Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2019shares | |
Document Information | |
Document Type | 20-F |
Document Registration Statement | false |
Document Annual Report | true |
Document Transition Report | false |
Document Shell Company Report | false |
Amendment Flag | false |
Document Period End Date | Dec. 31, 2019 |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | FY |
Trading Symbol | HMI |
Title of 12(b) Security | American depositary shares (each representing four Class Aordinary shares Class A ordinary shares, par value US$0.0001 per share) |
Entity Registrant Name | Huami Corporation |
Entity Central Index Key | 0001720446 |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | No |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Interactive Data Current | Yes |
Entity Filer Category | Accelerated Filer |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | true |
Entity Shell Company | false |
Class A Ordinary Shares | |
Document Information | |
Entity Common Stock, Shares Outstanding | 91,459,708 |
Class B Ordinary Shares | |
Document Information | |
Entity Common Stock, Shares Outstanding | 156,060,279 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS ¥ in Thousands, $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) |
Current assets: | |||
Cash and cash equivalents | $ 259,002 | ¥ 1,803,117 | ¥ 1,441,802 |
Restricted cash | 126 | 874 | 10,010 |
Term deposit | 96,969 | ||
Accounts receivable (net of allowance of nil and nil as of December 31, 2018 and 2019, respectively) | 27,140 | 188,940 | 58,925 |
Amounts due from related parties (net of allowance of nil and nil as of December 31, 2018 and 2019, respectively) | 204,138 | 1,421,170 | 656,399 |
Inventories, net | 128,387 | 893,806 | 484,622 |
Short-term investments | 2,469 | 17,187 | 50,482 |
Prepaid expenses and other current assets | 9,675 | 67,358 | 58,247 |
Total current assets | 630,937 | 4,392,452 | 2,857,456 |
Property, plant and equipment, net | 9,243 | 64,350 | 40,042 |
Intangible assets, net | 12,318 | 85,753 | 63,722 |
Long-term investments | 58,332 | 406,099 | 208,949 |
Deferred tax assets | 14,745 | 102,649 | 75,032 |
Operating lease right-of-use assets | 15,611 | 108,682 | |
Goodwill | 852 | 5,930 | 5,930 |
Other non-current assets | 1,268 | 8,828 | 7,350 |
Total assets | 743,306 | 5,174,743 | 3,258,481 |
Current liabilities: | |||
Accounts payable (including accounts payable of the consolidated VIEs without recourse to the Group of RMB1,059,676 and RMB1,996,010 as of December 31, 2018 and 2019, respectively) | 287,275 | 1,999,951 | 1,064,106 |
Advance from customers (including advance from customers of the consolidated VIEs without recourse to the Group of RMB5,930 and RMB44,380 as of December 31, 2018 and 2019, respectively) | 6,434 | 44,793 | 5,943 |
Amount due to related parties of the consolidated VIEs without recourse to the Group | 2,121 | 14,769 | 10,695 |
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated VIEs without recourse to the Group of RMB159,736 and RMB236,708 as of December 31, 2018 and 2019, respectively) | 50,598 | 352,249 | 213,975 |
Income tax payables of the consolidated VIEs without recourse to the Group | 9,747 | 67,854 | 54,037 |
Notes payable of the consolidated VIEs without recourse to the Group | 314 | 2,184 | 18,936 |
Bank borrowings of the consolidated VIEs without recourse to the Group | 20,000 | ||
Total current liabilities | 356,489 | 2,481,800 | 1,387,692 |
Deferred tax liabilities of the consolidated VIEs without recourse to the Group | 776 | 5,399 | 4,962 |
Other non-current liabilities of the consolidated VIEs without recourse to the Group | 16,317 | 113,596 | 56,249 |
Noncurrent operating lease liabilities (including Noncurrent operating lease liabilities of the consolidated VIEs without recourse to the Group of RMB nil and RMB64,300 as of December 31, 2018 and 2019, respectively) | 10,968 | 76,360 | |
Total liabilities | 384,550 | 2,677,155 | 1,448,903 |
Equity | |||
Additional paid-in capital | 212,431 | 1,478,902 | 1,373,577 |
Accumulated retained earnings | 130,801 | 910,612 | 340,046 |
Accumulated other comprehensive income | 15,956 | 111,081 | 97,141 |
Total Huami Corporation shareholders' equity | 359,210 | 2,500,750 | 1,810,915 |
Noncontrolling interest | (454) | (3,162) | (1,337) |
Total equity | 358,756 | 2,497,588 | 1,809,578 |
Total liabilities and equity | 743,306 | 5,174,743 | 3,258,481 |
Class A Ordinary Shares | |||
Equity | |||
Ordinary shares | 8 | 57 | 36 |
Class B Ordinary Shares | |||
Equity | |||
Ordinary shares | $ 14 | ¥ 98 | ¥ 115 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) ¥ in Thousands, $ in Thousands | Dec. 31, 2019CNY (¥)shares | Dec. 31, 2018CNY (¥)shares |
Allowance for doubtful accounts | ¥ | ¥ 0 | ¥ 0 |
Amounts due from related parties, allowance | ¥ | 0 | 0 |
Accounts payable | 1,999,951 | 1,064,106 |
Advance from customers | 44,793 | 5,943 |
Accrued expenses and other current liabilities | 352,249 | ¥ 213,975 |
Noncurrent operating lease liabilities | ¥ 76,360 | |
Class A Ordinary Shares | ||
Ordinary shares, authorized | shares | 9,800,000,000 | 9,800,000,000 |
Ordinary shares, issued | shares | 91,459,708 | 57,303,093 |
Ordinary shares, outstanding | shares | 91,459,708 | 57,303,093 |
Class B Ordinary Shares | ||
Ordinary shares, authorized | shares | 200,000,000 | 200,000,000 |
Ordinary shares, issued | shares | 156,060,279 | 184,376,679 |
Ordinary shares, outstanding | shares | 156,060,279 | 184,376,679 |
Variable Interest Entities | ||
Accounts payable | ¥ | ¥ 1,996,010 | ¥ 1,059,676 |
Advance from customers | ¥ | 44,380 | 5,930 |
Accrued expenses and other current liabilities | ¥ | 236,708 | 159,736 |
Noncurrent operating lease liabilities | ¥ | ¥ 64,300 | ¥ 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2019CNY (¥)¥ / sharesshares | Dec. 31, 2018CNY (¥)¥ / sharesshares | Dec. 31, 2017CNY (¥)¥ / sharesshares | |
Revenues (including RMB1,778,640, RMB2,816,995 and RMB 4,281,005 with related parties for the years ended December 31, 2017, 2018 and 2019, respectively) | $ 834,878 | ¥ 5,812,255 | ¥ 3,645,335 | ¥ 2,048,896 |
Cost of revenues (including RMB1,355,493, RMB2,141,123 and RMB3,342,084 with related parties for the years ended December 31, 2017, 2018 and 2019, respectively) | 624,050 | 4,344,512 | 2,705,885 | 1,554,194 |
Gross profit | 210,828 | 1,467,743 | 939,450 | 494,702 |
Operating expenses | ||||
Selling and marketing | 26,139 | 181,975 | 96,538 | 44,026 |
General and administrative | 35,689 | 248,462 | 213,973 | 114,880 |
Research and development | 61,884 | 430,822 | 263,220 | 153,827 |
Total operating expenses | 123,712 | 861,259 | 573,731 | 312,733 |
Operating income | 87,116 | 606,484 | 365,719 | 181,969 |
Other income and expenses | ||||
Interest income | 4,809 | 33,478 | 11,595 | 3,003 |
Realized gain from investments | 262 | 1,822 | 261 | 2,373 |
Gain from fair value change of long-term investments | 7,860 | |||
Impairment loss from long-term investments | (373) | (2,600) | (7,590) | |
Other income, net | 1,894 | 13,186 | 8,768 | 4,555 |
Income before income tax and income/(loss) from equity method investments | 93,708 | 652,370 | 386,613 | 191,900 |
Provision for income taxes | (11,188) | (77,887) | (52,036) | (27,611) |
Income before income/(loss) from equity method investments | 82,520 | 574,483 | 334,577 | 164,289 |
Income/(loss) from equity method investments | (160) | (1,112) | 1,743 | 2,806 |
Net income | 82,360 | 573,371 | 336,320 | 167,095 |
Less: Net loss attributable to noncontrolling interest | (262) | (1,825) | (3,726) | (587) |
Net income attributable to Huami Corporation | 82,622 | 575,196 | 340,046 | 167,682 |
Less: Deemed dividend to preferred shareholders | 209,752 | |||
Less: Undistributed earnings allocated to participating preferred shares and nonvested restricted shares | 352 | 2,450 | 12,210 | 80,291 |
Net income attributable to ordinary shareholders of Huami Corporation | $ 82,270 | ¥ 572,746 | ¥ 113,490 | ¥ 46,120 |
Net income per share attributable to ordinary shareholders of Huami Corporation | ||||
Basic income per ordinary share | (per share) | $ 0.34 | ¥ 2.35 | ¥ 0.54 | ¥ 0.68 |
Diluted income per ordinary share | (per share) | $ 0.32 | ¥ 2.24 | ¥ 0.51 | ¥ 0.65 |
Weighted average number of shares used in computing net (loss)/income per share | ||||
Ordinary share - basic | shares | 243,648,186 | 243,648,186 | 211,873,704 | 67,777,592 |
Ordinary share - diluted | shares | 255,959,172 | 255,959,172 | 225,034,650 | 76,291,901 |
Series A Preferred Shares | ||||
Other income and expenses | ||||
Less: Accretion of Preferred Shares | ¥ 177 | ¥ 3,762 | ||
Less: Undistributed earnings allocated to participating preferred shares and nonvested restricted shares | 4,521 | 48,753 | ||
Series B-1 Preferred Shares | ||||
Other income and expenses | ||||
Less: Accretion of Preferred Shares | 368 | 3,127 | ||
Less: Undistributed earnings allocated to participating preferred shares and nonvested restricted shares | 126 | 1,361 | ||
Series B-2 Preferred Shares | ||||
Other income and expenses | ||||
Less: Accretion of Preferred Shares | 4,049 | 34,382 | ||
Less: Undistributed earnings allocated to participating preferred shares and nonvested restricted shares | ¥ 1,319 | ¥ 14,220 |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | |||
Revenue from related parties | ¥ 4,281,005 | ¥ 2,816,995 | ¥ 1,778,640 |
Cost of revenue related parties | ¥ 3,342,084 | ¥ 2,141,123 | ¥ 1,355,493 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Consolidated Statements of Comprehensive Income | ||||
Net income | $ 82,360 | ¥ 573,371 | ¥ 336,320 | ¥ 167,095 |
Other comprehensive income, net of tax | ||||
Foreign currency translation adjustment | 1,619 | 11,274 | 60,357 | (3,175) |
Unrealized gain on available-for-sale investments and others, (net of tax effect of 1,554, RMB2,250 and RMB620 for years ended December 31, 2017, 2018 and 2019, respectively) | 383 | 2,666 | 14,684 | 9,484 |
Comprehensive income | 84,362 | 587,311 | 411,361 | 173,404 |
Less: Net loss attributable to noncontrolling interest | (262) | (1,825) | (3,726) | (587) |
Comprehensive income attributable to Huami Corporation | $ 84,624 | ¥ 589,136 | ¥ 415,087 | ¥ 173,991 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Consolidated Statements of Comprehensive Income | |||
Unrealized gain on available-for-sale investments and others, tax effect | ¥ 620 | ¥ 2,250 | ¥ 1,554 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN (DEFICIT) EQUITY ¥ in Thousands, $ in Thousands | Ordinary SharesInitial Public OfferingCNY (¥)shares | Ordinary SharesCNY (¥)shares | Additional Paid-in CapitalSeries A Preferred SharesCNY (¥) | Additional Paid-in CapitalSeries B Preferred SharesCNY (¥) | Additional Paid-in CapitalInitial Public OfferingCNY (¥) | Additional Paid-in CapitalCNY (¥) | Accumulated Other Comprehensive IncomeCNY (¥) | (Accumulated Deficit)/Retained EarningsCNY (¥) | Total Huami Corporation Shareholders' (Deficit)/EquitySeries A Preferred SharesCNY (¥) | Total Huami Corporation Shareholders' (Deficit)/EquitySeries B Preferred SharesCNY (¥) | Total Huami Corporation Shareholders' (Deficit)/EquityInitial Public OfferingCNY (¥) | Total Huami Corporation Shareholders' (Deficit)/EquityCNY (¥) | Noncontrolling InterestCNY (¥) | Series A Preferred SharesCNY (¥) | Series B Preferred SharesCNY (¥) | Initial Public OfferingCNY (¥) | USD ($) | CNY (¥) |
Beginning Balance at Dec. 31, 2016 | ¥ 56 | ¥ 50,822 | ¥ 15,791 | ¥ (36,490) | ¥ 30,179 | ¥ 30,179 | ||||||||||||
Beginning Balance, shares at Dec. 31, 2016 | shares | 91,169,327 | |||||||||||||||||
Accretion of preferred shares | ¥ (3,762) | ¥ (37,509) | ¥ (3,762) | ¥ (37,509) | ¥ (3,762) | ¥ (37,509) | ||||||||||||
Exercise of option | 89 | 89 | 89 | |||||||||||||||
Exercise of option, shares | shares | 135,000 | |||||||||||||||||
Net income | 167,682 | 167,682 | ¥ (587) | 167,095 | ||||||||||||||
Foreign currency translation adjustment | (3,175) | (3,175) | (3,175) | |||||||||||||||
Share-based compensation | 62,787 | 62,787 | 62,787 | |||||||||||||||
Noncontrolling interest arise from acquisition | 2,976 | 2,976 | ||||||||||||||||
Unrealized gain on available-for-sale investments | 9,484 | 9,484 | 9,484 | |||||||||||||||
Ending Balance at Dec. 31, 2017 | ¥ 56 | 72,427 | 22,100 | 131,192 | 225,775 | 2,389 | 228,164 | |||||||||||
Ending Balance, shares at Dec. 31, 2017 | shares | 91,304,327 | |||||||||||||||||
Accretion of preferred shares | ¥ (177) | ¥ (4,417) | ¥ (177) | ¥ (4,417) | ¥ (177) | ¥ (4,417) | ||||||||||||
Issuance of ordinary shares | ¥ 26 | ¥ 657,035 | ¥ 657,061 | ¥ 657,061 | ||||||||||||||
Issuance of ordinary shares, shares | shares | 41,600,000 | |||||||||||||||||
Conversion of participating convertible redeemable preferred shares to ordinary shares upon initial public offering | ¥ 60 | ¥ 354,152 | ¥ 354,212 | ¥ 354,212 | ||||||||||||||
Conversion of participating convertible redeemable preferred shares to ordinary shares upon initial public offering, shares | shares | 94,537,315 | |||||||||||||||||
Exercise of option and restricted shares | ¥ 2 | 3,484 | 3,486 | 3,486 | ||||||||||||||
Exercise of option and restricted shares, shares | shares | 2,661,305 | |||||||||||||||||
Net income | 340,046 | 340,046 | (3,726) | 336,320 | ||||||||||||||
Foreign currency translation adjustment | 60,357 | 60,357 | 60,357 | |||||||||||||||
Share-based compensation | 134,709 | 134,709 | 134,709 | |||||||||||||||
Repurchase of ordinary shares | (8,157) | (8,157) | (8,157) | |||||||||||||||
Repurchase of ordinary shares | shares | (488,000) | |||||||||||||||||
Unrealized gain on available-for-sale investments | 14,684 | 14,684 | 14,684 | |||||||||||||||
Cumulative effect adjustment related to opening retained earnings for adoption of ASC 606 | 33,329 | 33,329 | 33,329 | |||||||||||||||
Deemed dividend related to issuance of ordinary shares to preferred shareholders | ¥ 7 | 164,521 | (164,521) | 7 | 7 | |||||||||||||
Deemed dividend related to issuance of ordinary shares to preferred shareholders, Shares | shares | 12,064,825 | |||||||||||||||||
Ending Balance at Dec. 31, 2018 | ¥ 151 | 1,373,577 | 97,141 | 340,046 | 1,810,915 | (1,337) | 1,809,578 | |||||||||||
Ending Balance, shares at Dec. 31, 2018 | shares | 241,679,772 | |||||||||||||||||
Issuance of ordinary shares | ¥ 2 | 49,174 | 49,176 | 49,176 | ||||||||||||||
Issuance of ordinary shares, shares | shares | 3,174,600 | |||||||||||||||||
Exercise of option and restricted shares | ¥ 2 | 931 | 933 | 933 | ||||||||||||||
Exercise of option and restricted shares, shares | shares | 2,665,615 | |||||||||||||||||
Net income | 575,196 | 575,196 | (1,825) | $ 82,360 | 573,371 | |||||||||||||
Foreign currency translation adjustment | 11,274 | 11,274 | 11,274 | |||||||||||||||
Share-based compensation | 55,128 | 55,128 | 55,128 | |||||||||||||||
Unrealized gain on available-for-sale investments | 2,666 | 2,666 | 383 | 2,666 | ||||||||||||||
Deemed dividend to shareholders | (4,538) | (4,538) | (4,538) | |||||||||||||||
Statutory reserve | 92 | (92) | ||||||||||||||||
Ending Balance at Dec. 31, 2019 | ¥ 155 | ¥ 1,478,902 | ¥ 111,081 | ¥ 910,612 | ¥ 2,500,750 | ¥ (3,162) | $ 358,756 | ¥ 2,497,588 | ||||||||||
Ending Balance, shares at Dec. 31, 2019 | shares | 247,519,987 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN (DEFICIT) EQUITY (Parenthetical) ¥ in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Consolidated Statements of Changes in (Deficit) Equity | ||
Offering costs | $ 434 | $ 10,512 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Cash Flows from Operating Activities | ||||
Net income | $ 82,360 | ¥ 573,371 | ¥ 336,320 | ¥ 167,095 |
Adjustment to reconcile net income to net cash provided by operating activities: | ||||
Non-cash lease expense | 3,976 | 27,683 | ||
Depreciation of property, plant and equipment | 1,352 | 9,409 | 5,773 | 3,542 |
Amortization of intangible assets | 1,121 | 7,806 | 443 | 175 |
Write-off of short-term loans | 810 | 5,640 | 5,500 | |
Impairment loss from long-term investments | 373 | 2,600 | 7,590 | |
Provision for excess and obsolete inventories | 3,419 | 23,799 | 0 | 2,449 |
Share-based compensation | 7,918 | 55,128 | 134,709 | 62,787 |
Loss / (gain) from equity method investment | 160 | 1,112 | (1,743) | (2,806) |
Realized gain from investments | (262) | (1,822) | (261) | (2,373) |
Loss on disposal of property, plant and equipment | 110 | 767 | 26 | 192 |
Gain from fair value change of long-term investments | (7,860) | |||
Deferred income taxes | (3,993) | (27,800) | (32,895) | (18,962) |
Others | 295 | |||
Changes in operating assets and liabilities | ||||
Accounts receivable | (18,675) | (130,015) | (26,058) | (13,158) |
Inventories | (62,194) | (432,983) | (234,887) | (57,609) |
Prepaid expenses and other current assets | (4,660) | (32,444) | (5,748) | (32,985) |
Amount due from related parties | (110,744) | (770,976) | (45,116) | (109,756) |
Other non-current assets | (385) | (2,678) | (3,150) | |
Amount due to related parties | 585 | 4,074 | 5,757 | (281) |
Accounts payable | 134,426 | 935,845 | 356,324 | 181,628 |
Notes payable | (2,406) | (16,752) | 13,693 | 2,581 |
Advance from customers | 5,580 | 38,850 | (4,740) | 4,333 |
Income tax payable | 1,985 | 13,817 | 32,437 | 972 |
Accrued expense and other current liabilities | 12,386 | 86,221 | 119,887 | 45,572 |
Other non-current liability | 8,237 | 57,347 | 51,309 | 4,940 |
Net Cash provided by Operating Activities | 61,479 | 427,999 | 707,605 | 238,336 |
Cash Flows from Investing Activities | ||||
Purchase of property, plant and equipment | (4,924) | (34,276) | (17,136) | (21,454) |
Prepayment for other non-current assets | (3,000) | |||
Purchase of intangible assets | (1,701) | (11,845) | (52,017) | (88) |
Cash received from the disposal of property, plant and equipment | 20 | 143 | 65 | 164 |
Purchase of term deposits | (385,028) | |||
Proceeds from maturity of term deposits | 13,929 | 96,969 | 288,771 | |
Purchase of business, net of cash acquired of RMB3,475 | 2,323 | |||
Loans provided to related parties | (5,000) | |||
Loans provided to third-parties | (8,920) | (12,857) | ||
Proceeds received from loans provided to third-parties | 973 | 6,772 | 5,578 | 1,000 |
Purchase of short-term investments | (41,300) | (6,506) | ||
Purchase of long-term investments | (25,988) | (180,927) | (109,854) | (23,610) |
Disposal of short-term investments | 1,503 | 10,461 | 2,062 | |
Disposal of long-term investments | 23,085 | |||
Net Cash Used in Investing Activities | (16,188) | (112,703) | (324,841) | (38,881) |
Cash Flows from Financing Activities | ||||
Loans repaid to related party | (3,221) | |||
Exercise of share options and restricted shares | 134 | 933 | 3,486 | 89 |
Bank borrowings | 20,000 | 30,000 | ||
Repayment of bank borrowing | (2,873) | (20,000) | (30,000) | (10,000) |
Net proceeds from initial public offering | 657,062 | |||
Repurchase of ordinary shares | (8,157) | |||
Net proceeds from the secondary offering | 7,069 | 49,214 | ||
Deemed dividend to shareholders | (652) | (4,538) | ||
Net Cash Provided by Financing Activities | 3,678 | 25,609 | 639,170 | 20,089 |
Net (decrease) increase in cash and cash equivalents and restricted cash | 48,969 | 340,905 | 1,021,934 | 219,544 |
Effect of exchange rate changes | 1,619 | 11,274 | 60,357 | (3,175) |
Cash and cash equivalents and restricted cash at beginning of year | 208,540 | 1,451,812 | 369,521 | 153,152 |
Cash and cash equivalents and restricted cash at end of the year | 259,128 | 1,803,991 | 1,451,812 | 369,521 |
Supplemental disclosure of cash flow information | ||||
Income tax paid | 13,176 | 91,732 | 52,063 | 35,892 |
Interest paid | 41 | 286 | 1,310 | 1,997 |
Non-cash investing and financing activity | ||||
Payable for long-term investment | 275 | |||
Payable for Intangible asset | 2 | 16 | ||
Conversion from loan to long-term investment | 8,000 | |||
Conversion from convertible bond to long-term investment | 2,270 | 15,800 | ||
Non-monetary exchange of convertible bond to intangible assets | 1,152 | 8,019 | 7,104 | |
Non-monetary transaction of exchanging loan for Intangible assets | 1,430 | 9,957 | ||
Payable for property, plant and equipment | $ 50 | ¥ 351 | 15 | ¥ 264 |
Conversion of preferred shares to ordinary shares | 354,212 | |||
Deemed dividend related to issuance of ordinary shares to preferred shareholders | ¥ 209,752 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) ¥ in Thousands | 12 Months Ended |
Dec. 31, 2017CNY (¥) | |
CONSOLIDATED STATEMENTS OF CASH FLOWS | |
Purchase of business, cash acquired | ¥ 3,475 |
ORGANIZATION AND PRINCIPAL ACTI
ORGANIZATION AND PRINCIPAL ACTIVITIES | 12 Months Ended |
Dec. 31, 2019 | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | 1. ORGANAZATION AND PRINCIPAL ACTIVITIES Huami 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”), and Anhui Huami’s subsidiaries, are collectively referred to as the “Group”. The Group primarily engages in the business of developing, manufacturing and selling smart, wearable technological devices in the People’s Republic of China (“PRC”). During the years ended December 31, 2017, 2018 and 2019, the Group derived 78.8%, 66.9% and 72.2% 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, 2019, details of the Company’s subsidiaries and VIEs were as follows: Date of Percentage Place of incorporation incorporation/acquisition of ownership Subsidiaries of the Company: Huami HK Limited (“Huami HK”) Hong Kong (“HK”) December 23, 2014 100% Huami, Inc. (“Huami Inc”) United States of America (“U.S.”) January 15, 2015 100% Beijing ShunYuan KaiHua Technology Co., Ltd. (“ShunYuan”) PRC February 25, 2015 100% Huami (Shenzhen) Information Technology Co., Ltd. (“Huami SZ”) PRC December 7, 2015 100% Anhui Huami Intelligent Technology Co., Ltd. (“Huami Intelligent”) PRC December 28, 2015 100% Rill, Inc. (“Rill”) U.S. June 16, 2016 100% DingShow Cayman Islands October 10, 2018 100% Huami Inc. Canada branch (Huami Canada) Canada November 2, 2018 100% Bitinno Technologies Inc. ("Bitinno") U.S. November 26, 2018 100% Huami Investment Platform I Ltd. British Virgin Islands December 14, 2018 100% Galaxy Trading Platform Limited ("Galaxy") HK May 8, 2019 100% Variable interest entities of the Company: Anhui Huami PRC December 27, 2013 Consolidated VIE Beijing Huami PRC July 11, 2014 Consolidated VIE Subsidiaries of Anhui Huami: Anhui Huami Healthcare Co., Ltd . (“Huami Healthcare”) PRC December 5, 2016 VIE's subsidiary Shenzhen Yunding Information Technology Co., Ltd. (“Yunding”) PRC July 31, 2017 VIE's subsidiary Oclean Information Technology Co., Ltd. ("Yunding HK ") HK March 7, 2017 VIE's subsidiary Hefei Huami Micro-electronics Co.Ltd("Huami Micro") PRC January 17, 2019 VIE’s subsidiary Huami (Nanjing) Information Technology Co., Ltd. (“Huami NJ”) PRC July 4, 2019 VIE’s subsidiary Hefei Hi-Tech Huami Intelligence Polyclinic Co.Ltd (“Huami Intelligence Polyclinic”) PRC July 31, 2019 VIE’s subsidiary Anhui Huami Medical System Co.Ltd(“Huami Medical System”) PRC August 26, 2019 VIE’s subsidiary Subsidiary of Beijing Huami: Huami Beijing Medical Health Technology Co. Ltd.(“Beijing Huami Health") PRC March 29, 2019 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. 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. On March 20, 2020, due to the change of the nominee shareholders in the VIEs, the equity pledge agreement for Anhui Huami and Beijing Huami was amended and restated with the same terms as before. The Group has completed the registration of the equity pledge for Anhui Huami and is in the process of registering the equity pledge with the local authority for Beijing Huami. 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 product 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. 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 or 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. 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 28.1% of the total common shares as of December 31, 2019. 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. 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 and Beijing Huami. The following financial statement amounts and balances of the VIEs were included in the accompanying consolidated financial statements after the elimination of intercompany balances and transactions within the Group: As of December 31, 2018 2019 RMB RMB Total current assets 2,202,009 3,828,544 Total non-current assets 191,522 466,774 Total assets 2,393,531 4,295,318 Total current liabilities 1,329,010 2,361,906 Total non-current liabilities 61,211 183,295 Total liabilities 1,390,221 2,545,201 For the years ended December 31, 2017 2018 2019 RMB RMB RMB Revenues 2,042,640 3,638,560 5,801,405 Net income 327,101 643,239 987,672 For the years ended December 31, 2017 2018 2019 RMB RMB RMB Net cash provided by operating activities 248,642 712,210 478,806 Net cash used in investing activities (19,643) (72,862) (126,887) Net cash provided by financing activities 20,000 (13,221) (20,000) The intercompany payable between Anhui Huami and Shunyuan were RMB68,713 and RMB43,971 as of December 31, 2018 and 2019, respectively. Those were eliminated by the Company upon consolidation. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
