareholders | (288,308) | $ (41,801) | 137,803 | 228,753 | |
Non-current assets | 50,389 | 19,593 | $ 7,306 | ||
Current liabilities | 1,668,668 | 2,152,132 | $ 241,933 | ||
Equity method investments | |||||
LONG-TERM INVESTMENTS | |||||
Revenue | 412,975 | 330,685 | 28,087 | ||
Gross profit | 147,434 | 198,495 | 15,114 | ||
Income from operations | 68,663 | 140,006 | 3,011 | ||
Net income (loss) | 66,039 | 137,681 | 3,042 | ||
Net income attributable to ordinary shareholders | 66,039 | 137,681 | ¥ 3,042 | ||
Current assets | 825,465 | 941,812 | |||
Non-current assets | 913,919 | 780,128 | |||
Current liabilities | 88,454 | 122,430 | |||
Non-current liabilities | ¥ 1,386 | ¥ 36,807 |
FAIR-VALUE MEASUREMENT (Details
FAIR-VALUE MEASUREMENT (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Fair Value Assets Measured On Recurring Basis [Line Items] | |||
Short-term investments (including available-for-sale debt securities measured at fair value of RMB19,351 and RMB34,316 as of December 31, 2021 and 2022, respectively) | ¥ 34,316 | $ 4,975 | ¥ 19,351 |
Long-term investments (including available-for-sale debt securities measured at fair value of RMB108,448 and RMB148,819 as of December 31, 2021 and 2022, respectively) | 1,686,628 | $ 244,538 | 1,552,591 |
Recurring Basis | |||
Fair Value Assets Measured On Recurring Basis [Line Items] | |||
Available-for-sale investments | 187,548 | 159,468 | |
Recurring Basis | Redeemable Preferred Shares | |||
Fair Value Assets Measured On Recurring Basis [Line Items] | |||
Long-term investments (including available-for-sale debt securities measured at fair value of RMB108,448 and RMB148,819 as of December 31, 2021 and 2022, respectively) | 110,078 | 65,393 | |
Recurring Basis | Fair Value, Inputs, Level 1 | |||
Fair Value Assets Measured On Recurring Basis [Line Items] | |||
Available-for-sale investments | 4,413 | ||
Recurring Basis | Significant Other Observable Inputs Level 2 | |||
Fair Value Assets Measured On Recurring Basis [Line Items] | |||
Available-for-sale investments | 37,044 | 94,075 | |
Recurring Basis | Significant Other Observable Inputs Level 2 | Redeemable Preferred Shares | |||
Fair Value Assets Measured On Recurring Basis [Line Items] | |||
Long-term investments (including available-for-sale debt securities measured at fair value of RMB108,448 and RMB148,819 as of December 31, 2021 and 2022, respectively) | 37,044 | ||
Recurring Basis | Significant Unobservable Inputs Level 3 | |||
Fair Value Assets Measured On Recurring Basis [Line Items] | |||
Available-for-sale investments | 146,091 | 65,393 | |
Recurring Basis | Significant Unobservable Inputs Level 3 | Redeemable Preferred Shares | |||
Fair Value Assets Measured On Recurring Basis [Line Items] | |||
Long-term investments (including available-for-sale debt securities measured at fair value of RMB108,448 and RMB148,819 as of December 31, 2021 and 2022, respectively) | 73,034 | 65,393 | |
Recurring Basis | Convertible Bond | |||
Fair Value Assets Measured On Recurring Basis [Line Items] | |||
Short-term investments (including available-for-sale debt securities measured at fair value of RMB19,351 and RMB34,316 as of December 31, 2021 and 2022, respectively) | 34,316 | 19,351 | |
Long-term investments (including available-for-sale debt securities measured at fair value of RMB108,448 and RMB148,819 as of December 31, 2021 and 2022, respectively) | 38,741 | 43,055 | |
Recurring Basis | Convertible Bond | Significant Other Observable Inputs Level 2 | |||
Fair Value Assets Measured On Recurring Basis [Line Items] | |||
Short-term investments (including available-for-sale debt securities measured at fair value of RMB19,351 and RMB34,316 as of December 31, 2021 and 2022, respectively) | 19,351 | ||
Long-term investments (including available-for-sale debt securities measured at fair value of RMB108,448 and RMB148,819 as of December 31, 2021 and 2022, respectively) | 43,055 | ||
