![\"Zepp](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2026\/06\/1781063839_349_w=9999.png\")
<\/p>\n
A gross margin of 37.7% appears to be down from the record 40.4% posted in Q4 2025. Leon Deng pointed to two causes:<\/p>\n
- \n
- the standard first-quarter refresh of lower-margin entry-level lines, and<\/li>\n
- elevated memory component costs as the industry transitions from DDR4 to DDR5, an issue faced by every competitor.<\/li>\n<\/ul>\n
Turning to the cost side in a tad more detail, operating expenses rose to $37.1m from $32.7m, front-loaded for a first half heavy with product launch costs. GAAP net loss was $19.6m, nearly flat on $19.7m a year ago.<\/p>\n
Against expectations<\/p>\n
The disconnect between Q1 results and the share price reaction is the story of this quarter<\/strong>. Revenue grew 33.8%. The operating loss narrowed. Gross profit rose 35%. By any standard reading of an earnings release, this was a strong performance.<\/p>\n
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![\"NYSE](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2026\/06\/w=800,h=413.png\")
<\/a><\/p>\n\t\t\t\t
![\"ZEPP](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2026\/06\/w=800,h=512.png\")
<\/a><\/p>\n\u00a0<\/p>\n
Sadly, the market response told a different story. Two factors appear to be in play.<\/p>\n
- \n
- First, the balance sheet. Current liabilities exceed current assets by $35m<\/strong>, and short-term borrowings nearly doubled in the quarter. Management confirmed this is a reclassification of maturing debt rather than new borrowing, and the $103.2m cash position provides cover. Deng told analysts: \u201cOur longer-term focus remains on maintaining disciplined control over total debt levels.\u201d A balance sheet that reads as stretched is a sufficient reason to sell without reading further.<\/li>\n
- Second, the profitability timeline. Q3 2025 reached adjusted operating breakeven at $75.8m revenue. Q2 2026 is guided at $63-68m, well below that level. Deng was direct: \u201cFor the 2026 full year, we\u2019re looking at profitable growth over 2025.\u201d That requires delivering over the next six months, starting now.<\/li>\n<\/ul>\n
An interesting aside<\/strong> with a future-leaning perspective. Zepp spent 25.4 per cent<\/strong> of Q1 revenue on R&D against Garmin\u2019s<\/a> 16.9 per cen<\/strong>t. Zepp is building a platform from scratch; Garmin is maintaining one. Nevertheless, Zepp cannot be accused of failing to invest in its future. As always, it\u2019s a case of whether the brand invests wisely. I\u2019ll cover that later with a more considered piece on what appears to be a Hail Mary play with the move toward HYROX.<\/p>\n
What\u2019s coming next<\/p>\n
Two signals point to a stronger H2.<\/p>\n
- \n
- The first is the product pipeline. Sources at Amazfit have confirmed 10 or more launches in 2026,<\/strong> with several still to come. The Helio Ring 2<\/a> and Helio Strap 2<\/a> are both confirmed for H2. The Falcon 2, Amazfit\u2019s premium titanium multi-sport watch competing directly at the Garmin Fenix tier, has leaked via app code and a regulatory filing. The full picture of Amazfit\u2019s 2026 product launches<\/a> is here.<\/li>\n
- The second is pricing. ASP rose more than 20 per cent year-on-year in Q1. None of the 2026 launches has been discounted. Wang Huang was explicit: \u201cusers are showing a growing willingness to engage with Amazfit at more premium price tiers.\u201d Q3 and Q4 pricing will determine whether gross margin returns to Q4 2025 territory or stays compressed by memory costs. The full analysis of the Amazfit price rise story<\/a> is here.<\/li>\n<\/ul>\n
Consider:<\/strong> In many ways, Amazfit appears to want to compete with Garmin head-on, e.g., the Falcon with the Fenix and the Cheetah with the Forerunner 970. Where are the brand\u2019s products and features that try to carve out a new niche with true marketing innovation? OK, HYROX is one, but where are the niche plays like climbing and fishing from Coros, or the Running Track mode (again by the same company)? I sometimes say negative things about Coros, but never that the company fails to innovate. Innovate or die.<\/p>\n
My take<\/p>\n
The operational picture is improving. Revenue growing, margins expanding, losses narrowing. The share price fall reflects a balance sheet that looks stretched on first reading, a profitability timeline that keeps moving, and an uncertain product trajectory. The company reached adjusted operating breakeven once, in Q3 2025, then guided Q2 2026 below that level. Until Zepp posts two or three consecutive quarters at or above breakeven, the market will remain sceptical regardless of how good the watches get.<\/p>\n
For comparison with Garmin\u2019s very different financial position, see Garmin Q1 2026 earnings<\/a> and this site\u2019s longer-term analysis of where Garmin\u2019s structural vulnerabilities lie<\/a>.<\/p>\n
Sources<\/p>\n
Frequently Asked Questions
\nIs Zepp Health profitable?<\/p>\nNo. GAAP net loss in Q1 2026 was $19.6m. Adjusted net loss was $17.9m. The company reached adjusted operating breakeven in Q3 2025 at $75.8m revenue, but Q2 2026 is guided below that level.<\/p>\n