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 allowance for doubtful accounts, inventory valuation, the useful lives of long-lived assets, impairment of long-lived assets, impairment of goodwill, incremental borrowing rate for leases, product warranties, fair value measurement of ordinary shares and preferred shares, 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, share-based compensation, 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. 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 and liabilities primarily including available-for-sale securities at fair value on a recurring basis as of December 31, 2018 and 2019. Measured fair value on a nonrecurring basis The Group measured the fair value of the intangible assets acquired through non-monetary exchange at fair value. The fair values was determined using models with significant unobservable inputs (Level 3 inputs). The Group used the income approach by applying the discounted cash flow method (“DCF”). The DCF involves applying an appropriate discount rate to discount future cash flows to present value. The future cash flows represent management’s best estimation as of the measurement date. The projected cash flow estimation includes, among others, analysis of projected revenue growth, gross margins and terminal value and these assumptions are consistent with the Group’s business plan. In determining an appropriate discount rate, the Group has considered the weighted average cost of capital (“WACC”) by considering relative risk of the industry and the characteristics of the Company. A discount rate of 22% and 19% as of the valuation date during 2018 and 2019 was used for the fair value measurement of intangible assets. 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 Group did not recognize any impairment loss related to acquired intangible assets arising from acquisitions during the years ended December 31, 2017, 2018 and 2019. 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 goodwill is determined using discounted cash flows, and an impairment loss will be recognized for any excess in the carrying value of goodwill over the implied fair value of goodwill. The Group did not recognize any impairment loss related to goodwill during the year ended December 31, 2017, 2018 and 2019. For equity investments without readily determinable fair values for which the Company elected to use the measurement alternative starting in 2018, 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. During the years ended December 31, 2017, 2018 and 2019, the Group recognized impairment losses of nil, nil and RMB2,382 related to equity investments without readily determinable fair value. Fair value of financial instruments The Group’s financial instruments consist primarily of cash and cash equivalents, restricted cash, term deposit, accounts receivable, amount due from related parties, available-for-sale securities investments, accounts payable, notes payable, short-term bank borrowing, amount due to related parties and noncurrent operating lease liabilities. 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, amount due from related parties, accounts payable, notes payable and short-term bank borrowings approximate their fair values due to the short-term maturities of these instruments. 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 requires the Group to make a deposit for 40% or 60% 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 sheet as of December 31, 2018 and 2019. 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. As of December 31, 2018 and 2019, the Company recorded nil 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. During the years ended December 31, 2017, 2018 and 2019, inventory provision amounted to RMB2,449, nil and RMB23,799, respectively. 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. Prepaid expenses and other current assets Prepaid expenses and other current assets primarily consist of advance to suppliers, prepaid expenses, other receivables and value-added tax receivables. 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.huami.com, trademark and patents. The domain name is 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 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. The 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 9 to 10 years. Leases The Group leases administrative office spaces in different cities in the PRC and Overseas 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 initial direct costs it incurs under the lease. The Group begins recognizing operating lease expense when the lessor makes the underlying asset available to the Group. The Group's leases have remaining lease terms of up to five 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, the Group records operating lease expense 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, and determination of the Group’s weighted average cost of capital. 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 performs a two-step goodwill impairment test. The first step compares the fair values of each reporting unit to its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill is not considered impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of the affected reporting unit’s goodwill to the carrying value of that goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. This allocation process is only performed for purposes of evaluating goodwill impairment and does not result in an entry to adjust the value of any assets or liabilities. An impairment loss is recognized for any excess in the carrying value of goodwill over the implied fair value of goodwill. During the years ended December 31, 2017, 2018 and 2019, the Group recognized nil impairment loss on goodwill. Long-term investments The Group’s long-term investments consist of equity securities without readily determinable fair value, equity method investments and available-for-sale securities investments. (a) Equity securities without readily determinable fair value On January 1, 2018, the Group adopted Accounting Standards Update ("ASU") No. 2016‑01 Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities and 2018‑03 Technical Corrections and Improvements to Financial Instruments – Overall (Subtopic 825‑10): Recognition and Measurement of Financial Assets and Financial Liabilities. Prior to 2018, for investee companies over which the Group does not have significant influence or a controlling interest, equity securities without determinable fair value were accounted for using the cost method of accounting, measured at cost less other-than-temporary impairment. Starting in 2018, these securities are measured and recorded using a measurement alternative that measures the securities at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes. 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, the operating performance of the companies including current earning trends and other company specific information. During the years ended December 31, 2017, 2018 and 2019, the Group recorded nil, nil and RMB2,382 impairment losses on its equity securities without readily determinable fair values. (b) 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 “income/(loss) 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, and the determination of the weighted average cost of capital. The Group recorded nil, RMB4,133 and RMB218 impairment losses on its equity method investments during the years ended December 31, 2017, 2018 and 2019. (c) 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 reviews its available for sale investments for other than temporary impairment based on the specific identification method. The Group considers available quantitative and qualitative evidence in evaluating potential impairment of its investments. If the cost of an investment exceeds the investment’s fair value, the Group considers, among other factors, general market conditions, government economic plans, the duration and the extent to which the fair value of the investment is less than the cost, the Group’s intent and ability to hold the investment, and the financial condition and near term prospects of the investees. The Group recorded nil, RMB3,457 and nil impairment losses on its available- for-sale investments during the years ended December 31, 2017, 2018 and 2019, respectively. Notes payable The Group endorses bank acceptance notes (“Notes”) to suppliers in the PRC in the normal course of business. The Group may endorse these Notes with its suppliers to clear its accounts payable. When the Notes are endorsed by the Group, the Group is jointly liable with other endorsers in the Notes. Notes that have been presented to banks or endorsed with suppliers are derecognized from the consolidated balance sheets when the Notes are settled with banks or when the obligations as endorser are discharged. Revenue recognition (a) On January 1, 2018, the Group adopted ASU 2014-09, Revenue Contracts with Customers (Topic 606), "Topic 606" applying the modified retrospective method to all contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period. The Group recorded an increase to retained earnings and amount due from related parties of RMB33,329 as of January 1, 2018 due to the cumulative impact of adopting Topic 606. 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 year ended December 31, 2018 and 2019, the Group generated 66.9% and 72.2% of revenue from one customer for sales of exclusively designed and manufactured smart wearable devices, and generated 33.1% and 27.8% 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"). 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 behaviours 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 cost plus margin estimated selling price for the software services and software upgrades was estimated from RMB1.77 to RMB5.68 per unit and RMB1.72 to RMB10.62 per unit for the year ended December 31, 2018 and 2019. 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 the reseller 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 For the year ended December 31, 2018 and 2019, the Group generated 33.1% and 27.8% of revenues from sales of the Group’s self-branded products and others to retailers, distributors and end users. The Group’s revenue recognition for its self-branded products was consistent with that described in the preceding paragraphs. Cooperation agreement with one customer For the year ended December 31, 2018 and 2019, the Group generated 66.9% and 72.2% of revenues 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 our shareholders (see Note 20). 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. 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 Starting in 2018, the Group 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. (b) The Group recognized revenue when a persuasive evidence of an arrangement exists, delivery has occurred and the services have been rendered, the sales price is fixed or determinable, and collection is reasonably assured. The Group recognized revenue, net of estimated sales returns and value-added taxes ("VAT"). The Group’s contracts with its customers included multiple element arrangements. The first deliverable was the smart wearable device and embedded firmware that was essential to the functionality of the device. The second deliverable was the software services included with the products, which were provided free of charge and enabled users to sync, view, and access real-time data on the Group’s mobile apps. The third deliverable was 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 allocated revenue to all deliverables based on their relative selling prices. The Group used a hierarchy to determine the selling price to be used for allocating revenue to the deliverables: (i) vendor-specific objective evidence (“VSOE”) of fair value, (ii) third-party evidence (“TPE”), and (iii) best estimate of the selling price (“BESP”). Because the Group did not have neither VSOE nor TPE for any of its deliverables, revenue was allocated to the deliverables on the Group’s BESP as if each deliverable was sold regularly on a stand-alone basis. The Group’s process for determining its BESP considered multiple factors including consumer behaviors and the Group’s internal pricing model. The BESP for the smart and wearable devices comprised the majority of the arrangement consideration. The BESP for the software services and software upgrades was estimated from RMB1.30 to RMB 5.69 per unit for the years ended December 31, 2017. The Group recognized revenue for the amounts allocated to the connected smart and wearable devices at the time of delivery (except as noted below), provided the other conditions for revenue recognition have been met. Revenue for products sold through distributors or retailers was recognized on a sell-in basis. Amounts allocated to the software services and unspecified upgrade rights were deferred and recognized on a straight-line basis over their estimated usage period which approximately 9 months. Sales of self-branded products and others For the years ended December 31, 2017, the Group generated 21.2% of revenues from sales of the Group’s self-branded products and others to retailers, distributors and end users. The Group’s revenue recognition for its self-branded products was consistent with that described in the preceding paragraphs. Cooperation agreement with one customer For the years ended December 31, 2017, the Group generated |
INVENTORIES, NET
INVENTORIES, NET | 12 Months Ended |
Dec. 31, 2019 | |
INVENTORIES, NET | |
INVENTORIES, NET | 3. INVENTORIES, NET Inventories consisted of the following: As of December 31, 2018 2019 RMB RMB Raw materials 191,242 275,583 Work in process 33,714 176,417 Finished goods 259,666 441,806 Inventories, net 484,622 893,806 During the years ended December 31, 2017, 2018 and 2019, the Group recorded a provision for the excess and obsolete inventories amounting to RMB2,449, nil and RMB23,799 and wrote off nil, nil and RMB17,739, respectively. |
SHORT-TERM INVESTMENTS
SHORT-TERM INVESTMENTS | 12 Months Ended |
Dec. 31, 2019 | |
SHORT-TERM INVESTMENTS | |
SHORT-TERM INVESTMENTS | 4. SHORT-TERM INVESTMENTS Short-term investments included convertible bonds with maturities less than 1 year and consisted of the following: As of December 31, 2018 2019 RMB RMB Convertible bonds: Shenzhen Snowball Technology Co., Ltd (“Snowball”) (a) 16,243 — Guangzhou Joyrun Technology Co., Ltd (“Joyrun”) (b) 10,751 11,591 Abee Semi, Inc.("Abee") (c) 8,097 — Others (d) 15,391 5,596 Total: 50,482 17,187 (a) In June 2018, the Group invested RMB20,000 to acquire a convertible bond from Snowball. The convertible bond includes a 4.35% interest rate and has one-year maturity. As part of the agreement, the Group also received two years of free services related to the connection to the city transportation system for the Amazfit NFC products from Snowball. The fair value of the service is insignificant and is amortized over the service period. Unrealized gains of RMB443 arise from fair value change of the investment was reported in other comprehensive income during the year ended December 31, 2018. During the year ended December 31, 2019, the Group converted the bond to equity interests in Snowball and recognized the investment as an equity security without readily determinable fair value. (b) In September 2018, the Group invested RMB10,500 to acquire a convertible bond issued by Joyrun with a 8% interest rate and a one-year maturity. The investment was classified as an available-for-sale investment and measured at fair value. The Group recognized RMB251 and RMB840 unrealized holding gains in other comprehensive income from the fair value changes in the investment during the years ended December 31, 2018 and 2019. (c) In June 2016, the Group invested RMB6,937 to acquire a convertible bond from Abee. The convertible bond includes a 7% interest rate and has one year maturity. In June 2017, the Group agreed to extend the maturity date for one additional year. The investment was classified as an available-for-sale investment and measured at fair value. During the year ended December 31, 2019, the Group exchanged its convertible bond amounting to RMB8,019 and a previously issued short-term loan issued to Abee amounting to RMB9,957 for certain patents used to facilitate its new product development. The patents were recorded at fair value in the Group's consolidated balance sheet. The gain from this non-monetary exchange was immaterial. (d) The others represent several insignificant short-term investments in convertible bonds which are classified as available-for-sales investments and measured at fair value. The Group recognized RMB391 and RMB400 unrealized gains from these investments in 2018 and 2019. |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2019 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 5. PREPAID EXPENSES AND OTHER CURRENT ASSETS As of December 31, 2018 2019 RMB RMB Value-added tax 19,542 Other receivables 8,049 Prepaid expenses 3,264 Short-term loans 14,559 — Advances to suppliers 8,359 Rental deposits 4,474 Total 58,247 |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2019 | |
PROPERTY, PLANT AND EQUIPMENT, NET | |
PROPERTY, PLANT AND EQUIPMENT, NET | 6. PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consisted of the following: As of December 31, 2018 2019 RMB RMB Software and electronic equipment 14,453 36,283 Buildings 19,342 19,342 Leasehold improvements 10,404 26,744 Total 44,199 82,369 Less: accumulated depreciation (12,029) (21,438) Construction in progress 7,872 3,419 Property, plant and equipment, net 40,042 64,350 The Group has recorded depreciation expenses of RMB3,542, RMB5,773 and RMB9,409 during the years ended December 31, 2017, 2018 and 2019, respectively. No impairment was recorded during the years ended December 31, 2017, 2018 and 2019. |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 12 Months Ended |
Dec. 31, 2019 | |
INTANGIBLE ASSETS, NET | |
INTANGIBLE ASSETS, NET | 7. INTANGIBLE ASSETS, NET Intangible assets, net, consisted of the following: As of December 31, 2018 2019 RMB RMB Intangible assets with indefinite lives: Domain name 1,222 2,024 Intangible assets with finite lives: Patents 63,130 92,165 Less: accumulated amortization (630) (8,436) Intangible assets, net 63,722 85,753 During 2018, the Group purchased patents from Physical Enterprises Inc. ("PEI") for a total cash consideration of RMB51,470. The Group acquired the patents for the purpose of facilitating their new product development. During the year ended December 31, 2019, the Group exchanged its convertible bond and short-term loan to one of its investee and acquired certain patents to facilitate its new product development. Refer to Note 4(c). Amortization expenses for the intangible assets for the years ended December 31, 2017, 2018 and 2019, were RMB175, RMB443 and RMB7,806, respectively. Future amortization expense relating to the existing intangible assets amounted to RMB9,304 per year for each of the next five years and thereafter. |
LONG-TERM INVESTMENTS
LONG-TERM INVESTMENTS | 12 Months Ended |
Dec. 31, 2019 | |
LONG-TERM INVESTMENTS | |
LONG-TERM INVESTMENTS | 8 . LONG-TERM INVESTMENTS Long-term investments consisted of the following: As of December 31, 2018 2019 RMB RMB Equity securities without readily determinable fair value Sifive, Inc. ("Sifive") (a) 20,192 20,445 Greenwaves Technologies ("Greenwaves") (b) 19,906 20,156 Morsel,Inc.("Morsel") (c) — 20,885 Shenzhen Snowball Technology Co., Ltd (“Snowball”) (d) — 15,800 Other equity securities without readily determinable fair value (e) 16,501 14,292 Equity method investments: Hefei Huaying Xingzhi Fund Partnership (limited partnership) (“Huaying Fund”) (f) 56,898 55,557 Anhui Huaying Zhihui Wulian Fund Parnership(limited partnership)("Huaying Fund II") (g) — 102,336 Global Technology and Innovation Ltd. (“GTI”) (h) — 93,289 Other equity method investments (i) 11,283 14,165 Available-for-sale investments Sunny Infinity Ltd. ("Sunny") (h) 49,091 — Other available-for-sale investments (j) 35,078 49,174 Total 208,949 406,099 (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 a RMB7,860 and nil gain from the fair value change of this investment during the years ended December 31, 2018 and 2019. (b) In 2018, the Group invested RMB19,906 to acquire 8.33% equity interests in Greenwaves. Greenwaves 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 Greenwaves was accounted for as equity securities without readily determinable fair value. For the years ended 2018 and 2019, no fair value change were observed and recognized. (c) In 2019, the Group invested USD3,500 to acquire 13.4% equity interests in Morsels. Morsels is a private company engaging in the business of mobile fitness. The investment included 11.3% equity interests with liquidation preference rights and 2.1% equity interests without liquidation preference. The Group accounted for the 11.3% equity interests as equity securities without readily determinable fair value as the liquidation preference is substantial, and accounted for the other 2.1% equity interests under the equity method since Group enjoys a board seat in Morsel and concluded that it has significant influence over Morsel. The income from the equity method investment was immaterial for the year ended December 31, 2019. (d) In 2019, the Group converted its convertible bond issued to Snowball to a 4.3% equity interests. The equity interest is not considered in-substance common shares due to substantial liquidation preference rights owned by the Group. Accordingly, the investment in Snowball was accounted for as equity securities without readily determinable fair value. (e) The other investments represent certain insignificant investments in third-party private companies, which the Group has no significant influence over the investees and accounted for these investments using the measurement alternative method. (f) 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 of common stock and the Group has significant influence through its board seat but does not control Huaying Fund I. (g) 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 under the equity method because the investments are of common stock and the Group has significant influence through its board seat but does not control Huaying Fund II. (h) In 2018, the Group acquired a 23% equity interest in Sunny for a total consideration of RMB49,091. The Group accounted for its investment as an available-for-sale investment as it determined that the interests were debt security due to its redemption feature and subsequently measured its investment at fair value. In January 2019, the Group lost its redemption right and reclassified its investment to the equity method investment as it concluded that it was able to significantly influence the investee. The Group's unrealized gain and loss at the time of transfer was immaterial. In 2019, the Group subscribed for additional equity interest for a total consideration of RMB43,302. Additionally, in November 2019, Sunny completed a restructuring and became an investment vehicle of GTI, a fund established for the sole purposes of making investments in certain start-up and early stage companies in the technology industry. The Group's investment in Sunny was further transferred to GTI as part of this restructuring and continued to be accounted for as equity method investment. (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) The other available-for-sale investments represent the investments in debt securities and measured at fair value, which mainly include the investments in convertible bonds and the investments with redemption features. |