Recurring Basis | Convertible Bond | Significant Unobservable Inputs Level 3 | |||
Fair Value Assets Measured On Recurring Basis [Line Items] | |||
Short-term investments (including available-for-sale debt securities measured at fair value of RMB19,351 and RMB34,316 as of December 31, 2021 and 2022, respectively) | 34,316 | ||
Long-term investments (including available-for-sale debt securities measured at fair value of RMB108,448 and RMB148,819 as of December 31, 2021 and 2022, respectively) | 38,741 | ||
Recurring Basis | Equity securities without readily determinable fair value | |||
Fair Value Assets Measured On Recurring Basis [Line Items] | |||
Long-term investments (including available-for-sale debt securities measured at fair value of RMB108,448 and RMB148,819 as of December 31, 2021 and 2022, respectively) | 4,413 | 31,669 | |
Recurring Basis | Equity securities without readily determinable fair value | Fair Value, Inputs, Level 1 | |||
Fair Value Assets Measured On Recurring Basis [Line Items] | |||
Long-term investments (including available-for-sale debt securities measured at fair value of RMB108,448 and RMB148,819 as of December 31, 2021 and 2022, respectively) | ¥ 4,413 | ||
Recurring Basis | Equity securities without readily determinable fair value | Significant Other Observable Inputs Level 2 | |||
Fair Value Assets Measured On Recurring Basis [Line Items] | |||
Long-term investments (including available-for-sale debt securities measured at fair value of RMB108,448 and RMB148,819 as of December 31, 2021 and 2022, respectively) | ¥ 31,669 |
FAIR-VALUE MEASUREMENT - Reconc
FAIR-VALUE MEASUREMENT - Reconciliation of the fair value measurements (Details) - Redeemable Preferred Shares - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Balance as of January 1, 2021 | ¥ 65,393 | ¥ 1,934 |
Initial recognition | 24,960 | |
Transfer from level 2 | 73,057 | 38,499 |
Unrealized gain | 19,575 | |
Transfer to level 2 | (11,934) | |
Balance as of December 31, 2022 | ¥ 146,091 | ¥ 65,393 |
FAIR-VALUE MEASUREMENT - Additi
FAIR-VALUE MEASUREMENT - Additional Information (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
FAIR-VALUE MEASUREMENT | |||
Impairment equity securities | ¥ 13,858 | ¥ 0 | |
Goodwill impairment loss | 0 | 0 | ¥ 0 |
Intangible assets impairment loss | ¥ 0 | ¥ 0 | ¥ 0 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2019 CNY (¥) |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |||||
Deferred revenue | ¥ 61,164 | ¥ 87,980 | |||
Current operating lease liabilities | ¥ 42,320 | ¥ 50,092 | |||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Total | Total | Total | ||
Accrued payroll and welfare | ¥ 25,875 | ¥ 41,948 | |||
Other tax payable | 20,535 | 23,541 | |||
Product warranty | 17,748 | 24,858 | ¥ 32,782 | ¥ 49,527 | |
Accrued expenses | 6,703 | 17,058 | |||
Refund liabilities | 4,845 | 5,745 | |||
Government subsidies | 1,745 | 3,129 | |||
Reverse factoring | 39,195 | ||||
Other current liabilities | 16,884 | 22,537 | |||
Total | ¥ 197,819 | $ 28,681 | ¥ 316,083 |
ACCRUED EXPENSES AND OTHER CU_4
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES - Product warranty (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |||
Beginning balance | ¥ 24,858 | ¥ 32,782 | ¥ 49,527 |
Provided during the year | 27,146 | 63,540 | 74,742 |
Utilized during the year | (34,256) | (71,464) | (91,487) |
Ending balance | ¥ 17,748 | ¥ 24,858 | ¥ 32,782 |
ACCRUED EXPENSES AND OTHER CU_5
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES - Warranty costs (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cost of Revenue | |||
Warranty costs | |||
Warrant cost | ¥ 27,146 | ¥ 63,540 | ¥ 74,742 |
BANK BORROWINGS (Details)
BANK BORROWINGS (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Short Term Debt [Line Items] | ||||
Bank borrowings received | ¥ 838,859 | $ 121,623 | ¥ 1,473,567 | ¥ 1,207,793 |
Repayments of bank debt | ¥ 727,500 | $ 105,478 | ¥ 953,387 | ¥ 643,122 |
Interest rate (as a percent) | 3.13% | 3.83% | ||
