hmi-6k_20180331.htm

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):________________

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):________________

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BEIJING, May 21, 2018 /PRNewswire/ -- Huami Corporation (“Huami” or the “Company”) (NYSE: HMI), a biometric and activity data-driven company with significant expertise in smart wearable technology, today announced its unaudited financial results for the first quarter ended March 31, 2018.

“We delivered strong results that exceeded our expectations in the quarter which provided a solid start to the year,” said Wang Huang, Chairman and CEO. “Revenues for the quarter increased by 77% and adjusted net income attributable to Huami Corporation grew by 818%, both year-over-year. We continue to experience an enthusiastic reception to our products in China and as we expand internationally, where our reputation for delivering great products with exceptional value is fueling demand. Our close relationship with Xiaomi provides us with a partner with established distribution channels and market knowledge that allows international expansion to be a key component of our continued growth strategy.”

David Cui, Chief Financial Officer, said, “The strong sales of both our self-branded and Xiaomi wearable products helped drive a better-than-expected quarter. Our revenue mix shift towards self-branded products, which generally yield both a higher average selling price and a higher gross margin, drove the increase in gross profit in the quarter while disciplined cost controls further enhanced operating profit. Our strong start to the year is representative of our leadership position in the industry, effective product development supported by the growing wearables market and our compelling opportunity for international expansion.”

Revenues increased by 77.0% to RMB585.9 million (US$93.4 million) from RMB331.1 million in the first quarter of 2017, due to an increase in the shipments of both Xiaomi wearable products and self-branded products.

Cost of revenues increased by 70.8% to RMB439.2 million (US$70.0 million) from RMB257.1 million in the first quarter of 2017. The increase was in line with the rapid sales growth of Xiaomi wearable products and self-branded products.

Gross profit increased by 98.3% to RMB146.7 million (US$23.4 million) from RMB74.0 million in the first quarter of 2017. Gross margin increased to 25.0% from 22.3% in the first quarter of 2017. The increase was driven by improved economies of scale and the rapid growth in sales of self-branded products.

Total operating expenses increased by 73.6% to RMB137.8 million (US$22.0 million) from RMB79.4 million in the first quarter of 2017. The Company’s successful IPO and the amendment of certain vesting schedules of previously granted options triggered an acceleration of expense recognition in the first quarter 2018. Excluding share-based compensation expenses, the total operating expenses remained steady compared to the first quarter of 2017.

Research and development expenses increased by 82.3% to RMB73.8 million (US$11.8 million) from RMB40.5 million for the first quarter of 2017, primarily due to an increase in share-based compensation expenses to retain research and development personnel.

General and administrative expenses increased by 72.9% to RMB49.3 million (US$7.9 million) from RMB28.5 million for the first quarter of 2017, primarily due to an increase in share-based compensation expeneses to retain senior management team.

Selling and marketing expenses increased by 41.8% to RMB14.7 million (US$2.4 million) from RMB10.4 million for the first quarter of 2017, primarily due to an increase in salary compensation and share-based compensation expenses to retain sales and marketing personnel.

Operating income was RMB8.8 million (US$1.4 million), compared to operating loss of RMB5.4 million for the first quarter of 2017.

Income before income tax was RMB16.5 million (US$2.6 million), compared to loss before income tax of RMB4.6 million for the first quarter of 2017.

Income tax expenses were RMB2.7 million (US$437 thousand), compared to income tax benefit of RMB603 thousand for the first quarter of 2017.

Net income attributable to Huami Corporation totaled RMB14.8 million (US$2.4 million), compared with net loss attributable to Huami Corporation of RMB4.5 million for the first quarter of 2017.

Net income/(loss) attributable to ordinary shareholders of Huami Corporation increased to RMB8.4 million (US$1.3 million), compared to net loss of RMB14.4 million for the first quarter of 2017.

Basic and diluted net income per share attributable to ordinary shareholders of Huami Corporation was RMB0.05 (US$0.01) and RMB0.05 (US$0.01), respectively, compared to basic and diluted net loss per share of RMB0.23 and RMB0.23, respectively, for the first quarter of 2017.

Adjusted net income attributable to Huami Corporation, which excludes share-based compensation expenses, increased by 817.5% to RMB92.5 million (US$14.8 million) from RMB10.1 million for the first quarter of 2017.

Adjusted basic and diluted net income per share attributable to ordinary shareholders of Huami Corporation was RMB0.47 (US$0.08) and RMB0.39 (US$0.06), respectively, compared to basic and diluted net income per share of RMB0.01 and RMB0.01, respectively, for the first quarter of 2017.