FAIR-VALUE MEASUREMENT
FAIR-VALUE MEASUREMENT | 12 Months Ended |
Dec. 31, 2019 | |
FAIR-VALUE MEASUREMENT | |
FAIR-VALUE MEASUREMENT | 9. FAIR-VALUE MEASUREMENT As of December 31, 2018 and 2019, the financial assets and liabilities measured at fair value on a recurring basis mainly consist of the available-for-sale investments, which includes the 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, 2018 and 2019 are as follows: As of December 31, 2018 Quoted Prices in Active Market for Significant Other Significant Identical Assets Observable Inputs Unobservable Description Level 1 Level 2 Inputs Level 3 Total RMB RMB RMB RMB Short-term investments: Convertible bonds — 50,482 — 50,482 Long-term investments: Redeemable preferred shares — 84,169 — 84,169 Total: — 134,651 — 134,651 As of December 31, 2019 Quoted Prices in Active Market for Significant Other Significant Identical Assets Observable Inputs Unobservable Description Level 1 Level 2 Inputs Level 3 Total RMB RMB RMB RMB Short-term investments: Convertible bonds — 17,187 — 17,187 Long-term investments: Convertible bonds — 6,962 — 6,962 Redeemable preferred shares — 42,212 — 42,212 Total: — — 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 as level 2 measurement. The Group measured the fair value of the redeemable preferred shares based on the recent transactions. 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. No transfers occurred between different level fair-value measurements during the years presented. For equity securities without readily determinable fair value for which the Group elected to use the measurement alternative starting in 2018, 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 was categorised as level 2 in the fair value hierarchy when directly or indirectly observable inputs in the market place was identified. When evaluating the impairment of these investments, inputs considered primarily include pricing of recent rounds of financing, future cash flow forecasts, liquidity factors, discount rate, and the selection of comparable companies operating in similar businesses and were categorized as Level 3 in the fair value hierarchy. During the years ended December 31, 2017, 2018 and 2019, the Group recognized an impairment loss of nil, nil and RMB2,382 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, 2019 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 10. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES As of December 31, 2018 2019 RMB RMB Accrued payroll and welfare 83,925 120,256 Deferred revenue 41,863 59,585 Product warranty 55,599 49,527 Current operating lease liabilities — 32,799 Accrued professional fee 3,945 19,194 Accrued expenses 6,107 17,688 Other tax payable 4,727 16,613 Other current liabilities 17,809 36,587 Total Product warranty activities were as follows: Product Warranty RMB Balance as of January 1, 2017 4,870 Provided during the year 23,093 Utilized during the year (19,532) Balance at December 31, 2017 8,431 Provided during the year 68,866 Utilized during the year (21,698) Balance at December 31, 2018 55,599 Provided during the year 80,048 Utilized during the year (86,120) Balance at December 31, 2019 49,527 The warranty costs recorded in cost of revenue were RMB23,093, RMB68,866 and RMB80,048 during the years ended December 31, 2017, 2018 and 2019, respectively. |
BANK BORROWING
BANK BORROWING | 12 Months Ended |
Dec. 31, 2019 | |
BANK BORROWING | |
BANK BORROWING | 11. BANK BORROWING On April 2, 2018, the Group entered into a loan agreement with Hefei Branch of China Merchants Bank amounting to RMB20,000 with one year maturity and a fixed interest rate of 5%. On April 3, 2019, the loan was fully repaid by the Group. |
REVENUE AND DEFERRED REVENUES
REVENUE AND DEFERRED REVENUES | 12 Months Ended |
Dec. 31, 2019 | |
REVENUE AND DEFERRED REVENUES | |
REVENUE AND DEFERRED REVENUES | 12. REVENUE AND DEFERRED REVENUES Disaggregation of revenue All the revenues for the period was recognized from contracts with customers. For the year ended December 31, 2019, the majority of the Group’s revenues result from sales of products which revenue is 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, 2018 2019 RMB RMB Xiaomi Wearable Products 2,439,534 Self-branded products and other 1,205,801 Total 3,645,335 During the years ended December 31, 2018 and 2019, the majority of the Group's products are sold to resellers and distributors in the PRC. This includes our products that have international versions which are first sold to the Group's domestic distributors who subsequently distribute those products internationally. Contract balances The following table provides information about receivables, deferred revenue and refund liability from contracts with customers As of December 31, 2018 2019 RMB RMB Accounts Receivables 58,925 Amounts due from related parties 656,399 Deferred revenue 41,863 Refund liability (sales return) 153 Accounts receivables are recorded when the right to consideration is unconditional and payments terms on invoiced amounts are typically 30 to 60 days. Amounts due from related parties include both amounts billed and unbilled due from related party under the cooperation agreement. As of December 31, 2018 and 2019, the amount due from related parties include the billed amount of RMB623,120 and RMB1,318,483, and unbilled amounted to RMB33,279 and RMB102,687, 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 our contractual right to consideration under our cooperation agreement for the second instalment payment not yet invoiced. The Company recorded no impairment charges related to contract assets in the periods. Contract liabilities, recorded in accrued expenses in the consolidated balance sheet, include payment received in advance of performance under the contract related to our 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. During the years ended December 31, 2018 and 2019, the Group recognized RMB17,876 and RMB41,863 of revenue previously included in deferred revenue as of January 1, 2018 and 2019, which mainly consist of revenue recognized related to its service subscription. Additionally, during the year ended December 31, 2018 and 2019, the Group billed RMB33,329 and RMB 33,279 to a related party, 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, 2019 | |
INCOME TAXES | 13. 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 Huami HK Limited, Yunding 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 Huami HK, HK Yunding and Galaxy will be taxed at 8.25%, while the remaining profits will continue to be taxed at the existing 16.5% tax rate. The Company’s subsidiaries, Huami Inc, Rill and Bitinno are located in the U.S. and are subject to the US federal income tax. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code including, but not limited to, (1) reducing the U.S. federal corporate tax rate, (2) requiring a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries that is payable over eight years, and (3) bonus depreciation that will allow for full expensing of qualified property. The impact of the Tax Act is not material to our operation and resulted in a decrease in income tax rate from 35% before January 1, 2018 to 21% after January 1, 2018 for tax and income earned as determined in accordance with the relevant tax rules and regulations. The Company's subsidiaries Huami Canada are subject to the Canada federal income tax and will be taxed at 15% for its taxable income. The Company’s PRC subsidiaries, the VIEs and VIEs’ subsidiaries are subject to the 25% standard enterprise income tax rate except for Anhui Huami that qualify as a high and new technology enterprise (“HNTE”), which is subject to a tax rate of 15%. Anhui Huami began to qualify as HNTE in 2015 and renewed the HNTE certificate in July 2018. Accordingly Anhui Huami was subject to a tax rate of 15% during the years ended December 31, 2017, 2018 and 2019. The current and deferred components of income taxes appearing in the consolidated statements of operation are as follows: For the years ended December 31, 2017 2018 2019 RMB RMB RMB Current tax expenses 46,573 84,931 105,663 Deferred tax benefits (18,962) (32,895) (27,776) Income tax expense 27,611 52,036 77,887 The significant components of the Group’s deferred tax assets were as follows: As of December 31, 2018 2019 RMB RMB Deferred tax assets Accrued expenses 28,585 50,644 Net operating loss carry forwards 46,447 53,989 Total deferred tax assets 75,032 104,633 Less: valuation allowance — (1,984) Deferred tax assets, net 75,032 102,649 As of December 31, 2019, the Group had RMB229,660 operating losses deriving from entities in the PRC, HK, U.S. and Canada. The operating loss in PRC with amount of RMB164,694 can be carried forward for five years and if not utilized, some will begin to expire in 2020. 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 without an expiration date. The operating loss incurred in the Canada can be carried back 3 years and forward 20 years for deduction against any form of income. 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, 2018 and 2019, the Company recorded nil and RMB1,984 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, 2017 2018 2019 RMB RMB RMB Income before income tax 191,900 386,613 652,370 Tax expense at PRC enterprise income tax rate of 25% 47,975 96,653 163,093 Income tax on tax holidays (30,740) (58,327) (72,396) Tax effect of permanence differences (8,190) (22,733) (31,088) Effect of income tax rate differences in jurisdictions other than the PRC 14,364 36,443 16,270 Change in tax rate 4,202 — — Changes in valuation allowances — — 2,008 Income tax expense 27,611 52,036 77,887 If the tax holiday granted to Anhui Huami was not available, the Group’s income tax expense would have increased by RMB30,740, RMB58,327 and RMB72,396, the basic net income per share attributable to the ordinary shareholders of the Company would have decreased by RMB0.45, RMB0.28 and RMB0.30 during the years ended December 31, 2017, 2018 and 2019, respectively, and the diluted net income per share attributable to the ordinary shareholders of the Company would have decreased by RMB0.45, RMB0.26 and RMB0.28 during the years ended December 31, 2017, 2018 and 2019, respectively. 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. Aggregate undistributed earnings of the Company’s PRC subsidiaries and VIEs that are available for distribution amounted to RMB860,613 and RMB1,559,898 as of December 31, 2018 and 2019, 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, 2017, 2018 and 2019, 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$14 (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. |
Parent Company | |
INCOME TAXES | 4. INCOME TAXES The Company is a Cayman Islands company, therefore, is not subjected to income taxes for all years presented. |
ORDINARY SHARES
ORDINARY SHARES | 12 Months Ended |
Dec. 31, 2019 | |
ORDINARY SHARES | |
ORDINARY SHARES | 14. ORDINARY SHARES The Company’s Amended and Restated Certificate of Formation authorizes the Company to issue 405,462,685 ordinary shares with a par value of US$0.0001 per share approximately. In February 2018, the Group completed its IPO upon which the Group’s ordinary shares were divided into 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 41,600,000 shares issued through the IPO were classified as Class A ordinary shares and the ordinary shares before the IPO were converted to class B ordinary shares. All of the Group’s preferred shares were automatically converted into 94,537,315 Class B ordinary shares, in which 13,359,788 Class B ordinary shares were re-designated to Class A ordinary shares on a one-for-one basis. Immediately prior to the completion of its IPO, the Group granted 12,064,825 Class B ordinary shares to its preferred shareholders in consideration of their waivers of the conditions of a qualified initial public offering as provided in the shareholders agreement between the Group and its preferred shareholders. The Group recorded the issuance at fair value and treated it as a deemed dividend to its preferred shareholders. The Group initially recorded the deemed dividend against retained earnings to reduce it to zero with the remaining amounts charged against additional paid-in capital. Additionally, the deemed dividend reduced the Group’s income available to ordinary shareholders. As of December 31, 2018, there were 57,303,093 Class A ordinary shares and 184,376,679 Class B ordinary shares issued and outstanding. In April 2019, the Group completed its secondary offering upon which 3,174,600 class A ordinary shares were issued and 28,316,400 Class B ordinary shares were converted into Class A ordinary shares. As of December 31, 2019, there were 91,459,708 Class A and 156,060,279 Class B ordinary shares issued and outstanding. |
SHARE-BASED PAYMENT
SHARE-BASED PAYMENT | 12 Months Ended |
Dec. 31, 2019 | |
SHARE-BASED PAYMENT | |
SHARE-BASED PAYMENT | 15. SHARE-BASED PAYMENT Restricted Share owned by the founders As one of the condition to the closing of the Preferential Equity Interests in January 2014, two founders entered into a share restriction agreement with the preferential equity interests shareholders. Pursuant to this agreement, those founders are prohibited from transferring, selling, assigning, pledging or disposing in any way their equity interests in the Company before such interest is vested. The equity interests held by the Founders were 50% converted to restricted equity interests and vest in 24 equal and continuous monthly installments for each month starting from January 2014, provided that those founders remain full-time employees of the Group at the end of such month. A total of 45,567,164 restricted shares were held by those founders as of April 2015. In April 2015, as one of the condition of the closing of the preferred shareholder agreement, the agreement was amended to (1) restrict additional shares and extend the vesting period for an additional 48 months and (2) restrict shares held by four other founders similar to the restrictions imposed in January 2014. The Group also obtained an irrevocable and exclusive option to repurchase all of the restricted shares held by those founders at par value both in January 2014 and April 2015. The share restriction agreement between the founders and the Company was accounted for as a grant of restricted stock awards under a stock-based compensation plan. Accordingly, the Group measured the fair value of the restricted shares of the Founders at the grant date and recognizes the amount as compensation expense over the service period. Additionally, the modification of the restriction in April 2015 was accounted as a modification of share-based compensation. The Group calculated the incremental fair value resulting from the modification and recorded it as share-based compensation over the revised vesting term. A summary of non-vested restricted share activity during the year ended December 31, 2019 is presented below: Number of shares Outstanding at January 1, 2019 11,391,791 Granted — Forfeited — Vested (11,391,791) Outstanding at December 31, 2019 — The Group determined that the non-vested restricted shares are participating securities as the holders of the non-vested restricted shares have a non-forfeitable right to receive dividends with all ordinary shares but the non-vested restricted shares do not have a contractual obligation to fund or otherwise absorb the Group’s losses. See Note 21 for details. During the years ended December 31, 2017, 2018 and 2019, the Group recorded share-based compensation expense of RMB51,463, RMB55,311 and RMB17,794 related to the unvested shares of the Founders respectively. 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. During the years ended December 31, 2017, 2018 and 2019, the Group granted 1,545,688, nil and nil share options to certain personnel under the PRC Plan. Those options have an exercise price of US$0 per share and expire 10 years from the date of grant. Those options also include an exercise provision whereas shares become exercisable after the closing of an IPO. The Group has recorded nil, 40,449 and RMB1,194 share-based compensation expense for the years ended December 31, 2017, 2018 and 2019 related to such options, respectively. During the years ended December 31, 2017, 2018 and 2019, the Group granted 500,000, nil and nil share options to certain personnel under the U.S. Plan which were fully vested as of the grant date. Those options have an exercise price range from US$0.79 to US$0.99 per share and expire 10 years from the date of grant. 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, assuming the underwriters do not exercise their over-allotment option. 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 year ended December 31, 2018 and 2019, the Group granted 6,988,469 and 651,000 share options to certain personnel under the 2018 Plan. The weighted average exercise price of options granted during the years ended December 31, 2018 and 2019 was US$0.35 per share and US$0 per share. During the year ended December 31, 2018 and 2019, the Group has recorded RMB9,523 and RMB32,424 share-based compensation expense for such options, 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, 2017, 2018 and 2019 are summarized in the following table: For the years ended December 31, 2017 2018 2019 Risk-free interest rate 2.2 % 2.04%-2.83 % 2.14 % Expected volatility 49.0 % 36%-52.5 % 50.4 % Expected life of option (years) 9.76-10 1-10 10 Expected dividend yield 0.0 % 0.0 % 0.0 % Fair value per ordinary share 12.56 15.03-16.85 (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. (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, 2018 and 2019, the fair value of the underlying ordinary shares is determined based on the closing market price of the share. During the years ended December 31, 2017, the estimated fair value of ordinary shares as of the respective dates was determined based on a retrospective valuation with the assistance of a third party appraiser. A summary of the stock option activity under the 2015 and 2018 Plan during the year ended December 31, 2019 is included in the table below. Weighted average Options granted exercise price Share Number per option US$ Outstanding at January 1, 2019 13,343,230 0.23 Granted 651,000 — Exercised (694,735) 0.19 Cancelled and forfeited (1,253,259) — Outstanding at December 31, 2019 12,046,236 0.24 The following table summarizes information regarding the share options as of December 31, 2019: December 31, 2019 Weighted- average remaining Weighted- exercise average exercise contractual Aggregate Options Number price per option life (years) intrinsic value US$ US$ Options Outstanding 12,046,236 0.24 33,279 Exercisable 6,580,899 0.19 18,536 Expected to vest 5,465,337 0.31 14,743 In January 2018, the Group amended and accelerated the vesting schedule of 6,817,372 previously granted options, which became immediately exercisable. The Group recognized the remaining compensation cost immediately for those shares upon the modification. The total intrinsic value of options exercised during the years ended December 31, 2017, 2018 and 2019 amounted RMB1,695, RMB6,858 and RMB13,608, respectively. The weighted average grant date fair value of options granted during the year ended December 31, 2017, 2018 and 2019 was RMB11.22, RMB15.12 and RMB12.65 per share, respectively. During the years ended December 31, 2017, 2018 and 2019, the Group recorded share-based compensation expense of RMB4,713, RMB49,972 and RMB33,618 for the options granted under the 2015 Plan and 2018 Plan. As of December 31, 2019, there was RMB50,041 of unrecognized compensation expenses related to the options. Restricted Share On October 21, 2015, the Company granted 4,740 ,777 restricted shares under the U.S. Plan to employees at exercise price of US$0 per share. These shares have a vesting period of four years of employment services with the first one-fourth vesting on the first anniversary from the grant date, and the remaining three-fourth vesting on an annual basis over a three-year period ending on the fourth anniversary of the grant date. The non-vested shares 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 effectively. The outstanding non-vested shares shall be forfeited and automatically transferred to and reacquired by the Company at nil consideration. The Group recognized compensation expense over the four-year service period on a straight-line basis. The aggregate fair value of the restricted shares at the grant dates was RMB25,397. The fair values of non-vested shares are measured at the fair value of the Company’s ordinary shares on the grant-date which was RMB5.36 (US$0.84). The total fair value of the vested shares for the years ended December 31, 2017, 2018 and 2019 were RMB6,165, RMB6,165 and RMB2,758, respectively. As of December 31, 2019, there was nil unrecognized compensation cost. A summary of the restricted share activity for the year ended December 31, 2017, 2018 and 2019 is presented below: Restricted Shares Outstanding at January 1, 2017 3,228,278 Vested 1,150,718 Outstanding at December 31, 2017 2,077,560 Cancelled and forfeited 411,930 Vested 1,150,718 Outstanding at December 31, 2018 514,912 Cancelled and forfeited — Vested 514,912 Outstanding at December 31, 2019 — During the years ended December 31, 2017, 2018 and 2019, the Group recorded compensation expense of RMB6,611, RMB3,992 and RMB118 for the restricted shares, respectively. Restricted Stock Units During the year ended December 31, 2017, 2018 and 2019, the Company granted 1,700,000, 658,056 and 30,000 restricted stock units respectively to employees at an exercise price of US$0 per share. These shares have a vesting period of four years of employment services with the first one-fourth vesting on the first anniversary from grant date, and the remaining three-fourth vesting on an annual basis over a three-year period ending on the fourth anniversary of the grant date. The restricted stock units (“RSU”) 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 effectively. The outstanding restricted stock units shall be forfeited and automatically transferred to and reacquired by the Company at nil consideration. The Group recognized compensation expense over the four-year service period on a straight-line basis. The aggregate fair value of the restricted stock units at grant dates was RMB42,092. The fair values of non-vested shares are measured at the fair value of the Company’s ordinary shares on the grant-date which were RMB11.38, RMB15.87 and RMB15.71 during the years ended December 31, 2017, 2018 and 2019. During the years ended December 31, 2017, 2018 and 2019, the Group recorded compensation expense of nil, RMB25,434 and RMB3,598 for the restricted stock units, respectively. As of December 31, 2019, there was RMB5,688 unrecognized compensation cost related to restricted stock units which is expected to be recognized over a weighted average vesting period of 2.47 years. The weighted average granted fair value of restricted stock units granted during the years ended December 31, 2017, 2018 and 2019 were RMB12.54 per RSU, RMB15.75 per RSU and RMB12.65 per RSU. A summary of the restricted stock units activity during the year ended December 31, 2019 is presented below: RSUs Unvested balance at January 1, 2019 562,913 Granted 30,000 Cancelled and forfeited — Vested 5,229 Unvested balance at December 31, 2019 587,684 Total share-based compensation recognized was as follows: For the years ended December 31, 2017 2018 2019 RMB RMB RMB General and administrative 55,804 87,857 40,684 Research and development 6,983 42,167 11,191 Selling and Marketing — 4,271 3,198 Cost of revenues — 414 55 Total stock-based compensation expense 62,787 134,709 55,128 |