Unused lines of credit available for future borrowing | ¥ 1,789,015 | |||
Jiangsu Yitong | ||||
Short Term Debt [Line Items] | ||||
Bank borrowings | ¥ 464,000 | |||
Percentage of equity interest pledged to bank | 20.48% | |||
Minimum | ||||
Short Term Debt [Line Items] | ||||
Maturity term (in years) | 1 year | 1 year | ||
Maximum | ||||
Short Term Debt [Line Items] | ||||
Maturity term (in years) | 7 years | 7 years |
BANK BORROWINGS - Principal rep
BANK BORROWINGS - Principal repayment schedule of bank borrowings (Details) ¥ in Thousands | Dec. 31, 2022 CNY (¥) |
BANK BORROWINGS | |
2023 | ¥ 512,000 |
2024 | 140,000 |
2025 | 260,000 |
2026 | 65,000 |
2027 and thereafter | ¥ 219,210 |
DIVIDEND (Details)
DIVIDEND (Details) | Mar. 17, 2022 $ / shares |
DIVIDEND | |
Cash dividend per ordinary share | $ 0.025 |
ADR | |
DIVIDEND | |
Cash dividend per ordinary share | $ 0.1 |
REVENUE AND DEFERRED REVENUES -
REVENUE AND DEFERRED REVENUES - Disaggregation of revenue (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Disaggregation Of Revenue | ||||
Revenue | ¥ 4,142,862 | $ 600,659 | ¥ 6,250,109 | ¥ 6,433,363 |
Smart Wearable Devices | ||||
Disaggregation Of Revenue | ||||
Revenue | 1,697,053 | 3,340,857 | 4,438,081 | |
Self-branded products and others | ||||
Disaggregation Of Revenue | ||||
Revenue | ¥ 2,445,809 | ¥ 2,909,252 | ¥ 1,995,282 |
REVENUE AND DEFERRED REVENUES_2
REVENUE AND DEFERRED REVENUES - Contract balances (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
REVENUE AND DEFERRED REVENUES | |||
Accounts receivables | ¥ 682,103 | $ 98,896 | ¥ 537,084 |
Amounts due from related parties | 138,614 | $ 20,097 | 295,614 |
Deferred revenue | 61,164 | 87,980 | |
Refund liability (sales return) | ¥ 6,932 | ¥ 5,745 |
REVENUE AND DEFERRED REVENUES_3
REVENUE AND DEFERRED REVENUES - Additional Information (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation Of Revenue | |||
Amount due from related parties, billed receivable | ¥ 136,001 | ¥ 231,485 | |
Amount due from related parties, unbilled receivable | 2,613 | 64,129 | |
Asset impairment charges | 0 | 0 | ¥ 0 |
Deferred revenue, revenue recognized | 87,980 | 51,780 | 59,585 |
Additions to the allowance | 157,821 | 84,869 | 3,679 |
Deductions from the allowance | 156,634 | 79,490 | 3,895 |
Cooperation Agreement | |||
Disaggregation Of Revenue | |||
Amount due from related parties, billed receivable | ¥ 64,129 | ¥ 80,675 | ¥ 102,687 |
Minimum | |||
Disaggregation Of Revenue | |||
Payment terms (in days) | 30 days | ||
Minimum | Cooperation Agreement | |||
Disaggregation Of Revenue | |||
Payment terms (in days) | 30 days | ||
Maximum | |||
Disaggregation Of Revenue | |||
Payment terms (in days) | 90 days | ||
Maximum | Cooperation Agreement | |||
Disaggregation Of Revenue | |||
Payment terms (in days) | 60 days |
INCOME TAXES (Details)
INCOME TAXES (Details) ¥ / shares in Units, ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||||
Apr. 01, 2018 CNY (¥) | Dec. 31, 2022 CNY (¥) item ¥ / shares | Dec. 31, 2022 USD ($) item | Dec. 31, 2021 CNY (¥) ¥ / shares | Dec. 31, 2020 CNY (¥) ¥ / shares | Dec. 31, 2017 | Dec. 31, 2022 USD ($) | |
Income Tax Contingency [Line Items] | |||||||
Net income (loss) | ¥ (289,001) | $ (41,901) | ¥ 136,952 | ¥ 229,706 | |||
Operating loss | (410,242) | $ (59,480) | 93,942 | 174,196 | |||
Deferred tax assets, valuation allowance | ¥ 42,187 | 6,976 | |||||
Percentage of withholding tax on dividends paid to foreign investors | 10% | 10% | |||||
Aggregate undistributed earnings available for distribution | ¥ 1,993,460 | 2,228,550 | |||||
Deferred tax liabilities attributable to undistributed earning | 0 | ||||||
PRC, Hong Kong, United States and Canada | |||||||
Income Tax Contingency [Line Items] | |||||||
Operating loss | ¥ 1,119,767 | ||||||
Beijing Shunyuan | |||||||
Income Tax Contingency [Line Items] | |||||||
Income tax rate | 15% | 15% | |||||
Anhui Huami, Anhui Health and Shun Yuan | |||||||