As of March 31, 2018, the Company had cash and cash equivalents of RMB1,117.7 million (US$178.2 million), compared to RMB366.3 million as of December 31, 2017.

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

The Company’s management will hold a conference call at 8:00 a.m. Eastern Time on Monday, May 21, 2018 (8:00 p.m. Beijing Time on May 21, 2018) to discuss financial results and answer questions from investors and analysts. Listeners may access the call by dialing:

A telephone replay will be available two hours after the call until May 28, 2018 by dialing:

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

Huami is a biometric and activity data-driven company with significant expertise in smart wearable technology. Since its inception in 2013, Huami has quickly established its global market leadership and recognition by shipping millions of units of smart wearable devices. In 2017, Huami shipped 18.1 million units of smart wearable devices. Huami has one of the largest biometric and activity databases in the global smart wearables industry. Huami’s mobile apps work hand in hand with its smart wearable devices and provide users with a comprehensive view and analysis of their biometric and activity data. In addition to designing, manufacturing and selling smart bands and watches under its own Amazfit brand, Huami is the sole partner of Xiaomi, a leading mobile internet company and global consumer electronics brand, to design and manufacture Xiaomi-branded smart bands, watches (excluding children watches and quartz watches), scales and associated accessories.

We use adjusted net income, a non-GAAP financial measure, in evaluating our operating results and for financial and operational decision-making purposes. Adjusted net income represents net income excluding share-based compensation expenses, and such adjustment has no impact on income tax.

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

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

On January 1, 2018, we adopted Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”), the new revenue standard, utilizing the modified retrospective transition method. The impact of applying the new revenue standard for the three months ended March 31, 2018 on new shipments made in 2018 resulted in an increase in net product revenues of approximately RMB35.5 million. This increase was offset with revenue related to the second installment received in 2018 from shipments made in 2017 amounting to RMB33.3 million recorded in retained earnings as a result of the adoption of the new standard.

The adjustment is primarily related to the timing of when the second installment payment in the Company's cooperation agreement is recognized. Under the accounting standards in effect in the prior period, the second installment in the Company's cooperation agreement, calculated as 50% of the future net profits from commercial sales made by the customer, was considered contingent and recognized in the period following the commercial sale by the customer, which is when the fee became fixed or determinable.

Under ASC 606, revenue related to the second installment is considered variable consideration and the amount determined to not be probable of significant future reversal, which is the entire second installment, is included in the transaction price utilizing the expected value method. In addition, ASC 606 requires the presentation of sales returns reserve as current liability. The Company's sales return reserve was immaterial as of March 31, 2018.

The Company’s business is primarily conducted in China and the significant majority of revenues generated are denominated in Renminbi (“RMB”). This announcement contains currency conversions of RMB amounts into U.S. dollars (“US$”) solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ are made at a rate of RMB6.2726 to US$1.00, the effective noon buying rate for March 30, 2018 as set forth in the H.10 statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on March 30, 2018, or at any other rate.

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident” and similar statements. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking

statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the cooperation with Xiaomi, the recognition of the Company’s self-branded products; the Company’s growth strategies; trends and competition in global wearable technology market; changes in the Company’s revenues and certain cost or expense accounting policies; governmental policies relating to the Company’s industry and general economic conditions in China and the global. Further information regarding these and other risks is included in the Company’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and the Company undertakes no obligation to update any forward-looking statement, except as required under applicable law.

HUAMI CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)
except for number of shares and per share data, or otherwise noted)

	As of December 31,		As of March 31,
	2017		2018		2018
	RMB		RMB		US$

Assets
Current assets:
Cash and cash equivalents		366,336		1,117,710		178,189
Restricted cash		3,185		—		—
Accounts receivable		32,867		35,545		5,667
Amounts due from related parties, current		578,454		341,427		54,431
Inventories		249,735		405,068		64,577
Short-term investments		13,721		13,491		2,151
Prepaid expenses and other current assets		51,062		42,556		6,785
Total current assets		1,295,360		1,955,797		311,800
Property, plant and equipment, net		28,755		28,579		4,556
Intangible asset, net		5,339		5,309		846
Goodwill		5,930		5,930		945
Long-term investments		85,238		84,907		13,536
Deferred tax assets		41,895		46,802		7,461
Other non-current assets		3,000		4,882		778
Total assets		1,465,517		2,132,206		339,922