MAINLAND CHINA CONTRIBUTION PLA
MAINLAND CHINA CONTRIBUTION PLAN | 12 Months Ended |
Dec. 31, 2019 | |
MAINLAND CHINA CONTRIBUTION PLAN | |
MAINLAND CHINA CONTRIBUTION PLAN | 16. 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 RMB24,539, RMB39,495 and RMB63,799 during the years ended December 31, 2017, 2018 and 2019. |
NONCONTROLLING INTERESTS
NONCONTROLLING INTERESTS | 12 Months Ended |
Dec. 31, 2019 | |
NONCONTROLLING INTERESTS | |
NONCONTROLLING INTERESTS | 17. NONCONTROLLING INTERESTS Yunding RMB Balance as of January 1, 2018 2,389 Loss attributed to noncontrolling interest shareholders (3,726) Balance as of December 31, 2018 (1,337) Loss attributed to noncontrolling interest shareholders (1,825) Balance as of December 31, 2019 (3,162) |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2019 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | 18. 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, 2017, 2018 and 2019, the Group identified two operating segments. Those segments include Xiaomi Wearable Products and Self-branded products and others. The 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, 2017 Xiaomi Self-branded Wearable products Products and others Total RMB RMB RMB Revenues 1,614,512 434,384 2,048,896 Cost of revenues 1,232,792 321,402 1,554,194 Gross Profit 381,720 112,982 494,702 For the year ended December 31, 2018 Xiaomi Self-branded Wearable products Products and others Total RMB RMB RMB Revenues 2,439,534 1,205,801 3,645,335 Cost of revenues 1,883,509 822,376 2,705,885 Gross Profit 556,025 383,425 939,450 For the year ended December 31, 2019 Xiaomi Self-branded Wearable products Products and others Total RMB RMB RMB Revenues 4,193,665 1,618,590 5,812,255 Cost of revenues 3,296,696 1,047,816 4,344,512 Gross Profit 896,969 570,774 1,467,743 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, 2019 | |
STATUTORY RESERVES AND RESTRICTED NET ASSETS | |
STATUTORY RESERVES AND RESTRICTED NET ASSETS | 19. 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. As of December 31, 2015, the Group’s profit appropriation made to the reserve fund reached the maximum required amount of 50% of registered capital and amounted to RMB1,509. Accordingly, no additional profit appropriation during the years ended December 31, 2017 and 2018. During the year ended December 31, 2019, due to the new appropriable profit earned by certain PRC entities in the Group, the Group accrued an additional RMB92 statutory reserve. 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 RMB163,350, RMB153,851 and RMB153,943 as of December 31, 2017, 2018 and 2019, respectively. |
RELATED PARTY BALANCES AND TRAN
RELATED PARTY BALANCES AND TRANSACTIONS | 12 Months Ended |
Dec. 31, 2019 | |
RELATED PARTY BALANCES AND TRANSACTIONS | |
RELATED PARTY BALANCES AND TRANSACTIONS | 20. 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 Beijing Xiaomi Mobile Software Co. Ltd.("Xiaomi Mobile") 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 Mobile, 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 Hangzhou Yunyou Technology Co. Ltd.("Hanzhou Yunyou") Significant influence by one of the Company’s shareholders (1) Balances : As of December 31, 2018 2019 RMB RMB Amount due from related parties: Xiaomi Communication (a) 631,204 1,401,015 Youpin Information (a) — 9,845 Xiaomi Information (a) 9,727 7,669 Xiaomi Technology (a) 7,442 — Hangzhou Yunyou (b) 5,143 — Others 2,883 2,641 Total As of December 31, 2018 2019 RMB RMB Amount due to related parties, current: Xiaomi Technology(c) — (14,186) Xiaomi Mobile (c) (10,350) — Others (345) (583) Total (10,695) (14,769) (2) Transactions: For the years ended December 31, 2017 2018 2019 RMB RMB RMB Sales to related parties: Xiaomi Communication 1,773,595 2,798,824 4,271,135 Xiaomi Information 1,318 17,859 9,870 Xiaomi Technology 2,072 — — Others 1,655 312 — Total 1,778,640 2,816,995 4,281,005 For the years ended December 31, 2017 2018 2019 RMB RMB RMB Others: Loan provided to related parties (b) (8,000) 5,143 — Investments disposed to a related party (d) 22,047 3,061 — Purchase from related parties (e) — — (a) The amount due from Xiaomi represents receivables from the sales of products and services, which includes an unbilled amount of RMB102,687. (b) In 2018, the group provided a RMB5,000 loan to Hangzhou Yunyou, with annual interest of 15% and maturing in April 2019. During 2019, the Group evaluated the loan would not be collected and recognized an impairment loss of RMB5,640. (c) The amounts due to Xiaomi Mobile and Xiaomi Technology represent the payable for the cloud service received by the Group. (d) The Group disposed five long-term investments and one long-term investment to Huaying Fund and recorded RMB284 and RMB31 gain during the years ended December 31, 2017 and 2018, respectively. During 2019, there was no investment disposed by the Group to related parties. (e) During 2019, the Group purchased certain intangible assets from Hefei Huaheng which amounted to RMB11,321. |
NET INCOME PER SHARE
NET INCOME PER SHARE | 12 Months Ended |
Dec. 31, 2019 | |
NET INCOME PER SHARE | |
NET INCOME PER SHARE | 21. NET INCOME PER SHARE During the years ended December 31, 2017 and 2018, the Group has determined that its convertible redeemable participating preferred shares are participating securities as the preferred shares participate in undistributed earnings on an as-if-converted basis. The holders of the preferred shares are entitled to receive dividends on a pro rata basis, as if their shares had been converted into ordinary shares. The Group determined that the nonvested restricted shares of the founders are participating securities as the holders of the nonvested restricted shares have a nonforfeitable right to receive dividends with all ordinary shares but the nonvested restricted shares do not have a contractual obligation to fund or otherwise absorb the Company’s losses. Accordingly, the Group uses the two class method of computing net loss per share, for ordinary shares, nonvested restricted shares and preferred shares according to the participation rights in undistributed earnings. However, undistributed loss is only allocated to ordinary shareholders because holders of preferred shares and nonvested restricted shares are not contractually obligated to share losses. For the years ended December 31, 2017 2018 2019 RMB RMB RMB Basic net income per share calculation Numerator: Net income for the year attributable to the Company: 167,682 340,046 575,196 Less: Accretion of Series A Shares 3,762 177 — Less: Accretion of Series B-1 Shares 3,127 368 — Less: Accretion of Series B-2 Shares 34,382 4,049 — Less: Deemed dividend to preferred shareholders — 209,752 — Less: Undistributed earnings allocated to Series A preferred shareholders 48,753 4,521 — Less: Undistributed earnings allocated to Series B-1 preferred shareholders 1,361 126 — Less: Undistributed earnings allocated to Series B-2 preferred shareholders 14,220 1,319 — Less: Undistributed earnings allocated to participating nonvested restricted shares 15,957 6,244 2,450 Net income attributed to ordinary shareholders for computing net income per ordinary shares—basic 46,120 113,490 572,746 Denominator: Weighted average ordinary shares outstanding used in computing net income per ordinary shares – basic 67,777,592 211,873,704 243,648,186 Net income per ordinary share attributable to ordinary shareholders—basic 0.68 0.54 2.35 Diluted net income per share calculation Net income attributable to ordinary shareholders for computing net income per ordinary shares—basic 46,120 113,490 572,746 Add: adjustments to undistributed earnings to participating securities 3,519 648 117 Net income attributed to ordinary shareholders for computing net income per ordinary shares—basic 49,639 114,138 572,863 Denominator: Weighted average ordinary shares basic outstanding 67,777,592 211,873,704 243,648,186 Effect of potentially diluted stock options, restricted stocks and RSUs 8,514,309 13,160,946 12,310,986 Weighted average ordinary shares outstanding used in computing net income per ordinary shares—dilute 76,291,901 225,034,650 255,959,172 Net income per ordinary share attributable to ordinary shareholders—diluted 0.65 0.51 2.24 For the year ended December 31, 2017, 2018 and 2019, 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 year presented: For the years ended December 31, 2017 2018 2019 RMB RMB RMB Shares issuable upon exercise of share options, restricted stocks and RSUs 12,683,366 705,407 294,352 Shares issuable upon vesting of nonvested restricted shares 23,450,173 11,657,620 1,042,234 Shares issuable upon conversion of Series A shares 71,641,792 — — Shares issuable upon conversion of Series B-1 shares 2,000,000 — — Shares issuable upon conversion of Series B-2 shares 20,895,523 — — |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2019 | |
LEASES | |
LEASES | 22. LEASES The Group's leases consist of operating leases for administrative office spaces in different cities in the PRC and Overseas. The Group determines if an arrangement is a lease at inception. Some lease agreements contain lease and non-lease components, which the Group choose 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. As of December 31, 2019, the Group had no long-term leases that were classified as a financing lease. As of December 31, 2019, the Group has entered into a lease that have not yet commenced with future lease payments of RMB79,828. The lease will commence in fiscal year 2020 with lease term of 5 years. The following table represents lease costs recognized in the Group’s Consolidated Statements of Operation for the year ended December 31, 2019. Lease costs are included in selling, general and administrative expense and research and development expense on the Group’s Consolidated Statements of Operations. For the years ended December 31, 2019 RMB Operating lease cost (1) 30,788 Sublease income (1,382) Total lease cost 29,406 (1) Operating lease cost includes short-term lease costs, which was not material in the period presented. Prior to the adoption of the new lease standard, lease expense for the years ended December 31, 2017 and 2018 were RMB6,741 and RMB11,423, respectively. The following table represents the components of leases that are recognized on the Group’s Consolidated Balance Sheets as of December 31, 2019. For the years ended December 31, 2019 RMB Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases 26,733 Non-cash Right-of-use assets in exchange for new lease liabilities: Operating leases 112,513 Weighted average remaining lease term Operating leases 3.76 years Weighted average discount rate Operating leases 5.21 % The following is a maturity analysis of the annual undiscounted cash flows for the year ending December 31: Year ending December 31, RMB 2020 33,928 2021 29,174 2022 23,545 2023 23,703 2024 11,893 Total lease payments 122,243 Less: imputed interest 13,084 Present value of lease liabilities 109,159 Future minimum payments under non-cancellable operating leases related to offices consisted of the following at December 31, 2018: RMB 2019 2020 6,648 2021 and after 3,171 Total 26,152 |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 12 Months Ended |
Dec. 31, 2019 | |
SUBSEQUENT EVENT | |
SUBSEQUENT EVENT | 23. SUBSEQUENT EVENT New Bank Borrowing loans Subsequent to 2019 year-end, the Group borrowed approximately RMB882 million in different currencies from several commercial banks. These bank loans are with one year maturity and weighted average interest rate of 3.33%, and will be used for the daily operations of the Group. Outbreak of 2019 Novel Coronavirus ("COVID-19") Started in late January 2020, COVID-19 was rapidly evolving in China and later globally. Reacting to the outbreak, counter-measures were put in place by the authorities which include travel restrictions. The Group made temporary closures of its offices and most employees worked remotely away from the office. The suppliers of the Group experienced low manufacturing capacity in January and February 2020, and the manufacturing facilities have still been in ramp-up to its full capacity since March 2020. Considering the future developments of the outbreak, both in China and globally, are highly uncertain and cannot be predicted at the current stage, the Group estimates a decrease in demand for smart wearable products, both in China and overseas. The decrease, may adversely affect business and financial performance of 2020 and beyond, the extent of which will depend on future developments both in China and globally, which are highly uncertain and cannot be predicted at this stage. |
FINANCIAL STATEMENT SCHEDULE I
FINANCIAL STATEMENT SCHEDULE I CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY | 12 Months Ended |
Dec. 31, 2019 | |
FINANCIAL STATEMENT SCHEDULE I CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY | |
FINANCIAL STATEMENT SCHEDULE I CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY | 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) For the years ended December 31, 2018 2019 2019 RMB RMB US$ (Note2) Assets Current assets: Cash and cash equivalents 458,371 398,604 57,256 Term deposit 96,969 — — Prepaid expenses and other current assets 3,782 402 58 Amount due from related parties 314,658 533,449 76,625 Total current assets 873,780 932,455 133,939 Investments in subsidiaries 963,064 1,594,844 229,085 Total assets 1,836,844 2,527,299 363,024 Liabilities Current liabilities: Accrued expense and other current liabilities 4,564 166 24 Amount due to related parties 21,365 26,383 3,790 Total current liabilities 25,929 26,549 3,814 Total liabilities 25,929 26,549 3,814 Equity Class A Ordinary shares (US$0.0001 par value; 9,800,000,000 and 9,800,000,000 shares authorized as of December 31, 2018 and 2019; 57,303,093 and 91,459,708 shares issued and outstanding as of December 31, 2018 and 2019, respectively) 36 57 8 Class B Ordinary shares(US$0.0001 par value; 200,000,000 and 200,000,000 shares authorized as of December 31, 2018 and 2019; 184,376,679 and 156,060,279 shares issued and outstanding as of December 31, 2018 and 2019, respectively) 115 98 14 Additional paid-in capital 1,373,577 1,478,902 212,431 Accumulated retained earnings 340,046 910,612 130,801 Accumulated other comprehensive income 97,141 111,081 15,956 Total equity 1,810,915 2,500,750 359,210 Total liabilities and equity 1,836,844 2,527,299 363,024 The accompanying notes are an integral part of these condensed consolidated financial statements. STATEMENTS OF OPERATIONS (Amounts in thousands of Renminbi (“RMB” and U.S. dollars (“US$”)) except for number of shares and per share data, or otherwise noted) For the year ended December 31, 2017 2018 2019 2019 RMB RMB RMB US$ (Note2) Cost — 414 55 8 Gross profit — 414 55 8 Operating expenses: Selling and marketing — 4,271 3,198 459 General and administrative expenses 57,898 99,881 50,572 7,264 Research and development 6,984 42,167 11,191 1,607 Total operating expenses 64,882 146,319 64,961 9,330 Operating loss (64,882) (146,733) (65,016) (9,338) Interest Income — 2,185 6,868 987 Other loss — — (699) (100) Equity in earnings of subsidiaries and VIEs 232,564 484,594 634,043 91,073 Net income The accompanying notes are an integral part of these condensed consolidated financial statements. STATEMENTS OF COMPREHENSIVE INCOME (Amounts in thousands of Renminbi (“RMB” and U.S. dollars (“US$”)) except for number of shares and per share data, or otherwise noted) For the years ended December 31, 2017 2018 2019 2018 RMB RMB RMB US$ (Note2) Net income 167,682 340,046 575,196 82,622 Other comprehensive income, net of tax Foreign currency translation adjustment (3,175) 75,041 13,940 2,002 Unrealized gain on available-for-sale investments and others, (net of tax effect of 1,554, RMB nil and nil for years ended December 31, 2017, 2018 and 2019, respectively) 9,484 — — — Comprehensive income attributable to Huami Corporation 173,991 415,087 589,136 84,624 The accompanying notes are an integral part of these condensed consolidated financial statements. STATEMENTS OF CASH FLOW (Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”), except share and share related data, or otherwise noted) For the years ended December 31, 2017 2018 2019 2019 RMB RMB RMB US$ (Note2) Cash Flow from Operating Activities Net income 167,682 340,046 575,196 82,622 Equity in earnings of subsidiaries (232,564) (484,594) (634,043) (91,073) Share-based compensation 62,787 134,709 55,128 7,918 Changes in operating assets and liabilities Prepaid expenses and other current assets (14,284) 8,625 2,373 341 Accrued expense and other current liabilities 10,043 (5,507) (4,436) (637) Amount due to a related party (8,500) 4,489 5,018 721 Net Cash used in Operating Activities (14,836) (2,232) (764) (108) Cash Flow from Investing Activities Amount due from related parties 21,646 (196,158) (218,791) (31,427) Investment in subsidiaries (9,772) (10,056) 2,263 325 Purchase of term deposits — (385,028) — — Maturity of term deposits — 288,771 96,969 13,929 Proceed received from loan to third parties — 3,578 1,007 145 Loans provided to third party — (2,406) — — Net Cash provided (used in) by Investing Activities 11,874 (301,299) (118,552) (17,028) Cash Flow from Financing Activities Net proceeds from initial public offering — 657,062 — — Exercise of share options 89 3,486 933 134 Payment for repurchase of ordinary shares — (8,157) — — Net proceeds from the second offering — — 49,214 7,069 Deemed Dividend to shareholders — — (4,538) (652) Net Cash provided by Financing Activities 89 652,391 45,609 6,551 Net increase/(decrease) in cash and cash equivalent (2,873) 348,860 (73,707) (10,585) Effect of exchange rate changes (3,175) 75,041 13,940 2,002 Cash and cash equivalents at beginning of the year 40,518 34,470 458,371 65,839 Cash and cash equivalents at end of the year 34,470 458,371 398,604 57,256 The accompanying notes are an integral part of these condensed consolidated financial statement. |
BASIS FOR PREPARATION
BASIS FOR PREPARATION | 12 Months Ended |
Dec. 31, 2019 | |
Parent Company | |
BASIS FOR PREPARATION | 1. BASIS FOR PREPARATION The condensed financial information of the Company has been prepared using the same accounting policies as set out in the Group’s consolidated financial statements except that the Company has used the equity method to account for investments in its subsidiaries and VIEs. |
CONVENIENCE TRANSLATION
CONVENIENCE TRANSLATION | 12 Months Ended |
Dec. 31, 2019 | |
CONVENIENCE TRANSLATION | |
CONVENIENCE TRANSLATION | 2. CONVENIENCE TRANSLATION Translations of balances in condensed financial information of parent company balance sheets, statements of operations statements of comprehensive income and statements of cash flows from RMB into US$ as of and during the year ended December 31, 2019 is solely for the convenience of the reader and were calculated at the rate of US$1.00 = RMB6.9618, representing the rate as certified by the statistical release of the Federal Reserve Board of United States on December 31, 2019. 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, 2019, or at any other rate |
INVESTMENTS IN SUBSIDIARIES AND
INVESTMENTS IN SUBSIDIARIES AND VIEs | 12 Months Ended |
Dec. 31, 2019 | |
Parent Company | |
INVESTMENTS IN SUBSIDIARIES AND VIEs | 3. INVESTMENTS IN SUBSIDIARIES AND VIEs The Company and its subsidiaries and VIEs were included in the consolidated financial statements where the intercompany transactions and balances were eliminated upon consolidation. For purpose of the Company’s standalone financial statements, its investments in subsidiaries and VIEs were reported using the equity method of accounting. The Company’s share of income and losses from its subsidiaries and VIEs were reported as equity in earnings of subsidiaries and VIEs in the accompanying parent company financial statements. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
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 allowance for doubtful accounts, inventory valuation, the useful lives of long-lived assets, impairment of long-lived assets, impairment of goodwill, incremental borrowing rate for leases, product warranties, fair value measurement of ordinary shares and preferred shares, 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, share-based compensation, 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. 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 and liabilities primarily including available-for-sale securities at fair value on a recurring basis as of December 31, 2018 and 2019. Measured fair value on a nonrecurring basis The Group measured the fair value of the intangible assets acquired through non-monetary exchange at fair value. The fair values was determined using models with significant unobservable inputs (Level 3 inputs). The Group used the income approach by applying the discounted cash flow method (“DCF”). The DCF involves applying an appropriate discount rate to discount future cash flows to present value. The future cash flows represent management’s best estimation as of the measurement date. The projected cash flow estimation includes, among others, analysis of projected revenue growth, gross margins and terminal value and these assumptions are consistent with the Group’s business plan. In determining an appropriate discount rate, the Group has considered the weighted average cost of capital (“WACC”) by considering relative risk of the industry and the characteristics of the Company. A discount rate of 22% and 19% as of the valuation date during 2018 and 2019 was used for the fair value measurement of intangible assets. 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 Group did not recognize any impairment loss related to acquired intangible assets arising from acquisitions during the years ended December 31, 2017, 2018 and 2019. 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 goodwill is determined using discounted cash flows, and an impairment loss will be recognized for any excess in the carrying value of goodwill over the implied fair value of goodwill. The Group did not recognize any impairment loss related to goodwill during the year ended December 31, 2017, 2018 and 2019. For equity investments without readily determinable fair values for which the Company elected to use the measurement alternative starting in 2018, 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. During the years ended December 31, 2017, 2018 and 2019, the Group recognized impairment losses of nil, nil and RMB2,382 related to equity investments without readily determinable fair value. |