Income Tax Contingency [Line Items] | |||||||
Increase in income tax expenses | ¥ 29,784 | ¥ 19,387 | ¥ 41,869 | ||||
Decrease in net income per share - basic | ¥ / shares | ¥ 0.12 | ¥ 0.08 | ¥ 0.17 | ||||
Decrease in net income per share - diluted | ¥ / shares | ¥ 0.12 | ¥ 0.07 | ¥ 0.16 | ||||
Minimum | |||||||
Income Tax Contingency [Line Items] | |||||||
Underpayment of tax liability | ¥ 100 | $ 15 | |||||
Hong Kong | |||||||
Income Tax Contingency [Line Items] | |||||||
Number of nominators | item | 1 | 1 | |||||
Hong Kong | Minimum | |||||||
Income Tax Contingency [Line Items] | |||||||
Net income (loss) | ¥ 2,000 | ||||||
Income tax rate | 8.25% | ||||||
Hong Kong | Maximum | |||||||
Income Tax Contingency [Line Items] | |||||||
Income tax rate | 16.50% | ||||||
United States | |||||||
Income Tax Contingency [Line Items] | |||||||
Income tax rate | 21% | 21% | |||||
Operating loss carry forwards carry forward period | 20 years | ||||||
Netherland | |||||||
Income Tax Contingency [Line Items] | |||||||
Income tax rate | 15% | 15% | |||||
PRC | |||||||
Income Tax Contingency [Line Items] | |||||||
Income tax rate | 25% | 25% | |||||
Operating loss | ¥ 942,754 | ||||||
PRC | Anhui Huami | |||||||
Income Tax Contingency [Line Items] | |||||||
Income tax rate | 15% | 15% | 15% | 15% | |||
PRC | Anhui Huami Health Technology Co., Ltd ("Anhui Health") | |||||||
Income Tax Contingency [Line Items] | |||||||
Income tax rate | 15% | 15% | 15% | 15% | |||
Canada | Minimum | |||||||
Income Tax Contingency [Line Items] | |||||||
Operating loss carry forwards carry forward period | 3 years | 3 years | |||||
Canada | Maximum | |||||||
Income Tax Contingency [Line Items] | |||||||
Operating loss carry forwards carry forward period | 20 years | 20 years |
INCOME TAXES - Current and defe
INCOME TAXES - Current and deferred (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
INCOME TAXES | ||||
Current tax expenses | ¥ 379 | ¥ 31,543 | ¥ 42,257 | |
Deferred tax benefits | (66,254) | (20,798) | (11,103) | |
Income tax expenses/(benefit) | ¥ (65,875) | $ (9,551) | ¥ 10,745 | ¥ 31,154 |
INCOME TAXES - Deferred tax ass
INCOME TAXES - Deferred tax assets (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets | ||
Accrued expenses and other current liabilities | ¥ 46,958 | ¥ 47,005 |
Net operating loss carry forwards | 178,689 | 75,100 |
Intra-entity transfer of certain intangible assets | 26,726 | 28,290 |
Total deferred tax assets | 252,373 | 150,395 |
Less: valuation allowance | (42,187) | (6,976) |
Deferred tax assets, net | ¥ 210,186 | ¥ 143,419 |
INCOME TAXES - Tax Expense Reco
INCOME TAXES - Tax Expense Reconciliation (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
INCOME TAXES | ||||
Income/(loss) before income tax | ¥ (372,533) | $ (54,012) | ¥ 106,669 | ¥ 265,609 |
Tax expense/(benefit) at PRC enterprise income tax rate of 25% | (93,133) | 26,667 | 66,402 | |
Effect of preferential tax rates | (29,784) | 19,387 | 41,869 | |
Tax effect of permanence differences | (53,808) | (34,587) | (20,001) | |
Effect of income tax rate differences in other jurisdictions | 16,071 | 23,666 | 21,625 | |
Change in tax rate | 9,549 | 3,460 | ||
Changes in valuation allowances | 35,211 | 4,837 | 1,537 | |
Income tax expenses/(benefit) | ¥ (65,875) | $ (9,551) | ¥ 10,745 | ¥ 31,154 |
ORDINARY SHARES (Details)
ORDINARY SHARES (Details) $ / shares in Units, ¥ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Dec. 31, 2021 CNY (¥) | Dec. 31, 2022 CNY (¥) shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 CNY (¥) shares | Dec. 31, 2021 USD ($) $ / shares shares | |
Class Of Stock [Line Items] | |||||
Ordinary shares, shares authorized | 405,462,685 | ||||
Ordinary shares, par value | $ / shares | $ 0.0001 | ||||
Common stock shares repurchased, value | ¥ | ¥ 45,365 | ¥ 21,798 | |||
Class B Ordinary Shares | |||||
Class Of Stock [Line Items] | |||||
Ordinary shares, shares authorized | 200,000,000 | 200,000,000 | |||