	As of December 31,		As of March 31,
	2017		2018		2018
	RMB		RMB		US$

Liabilities
Current liabilities:
Accounts payable		707,782		613,111		97,744
Advance from customers		10,683		41,865		6,674
Amount due to related parties, current		8,143		5,249		837
Accrued expenses and other current liabilities		93,798		76,199		12,147
Income tax payables		21,600		26,269		4,188
Notes payable		5,243		—		—
Bank borrowings		30,000		—		—
Total current liabilities		877,249		762,693		121,590
Deferred tax liabilities		2,470		2,446		390
Amount due to a related party, non-current		3,076		3,120		497
Other non-current liabilities		4,940		9,104		1,451
Total liabilities		887,735		777,363		123,928

	As of December 31,		As of March 31,
		2017		2018	2018
		RMB		RMB	US$

Mezzanine equity
Series A convertible redeemable participating preferred shares		26,770		—	—
Series B-1 convertible redeemable participating preferred shares		26,906		—	—
Series B-2 convertible redeemable participating preferred shares		295,942		—	—
Total mezzanine equity		349,618		—	—
Equity
Ordinary shares		56		150	24
Additional paid-in capital		72,427		1,159,871	184,911
Accumulated retained earnings³		131,192		179,289	28,583
Accumulated other comprehensive income		22,100		14,192	2,262
Total Huami Corporation shareholders’ equity		225,775		1,353,502	215,780
Non-controlling interests		2,389		1,341	214
Total equity		228,164		1,354,843	215,994
Total liabilities, mezzanine equity and equity		1,465,517		2,132,206	339,922

HUAMI CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)
except for number of shares and per share data, or otherwise noted)

	For the three months ended March 31,
	2017		2018		2018
		RMB	RMB		US$

Revenues¹		331,104		585,920		93,409
Cost of revenues		257,136		439,246		70,026
Gross profit		73,968		146,674		23,383
Operating expenses:
Selling and marketing		10,393		14,740		2,350
General and administrative		28,498		49,270		7,855
Research and development		40,502		73,838		11,771
Total operating expenses		79,393		137,848		21,976
Operating (loss)/income		(5,425)		8,826		1,407
Other income and expenses:
Interest income		433		1,394		222
Other income		420		6,237		994
(Loss)/income before income tax		(4,572)		16,457		2,623
Income tax benefits/(expenses)		603		(2,744)		(437)
(Loss)/income before (loss)/income from equity method investments		(3,969)		13,713		2,186
(Loss)/income from equity method investments		(568)		7		1
Net (loss)/income		(4,537)		13,720		2,187
Less: Net loss attributable to non-controlling interest		—		(1,048)		(167
Net (loss)/income attributable to Huami Corporation		(4,537)		14,768		2,354
Less: Accretion of Series A Preferred Shares		893		177		28
Less: Accretion of Series B-1 Preferred Shares		750		368		59
Less: Accretion of Series B-2 Preferred Shares		8,246		4,049		646
Less: Undistributed earnings allocated to participating preferred shares and nonvested restricted shares		—		1,784		284
Net (loss)/income attributable to ordinary shareholders of Huami Corporation		(14,426)		8,390		1,337
Net (loss)/income per share attributable to ordinary shareholders of Huami Corporation
Basic (loss)/income per ordinary share		(0.23)		0.05		0.01
Diluted (loss)/income per ordinary share		(0.23)		0.05		0.01

Weighted average number of shares used in computing net (loss)/ income per share
Ordinary share – basic		63,603,448		152,893,007		152,893,007
Ordinary share – diluted		63,603,448		162,243,568		162,243,568

HUAMI CORPORATION
Reconciliation of GAAP and Non-GAAP Results
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)
except for number of shares and per share data, or otherwise noted)

	For the three months ended March 31,
		2017	2018	2018
		RMB	RMB	US$

Net (loss)/income attributable to Huami Corporation		(4,537)	14,768	2,354
Share-based compensation expenses		14,621	77,756	12,396
Adjusted net income attributable to Huami Corporation		10,084	92,524	14,750
Less: Accretion of Series A Preferred Shares		893	177	28
Less: Accretion of Series B-1 Preferred Shares		750	368	59
Less: Accretion of Series B-2 Preferred Shares		8,246	4,049	646
Less: Undistributed earnings allocated to participating preferred shares and nonvested restricted shares		—	15,415	2,458
Adjusted net income attributable to ordinary shareholders of Huami Corporation		195	72,515	11,559

Adjusted net income per share attributable to ordinary shareholders of Huami Corporation
Adjusted basic income per ordinary share		0.01	0.47	0.08
Adjusted diluted income per ordinary share		0.01	0.39	0.06

Weighted average number of shares used in computing net income per share
Ordinary share – basic		63,603,448	152,893,007	152,893,007
Ordinary share – diluted		63,603,448	162,243,568	162,243,568


Huami Corporation


By	:	/s/ David Cui
Name	:	David Cui
Title	:	Chief Financial Officer

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