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, amount due from related parties, available-for-sale securities investments, accounts payable, notes payable, short-term bank borrowing, amount due to related parties and noncurrent operating lease liabilities. 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, amount due from related parties, accounts payable, notes payable and short-term bank borrowings approximate their fair values due to the short-term maturities of these instruments. |
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 requires the Group to make a deposit for 40% or 60% 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 sheet as of December 31, 2018 and 2019. |
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. As of December 31, 2018 and 2019, the Company recorded nil 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. During the years ended December 31, 2017, 2018 and 2019, inventory provision amounted to RMB2,449, nil and RMB23,799, respectively. |
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. |
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 and value-added tax receivables. |
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.huami.com, trademark and patents. The domain name is 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 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. The 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 9 to 10 years. |
Leases | Leases The Group leases administrative office spaces in different cities in the PRC and Overseas 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 initial direct costs it incurs under the lease. The Group begins recognizing operating lease expense when the lessor makes the underlying asset available to the Group. The Group's leases have remaining lease terms of up to five 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, the Group records operating lease expense 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, and determination of the Group’s weighted average cost of capital. 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 performs a two-step goodwill impairment test. The first step compares the fair values of each reporting unit to its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill is not considered impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of the affected reporting unit’s goodwill to the carrying value of that goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. This allocation process is only performed for purposes of evaluating goodwill impairment and does not result in an entry to adjust the value of any assets or liabilities. An impairment loss is recognized for any excess in the carrying value of goodwill over the implied fair value of goodwill. During the years ended December 31, 2017, 2018 and 2019, the Group recognized nil impairment loss on goodwill. |
Long-term investments | Long-term investments The Group’s long-term investments consist of equity securities without readily determinable fair value, equity method investments and available-for-sale securities investments. (a) Equity securities without readily determinable fair value On January 1, 2018, the Group adopted Accounting Standards Update ("ASU") No. 2016‑01 Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities and 2018‑03 Technical Corrections and Improvements to Financial Instruments – Overall (Subtopic 825‑10): Recognition and Measurement of Financial Assets and Financial Liabilities. Prior to 2018, for investee companies over which the Group does not have significant influence or a controlling interest, equity securities without determinable fair value were accounted for using the cost method of accounting, measured at cost less other-than-temporary impairment. Starting in 2018, these securities are measured and recorded using a measurement alternative that measures the securities at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes. 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, the operating performance of the companies including current earning trends and other company specific information. During the years ended December 31, 2017, 2018 and 2019, the Group recorded nil, nil and RMB2,382 impairment losses on its equity securities without readily determinable fair values. (b) 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 “income/(loss) 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, and the determination of the weighted average cost of capital. The Group recorded nil, RMB4,133 and RMB218 impairment losses on its equity method investments during the years ended December 31, 2017, 2018 and 2019. (c) 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 reviews its available for sale investments for other than temporary impairment based on the specific identification method. The Group considers available quantitative and qualitative evidence in evaluating potential impairment of its investments. If the cost of an investment exceeds the investment’s fair value, the Group considers, among other factors, general market conditions, government economic plans, the duration and the extent to which the fair value of the investment is less than the cost, the Group’s intent and ability to hold the investment, and the financial condition and near term prospects of the investees. The Group recorded nil, RMB3,457 and nil impairment losses on its available- for-sale investments during the years ended December 31, 2017, 2018 and 2019, respectively. |
Notes payable | Notes payable The Group endorses bank acceptance notes (“Notes”) to suppliers in the PRC in the normal course of business. The Group may endorse these Notes with its suppliers to clear its accounts payable. When the Notes are endorsed by the Group, the Group is jointly liable with other endorsers in the Notes. Notes that have been presented to banks or endorsed with suppliers are derecognized from the consolidated balance sheets when the Notes are settled with banks or when the obligations as endorser are discharged. |
Revenue recognition | Revenue recognition (a) On January 1, 2018, the Group adopted ASU 2014-09, Revenue Contracts with Customers (Topic 606), "Topic 606" applying the modified retrospective method to all contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period. The Group recorded an increase to retained earnings and amount due from related parties of RMB33,329 as of January 1, 2018 due to the cumulative impact of adopting Topic 606. 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 year ended December 31, 2018 and 2019, the Group generated 66.9% and 72.2% of revenue from one customer for sales of exclusively designed and manufactured smart wearable devices, and generated 33.1% and 27.8% 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"). 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 behaviours 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 cost plus margin estimated selling price for the software services and software upgrades was estimated from RMB1.77 to RMB5.68 per unit and RMB1.72 to RMB10.62 per unit for the year ended December 31, 2018 and 2019. 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 the reseller 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 For the year ended December 31, 2018 and 2019, the Group generated 33.1% and 27.8% of revenues from sales of the Group’s self-branded products and others to retailers, distributors and end users. The Group’s revenue recognition for its self-branded products was consistent with that described in the preceding paragraphs. |
Cooperation agreement with one customer | Cooperation agreement with one customer For the year ended December 31, 2018 and 2019, the Group generated 66.9% and 72.2% of revenues 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 our shareholders (see Note 20). 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. 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 Starting in 2018, the Group 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. (b) The Group recognized revenue when a persuasive evidence of an arrangement exists, delivery has occurred and the services have been rendered, the sales price is fixed or determinable, and collection is reasonably assured. The Group recognized revenue, net of estimated sales returns and value-added taxes ("VAT"). The Group’s contracts with its customers included multiple element arrangements. The first deliverable was the smart wearable device and embedded firmware that was essential to the functionality of the device. The second deliverable was the software services included with the products, which were provided free of charge and enabled users to sync, view, and access real-time data on the Group’s mobile apps. The third deliverable was 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 allocated revenue to all deliverables based on their relative selling prices. The Group used a hierarchy to determine the selling price to be used for allocating revenue to the deliverables: (i) vendor-specific objective evidence (“VSOE”) of fair value, (ii) third-party evidence (“TPE”), and (iii) best estimate of the selling price (“BESP”). Because the Group did not have neither VSOE nor TPE for any of its deliverables, revenue was allocated to the deliverables on the Group’s BESP as if each deliverable was sold regularly on a stand-alone basis. The Group’s process for determining its BESP considered multiple factors including consumer behaviors and the Group’s internal pricing model. The BESP for the smart and wearable devices comprised the majority of the arrangement consideration. The BESP for the software services and software upgrades was estimated from RMB1.30 to RMB 5.69 per unit for the years ended December 31, 2017. The Group recognized revenue for the amounts allocated to the connected smart and wearable devices at the time of delivery (except as noted below), provided the other conditions for revenue recognition have been met. Revenue for products sold through distributors or retailers was recognized on a sell-in basis. Amounts allocated to the software services and unspecified upgrade rights were deferred and recognized on a straight-line basis over their estimated usage period which approximately 9 months. Sales of self-branded products and others For the years ended December 31, 2017, the Group generated 21.2% of revenues from sales of the Group’s self-branded products and others to retailers, distributors and end users. The Group’s revenue recognition for its self-branded products was consistent with that described in the preceding paragraphs. Cooperation agreement with one customer For the years ended December 31, 2017, the Group generated 78.8% of revenues from one customer for sales of exclusively designed and manufactured smart wearable devices. That customer was also the sole distribution channel for such smart wearable devices and is controlled by one of our shareholders (see Note 20). 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 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 relative fair value 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. Given the revenue from the profit sharing arrangement is contingent on the commercial sale, the Group recognized revenue from the second instalment in the period following the commercial sale by the customer, which is when the fee was fixed and determinable. The fee related to the second instalment was usually earned by the Group between 30 to 45 days after initial shipment of the product to the customer. The second instalment was also allocated between the hardware device, the software services, and the software upgrades based on their relative fair value 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 was substantially consistent with that for its sales of self-branded products except that the instalment payments arrangement under the cooperation agreement is not available for the self-branded products. |
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%. 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 limited sales returns for self-branded products sold directly to its customers. The Group estimates the amount of its products sales that may be returned by its customers 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 own historical sales information. For the years ended December 31, 2017, 2018 and 2019, sales returns were insignificant. |
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 a standard product warranty that the product will operate under normal use. For products sold to the one customer under the cooperation agreement, the warranty period is 18 months which includes a six-month warranty to that customer and an additional 12 months warranty to end-users. For products sold directly to end users, the warranty period is 12 months. The Group has the obligation, at customers’ option, to either repair or replace the defective product. 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 revenue. |
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 expense, general expenses and depreciation expenses associated with research and development activities. |
Advertising expense | Advertising expense Advertising expense are expensed as incurred and included in selling and marketing expenses. Total advertising expenses were RMB7,586, RMB25,362 and RMB72,269 for the years ended December 31, 2017, 2018 and 2019, respectively. |
Government subsidies | Government subsidies Government subsidies represent government grants received from local government authorities to encourage the Group’s technology and innovation. The Group records such government subsidies as other income when it has fulfilled all of its obligation related to the subsidy. During the years ended December 31, 2017, 2018 and 2019, the Group recognized RMB6,719, RMB9,679 and RMB14,723 as subsidy income, respectively. As of December 31,2018 and 2019, subsidies of RMB8,888 and RMB26,098 were recorded as other current liabilities, RMB56,249 and RMB113,596 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 Current income taxes are provided for in accordance with the laws of the relevant tax authorities. Deferred income taxes 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 expense. |
Share-based payment | Share-based payment Share-based payment transactions with employees, such as share options 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 equity awards granted with graded vesting provided that 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, which is generally the vesting period of the award. |
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 outside of the PRC is the US$. 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, 2017, 2018 and 2019, the transaction gains/(losses) amounted to RMB779, RMB(7,588) and RMB(14,231) and were recorded in general and administrative expenses. 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$ amounted to RMB513,526 and RMB717,576 as of December 31, 2018 and 2019, 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, 2019 is solely for the convenience of the reader and were calculated at the rate of US$1.00 = RMB6.9618, representing the rate as certified by the statistical release of the Federal Reserve Board of United States on December 31, 2019. 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, 2019, 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. The Group’s convertible redeemable participating preferred shares are participating securities as they participate in undistributed earnings on an as-if converted basis. The Group determined that the nonvested restricted shares owned by the founders are participating securities as the holders of these nonvested restricted shares have nonforfeitable rights to receive dividends with all ordinary shares but these nonvested restricted shares do not have a contractual obligation to fund or otherwise absorb the Group’s loss. Accordingly, the Group uses the two-class method, whereby undistributed net income is allocated on a pro rata basis to the ordinary shares, preferred shares and nonvested restricted shares held by the founders to the extent that each class may share income in the year; whereas the undistributed net loss for the year is allocated to ordinary shares only because the convertible redeemable participating preferred shares and nonvested restricted shares owned by the founders are not contractually obligated to share the loss. Diluted income per ordinary share reflect the potential dilution that would occur if securities were exercised or converted into ordinary shares. The Group had convertible redeemable participating preferred shares, share options, restricted shares and restricted stock units 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 convertible redeemable participating preferred shares is computed using the as-if-converted method; the effect of the share options, restricted shares and restricted stock units 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 and revenue. 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. Accounts receivable concentration of credit risk is as below: As of December 31, 2018 2019 RMB RMB Company A 10,600(18.0%) 13,495(7.1%) Company B 25,264(42.9%) 50,567(26.8%) Company C — 80,024(42.4%) Total 35,864(60.9%) 144,086(76.3%) Amount due from related parties concentration of credit risk is as below: As of December 31, 2018 2019 RMB RMB Company D 631,204(96.2%) 1,401,015(98.6%) Total 631,204(96.2%) 1,401,015(98.6%) Revenue generated from Company D accounted for 86.6%, 76.8% and 73.5% of total revenue during the year ended December 31, 2017, 2018 and 2019, respectively. Company D is subsidiary of a company controlled by one of the Group’s shareholders (see note 20). For the years ended December 31, 2017 2018 2019 RMB RMB RMB Company D 1,773,595 (86.6) % 2,798,824 (76.8) % 4,271,135 (73.5) % Total 1,773,595 (86.6) % 2,798,824 (76.8) % 4,271,135 (73.5) % |
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, 2018, 38.6% of its raw materials were purchased through Company E and for the year ended December 31, 2019, 13.5% and 10.5% of its raw materials were purchased through Company F and G, respectively, but numerous alternate sources of supply are readily available on comparable terms. |
Newly adopted accounting pronouncements | Newly adopted accounting pronouncements In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The FASB subsequently issued Accounting Standards Update No. 2018-10 and Accounting Standards Update No. 2018-11 in July 2018, which provide clarifications and improvements to ASU 2016-02 (collectively, the “new lease standard”). Accounting Standards Update No. 2018-11 also provides the optional transition method which allows companies to apply the new lease standard at the adoption date instead of at the earliest comparative period presented. The new lease standard requires lessees to present a right-of-use asset and a corresponding lease liability on the balance sheet. The Group adopted the new lease standard as of the beginning of the 2019 fiscal year using the optional transition method. The Group did not have a cumulative effect adjustment to retained earnings as a result of adopting the new lease standard and did not have a material impact on the Group’s Consolidated Statements of Operations or Consolidated Statements of Cash Flows in future periods. The Group elected the package of transitional practical expedients upon adoption which, among other provisions, allowed the Group to carry forward historical lease classification. Refer to Note 22 for further information on leases. Recent accounting pronouncements not yet adopted On June 16, 2016, the FASB issued ASU 2016‑13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequently in November 2018, ASU 2018‑19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. The ASUs amend the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. In addition, these amendments require the measurement of all expected credit losses for financial assets, including trade accounts receivable, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This guidance and related amendments is effective for annual reporting periods beginning after December 15, 2019, including interim periods therein. Early application is permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Group is currently assessing the impact this guidance will have on its consolidated financial statements. In January 2017, the FASB issued ASU 2017‑04, addressing concerns regarding the cost and complexity of the two-step goodwill impairment test, the amendments in this ASU remove the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. For public entities, the amendments are effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019. For public entities, the ASU’s amendments are effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2020. For all other entities, including not-for-profit entities, the ASU’s amendments are effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2021. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of this standard is not expected to have a material impact on the Group’s consolidated financial statements. In August 2018, the FASB issued ASU 2018‑13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement to ASC Topic 820, Fair Value Measurement ("ASC 820") . ASU 2018‑13 modifies the disclosure requirements for fair value measurements by removing, modifying, and/or adding certain disclosures. ASU 2018‑13 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2019. An entity is permitted to early adopt by modifying existing disclosures and delay adoption of the additional disclosures until the effective date. The adoption of this standard is not expected to have a material impact on the Group’s consolidated financial statements. In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to the Related Party Guidance for Variable Interest Entities. ASU 2018-17 changes how entities evaluate decision-making fees under the variable interest entity guidance. To determine whether decision-making fees represent a variable interest, an entity considers indirect interests held through related parties under common control on a proportional basis, rather than in their entirety. This guidance will be adopted using a retrospective approach and is effective for the Group on January 1, 2020. The Group is in the process of evaluating the impact of the adoption of this pronouncement on its consolidated financial statements. |
ORGANIZATION AND PRINCIPAL AC_2