Ordinary shares, par value | $ / shares | $ 0.0001 | $ 0.0001 | |||
Ordinary shares, shares outstanding | 117,208,247 | 117,208,247 | |||
Class A Ordinary Shares | |||||
Class Of Stock [Line Items] | |||||
Ordinary shares, shares authorized | 9,700,000,000 | 9,700,000,000 | |||
Ordinary shares, par value | $ / shares | $ 0.0001 | $ 0.0001 | |||
Ordinary shares, shares outstanding | 128,130,440 | 133,992,912 | |||
Ordinary Shares | Class A Ordinary Shares | |||||
Class Of Stock [Line Items] | |||||
Common stock shares repurchased | 10,219,572 | 10,219,572 | 2,656,164 | 2,656,164 | |
Common stock shares repurchased, value | ¥ 21,798 | ¥ 45,365 | $ 6,905 | $ 3,411 | |
Ordinary Shares | Class A Ordinary Shares | Weighted Average | |||||
Class Of Stock [Line Items] | |||||
Weighted average share price | $ / shares | $ 0.671 | $ 1.284 | |||
Total Huami Corporation Shareholders' (Deficit)/Equity | |||||
Class Of Stock [Line Items] | |||||
Common stock shares repurchased, value | ¥ | ¥ 45,365 | ¥ 21,798 |
SHARE-BASED PAYMENT - 2015 Plan
SHARE-BASED PAYMENT - 2015 Plan (Details) - shares | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Oct. 21, 2015 | |
2015 Plan | ||||
SHARE-BASED PAYMENT | ||||
Shares authorized (in shares) | 14,328,358 | |||
PRC Plan | Share options | ||||
SHARE-BASED PAYMENT | ||||
Share options granted | 0 | 0 | 0 |
SHARE-BASED PAYMENT - 2018 Plan
SHARE-BASED PAYMENT - 2018 Plan (Details) ¥ in Thousands | 12 Months Ended | ||||||
Jan. 01, 2018 shares | Dec. 31, 2022 $ / shares | Dec. 31, 2022 CNY (¥) shares | Dec. 31, 2021 $ / shares | Dec. 31, 2021 CNY (¥) shares | Dec. 31, 2020 $ / shares | Dec. 31, 2020 CNY (¥) shares | |
SHARE-BASED PAYMENT | |||||||
Share-based compensation expense | ¥ | ¥ 49,107 | ¥ 83,122 | ¥ 65,154 | ||||
2018 Plan | Share options | |||||||
SHARE-BASED PAYMENT | |||||||
Shares authorized (in shares) | shares | 9,559,607 | ||||||
Increase in authorized shares (as percent of outstanding shares) | 1% | ||||||
Granted (in shares) | shares | 1,492,332 | 8,988,000 | 4,030,108 | ||||
Share options granted exercise price | $ / shares | $ 0 | $ 0.01 | $ 0 | ||||
Share-based compensation expense | ¥ | ¥ 32,916 | ¥ 64,415 | ¥ 42,316 |
SHARE-BASED PAYMENT - Share Opt
SHARE-BASED PAYMENT - Share Options Fair Value Assumption (Details) - ¥ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
SHARE-BASED PAYMENT | |||
Risk-free interest rate, minimum | 0.67% | ||
Expected volatility, minimum | 51.90% | ||
Share options | |||
SHARE-BASED PAYMENT | |||
Risk-free interest rate | 4.25% | 1.66% | |
Risk-free interest rate, maximum | 0.72% | ||
Expected volatility | 52.40% | 52.20% | |
Expected volatility, maximum | 52% | ||
Expected life of option (years) | 10 years | 10 years | 10 years |
Expected dividend yield | 0% | 0% | 0% |
Weighted average share price | ¥ 1.96 | ||
Share options | Minimum | |||
SHARE-BASED PAYMENT | |||
Weighted average share price | ¥ 8.05 | ¥ 21.60 | |
Share options | Maximum | |||
SHARE-BASED PAYMENT | |||
Weighted average share price | ¥ 12.98 | ¥ 23.10 |
SHARE-BASED PAYMENT - Share O_2
SHARE-BASED PAYMENT - Share Options Activity (Details) - 2015 and 2018 Plans - Share options $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) $ / shares shares | |
Share number | |
Outstanding at beginning of year | 16,798,153 |
Granted (in shares) | 1,492,332 |
Exercised | (4,357,100) |
Canceled and forfeited | (1,105,682) |
Outstanding at end of year | 12,827,703 |
Exercisable | 7,904,689 |
Expected to vest | 4,923,014 |
Weighted average exercise price per option | |
Outstanding at beginning of year (in USD per share) | $ / shares | $ 0.07 |
Cancelled and forfeited (in USD per share) | $ / shares | 0.45 |
Outstanding at end of year (in USD per share) | $ / shares | 0.05 |
Exercisable (in USD per share) | $ / shares | $ 0.08 |
Weighted-average remaining exercise contractual life (years) | |
Outstanding | 7 years 3 months 3 days |
Exercisable | 6 years 8 months 1 day |
Excepted to vest | 8 years 2 months 15 days |