Why did the ZEPP share price fall after Q1 2026 results?<\/p>\n
Current liabilities exceed current assets by $35m, and short-term borrowings nearly doubled in the quarter. The profitability timeline also remains uncertain: Q2 2026 revenue guidance is below the level at which the company previously reached operating breakeven.<\/p>\n
What products is Amazfit launching in H2 2026?<\/p>\n
The Helio Ring 2<\/a> and Helio Strap 2<\/a> are both confirmed. The Falcon 2, a premium titanium multi-sport watch, has leaked but has not been officially confirmed. Further T-Rex family additions have also been indicated.<\/p>\n
How does Zepp Health\u2019s R&D spending compare to Garmin\u2019s?<\/p>\n
Zepp spent 25.4 per cent of Q1 2026 revenue on R&D. Garmin spent 16.9 per cent. In absolute terms, Garmin outspends Zepp by 22 times, but Zepp\u2019s R&D intensity as a proportion of revenue is higher, reflecting the cost of building a platform from a smaller base.<\/p>\n
Last Updated on 9 June 2026 by the5krunner<\/a><\/p>\n
My favourite kit and nutrition<\/p>\n
- \n
- Maurten<\/a> \u2014 the race nutrition trusted by elite athletes. Gels and drink mix engineered to be easy on the stomach.<\/li>\n
- Garmin 90-degree charging adapter<\/a> \u2014 the small adapter that keeps your charging cable tidy at the stem. Essential for race day.<\/li>\n
- Garmin charging puck<\/a> \u2014 the fastest and most reliable way to top up your Garmin before a session.<\/li>\n
- Ravemen FR300<\/a> \u2014 front light that mounts directly under your Garmin or Wahoo head unit. Keeps your bars clean and your beam pointed where it matters.<\/li>\n
- Garmin Varia RTL515<\/a> \u2014 radar rear light that alerts you to vehicles approaching from behind. Pairs with your Edge or Garmin watch.<\/li>\n
- Stryd<\/a> \u2014 the footpod that brings running power to your Garmin. The single most useful running upgrade I have made.<\/li>\n
- Favero Assioma Pro RS2<\/a> \u2014 the power meter pedals most serious cyclists end up choosing. Accurate, easy to move between bikes.<\/li>\n<\/ul>\n
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\t\t
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<\/p>\ntfk is the founder and author of the5krunner, an independent endurance sports technology publication. With 20 years of hands-on testing of GPS watches and wearables, and competing in triathlons at an international age-group level, tfk provides in-depth expert analysis of fitness technology for serious athletes and endurance sport competitors. ID<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Zepp Health opened 2026 with record first-quarter revenue, strong growth, and a narrowing operating loss. The market response…\n","protected":false},"author":2,"featured_media":1016738,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[3160],"tags":[23326,1830,1685,281395,53,16,15,98570,98571],"class_list":["post-1016737","post","type-post","status-publish","format-standard","has-post-thumbnail","category-gadgets","tag-amazfit","tag-earnings","tag-gadgets","tag-q1-2026","tag-technology","tag-uk","tag-united-kingdom","tag-zepp","tag-zepp-health"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/116723807450849674","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/1016737","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=1016737"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/1016737\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/1016738"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=1016737"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=1016737"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=1016737"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
- Garmin 90-degree charging adapter<\/a> \u2014 the small adapter that keeps your charging cable tidy at the stem. Essential for race day.<\/li>\n
- The second is pricing. ASP rose more than 20 per cent year-on-year in Q1. None of the 2026 launches has been discounted. Wang Huang was explicit: \u201cusers are showing a growing willingness to engage with Amazfit at more premium price tiers.\u201d Q3 and Q4 pricing will determine whether gross margin returns to Q4 2025 territory or stays compressed by memory costs. The full analysis of the Amazfit price rise story<\/a> is here.<\/li>\n<\/ul>\n
- Second, the profitability timeline. Q3 2025 reached adjusted operating breakeven at $75.8m revenue. Q2 2026 is guided at $63-68m, well below that level. Deng was direct: \u201cFor the 2026 full year, we\u2019re looking at profitable growth over 2025.\u201d That requires delivering over the next six months, starting now.<\/li>\n<\/ul>\n
- First, the balance sheet. Current liabilities exceed current assets by $35m<\/strong>, and short-term borrowings nearly doubled in the quarter. Management confirmed this is a reclassification of maturing debt rather than new borrowing, and the $103.2m cash position provides cover. Deng told analysts: \u201cOur longer-term focus remains on maintaining disciplined control over total debt levels.\u201d A balance sheet that reads as stretched is a sufficient reason to sell without reading further.<\/li>\n