ORGANIZATION AND PRINCIPAL ACTIVITIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | |
Schedule of Subsidiaries and VIEs | Date of Percentage Place of incorporation incorporation/acquisition of ownership Subsidiaries of the Company: Huami HK Limited (“Huami HK”) Hong Kong (“HK”) December 23, 2014 100% Huami, Inc. (“Huami Inc”) United States of America (“U.S.”) January 15, 2015 100% Beijing ShunYuan KaiHua Technology Co., Ltd. (“ShunYuan”) PRC February 25, 2015 100% Huami (Shenzhen) Information Technology Co., Ltd. (“Huami SZ”) PRC December 7, 2015 100% Anhui Huami Intelligent Technology Co., Ltd. (“Huami Intelligent”) PRC December 28, 2015 100% Rill, Inc. (“Rill”) U.S. June 16, 2016 100% DingShow Cayman Islands October 10, 2018 100% Huami Inc. Canada branch (Huami Canada) Canada November 2, 2018 100% Bitinno Technologies Inc. ("Bitinno") U.S. November 26, 2018 100% Huami Investment Platform I Ltd. British Virgin Islands December 14, 2018 100% Galaxy Trading Platform Limited ("Galaxy") HK May 8, 2019 100% Variable interest entities of the Company: Anhui Huami PRC December 27, 2013 Consolidated VIE Beijing Huami PRC July 11, 2014 Consolidated VIE Subsidiaries of Anhui Huami: Anhui Huami Healthcare Co., Ltd . (“Huami Healthcare”) PRC December 5, 2016 VIE's subsidiary Shenzhen Yunding Information Technology Co., Ltd. (“Yunding”) PRC July 31, 2017 VIE's subsidiary Oclean Information Technology Co., Ltd. ("Yunding HK ") HK March 7, 2017 VIE's subsidiary Hefei Huami Micro-electronics Co.Ltd("Huami Micro") PRC January 17, 2019 VIE’s subsidiary Huami (Nanjing) Information Technology Co., Ltd. (“Huami NJ”) PRC July 4, 2019 VIE’s subsidiary Hefei Hi-Tech Huami Intelligence Polyclinic Co.Ltd (“Huami Intelligence Polyclinic”) PRC July 31, 2019 VIE’s subsidiary Anhui Huami Medical System Co.Ltd(“Huami Medical System”) PRC August 26, 2019 VIE’s subsidiary Subsidiary of Beijing Huami: Huami Beijing Medical Health Technology Co. Ltd.(“Beijing Huami Health") PRC March 29, 2019 VIE’s subsidiary |
Schedule of Financial Statement Amounts and Balances of VIEs | The following financial statement amounts and balances of the VIEs were included in the accompanying consolidated financial statements after the elimination of intercompany balances and transactions within the Group: As of December 31, 2018 2019 RMB RMB Total current assets 2,202,009 3,828,544 Total non-current assets 191,522 466,774 Total assets 2,393,531 4,295,318 Total current liabilities 1,329,010 2,361,906 Total non-current liabilities 61,211 183,295 Total liabilities 1,390,221 2,545,201 For the years ended December 31, 2017 2018 2019 RMB RMB RMB Revenues 2,042,640 3,638,560 5,801,405 Net income 327,101 643,239 987,672 For the years ended December 31, 2017 2018 2019 RMB RMB RMB Net cash provided by operating activities 248,642 712,210 478,806 Net cash used in investing activities (19,643) (72,862) (126,887) Net cash provided by financing activities 20,000 (13,221) (20,000) |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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 |
Credit Concentration Risk | |
Significant accounting policies | |
Schedule of concentration risk: | As of December 31, 2018 2019 RMB RMB Company A 10,600(18.0%) 13,495(7.1%) Company B 25,264(42.9%) 50,567(26.8%) Company C — 80,024(42.4%) Total 35,864(60.9%) 144,086(76.3%) |
Related parties concentration risk | |
Significant accounting policies | |
Schedule of concentration risk: | As of December 31, 2018 2019 RMB RMB Company D 631,204(96.2%) 1,401,015(98.6%) Total 631,204(96.2%) 1,401,015(98.6%) |
Customer Concentration Risk | |
Significant accounting policies | |
Schedule of concentration risk: | For the years ended December 31, 2017 2018 2019 RMB RMB RMB Company D 1,773,595 (86.6) % 2,798,824 (76.8) % 4,271,135 (73.5) % Total 1,773,595 (86.6) % 2,798,824 (76.8) % 4,271,135 (73.5) % |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INVENTORIES, NET | |
Schedule of Inventories | As of December 31, 2018 2019 RMB RMB Raw materials 191,242 275,583 Work in process 33,714 176,417 Finished goods 259,666 441,806 Inventories, net 484,622 893,806 |
SHORT-TERM INVESTMENTS (Tables)
SHORT-TERM INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SHORT-TERM INVESTMENTS | |
Schedule of short-term investments: | Short-term investments included convertible bonds with maturities less than 1 year and consisted of the following: As of December 31, 2018 2019 RMB RMB Convertible bonds: Shenzhen Snowball Technology Co., Ltd (“Snowball”) (a) 16,243 — Guangzhou Joyrun Technology Co., Ltd (“Joyrun”) (b) 10,751 11,591 Abee Semi, Inc.("Abee") (c) 8,097 — Others (d) 15,391 5,596 Total: 50,482 17,187 (a) In June 2018, the Group invested RMB20,000 to acquire a convertible bond from Snowball. The convertible bond includes a 4.35% interest rate and has one-year maturity. As part of the agreement, the Group also received two years of free services related to the connection to the city transportation system for the Amazfit NFC products from Snowball. The fair value of the service is insignificant and is amortized over the service period. Unrealized gains of RMB443 arise from fair value change of the investment was reported in other comprehensive income during the year ended December 31, 2018. During the year ended December 31, 2019, the Group converted the bond to equity interests in Snowball and recognized the investment as an equity security without readily determinable fair value. (b) In September 2018, the Group invested RMB10,500 to acquire a convertible bond issued by Joyrun with a 8% interest rate and a one-year maturity. The investment was classified as an available-for-sale investment and measured at fair value. The Group recognized RMB251 and RMB840 unrealized holding gains in other comprehensive income from the fair value changes in the investment during the years ended December 31, 2018 and 2019. (c) In June 2016, the Group invested RMB6,937 to acquire a convertible bond from Abee. The convertible bond includes a 7% interest rate and has one year maturity. In June 2017, the Group agreed to extend the maturity date for one additional year. The investment was classified as an available-for-sale investment and measured at fair value. During the year ended December 31, 2019, the Group exchanged its convertible bond amounting to RMB8,019 and a previously issued short-term loan issued to Abee amounting to RMB9,957 for certain patents used to facilitate its new product development. The patents were recorded at fair value in the Group's consolidated balance sheet. The gain from this non-monetary exchange was immaterial. (d) The others represent several insignificant short-term investments in convertible bonds which are classified as available-for-sales investments and measured at fair value. The Group recognized RMB391 and RMB400 unrealized gains from these investments in 2018 and 2019. |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |
Schedule of prepaid expenses and other current assets: | As of December 31, 2018 2019 RMB RMB Value-added tax 19,542 Other receivables 8,049 Prepaid expenses 3,264 Short-term loans 14,559 — Advances to suppliers 8,359 Rental deposits 4,474 Total 58,247 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
PROPERTY, PLANT AND EQUIPMENT, NET | |
Schedule of property, plant and equipment, net | As of December 31, 2018 2019 RMB RMB Software and electronic equipment 14,453 36,283 Buildings 19,342 19,342 Leasehold improvements 10,404 26,744 Total 44,199 82,369 Less: accumulated depreciation (12,029) (21,438) Construction in progress 7,872 3,419 Property, plant and equipment, net 40,042 64,350 |
INTANGIBLE ASSETS, NET (Tables)
INTANGIBLE ASSETS, NET (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INTANGIBLE ASSETS, NET | |
Schedule of intangible assets, net | As of December 31, 2018 2019 RMB RMB Intangible assets with indefinite lives: Domain name 1,222 2,024 Intangible assets with finite lives: Patents 63,130 92,165 Less: accumulated amortization (630) (8,436) Intangible assets, net 63,722 85,753 |
LONG-TERM INVESTMENTS (Tables)
LONG-TERM INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
LONG-TERM INVESTMENTS | |
Schedule of long-term investments: | As of December 31, 2018 2019 RMB RMB Equity securities without readily determinable fair value Sifive, Inc. ("Sifive") (a) 20,192 20,445 Greenwaves Technologies ("Greenwaves") (b) 19,906 20,156 Morsel,Inc.("Morsel") (c) — 20,885 Shenzhen Snowball Technology Co., Ltd (“Snowball”) (d) — 15,800 Other equity securities without readily determinable fair value (e) 16,501 14,292 Equity method investments: Hefei Huaying Xingzhi Fund Partnership (limited partnership) (“Huaying Fund”) (f) 56,898 55,557 Anhui Huaying Zhihui Wulian Fund Parnership(limited partnership)("Huaying Fund II") (g) — 102,336 Global Technology and Innovation Ltd. (“GTI”) (h) — 93,289 Other equity method investments (i) 11,283 14,165 Available-for-sale investments Sunny Infinity Ltd. ("Sunny") (h) 49,091 — Other available-for-sale investments (j) 35,078 49,174 Total 208,949 406,099 (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 a RMB7,860 and nil gain from the fair value change of this investment during the years ended December 31, 2018 and 2019. (b) In 2018, the Group invested RMB19,906 to acquire 8.33% equity interests in Greenwaves. Greenwaves 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 Greenwaves was accounted for as equity securities without readily determinable fair value. For the years ended 2018 and 2019, no fair value change were observed and recognized. (c) In 2019, the Group invested USD3,500 to acquire 13.4% equity interests in Morsels. Morsels is a private company engaging in the business of mobile fitness. The investment included 11.3% equity interests with liquidation preference rights and 2.1% equity interests without liquidation preference. The Group accounted for the 11.3% equity interests as equity securities without readily determinable fair value as the liquidation preference is substantial, and accounted for the other 2.1% equity interests under the equity method since Group enjoys a board seat in Morsel and concluded that it has significant influence over Morsel. The income from the equity method investment was immaterial for the year ended December 31, 2019. (d) In 2019, the Group converted its convertible bond issued to Snowball to a 4.3% equity interests. The equity interest is not considered in-substance common shares due to substantial liquidation preference rights owned by the Group. Accordingly, the investment in Snowball was accounted for as equity securities without readily determinable fair value. (e) The other investments represent certain insignificant investments in third-party private companies, which the Group has no significant influence over the investees and accounted for these investments using the measurement alternative method. (f) 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 of common stock and the Group has significant influence through its board seat but does not control Huaying Fund I. (g) 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 under the equity method because the investments are of common stock and the Group has significant influence through its board seat but does not control Huaying Fund II. (h) In 2018, the Group acquired a 23% equity interest in Sunny for a total consideration of RMB49,091. The Group accounted for its investment as an available-for-sale investment as it determined that the interests were debt security due to its redemption feature and subsequently measured its investment at fair value. In January 2019, the Group lost its redemption right and reclassified its investment to the equity method investment as it concluded that it was able to significantly influence the investee. The Group's unrealized gain and loss at the time of transfer was immaterial. In 2019, the Group subscribed for additional equity interest for a total consideration of RMB43,302. Additionally, in November 2019, Sunny completed a restructuring and became an investment vehicle of GTI, a fund established for the sole purposes of making investments in certain start-up and early stage companies in the technology industry. The Group's investment in Sunny was further transferred to GTI as part of this restructuring and continued to be accounted for as equity method investment. (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) The other available-for-sale investments represent the investments in debt securities and measured at fair value, which mainly include the investments in convertible bonds and the investments with redemption features. |
FAIR-VALUE MEASUREMENT (Tables)
FAIR-VALUE MEASUREMENT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
FAIR-VALUE MEASUREMENT | |
Schedule of fair-value measurement | As of December 31, 2018 Quoted Prices in Active Market for Significant Other Significant Identical Assets Observable Inputs Unobservable Description Level 1 Level 2 Inputs Level 3 Total RMB RMB RMB RMB Short-term investments: Convertible bonds — 50,482 — 50,482 Long-term investments: Redeemable preferred shares — 84,169 — 84,169 Total: — 134,651 — 134,651 As of December 31, 2019 Quoted Prices in Active Market for Significant Other Significant Identical Assets Observable Inputs Unobservable Description Level 1 Level 2 Inputs Level 3 Total RMB RMB RMB RMB Short-term investments: Convertible bonds — 17,187 — 17,187 Long-term investments: Convertible bonds — 6,962 — 6,962 Redeemable preferred shares — 42,212 — 42,212 Total: — — |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Schedule of accrued expenses and other current liabilities | As of December 31, 2018 2019 RMB RMB Accrued payroll and welfare 83,925 120,256 Deferred revenue 41,863 59,585 Product warranty 55,599 49,527 Current operating lease liabilities — 32,799 Accrued professional fee 3,945 19,194 Accrued expenses 6,107 17,688 Other tax payable 4,727 16,613 Other current liabilities 17,809 36,587 Total |
Schedule of product warranty | Product Warranty RMB Balance as of January 1, 2017 4,870 Provided during the year 23,093 Utilized during the year (19,532) Balance at December 31, 2017 8,431 Provided during the year 68,866 Utilized during the year (21,698) Balance at December 31, 2018 55,599 Provided during the year 80,048 Utilized during the year (86,120) Balance at December 31, 2019 49,527 |
REVENUE AND DEFERRED REVENUES (
REVENUE AND DEFERRED REVENUES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
REVENUE AND DEFERRED REVENUES | |
Schedule of disaggregated revenue by segment: | For the years ended December 31, 2018 2019 RMB RMB Xiaomi Wearable Products 2,439,534 Self-branded products and other 1,205,801 Total 3,645,335 |
Schedule of deferred revenue and refund liability: | As of December 31, 2018 2019 RMB RMB Accounts Receivables 58,925 Amounts due from related parties 656,399 Deferred revenue 41,863 Refund liability (sales return) 153 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
Schedule of current and deferred components of income taxes | For the years ended December 31, 2017 2018 2019 RMB RMB RMB Current tax expenses 46,573 84,931 105,663 Deferred tax benefits (18,962) (32,895) (27,776) Income tax expense 27,611 52,036 77,887 |
Schedule of deferred tax assets | As of December 31, 2018 2019 RMB RMB Deferred tax assets Accrued expenses 28,585 50,644 Net operating loss carry forwards 46,447 53,989 Total deferred tax assets 75,032 104,633 Less: valuation allowance — (1,984) Deferred tax assets, net 75,032 102,649 |
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, 2017 2018 2019 RMB RMB RMB Income before income tax 191,900 386,613 652,370 Tax expense at PRC enterprise income tax rate of 25% 47,975 96,653 163,093 Income tax on tax holidays (30,740) (58,327) (72,396) Tax effect of permanence differences (8,190) (22,733) (31,088) Effect of income tax rate differences in jurisdictions other than the PRC 14,364 36,443 16,270 Change in tax rate 4,202 — — Changes in valuation allowances — — 2,008 Income tax expense 27,611 52,036 77,887 |
SHARE-BASED PAYMENT (Tables)
SHARE-BASED PAYMENT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SHARE-BASED PAYMENT | |
Schedule of assumptions used to determine fair value of share options granted | Assumptions used to determine the fair value of share options granted during the years ended December 31, 2017, 2018 and 2019 are summarized in the following table: For the years ended December 31, 2017 2018 2019 Risk-free interest rate 2.2 % 2.04%-2.83 % 2.14 % Expected volatility 49.0 % 36%-52.5 % 50.4 % Expected life of option (years) 9.76-10 1-10 10 Expected dividend yield 0.0 % 0.0 % 0.0 % Fair value per ordinary share 12.56 15.03-16.85 |
Schedule of stock option activity | A summary of the stock option activity under the 2015 and 2018 Plan during the year ended December 31, 2019 is included in the table below. Weighted average Options granted exercise price Share Number per option US$ Outstanding at January 1, 2019 13,343,230 0.23 Granted 651,000 — Exercised (694,735) 0.19 Cancelled and forfeited (1,253,259) — Outstanding at December 31, 2019 12,046,236 0.24 |
Schedule of share options granted | The following table summarizes information regarding the share options as of December 31, 2019: December 31, 2019 Weighted- average remaining Weighted- exercise average exercise contractual Aggregate Options Number price per option life (years) intrinsic value US$ US$ Options Outstanding 12,046,236 0.24 33,279 Exercisable 6,580,899 0.19 18,536 Expected to vest 5,465,337 0.31 14,743 |
Schedule of restricted stock units activity | A summary of the restricted stock units activity during the year ended December 31, 2019 is presented below: RSUs Unvested balance at January 1, 2019 562,913 Granted 30,000 Cancelled and forfeited — Vested 5,229 Unvested balance at December 31, 2019 587,684 |
Schedule of total share-based compensation recognized | Total share-based compensation recognized was as follows: For the years ended December 31, 2017 2018 2019 RMB RMB RMB General and administrative 55,804 87,857 40,684 Research and development 6,983 42,167 11,191 Selling and Marketing — 4,271 3,198 Cost of revenues — 414 55 Total stock-based compensation expense 62,787 134,709 55,128 |
Restricted Shares | |
SHARE-BASED PAYMENT | |
Schedule of non-vested restricted share activity | A summary of the restricted share activity for the year ended December 31, 2017, 2018 and 2019 is presented below: Restricted Shares Outstanding at January 1, 2017 3,228,278 Vested 1,150,718 Outstanding at December 31, 2017 2,077,560 Cancelled and forfeited 411,930 Vested 1,150,718 Outstanding at December 31, 2018 514,912 Cancelled and forfeited — Vested 514,912 Outstanding at December 31, 2019 — |
Founders | |
SHARE-BASED PAYMENT | |
Schedule of non-vested restricted share activity | A summary of non-vested restricted share activity during the year ended December 31, 2019 is presented below: Number of shares Outstanding at January 1, 2019 11,391,791 Granted — Forfeited — Vested (11,391,791) Outstanding at December 31, 2019 — |
NONCONTROLLING INTERESTS (Table
NONCONTROLLING INTERESTS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
NONCONTROLLING INTERESTS | |
Schedule of Noncontrolling interests | Yunding RMB Balance as of January 1, 2018 2,389 Loss attributed to noncontrolling interest shareholders (3,726) Balance as of December 31, 2018 (1,337) Loss attributed to noncontrolling interest shareholders (1,825) Balance as of December 31, 2019 (3,162) |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SEGMENT INFORMATION | |
Schedule of segment information: | For the year ended December 31, 2017 Xiaomi Self-branded Wearable products Products and others Total RMB RMB RMB Revenues 1,614,512 434,384 2,048,896 Cost of revenues 1,232,792 321,402 1,554,194 Gross Profit 381,720 112,982 494,702 For the year ended December 31, 2018 Xiaomi Self-branded Wearable products Products and others Total RMB RMB RMB Revenues 2,439,534 1,205,801 3,645,335 Cost of revenues 1,883,509 822,376 2,705,885 Gross Profit 556,025 383,425 939,450 For the year ended December 31, 2019 Xiaomi Self-branded Wearable products Products and others Total RMB RMB RMB Revenues 4,193,665 1,618,590 5,812,255 Cost of revenues 3,296,696 1,047,816 4,344,512 Gross Profit 896,969 570,774 1,467,743 |
RELATED PARTY BALANCES AND TR_2
RELATED PARTY BALANCES AND TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
RELATED PARTY BALANCES AND TRANSACTIONS | |
Schedule of amounts due: | As of December 31, 2018 2019 RMB RMB Amount due from related parties: Xiaomi Communication (a) 631,204 1,401,015 Youpin Information (a) — 9,845 Xiaomi Information (a) 9,727 7,669 Xiaomi Technology (a) 7,442 — Hangzhou Yunyou (b) 5,143 — Others 2,883 2,641 Total As of December 31, 2018 2019 RMB RMB Amount due to related parties, current: Xiaomi Technology(c) — (14,186) Xiaomi Mobile (c) (10,350) — Others (345) (583) Total (10,695) (14,769) (a) The amount due from Xiaomi represents receivables from the sales of products and services, which includes an unbilled amount of RMB102,687. (b) In 2018, the group provided a RMB5,000 loan to Hangzhou Yunyou, with annual interest of 15% and maturing in April 2019. During 2019, the Group evaluated the loan would not be collected and recognized an impairment loss of RMB5,640. (c) The amounts due to Xiaomi Mobile and Xiaomi Technology represent the payable for the cloud service received by the Group. (d) The Group disposed five long-term investments and one long-term investment to Huaying Fund and recorded RMB284 and RMB31 gain during the years ended December 31, 2017 and 2018, respectively. During 2019, there was no investment disposed by the Group to related parties. (e) During 2019, the Group purchased certain intangible assets from Hefei Huaheng which amounted to RMB11,321. |
Schedule of transactions: | For the years ended December 31, 2017 2018 2019 RMB RMB RMB Sales to related parties: Xiaomi Communication 1,773,595 2,798,824 4,271,135 Xiaomi Information 1,318 17,859 9,870 Xiaomi Technology 2,072 — — Others 1,655 312 — Total 1,778,640 2,816,995 4,281,005 |
Schedule of others: | For the years ended December 31, 2017 2018 2019 RMB RMB RMB Others: Loan provided to related parties (b) (8,000) 5,143 — Investments disposed to a related party (d) 22,047 3,061 — Purchase from related parties (e) — — (a) The amount due from Xiaomi represents receivables from the sales of products and services, which includes an unbilled amount of RMB102,687. (b) In 2018, the group provided a RMB5,000 loan to Hangzhou Yunyou, with annual interest of 15% and maturing in April 2019. During 2019, the Group evaluated the loan would not be collected and recognized an impairment loss of RMB5,640. (c) The amounts due to Xiaomi Mobile and Xiaomi Technology represent the payable for the cloud service received by the Group. (d) The Group disposed five long-term investments and one long-term investment to Huaying Fund and recorded RMB284 and RMB31 gain during the years ended December 31, 2017 and 2018, respectively. During 2019, there was no investment disposed by the Group to related parties. (e) During 2019, the Group purchased certain intangible assets from Hefei Huaheng which amounted to RMB11,321. |
NET INCOME PER SHARE (Tables)
NET INCOME PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
NET INCOME PER SHARE | |