Aggregate intrinsic value | |
Outstanding | $ | $ 4,389 |
Exercisable | $ | 2,604 |
Expected to vest | $ | $ 1,784 |
SHARE-BASED PAYMENT - Share O_3
SHARE-BASED PAYMENT - Share Options Other Disclosures (Details) - CNY (¥) ¥ / shares in Units, ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
SHARE-BASED PAYMENT | |||
Share-based compensation expense | ¥ 49,107 | ¥ 83,122 | ¥ 65,154 |
Share options | |||
SHARE-BASED PAYMENT | |||
Intrinsic value share options exercised | ¥ 10,894 | ¥ 14,094 | ¥ 32,010 |
Weighted average grant date fair value of options granted | ¥ 1.96 | ¥ 12.95 | ¥ 22.42 |
Unrecognized compensation expenses related to the options | ¥ 47,616 |
SHARE-BASED PAYMENT - Restricte
SHARE-BASED PAYMENT - Restricted Stock Units (Details) - CNY (¥) ¥ / shares in Units, ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
SHARE-BASED PAYMENT | |||
Share-based compensation expense | ¥ 49,107 | ¥ 83,122 | ¥ 65,154 |
Restricted Stock Units | |||
SHARE-BASED PAYMENT | |||
Vesting rights percentage | 20% | 20% | 20% |
Reacquisition of non-vested shares, consideration | ¥ 0 | ¥ 0 | ¥ 0 |
Aggregate fair value of the restricted shares at the grant dates | ¥ 137,036 | ||
Weighted average grant-date fair value of non-vested shares | ¥ 22 | ||
Fair value of vested shares | ¥ 26,079 | 11,648 | 21,020 |
Share-based compensation expense | 16,191 | ¥ 18,707 | ¥ 22,838 |
Unrecognized compensation cost | ¥ 29,700 | ||
Weighted average vesting period over which unrecognized compensation costs is expected to be recognized | 2 years 1 month 17 days | ||
Weighted average grant date fair value (in RMB per share) | ¥ 6.88 | ¥ 21.44 | ¥ 22.84 |
Restricted Shares | |||
Balance at the beginning of the year (in shares) | 3,079,436 | ||
Granted (in shares) | 100,972 | 2,034,432 | 2,216,120 |
Vested (in shares) | (1,268,408) | ||
Cancelled and forfeited (in shares) | (213,700) | ||
Balance at the end of the year (in shares) | 1,698,300 | 3,079,436 | |
Restricted Stock Units | Annual Basis Ending on Fourth Anniversary of Grant Date | |||
SHARE-BASED PAYMENT | |||
Vesting period (in years) | 5 years | 5 years | 5 years |
Restricted Stock Units | Minimum | |||
SHARE-BASED PAYMENT | |||
Vesting period (in years) | 4 years | 4 years | 4 years |
Restricted Stock Units | Maximum | |||
SHARE-BASED PAYMENT | |||
Vesting period (in years) | 5 years | 5 years | 5 years |
SHARE-BASED PAYMENT - Share-bas
SHARE-BASED PAYMENT - Share-based Compensation Recognized (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
SHARE-BASED PAYMENT | |||
Total stock-based compensation expense | ¥ 49,107 | ¥ 83,122 | ¥ 65,154 |
General and administrative | |||
SHARE-BASED PAYMENT | |||
Total stock-based compensation expense | 21,353 | 32,247 | 38,605 |
Research and development | |||
SHARE-BASED PAYMENT | |||
Total stock-based compensation expense | 23,585 | 42,677 | 23,978 |
Selling and marketing | |||
SHARE-BASED PAYMENT | |||
Total stock-based compensation expense | ¥ 4,169 | ¥ 8,198 | ¥ 2,571 |
MAINLAND CHINA CONTRIBUTION P_2
MAINLAND CHINA CONTRIBUTION PLAN (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
MAINLAND CHINA CONTRIBUTION PLAN | |||
Total provisions for employee benefits | ¥ 101,345 | ¥ 104,650 | ¥ 64,734 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - segment | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
SEGMENT INFORMATION | |||
Number of operating segments | 2 | 2 | 2 |
SEGMENT INFORMATION - Schedule
SEGMENT INFORMATION - Schedule of Revenues, Cost of Revenues and Gross Profits by Segment (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Segment Reporting Information [Line Items] | ||||
Revenues | ¥ 4,142,862 | ¥ 6,250,109 | ¥ 6,433,363 | |
Cost of revenues | 3,339,746 | 4,944,467 | 5,100,698 | |
Gross profit | 803,116 | $ 116,441 | 1,305,642 | 1,332,665 |
Smart Wearable Devices | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 1,697,053 | 3,340,857 | 4,438,081 | |
Cost of revenues | 1,394,460 | 2,754,086 | 3,706,495 | |
Gross profit | 302,593 | 586,771 | 731,586 | |
Self-branded products and others | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 2,445,809 | 2,909,252 | 1,995,282 | |
Cost of revenues | 1,945,286 | 2,190,381 | 1,394,203 | |
Gross profit | ¥ 500,523 | ¥ 718,871 | ¥ 601,079 |
STATUTORY RESERVES AND RESTRI_2
STATUTORY RESERVES AND RESTRICTED NET ASSETS (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Statutory Accounting Practices [Line Items] | |||
Statutory reserve accrued | ¥ 0 | ¥ 0 | ¥ 5,997 |
Restricted net assets | ¥ 252,220 | ¥ 252,220 | ¥ 180,981 |
PRC | |||
Statutory Accounting Practices [Line Items] | |||
Required maximum percentage of statutory surplus reserve to registered capital | 50% | ||
Required minimum percentage of after tax profits to allocate to statutory common reserve | 10% | ||
Maximum | |||
Statutory Accounting Practices [Line Items] | |||
Percentage of profit appropriation made to reserve fund required amount of registered capital | 50% |
RELATED PARTY BALANCES AND TR_3
RELATED PARTY BALANCES AND TRANSACTIONS - Balances (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Amount due from related parties: | |||
Amounts due from related parties | ¥ 138,614 | $ 20,097 | ¥ 295,614 |
Amounts due from related parties | 144,947 | 295,614 | |
Amount due to related parties, current: | |||
Amount due to related parties | 40,978 | $ 5,941 | 50,123 |
Xiaomi Communication Technology Co. Ltd.("Xiaomi Communication") | |||
Amount due from related parties: | |||
Amounts due from related parties | 117,944 | 286,341 | |
Amount due to related parties, current: | |||
Amount due to related parties | 2,087 | ||
Field Medical | |||
Amount due from related parties: | |||
Amounts due from related parties | 10,375 | ||
Hefei Jingyu | |||
Amount due from related parties: | |||
Amounts due from related parties | 2,648 | 1,101 | |
Amount due to related parties, current: | |||
Amount due to related parties | 36,864 | 48,052 | |
Hefei LianRui Microelectronics Technology Co. Ltd | |||
Amount due from related parties: | |||
Amounts due from related parties | 2,452 | 2,452 | |
Yunding | |||
Amount due from related parties: | |||
Amounts due from related parties | 2,330 | 2,330 | |
Gongqingcheng Yunding | |||
Amount due from related parties: | |||
Amounts due from related parties | 2,500 | 2,500 | |
Xiaomi Technology Co. Ltd. ("Xiaomi Technology") | |||
Amount due to related parties, current: | |||
Amount due to related parties | 1,965 | 1,562 | |
Others | |||
Amount due from related parties: | |||
Amounts due from related parties | 365 | 890 | |
Amount due to related parties, current: | |||
Amount due to related parties | 62 | ¥ 509 | |
A vice president | |||
Amount due from related parties, non-current: | |||
Amount due from related parties, Non-current | ¥ 6,333 |
RELATED PARTY BALANCES AND TR_4
RELATED PARTY BALANCES AND TRANSACTIONS - Transactions - Related party (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Related Party Transaction [Line Items] | |||
Sales to related parties | ¥ 1,703,995 | ¥ 3,350,032 | ¥ 4,449,757 |
Xiaomi Communication Technology Co. Ltd.("Xiaomi Communication") | |||
Related Party Transaction [Line Items] | |||
Sales to related parties | 1,697,053 | 3,340,857 | 4,447,957 |
Xiaomi Youpin | |||
Related Party Transaction [Line Items] | |||
Sales to related parties | ¥ 6,942 | ¥ 9,175 | |
Others | |||
Related Party Transaction [Line Items] | |||
Sales to related parties | ¥ 1,800 |
RELATED PARTY BALANCES AND TR_5
RELATED PARTY BALANCES AND TRANSACTIONS - Transactions - Others (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Hefei Jingyu | |||
Related Party Transaction [Line Items] | |||
Purchase from related parties | ¥ 222,174 | ¥ 146,847 | |
Others | |||
Related Party Transaction [Line Items] | |||
Purchase from related parties | ¥ 12,000 |
RELATED PARTY BALANCES AND TR_6
RELATED PARTY BALANCES AND TRANSACTIONS - Additional information (Details) - CNY (¥) ¥ in Thousands | 1 Months Ended | 12 Months Ended | ||
Jan. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | |
Xiaomi Communication, Information, Technology | ||||
Related Party Transaction [Line Items] | ||||
Receivables from the sales of products and services | ¥ 2,613 | ¥ 64,129 | ||
Hefei Jingyu | ||||
Related Party Transaction [Line Items] | ||||
Purchase from related parties | ¥ 222,174 | ¥ 146,847 | ||
Yunding | ||||
Related Party Transaction [Line Items] | ||||
Ownership interest sold (as a percent) | 26.70% | |||
Cash consideration | ¥ 22,500 | |||
Proceeds from disposal of equity interest in subsidiary | ¥ 20,000 |
NET INCOME_(LOSS) PER SHARE (De
NET INCOME/(LOSS) PER SHARE (Details) ¥ / shares in Units, $ / shares in Units, ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) ¥ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 CNY (¥) ¥ / shares shares | Dec. 31, 2020 CNY (¥) ¥ / shares shares | |
Basic net income per share calculation Numerator: | ||||
Net income | ¥ (288,308) | $ (41,801) | ¥ 137,803 | ¥ 228,753 |
Net income attributed to ordinary shareholders for computing net income per ordinary shares-basic | ¥ (288,308) | $ (41,801) | ¥ 137,803 | ¥ 228,753 |
Denominator: | ||||
Weighted average ordinary shares outstanding used in computing net income per ordinary shares - basic | 246,283,328 | 246,283,328 | 252,167,610 | 248,470,684 |
Net income per ordinary share attributable to ordinary shareholders-basic | (per share) | ¥ (1.17) | $ (0.17) | ¥ 0.55 | ¥ 0.92 |
Diluted net income per share calculation | ||||
Net income attributed to ordinary shareholders for computing net income per ordinary shares-basic | ¥ (288,308) | $ (41,801) | ¥ 137,803 | ¥ 228,753 |
Denominator: | ||||
Ordinary share - basic | 246,283,328 | 246,283,328 | 252,167,610 | 248,470,684 |
Effect of potentially diluted stock options, restricted stocks and RSUs | 12,201,019 | 11,881,310 | ||
Weighted average ordinary shares outstanding used in computing net income per ordinary shares - dilute | 246,283,328 | 246,283,328 | 264,368,629 | 260,351,994 |
Net income per ordinary share attributable to ordinary shareholders-diluted | (per share) | ¥ (1.17) | $ (0.17) | ¥ 0.52 | ¥ 0.88 |
NET INCOME_(LOSS) PER SHARE - A
NET INCOME/(LOSS) PER SHARE - Anti-dilutive Securities Excluded from Calculation of Diluted Net (Loss)/Income Per Ordinary Shares (Details) - shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Shares issuable upon exercise of share options, restricted shares and RSUs | |||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Anti-dilutive securities excluded from calculation of diluted net (loss)/income per ordinary shares | 7,390,487 | 301,946 | 89,165 |
LEASES - Lease Costs Included i
LEASES - Lease Costs Included in Statements of Operations (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Lease Cost | |||
Operating lease cost | ¥ 37,428 | ¥ 41,595 | ¥ 57,080 |
Sublease income | (8,796) | (3,591) | (537) |
Total lease cost | ¥ 28,632 | ¥ 38,004 | ¥ 56,543 |
LEASES - Cash Flow from operati
LEASES - Cash Flow from operating leases (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | ¥ 50,357 | ¥ 49,644 |
Operating leases | ¥ 1,674 | ¥ 2,157 |
Weighted average remaining lease term, operating leases | 2 years 10 days | 2 years 9 months 18 days |
Weighted average discount rate, operating leases | 5.32% | 5.27% |
LEASES - Maturity Analysis (Det
LEASES - Maturity Analysis (Details) ¥ in Thousands | Dec. 31, 2022 CNY (¥) |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
2023 | ¥ 43,701 |
2024 | 26,291 |
2025 | 8,441 |
Total lease payments | 78,433 |
Less: imputed interest | (4,423) |
Present value of lease liabilities | ¥ 74,010 |
SUBSEQUENT EVENT - (Details)
SUBSEQUENT EVENT - (Details) | Jan. 11, 2023 shares |
Subsequent Event | 2023 Share Incentive Plan | |
Subsequent Event [Line Items] | |
Maximum aggregate number of Class A ordinary shares available for grant as awards | 10,322,520 |