Schedule of profit attributable to owners | For the years ended December 31, 2017 2018 2019 RMB RMB RMB Basic net income per share calculation Numerator: Net income for the year attributable to the Company: 167,682 340,046 575,196 Less: Accretion of Series A Shares 3,762 177 — Less: Accretion of Series B-1 Shares 3,127 368 — Less: Accretion of Series B-2 Shares 34,382 4,049 — Less: Deemed dividend to preferred shareholders — 209,752 — Less: Undistributed earnings allocated to Series A preferred shareholders 48,753 4,521 — Less: Undistributed earnings allocated to Series B-1 preferred shareholders 1,361 126 — Less: Undistributed earnings allocated to Series B-2 preferred shareholders 14,220 1,319 — Less: Undistributed earnings allocated to participating nonvested restricted shares 15,957 6,244 2,450 Net income attributed to ordinary shareholders for computing net income per ordinary shares—basic 46,120 113,490 572,746 Denominator: Weighted average ordinary shares outstanding used in computing net income per ordinary shares – basic 67,777,592 211,873,704 243,648,186 Net income per ordinary share attributable to ordinary shareholders—basic 0.68 0.54 2.35 Diluted net income per share calculation Net income attributable to ordinary shareholders for computing net income per ordinary shares—basic 46,120 113,490 572,746 Add: adjustments to undistributed earnings to participating securities 3,519 648 117 Net income attributed to ordinary shareholders for computing net income per ordinary shares—basic 49,639 114,138 572,863 Denominator: Weighted average ordinary shares basic outstanding 67,777,592 211,873,704 243,648,186 Effect of potentially diluted stock options, restricted stocks and RSUs 8,514,309 13,160,946 12,310,986 Weighted average ordinary shares outstanding used in computing net income per ordinary shares—dilute 76,291,901 225,034,650 255,959,172 Net income per ordinary share attributable to ordinary shareholders—diluted 0.65 0.51 2.24 |
Schedule of shares excluded from calculation of net income per share | For the years ended December 31, 2017 2018 2019 RMB RMB RMB Shares issuable upon exercise of share options, restricted stocks and RSUs 12,683,366 705,407 294,352 Shares issuable upon vesting of nonvested restricted shares 23,450,173 11,657,620 1,042,234 Shares issuable upon conversion of Series A shares 71,641,792 — — Shares issuable upon conversion of Series B-1 shares 2,000,000 — — Shares issuable upon conversion of Series B-2 shares 20,895,523 — — |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
LEASES | |
Schedule of components of lease cost | The following table represents lease costs recognized in the Group’s Consolidated Statements of Operation for the year ended December 31, 2019. Lease costs are included in selling, general and administrative expense and research and development expense on the Group’s Consolidated Statements of Operations. For the years ended December 31, 2019 RMB Operating lease cost (1) 30,788 Sublease income (1,382) Total lease cost 29,406 (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 | The following table represents the components of leases that are recognized on the Group’s Consolidated Balance Sheets as of December 31, 2019. For the years ended December 31, 2019 RMB Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases 26,733 Non-cash Right-of-use assets in exchange for new lease liabilities: Operating leases 112,513 Weighted average remaining lease term Operating leases 3.76 years Weighted average discount rate Operating leases 5.21 % |
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 ending December 31: Year ending December 31, RMB 2020 33,928 2021 29,174 2022 23,545 2023 23,703 2024 11,893 Total lease payments 122,243 Less: imputed interest 13,084 Present value of lease liabilities 109,159 |
Future minimum payments under non-cancellable operating leases, prior to adoption of ASU 2016-02 | Future minimum payments under non-cancellable operating leases related to offices consisted of the following at December 31, 2018: RMB 2019 2020 6,648 2021 and after 3,171 Total 26,152 |
ORGANIZATION AND PRINCIPAL AC_3
ORGANIZATION AND PRINCIPAL ACTIVITIES (Details) ¥ in Thousands | 12 Months Ended | ||||
Dec. 31, 2019CNY (¥)customer | Dec. 31, 2018CNY (¥)customer | Dec. 31, 2017customer | Nov. 03, 2017 | Apr. 29, 2015 | |
Organization and principal activities: | |||||
Intercompany payable | ¥ | ¥ 43,971 | ¥ 68,713 | |||
Anhui Huami | |||||
Organization and principal activities: | |||||
Ownership percentage | 100.00% | ||||
Beijing Huami | |||||
Organization and principal activities: | |||||
Ownership percentage | 100.00% | ||||
Beneficiary shareholder | |||||
Organization and principal activities: | |||||
Common shares held (as percentage of total shares) | 28.10% | ||||
Customer Concentration Risk | |||||
Organization and principal activities: | |||||
Number of customers | customer | 1 | 1 | 1 | ||
Customer Concentration Risk | Sales Revenue Net | |||||
Organization and principal activities: | |||||
Concentration risk, percentage | 72.20% | 66.90% | 78.80% |
ORGANIZATION AND PRINCIPAL AC_4
ORGANIZATION AND PRINCIPAL ACTIVITIES - Subsidiaries and VIEs (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Anhui Huami | |
Details of subsidiaries and VIEs | |
Date of incorporation/acquisition | Dec. 27, 2013 |
Variable interest entity, nature of VIE | Consolidated VIE |
Beijing Huami | |
Details of subsidiaries and VIEs | |
Date of incorporation/acquisition | Jul. 11, 2014 |
Variable interest entity, nature of VIE | Consolidated VIE |
Huami Healthcare | |
Details of subsidiaries and VIEs | |
Date of incorporation/acquisition | Dec. 5, 2016 |
Variable interest entity, nature of VIE | VIE's subsidiary |
Yunding | |
Details of subsidiaries and VIEs | |
Date of incorporation/acquisition | Jul. 31, 2017 |
Variable interest entity, nature of VIE | VIE's subsidiary |
Yunding HK | |
Details of subsidiaries and VIEs | |
Date of incorporation/acquisition | Mar. 7, 2017 |
Variable interest entity, nature of VIE | VIE's subsidiary |
Huami Micro | |
Details of subsidiaries and VIEs | |
Date of incorporation/acquisition | Jan. 17, 2019 |
Variable interest entity, nature of VIE | VIE's subsidiary |
Huami NJ | |
Details of subsidiaries and VIEs | |
Date of incorporation/acquisition | Jul. 4, 2019 |
Variable interest entity, nature of VIE | VIE's subsidiary |
Huami Intelligence Polyclinic | |
Details of subsidiaries and VIEs | |
Date of incorporation/acquisition | Jul. 31, 2019 |
Variable interest entity, nature of VIE | VIE's subsidiary |
Huami Medical System | |
Details of subsidiaries and VIEs | |
Date of incorporation/acquisition | Aug. 26, 2019 |
Variable interest entity, nature of VIE | VIE's subsidiary |
Beijing Huami Health | |
Details of subsidiaries and VIEs | |
Date of incorporation/acquisition | Mar. 29, 2019 |
Variable interest entity, nature of VIE | VIE's subsidiary |
Huami HK | |
Details of subsidiaries and VIEs | |
Date of incorporation/acquisition | Dec. 23, 2014 |
Percentage of ownership | 100.00% |
Huami Inc | |
Details of subsidiaries and VIEs | |
Date of incorporation/acquisition | Jan. 15, 2015 |
Percentage of ownership | 100.00% |
Shun Yuan | |
Details of subsidiaries and VIEs | |
Date of incorporation/acquisition | Feb. 25, 2015 |
Percentage of ownership | 100.00% |
Huami SZ | |
Details of subsidiaries and VIEs | |
Date of incorporation/acquisition | Dec. 7, 2015 |
Percentage of ownership | 100.00% |
Huami Intelligent | |
Details of subsidiaries and VIEs | |
Date of incorporation/acquisition | Dec. 28, 2015 |
Percentage of ownership | 100.00% |
Rill | |
Details of subsidiaries and VIEs | |
Date of incorporation/acquisition | Jun. 16, 2016 |
Percentage of ownership | 100.00% |
DingShow | |
Details of subsidiaries and VIEs | |
Date of incorporation/acquisition | Oct. 10, 2018 |
Percentage of ownership | 100.00% |
Huami Canada | |
Details of subsidiaries and VIEs | |
Date of incorporation/acquisition | Nov. 2, 2018 |
Percentage of ownership | 100.00% |
Bitinno | |
Details of subsidiaries and VIEs | |
Date of incorporation/acquisition | Nov. 26, 2018 |
Percentage of ownership | 100.00% |
Huami Investment Platform I Ltd. | |
Details of subsidiaries and VIEs | |
Date of incorporation/acquisition | Dec. 14, 2018 |
Percentage of ownership | 100.00% |
Galaxy | |
Details of subsidiaries and VIEs | |
Date of incorporation/acquisition | May 8, 2019 |
Percentage of ownership | 100.00% |
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, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2019CNY (¥) | |
Variable Interest Entity | |||||
Total current assets | $ 630,937 | ¥ 2,857,456 | ¥ 4,392,452 | ||
Total assets | 743,306 | 3,258,481 | 5,174,743 | ||
Total current liabilities | 356,489 | 1,387,692 | 2,481,800 | ||
Total liabilities | 384,550 | 1,448,903 | 2,677,155 | ||
Revenues | ¥ 5,812,255 | 3,645,335 | ¥ 2,048,896 | ||
Net income | 82,622 | 575,196 | 340,046 | 167,682 | |
Net cash provided by operating activities | 61,479 | 427,999 | 707,605 | 238,336 | |
Net cash used in investing activities | (16,188) | (112,703) | (324,841) | (38,881) | |
Net cash provided by financing activities | $ 3,678 | 25,609 | 639,170 | 20,089 | |
Variable Interest Entities | |||||
Variable Interest Entity | |||||
Total current assets | 2,202,009 | 3,828,544 | |||
Total non-current assets | 191,522 | 466,774 | |||
Total assets | 2,393,531 | 4,295,318 | |||
Total current liabilities | 1,329,010 | 2,361,906 | |||
Total non-current liabilities | 61,211 | 183,295 | |||
Total liabilities | 1,390,221 | ¥ 2,545,201 | |||
Revenues | 5,801,405 | 3,638,560 | 2,042,640 | ||
Net income | 987,672 | 643,239 | 327,101 | ||
Net cash provided by operating activities | 478,806 | 712,210 | 248,642 | ||
Net cash used in investing activities | (126,887) | (72,862) | (19,643) | ||
Net cash provided by financing activities | ¥ (20,000) | ¥ (13,221) | ¥ 20,000 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES (Details) | Apr. 01, 2019 | May 01, 2018 | Apr. 30, 2018 | Jan. 01, 2018CNY (¥) | Dec. 31, 2019USD ($)customerinstallment¥ / $ | Dec. 31, 2019CNY (¥)customerinstallment | Dec. 31, 2018USD ($)customer | Dec. 31, 2018CNY (¥)customer | Dec. 31, 2017USD ($)customer | Dec. 31, 2017CNY (¥)customer | Dec. 31, 2019CNY (¥)¥ / $ |
Significant accounting policies: | |||||||||||
Goodwill impairment | $ 0 | ¥ 0 | $ 0 | ¥ 0 | $ 0 | ¥ 0 | |||||
Allowance for doubtful accounts | 0 | ¥ 0 | |||||||||
Inventory provision | $ 3,419,000 | 23,799,000 | 0 | 2,449,000 | |||||||
Lease term | 5 years | 5 years | |||||||||
Impairment equity securities | 2,382,000 | 0 | 0 | ||||||||
Impairment equity method | 218,000 | 4,133,000 | 0 | ||||||||
Impairment available for sale | ¥ 0 | 3,457,000 | 0 | ||||||||
Amount due from related parties to the cumulative impact of adopting Topic 606 | ¥ 33,329,000 | ¥ 33,329,000 | |||||||||
Number of payment installments from customer | installment | 2 | 2 | |||||||||
Percentage of installment payments on future net profits | 50.00% | 50.00% | |||||||||
Value added tax rate | 13.00% | 16.00% | 17.00% | ||||||||
Advertising Expense | ¥ 72,269,000 | ¥ 25,362,000 | 7,586,000 | ||||||||
Government subsidies recognized as income | 14,723,000 | 9,679,000 | 6,719,000 | ||||||||
Government deferred subsidy income, current | 8,888,000 | ¥ 26,098,000 | |||||||||
Government deferred subsidy income, non-current | $ 16,317,000 | 56,249,000 | 113,596,000 | ||||||||
Cash and cash equivalents | $ 259,002,000 | 1,441,802,000 | ¥ 1,803,117,000 | ||||||||
Foreign currency exchange rate | ¥ / $ | 6.9618 | 6.9618 | |||||||||
U.S. Dollar Denominated | |||||||||||
Significant accounting policies: | |||||||||||
Cash and cash equivalents | 513,526,000 | ¥ 717,576,000 | |||||||||
General and Administrative Expenses | |||||||||||
Significant accounting policies: | |||||||||||
Transaction (losses)/gains | ¥ (14,231,000) | ¥ (7,588,000) | ¥ 779,000 | ||||||||
Wearable products | |||||||||||
Significant accounting policies: | |||||||||||
Percentage of sales revenue | 72.20% | 72.20% | 66.90% | 66.90% | 78.80% | 78.80% | |||||
Number of customers | customer | 1 | 1 | 1 | 1 | 1 | 1 | |||||
Percentage of second installment payment receivable | 50.00% | 50.00% | |||||||||
Warranty term for products sold to one customer | 18 months | 18 months | |||||||||
Product warranty term for one customer | 6 months | 6 months | |||||||||
Additional warranty term to end users for products sold to one customer | 12 months | 12 months | |||||||||
Warranty term for products sold to end users | 12 months | 12 months | |||||||||
Self-branded products and others | |||||||||||
Significant accounting policies: | |||||||||||
Percentage of sales revenue | 27.80% | 27.80% | 33.10% | 33.10% | 21.20% | 21.20% | |||||
Software services and software upgrades | |||||||||||
Significant accounting policies: | |||||||||||
Revenues recognition period | 9 months | 9 months | |||||||||
Minimum | |||||||||||
Significant accounting policies: | |||||||||||
Deposit (as percent of face value) | 40.00% | 40.00% | |||||||||
Second installment receivable period | 30 days | 30 days | |||||||||
Minimum | Software services and software upgrades | |||||||||||
Significant accounting policies: | |||||||||||
Selling price per unit | ¥ 1.72 | ¥ 1.77 | ¥ 1.30 | ||||||||
Minimum | Trademark and Patents | |||||||||||
Significant accounting policies: | |||||||||||
Useful lives | 9 years | 9 years | |||||||||
Maximum | |||||||||||
Significant accounting policies: | |||||||||||
Deposit (as percent of face value) | 60.00% | 60.00% | |||||||||
Second installment receivable period | 45 days | 45 days | |||||||||
Maximum | Software services and software upgrades | |||||||||||
Significant accounting policies: | |||||||||||
Selling price per unit | ¥ 10.62 | ¥ 5.68 | ¥ 5.69 | ||||||||
Maximum | Trademark and Patents | |||||||||||
Significant accounting policies: | |||||||||||
Useful lives | 10 years | 10 years | |||||||||
Discount rate | |||||||||||
Significant accounting policies: | |||||||||||
Discount rate | 22 | 22 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Estimated Useful Lives (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Software and electronic equipment | Maximum | |
Property, plant and equipment | |
Estimated useful life | P5Y |
Software and electronic equipment | Minimum | |
Property, plant and equipment | |
Estimated useful life | P3Y |
Building | |
Property, plant and equipment | |
Estimated useful life | P20Y |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - Account Receivable Concentration of Credit Risk (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2019CNY (¥) | |
Concentration Risk [Line Items] | |||
Accounts receivable | $ 27,140 | ¥ 58,925 | ¥ 188,940 |
Accounts Receivable | |||
Concentration Risk [Line Items] | |||
Accounts receivable | ¥ 35,864 | 144,086 | |
Concentration risk, percentage | 76.30% | 60.90% | |
Company A | Accounts Receivable | |||
Concentration Risk [Line Items] | |||
Accounts receivable | ¥ 10,600 | 13,495 | |
Concentration risk, percentage | 7.10% | 18.00% | |
Company B | Accounts Receivable | |||
Concentration Risk [Line Items] | |||
Accounts receivable | ¥ 25,264 | 50,567 | |
Concentration risk, percentage | 26.80% | 42.90% | |
Company C | Accounts Receivable | |||
Concentration Risk [Line Items] | |||
Accounts receivable | ¥ 80,024 | ||
Concentration risk, percentage | 42.40% |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES - Related Parties Concentration of Credit Risk (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2019CNY (¥) | |
Concentration Risk [Line Items] | |||
Amounts due from related parties | $ 204,138 | ¥ 656,399 | ¥ 1,421,170 |
Credit Concentration Risk | |||
Concentration Risk [Line Items] | |||
Amounts due from related parties | ¥ 631,204 | 1,401,015 | |
Concentration risk, percentage | 98.60% | 96.20% | |
Credit Concentration Risk | Customer D | |||
Concentration Risk [Line Items] | |||
Amounts due from related parties | ¥ 631,204 | ¥ 1,401,015 | |
Concentration risk, percentage | 98.60% | 96.20% |
SIGNIFICANT ACCOUNTING POLICI_8
SIGNIFICANT ACCOUNTING POLICIES - Revenue Generated from Related Parties (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Concentration Risk [Line Items] | |||
Revenues | ¥ 5,812,255 | ¥ 3,645,335 | ¥ 2,048,896 |
Credit Concentration Risk | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 98.60% | 96.20% | |
Sales Revenue Net | Credit Concentration Risk | |||
Concentration Risk [Line Items] | |||
Revenues | ¥ 4,271,135 | ¥ 2,798,824 | ¥ 1,773,595 |
Concentration risk, percentage | 73.50% | 76.80% | 86.60% |
SIGNIFICANT ACCOUNTING POLICI_9
SIGNIFICANT ACCOUNTING POLICIES - Supplier Concentration (Details) - Customer Concentration Risk | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Company E | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 38.60% | |
Company F | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 13.50% | |
Company G | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 10.50% |
INVENTORIES, NET (Details)
INVENTORIES, NET (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) |
INVENTORIES, NET | |||
Raw materials | ¥ 275,583 | ¥ 191,242 | |
Work in process | 176,417 | 33,714 | |
Finished goods | 441,806 | 259,666 | |
Inventories, net | $ 128,387 | ¥ 893,806 | ¥ 484,622 |
INVENTORIES, NET - Write downs
INVENTORIES, NET - Write downs (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
INVENTORIES, NET | ||||
Provision for excess and obsolete inventories | $ 3,419 | ¥ 23,799 | ¥ 0 | ¥ 2,449 |
Write down of obsolete inventory | ¥ 17,739 | ¥ 0 | ¥ 0 |
SHORT-TERM INVESTMENTS (Details
SHORT-TERM INVESTMENTS (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) |
Schedule Of Investments | |||
Short-term investments | $ 2,469 | ¥ 17,187 | ¥ 50,482 |
Snowball | |||
Schedule Of Investments | |||
Short-term investments | 16,243 | ||
Joyrun | |||
Schedule Of Investments | |||
Short-term investments | 11,591 | 10,751 | |
Abee | |||
Schedule Of Investments | |||
Short-term investments | 8,097 | ||
Others | |||
Schedule Of Investments | |||
Short-term investments | ¥ 5,596 | ¥ 15,391 |
SHORT-TERM INVESTMENTS - Additi
SHORT-TERM INVESTMENTS - Additional information (Details) ¥ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2018CNY (¥) | Jun. 30, 2018CNY (¥) | Jun. 30, 2017 | Jun. 30, 2016CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Schedule Of Investments | ||||||||
Payments to acquire investment | ¥ 41,300 | ¥ 6,506 | ||||||
Unrealized gain on available-for-sale investments | $ 383 | ¥ 2,666 | 14,684 | 9,484 | ||||
Unrealized gain on available-for-sale investments and others, tax effect | 620 | 2,250 | ¥ 1,554 | |||||
Non-monetary exchange of convertible bond to intangible assets | 1,152 | 8,019 | 7,104 | |||||
Non-monetary transaction of exchanging loan for Intangible assets | $ 1,430 | 9,957 | ||||||
Snowball | ||||||||
Schedule Of Investments | ||||||||
Payments to acquire investment | ¥ 20,000 | |||||||
Interest rate | 4.35% | |||||||
Maturity term | 1 year | |||||||
Servicing fees term | 2 years | |||||||
Unrealized gain on available-for-sale investments | 443 | |||||||
Joyrun | ||||||||
Schedule Of Investments | ||||||||
Payments to acquire investment | ¥ 10,500 | |||||||
Interest rate | 8.00% | |||||||
Maturity term | 1 year | |||||||
Unrealized gain on available-for-sale investments | 840 | 251 | ||||||
Abee | ||||||||
Schedule Of Investments | ||||||||
Payments to acquire investment | ¥ 6,937 | |||||||
Interest rate | 7.00% | |||||||
Maturity term | 1 year | 1 year | ||||||
Non-monetary exchange of convertible bond to intangible assets | 8,019 | |||||||
Non-monetary transaction of exchanging loan for Intangible assets | 9,957 | |||||||
Others | ||||||||
Schedule Of Investments | ||||||||
Unrealized gain on available-for-sale investments | ¥ 391 | |||||||
Unrealized gain on available-for-sale investments and others, tax effect | ¥ 400 |
PREPAID EXPENSES AND OTHER CU_3
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) |
Prepaid Expenses and Other Current Assets | |||
Value-added tax | ¥ 43,595 | ¥ 19,542 | |
Other receivables | 10,252 | 8,049 | |
Prepaid expenses | 9,595 | 3,264 | |
Short-term loans | 14,559 | ||
Advances to suppliers | 2,129 | 8,359 | |
Rental deposits | 1,787 | 4,474 | |
Total | $ 9,675 | ¥ 67,358 | ¥ 58,247 |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT, NET (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) |
Property, plant and equipment | |||
Property, plant and equipment, gross | ¥ 82,369 | ¥ 44,199 | |
Less: accumulated depreciation | (21,438) | (12,029) | |
Property, plant and equipment, net | $ 9,243 | 64,350 | 40,042 |
Software and electronic equipment | |||
Property, plant and equipment | |||
Property, plant and equipment, gross | 36,283 | 14,453 | |
Building | |||
Property, plant and equipment | |||
Property, plant and equipment, gross | 19,342 | 19,342 | |
Leasehold improvements | |||
Property, plant and equipment | |||
Property, plant and equipment, gross | 26,744 | 10,404 | |
Construction in progress | |||
Property, plant and equipment | |||
Property, plant and equipment, gross | ¥ 3,419 | ¥ 7,872 |
PROPERTY, PLANT AND EQUIPMENT_4
PROPERTY, PLANT AND EQUIPMENT, NET - Additional Information (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
PROPERTY, PLANT AND EQUIPMENT, NET | ||||
Depreciation expense | $ 1,352 | ¥ 9,409 | ¥ 5,773 | ¥ 3,542 |
Impairment charges | ¥ 0 | ¥ 0 | ¥ 0 |
INTANGIBLE ASSETS, NET (Details
INTANGIBLE ASSETS, NET (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) |
Intangible assets with indefinite lives: | |||
Domain name | ¥ 2,024 | ¥ 1,222 | |
Intangible assets: | |||
Patents | 92,165 | 63,130 | |
Less: accumulated amortization | (8,436) | (630) | |
Intangible assets, net | $ 12,318 | ¥ 85,753 | ¥ 63,722 |
INTANGIBLE ASSETS, NET - Additi
INTANGIBLE ASSETS, NET - Additional Information (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Intangible Assets [Line Items] | ||||
Purchase of intangible assets | $ 1,701 | ¥ 11,845 | ¥ 52,017 | ¥ 88 |
Amortization of intangible assets | $ 1,121 | 7,806 | 443 | ¥ 175 |
2020 | 9,304 | |||
2021 | 9,304 | |||
2022 | 9,304 | |||
2023 | 9,304 | |||
2024 | 9,304 | |||
Thereafter | ¥ 9,304 | |||
Patents | ||||
Intangible Assets [Line Items] | ||||
Purchase of intangible assets | ¥ 51,470 |
LONG-TERM INVESTMENTS (Details)
LONG-TERM INVESTMENTS (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) |
Schedule Of Investments | |||
Long-term investments | $ 58,332 | ¥ 406,099 | ¥ 208,949 |
Huaying Fund | |||
Schedule Of Investments | |||
Equity method investments | 55,557 | 56,898 | |
Huaying Fund II | |||
Schedule Of Investments | |||
Equity method investments | 102,336 | ||
GTI | |||
Schedule Of Investments | |||
Equity method investments | 93,289 | ||
Sifive | |||
Schedule Of Investments | |||
Equity securities without readily determinable fair value | 20,445 | 20,192 | |
Greenwaves | |||
Schedule Of Investments | |||
Equity securities without readily determinable fair value | 20,156 | 19,906 | |
Morsel Inc. | |||
Schedule Of Investments | |||
Equity securities without readily determinable fair value | 20,885 | ||
Snowball | |||
Schedule Of Investments | |||
Equity securities without readily determinable fair value | 15,800 | ||
Sunny | |||
Schedule Of Investments | |||
Available-for-sale investments | 49,091 | ||
Others | |||
Schedule Of Investments | |||
Equity securities without readily determinable fair value | 14,292 | 16,501 | |
Equity method investments | 14,165 | 11,283 | |
Available-for-sale investments | ¥ 49,174 | ¥ 35,078 |
LONG-TERM INVESTMENTS - Additio
LONG-TERM INVESTMENTS - Additional information (Details) ¥ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Dec. 31, 2018CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | |
Schedule Of Investments | ||||||
Purchase of long term investments | $ 25,988 | ¥ 180,927 | ¥ 109,854 | ¥ 23,610 | ||
Gain from fair value change of long-term investments | 7,860 | |||||
Huaying Fund | ||||||
Schedule Of Investments | ||||||
Purchase of long term investments | ¥ 50,000 | |||||
Equity method investment, ownership percentage | 49.50% | |||||
Huaying Fund II | ||||||
Schedule Of Investments | ||||||
Purchase of long term investments | ¥ 102,000 | |||||
Equity method investment, ownership percentage | 34.00% | 34.00% | ||||
Sifive | ||||||
Schedule Of Investments | ||||||
Purchase of long term investments | ¥ 12,332 | |||||
Equity interests (as a percent) | 1.01% | 1.01% | ||||
Gain from fair value change of long-term investments | $ 0 | ¥ 7,860 | ||||
Greenwaves | ||||||
Schedule Of Investments | ||||||
Purchase of long term investments | ¥ 19,906 | |||||
Equity interests (as a percent) | 8.33% | 8.33% | ||||
Morsel Inc. | ||||||
Schedule Of Investments | ||||||
Purchase of long term investments | $ | $ 3,500 | |||||
Equity interests (as a percent) | 13.40% | 13.40% | ||||
Equity interests with liquidation preference rights (as a percent) | 11.30% | 11.30% | ||||
Equity interests without liquidation preference | 2.10% | 2.10% | ||||
Snowball | ||||||
Schedule Of Investments | ||||||
Equity interests (as a percent) | 4.30% | 4.30% | ||||
Sunny | ||||||
Schedule Of Investments | ||||||
Purchase of long term investments | ¥ 43,302 | ¥ 49,091 | ||||
Equity interests (as a percent) | 23.00% | 23.00% |
FAIR-VALUE MEASUREMENT (Details
FAIR-VALUE MEASUREMENT (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) |
Fair Value Assets Measured On Recurring Basis [Line Items] | |||
Short-term investments | $ 2,469 | ¥ 17,187 | ¥ 50,482 |
Long-term investments | $ 58,332 | 406,099 | 208,949 |
Recurring Basis | |||
Fair Value Assets Measured On Recurring Basis [Line Items] | |||
Available-for-sale investments | 66,361 | 134,651 | |
Recurring Basis | Redeemable Preferred Shares | |||
Fair Value Assets Measured On Recurring Basis [Line Items] | |||
Long-term investments | 42,212 | 84,169 | |
Recurring Basis | Significant Other Observable Inputs Level 2 | |||
Fair Value Assets Measured On Recurring Basis [Line Items] | |||
Available-for-sale investments | 66,361 | 134,651 | |
Recurring Basis | Significant Other Observable Inputs Level 2 | Redeemable Preferred Shares | |||
Fair Value Assets Measured On Recurring Basis [Line Items] | |||
Long-term investments | 42,212 | 84,169 | |
Recurring Basis | Convertible Bond | |||
Fair Value Assets Measured On Recurring Basis [Line Items] | |||
Short-term investments | 17,187 | 50,482 | |
Long-term investments | 6,962 | ||
Recurring Basis | Convertible Bond | Significant Other Observable Inputs Level 2 | |||
Fair Value Assets Measured On Recurring Basis [Line Items] | |||
Short-term investments | 17,187 | ¥ 50,482 | |
Long-term investments | ¥ 6,962 |
FAIR-VALUE MEASUREMENT - Additi
FAIR-VALUE MEASUREMENT - Additional Information (Details) - CNY (¥) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
FAIR-VALUE MEASUREMENT | |||
Fair value assets transferred from level 1 to level 2 | ¥ 0 | ¥ 0 | |
Fair value assets transferred from level 2 to level 1 | 0 | 0 | |
Fair value assets transferred into level 3 | 0 | 0 | |
Fair value assets transferred out of level 3 | 0 | 0 | |
Impairment equity securities | ¥ 2,382,000 | ¥ 0 | ¥ 0 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |||||
Accrued payroll and welfare | ¥ 120,256 | ¥ 83,925 | |||
Deferred revenue | 59,585 | 41,863 | |||
Product warranty | 49,527 | 55,599 | ¥ 8,431 | ¥ 4,870 | |
Current operating lease liabilities | ¥ 32,799 | ||||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Total | Total | |||
Accrued professional fee | ¥ 19,194 | 3,945 | |||
Accrued expenses | 17,688 | 6,107 | |||
Other tax payable | 16,613 | 4,727 | |||
Other current liabilities | 36,587 | 17,809 | |||
Total | $ 50,598 | ¥ 352,249 | ¥ 213,975 |
ACCRUED EXPENSES AND OTHER CU_4
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES - Product warranty (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |||
Beginning balance | ¥ 55,599 | ¥ 8,431 | ¥ 4,870 |
Provided during the year | 80,048 | 68,866 | 23,093 |
Utilized during the year | (86,120) | (21,698) | (19,532) |
Ending balance | ¥ 49,527 | ¥ 55,599 | ¥ 8,431 |
ACCRUED EXPENSES AND OTHER CU_5
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES - Warranty costs (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cost of revenue | |||
Warranty costs | |||
Warrant cost | ¥ 80,048 | ¥ 68,866 | ¥ 23,093 |
BANK BORROWING (Details)
BANK BORROWING (Details) - CNY (¥) ¥ in Thousands | Apr. 02, 2018 | Dec. 31, 2018 |
Short Term Debt [Line Items] | ||
Bank borrowings | ¥ 20,000 | |
Loan agreement | ||
Short Term Debt [Line Items] | ||
Bank borrowings | ¥ 20,000 | |
Maturity term (in years) | 1 year | |
Interest rate (as a percent) | 5.00% |
REVENUE AND DEFERRED REVENUES -
REVENUE AND DEFERRED REVENUES - Disaggregation of revenue (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Disaggregation Of Revenue | ||||
Revenue | $ 834,878 | ¥ 5,812,255 | ¥ 3,645,335 | ¥ 2,048,896 |
Wearable products | ||||
Disaggregation Of Revenue | ||||
Revenue | 4,193,665 | 2,439,534 | ||
Self-branded products and others | ||||
Disaggregation Of Revenue | ||||
Revenue | ¥ 1,618,590 | ¥ 1,205,801 |
REVENUE AND DEFERRED REVENUES_2
REVENUE AND DEFERRED REVENUES - Contract balances (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) |
REVENUE AND DEFERRED REVENUES | |||
Accounts receivable | $ 27,140 | ¥ 188,940 | ¥ 58,925 |
Amounts due from related parties | $ 204,138 | 1,421,170 | 656,399 |
Deferred revenue | 59,585 | 41,863 | |
Refund liability (sales return) | ¥ 582 | ¥ 153 |
REVENUE AND DEFERRED REVENUES_3
REVENUE AND DEFERRED REVENUES - Additional Information (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Disaggregation Of Revenue | ||
Amount due from related parties, billed receivable | ¥ 1,318,483 | ¥ 623,120 |
Amount due from related parties, unbilled receivable | 102,687 | 33,279 |
Deferred revenue, revenue recognized | 41,863 | 17,876 |
Cooperation Agreement | ||
Disaggregation Of Revenue | ||
Amount due from related parties, billed receivable | ¥ 33,279 | ¥ 33,329 |
Minimum | ||
Disaggregation Of Revenue | ||
Payment terms (in days) | 30 days | |
Maximum | ||
Disaggregation Of Revenue | ||
Payment terms (in days) | 60 days |
INCOME TAXES (Details)
INCOME TAXES (Details) ¥ / shares in Units, ¥ in Thousands, $ in Thousands | Apr. 01, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥)¥ / shares | Dec. 31, 2018CNY (¥)¥ / shares | Dec. 31, 2017CNY (¥)¥ / shares | Dec. 31, 2019CNY (¥) |
Income Tax Contingency [Line Items] | ||||||||
Net income | $ 82,360 | ¥ 573,371 | ¥ 336,320 | ¥ 167,095 | ||||
Operating loss | $ 87,116 | ¥ 606,484 | 365,719 | 181,969 | ||||
Deferred tax assets, valuation allowance | 0 | ¥ 1,984 | ||||||
Percentage of withholding tax on dividends paid to foreign investors | 10.00% | 10.00% | ||||||
Aggregate undistributed earnings available for distribution | 860,613 | 1,559,898 | ||||||
Deferred tax liabilities attributable to undistributed earning | 0 | |||||||
PRC, Hong Kong and United States | ||||||||
Income Tax Contingency [Line Items] | ||||||||
Operating loss | ¥ (229,660) | |||||||
Anhui Huami | ||||||||
Income Tax Contingency [Line Items] | ||||||||
If no income tax holiday, increase effect in income tax expense | ¥ 72,396 | ¥ 58,327 | ¥ 30,740 | |||||
If no income tax holiday, decrease effect in basic net income per share | ¥ / shares | ¥ 0.30 | ¥ 0.28 | ¥ 0.45 | |||||
If no income tax holiday, decrease effect in diluted net income per share | ¥ / shares | ¥ 0.28 | ¥ 0.26 | ¥ 0.45 | |||||
Minimum | ||||||||
Income Tax Contingency [Line Items] | ||||||||
Underpayment of tax liability | $ 14 | 100 | ||||||
Hong Kong | Minimum | ||||||||
Income Tax Contingency [Line Items] | ||||||||
Net income | ¥ 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 | 21.00% | 35.00% | ||||||
Operating loss carry forwards carry forward period | 20 years | 20 years | ||||||
PRC | ||||||||
Income Tax Contingency [Line Items] | ||||||||
Income tax rate | 25.00% | 25.00% | ||||||
Carryforwards | ¥ 164,694 | |||||||
Operating loss carry forwards carry forward period | 5 years | 5 years | ||||||
PRC | Anhui Huami | ||||||||
Income Tax Contingency [Line Items] | ||||||||
Income tax rate | 15.00% | 15.00% | 15.00% | 15.00% | ||||
Canada | ||||||||
Income Tax Contingency [Line Items] | ||||||||
Operating loss carry forwards carry forward period | 20 years | 20 years | ||||||
Operating loss carried back period | 3 years | 3 years |
INCOME TAXES - Current and defe
INCOME TAXES - Current and deferred (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
INCOME TAXES | ||||
Current tax expenses | ¥ 105,663 | ¥ 84,931 | ¥ 46,573 | |
Deferred tax benefits | (27,776) | (32,895) | (18,962) | |
Income tax expense | $ 11,188 | ¥ 77,887 | ¥ 52,036 | ¥ 27,611 |
INCOME TAXES - Deferred tax ass
INCOME TAXES - Deferred tax assets (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets | ||
Accrued expenses | ¥ 50,644 | ¥ 28,585 |
Net operating loss carry forwards | 53,989 | 46,447 |
Total deferred tax assets | 104,633 | 75,032 |
Less: valuation allowance | (1,984) | 0 |
Deferred tax assets, net | ¥ 102,649 | ¥ 75,032 |
INCOME TAXES - Tax Expense Reco
INCOME TAXES - Tax Expense Reconciliation (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
INCOME TAXES | ||||
Income before income tax | $ 93,708 | ¥ 652,370 | ¥ 386,613 | ¥ 191,900 |
Tax expense at PRC enterprise income tax rate of 25% | 163,093 | 96,653 | 47,975 | |
Income tax on tax holidays | (72,396) | (58,327) | (30,740) | |
Tax effect of permanence differences | (31,088) | (22,733) | (8,190) | |
Effect of income tax rate differences in jurisdictions other than the PRC | 16,270 | 36,443 | 14,364 | |
Change in tax rate | 4,202 | |||
Change in valuation allowances | 2,008 | |||
Income tax expense | $ 11,188 | ¥ 77,887 | ¥ 52,036 | ¥ 27,611 |
ORDINARY SHARES (Details)
ORDINARY SHARES (Details) - $ / shares | 1 Months Ended | 12 Months Ended | ||||
Apr. 30, 2019 | Feb. 28, 2018 | Jan. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Class Of Stock [Line Items] | ||||||
Ordinary shares, shares authorized | 405,462,685 | |||||
Ordinary shares, par value | $ 0.0001 | |||||
Class B Ordinary Shares | ||||||
Class Of Stock [Line Items] | ||||||
Ordinary shares, shares authorized | 200,000,000 | 200,000,000 | ||||
Ordinary shares, par value | $ 0.0001 | $ 0.0001 | ||||
Ordinary shares, shares issued | 156,060,279 | 184,376,679 | ||||
Ordinary shares, shares outstanding | 156,060,279 | 184,376,679 | ||||
Issuance of ordinary shares, shares | 28,316,400 | |||||
Number of ordinary shares granted to preference shareholders | 12,064,825 | |||||
Class A Ordinary Shares | ||||||
Class Of Stock [Line Items] | ||||||
Ordinary shares, shares authorized | 9,800,000,000 | 9,800,000,000 | ||||
Ordinary shares, par value | $ 0.0001 | $ 0.0001 | ||||
Ordinary shares, shares issued | 91,459,708 | 57,303,093 | ||||
Ordinary shares, shares outstanding | 91,459,708 | 57,303,093 | ||||
Issuance of ordinary shares, shares | 3,174,600 | |||||
Conversion of Series A, B-1 and B-2 preferred shares | 13,359,788 | |||||
Ordinary Shares | ||||||
Class Of Stock [Line Items] | ||||||
Issuance of ordinary shares, shares | 3,174,600 | |||||
Number of ordinary shares granted to preference shareholders | 12,064,825 | |||||
Initial Public Offering | Ordinary Shares | ||||||
Class Of Stock [Line Items] | ||||||
Issuance of ordinary shares, shares | 41,600,000 | 41,600,000 | ||||
Conversion of Series A, B-1 and B-2 preferred shares | 94,537,315 | |||||
Initial Public Offering | Ordinary Shares | Class B Ordinary Shares | ||||||
Class Of Stock [Line Items] | ||||||
Conversion of Series A, B-1 and B-2 preferred shares | 94,537,315 |
SHARE-BASED PAYMENT - Founders
SHARE-BASED PAYMENT - Founders (Details) ¥ in Thousands | 1 Months Ended | 12 Months Ended | |||
Apr. 30, 2015shares | Jan. 31, 2014shareholderinstallment | Dec. 31, 2019CNY (¥)shares | Dec. 31, 2018CNY (¥)shares | Dec. 31, 2017CNY (¥) | |
SHARE-BASED PAYMENT | |||||
Share-based compensation expense | ¥ | ¥ 55,128 | ¥ 134,709 | ¥ 62,787 | ||
Founders | Restricted Shares | |||||
SHARE-BASED PAYMENT | |||||
Number of shareholders | shareholder | 2 | ||||
Equity interests (as a percent) | 50.00% | ||||
Number of equal vesting monthly installments | installment | 24 | ||||
Vesting period (in years) | 48 months | ||||
Balance at the beginning of the year (in shares) | 11,391,791 | ||||
Vested (in shares) | (11,391,791) | ||||
Balance at the end of the year (in shares) | 45,567,164 | 11,391,791 | |||
Share-based compensation expense | ¥ | ¥ 17,794 | ¥ 55,311 | ¥ 51,463 |
SHARE-BASED PAYMENT - 2015 Plan
SHARE-BASED PAYMENT - 2015 Plan (Details) ¥ in Thousands | 12 Months Ended | ||||
Dec. 31, 2019CNY (¥)shares | Dec. 31, 2018CNY (¥)shares | Dec. 31, 2017$ / shares | Dec. 31, 2017CNY (¥)shares | Oct. 21, 2015shares | |
SHARE-BASED PAYMENT | |||||
Share-based compensation expense | ¥ | ¥ 55,128 | ¥ 134,709 | ¥ 62,787 | ||
2015 Plan | |||||
SHARE-BASED PAYMENT | |||||
Shares authorized (in shares) | shares | 14,328,358 | ||||
PRC Plan | Share Options | |||||
SHARE-BASED PAYMENT | |||||
Granted | shares | 0 | 0 | 1,545,688 | ||
Share options granted exercise price | $ / shares | $ 0 | ||||
Share options granted expiration period | 10 years | ||||
Share-based compensation expense | ¥ | ¥ 1,194 | ¥ 40,449 | ¥ 0 | ||
US Plan | Share Options | |||||
SHARE-BASED PAYMENT | |||||
Granted | shares | 0 | 0 | 500,000 | ||
Share options granted expiration period | 10 years | ||||
US Plan | Share Options | Maximum | |||||
SHARE-BASED PAYMENT | |||||
Share options granted exercise price | $ / shares | 0.99 | ||||
US Plan | Share Options | Minimum | |||||
SHARE-BASED PAYMENT | |||||
Share options granted exercise price | $ / shares | $ 0.79 |
SHARE-BASED PAYMENT - 2018 Plan
SHARE-BASED PAYMENT - 2018 Plan (Details) ¥ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Jan. 31, 2018shares | Dec. 31, 2019$ / shares | Dec. 31, 2019CNY (¥)shares | Dec. 31, 2018$ / shares | Dec. 31, 2018CNY (¥)shares | Dec. 31, 2017CNY (¥) | |
SHARE-BASED PAYMENT | ||||||
Share-based compensation expense | ¥ | ¥ 55,128 | ¥ 134,709 | ¥ 62,787 | |||
2018 Plan | Share Options | ||||||
SHARE-BASED PAYMENT | ||||||
Shares authorized (in shares) | shares | 9,559,607 | |||||
Increase in authorized shares (as percent of outstanding shares) | 1.00% | |||||
Granted | shares | 651,000 | 6,988,469 | ||||
Share options granted exercise price | $ / shares | $ 0 | $ 0.35 | ||||
Share-based compensation expense | ¥ | ¥ 32,424 | ¥ 9,523 |
SHARE-BASED PAYMENT - Share Opt
SHARE-BASED PAYMENT - Share Options Fair Value Assumption (Details) - ¥ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Maximum | |||
SHARE-BASED PAYMENT | |||
Expected life of option (years) | 10 years | ||
Share Options | |||
SHARE-BASED PAYMENT | |||
Risk-free interest rate | 2.14% | 2.20% | |
Risk-free interest rate, minimum | 2.04% | ||
Risk-free interest rate, maximum | 2.83% | ||
Expected volatility | 50.40% | 49.00% | |
Expected volatility, minimum | 36.00% | ||
Expected volatility, maximum | 52.50% | ||
Expected life of option (years) | 10 years | ||
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Fair value per ordinary share | ¥ 12.65 | ¥ 12.56 | |
Share Options | Minimum | |||
SHARE-BASED PAYMENT | |||
Expected life of option (years) | 1 year | 9 years 9 months 4 days | |
Fair value per ordinary share | ¥ 12.65 | ¥ 15.03 | |
Share Options | Maximum | |||
SHARE-BASED PAYMENT | |||
Expected life of option (years) | 10 years | ||
Fair value per ordinary share | ¥ 16.85 |
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, 2019USD ($)$ / sharesshares | |
Share number | |
Outstanding at beginning of year | 13,343,230 |
Granted | 651,000 |
Exercised | (694,735) |
Canceled and forfeited | (1,253,259) |
Outstanding at end of year | 12,046,236 |
Exercisable | 6,580,899 |
Expected to vest | 5,465,337 |
Weighted average exercise price per option | |
Outstanding at beginning of year (in USD per share) | $ / shares | $ 0.23 |
Exercised (in USD per share) | $ / shares | 0.19 |
Outstanding at end of year (in USD per share) | $ / shares | 0.24 |
Exercisable (in USD per share) | $ / shares | 0.19 |
Expected vest (per option) | $ / shares | $ 0.31 |
Weighted-average remaining exercise contractual life (years) | |
Outstanding | 7 years 5 months 12 days |
Exercisable | 6 years 6 months 18 days |
Excepted to vest | 8 years 6 months 7 days |
Aggregate intrinsic value | |
Outstanding | $ | $ 33,279 |
Exercisable | $ | 18,536 |
Expected to vest | $ | $ 14,743 |
SHARE-BASED PAYMENT - Share O_3
SHARE-BASED PAYMENT - Share Options Other Disclosures (Details) - CNY (¥) ¥ / shares in Units, ¥ in Thousands | 1 Months Ended | 12 Months Ended | ||
Jan. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
SHARE-BASED PAYMENT | ||||
Share-based compensation expense | ¥ 55,128 | ¥ 134,709 | ¥ 62,787 | |
Share Options | ||||
SHARE-BASED PAYMENT | ||||
Amended and accelerated for vesting and immediately became exercisable (in shares) | 6,817,372 | |||
Intrinsic value share options exercised | ¥ 13,608 | ¥ 6,858 | ¥ 1,695 | |
Weighted average grant date fair value of options granted | ¥ 12.65 | ¥ 15.12 | ¥ 11.22 | |
Unrecognized compensation expenses related to the options | ¥ 50,041 | |||
2015 and 2018 Plans | Share Options | ||||
SHARE-BASED PAYMENT | ||||
Share-based compensation expense | ¥ 33,618 | ¥ 49,972 | ¥ 4,713 |
SHARE-BASED PAYMENT - Restricte
SHARE-BASED PAYMENT - Restricted Share (Details) ¥ / shares in Units, ¥ in Thousands | Oct. 21, 2015$ / shares | Oct. 21, 2015CNY (¥)shares | Dec. 31, 2019CNY (¥)shares | Dec. 31, 2018CNY (¥)shares | Dec. 31, 2017CNY (¥)shares | Oct. 21, 2015¥ / shares |
Expense | ||||||
Share-based compensation expense | ¥ 55,128 | ¥ 134,709 | ¥ 62,787 | |||
US Plan | Restricted Shares | ||||||
SHARE-BASED PAYMENT | ||||||
Number of restricted shares granted | shares | 4,740,777 | |||||
Exercise price per share | $ / shares | $ 0 | |||||
Vesting period (in years) | 4 years | |||||
Reacquisition of non-vested shares, consideration | ¥ 0 | |||||
Recognized compensation expense service period | 4 years | |||||
Aggregate fair value of the restricted shares at the grant dates | ¥ 25,397 | |||||
Fair value per ordinary share on the grant-date | (per share) | $ 0.84 | ¥ 5.36 | ||||
Fair value of vested shares | 2,758 | ¥ 6,165 | ¥ 6,165 | |||
Unrecognized compensation cost | ¥ 0 | |||||
Restricted Shares | ||||||
Balance at the beginning of the year (in shares) | shares | 514,912 | 2,077,560 | 3,228,278 | |||
Vested (in shares) | shares | 514,912 | 1,150,718 | 1,150,718 | |||
Cancelled and forfeited (in shares) | shares | 411,930 | |||||
Balance at the end of the year (in shares) | shares | 514,912 | 2,077,560 | ||||
Expense | ||||||
Share-based compensation expense | ¥ 118 | ¥ 3,992 | ¥ 6,611 | |||
US Plan | Restricted Shares | Tranche one | ||||||
SHARE-BASED PAYMENT | ||||||
Vesting rights percentage | 0.25% | |||||
US Plan | Restricted Shares | Annual Basis Ending on Fourth Anniversary of Grant Date | ||||||
SHARE-BASED PAYMENT | ||||||
Vesting period (in years) | 3 years | |||||
Vesting rights percentage | 0.75% |
SHARE-BASED PAYMENT - Restric_2
SHARE-BASED PAYMENT - Restricted Stock Units (Details) ¥ / shares in Units, ¥ in Thousands | 12 Months Ended | |||||
Dec. 31, 2019CNY (¥)$ / shares¥ / shares | Dec. 31, 2019CNY (¥)¥ / sharesshares | Dec. 31, 2018$ / shares¥ / shares | Dec. 31, 2018CNY (¥)¥ / sharesshares | Dec. 31, 2017$ / shares¥ / shares | Dec. 31, 2017CNY (¥)¥ / sharesshares | |
SHARE-BASED PAYMENT | ||||||
Share-based compensation expense | ¥ 55,128 | ¥ 134,709 | ¥ 62,787 | |||
Restricted Stock Units | ||||||
SHARE-BASED PAYMENT | ||||||
Exercise price per share | $ / shares | $ 0 | $ 0 | $ 0 | |||
Vesting period (in years) | 4 years | 4 years | 4 years | |||
Reacquisition of non-vested shares, consideration | ¥ 0 | ¥ 0 | ¥ 0 | |||
Recognized compensation expense service period | 4 years | 4 years | 4 years | |||
Aggregate fair value of the restricted shares at the grant dates | ¥ 42,092 | |||||
Fair value per ordinary share on the grant-date | ¥ / shares | $ 15.71 | ¥ 15.71 | $ 15.87 | ¥ 15.87 | $ 11.38 | ¥ 11.38 |
Share-based compensation expense | ¥ 3,598 | ¥ 25,434 | ¥ 0 | |||
Unrecognized compensation cost | $ 5,688 | ¥ 5,688 | ||||
Weighted average vesting period over which unrecognized compensation costs is expected to be recognized | 2 years 5 months 19 days | |||||
Weighted average grant date fair value (in RMB per share) | ¥ / shares | ¥ 12.65 | ¥ 15.75 | ¥ 12.54 | |||
Restricted Shares | ||||||
Balance at the beginning of the year (in shares) | shares | 562,913 | |||||
Granted (in shares) | shares | 30,000 | 658,056 | 1,700,000 | |||
Vested (in shares) | shares | 5,229 | |||||
Balance at the end of the year (in shares) | shares | 587,684 | 562,913 | ||||
Restricted Stock Units | Tranche one | ||||||
SHARE-BASED PAYMENT | ||||||
Vesting rights percentage | 0.25% | 0.25% | 0.25% | |||
Restricted Stock Units | Annual Basis Ending on Fourth Anniversary of Grant Date | ||||||
SHARE-BASED PAYMENT | ||||||
Vesting period (in years) | 3 years | 3 years | 3 years | |||
Vesting rights percentage | 0.75% | 0.75% | 0.75% |
SHARE-BASED PAYMENT - Share-bas
SHARE-BASED PAYMENT - Share-based Compensation Recognized (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
SHARE-BASED PAYMENT | |||
Total stock-based compensation expense | ¥ 55,128 | ¥ 134,709 | ¥ 62,787 |
General and Administrative Expenses | |||
SHARE-BASED PAYMENT | |||
Total stock-based compensation expense | 40,684 | 87,857 | 55,804 |
Research and Development | |||
SHARE-BASED PAYMENT | |||
Total stock-based compensation expense | 11,191 | 42,167 | ¥ 6,983 |
Selling and Marketing Expenses | |||
SHARE-BASED PAYMENT | |||
Total stock-based compensation expense | 3,198 | 4,271 | |
Cost of revenue | |||
SHARE-BASED PAYMENT | |||
Total stock-based compensation expense | ¥ 55 | ¥ 414 |
MAINLAND CHINA CONTRIBUTION P_2
MAINLAND CHINA CONTRIBUTION PLAN (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
MAINLAND CHINA CONTRIBUTION PLAN | |||
Total provisions for employee benefits | ¥ 63,799 | ¥ 39,495 | ¥ 24,539 |
NONCONTROLLING INTERESTS - (Det
NONCONTROLLING INTERESTS - (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
NONCONTROLLING INTERESTS | ||||
Beginning balance | ¥ (1,337) | ¥ 2,389 | ||
Loss attributed to noncontrolling interest shareholders | $ (262) | (1,825) | (3,726) | ¥ (587) |
Ending balance | $ (454) | ¥ (3,162) | ¥ (1,337) | ¥ 2,389 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - segment | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
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, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Segment Reporting Information [Line Items] | ||||
Revenues | ¥ 5,812,255 | ¥ 3,645,335 | ¥ 2,048,896 | |
Cost of revenues | 4,344,512 | 2,705,885 | 1,554,194 | |
Gross profit | $ 210,828 | 1,467,743 | 939,450 | 494,702 |
Wearable products | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 4,193,665 | 2,439,534 | 1,614,512 | |
Cost of revenues | 3,296,696 | 1,883,509 | 1,232,792 | |
Gross profit | 896,969 | 556,025 | 381,720 | |
Self-branded products and others | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 1,618,590 | 1,205,801 | 434,384 | |
Cost of revenues | 1,047,816 | 822,376 | 321,402 | |
Gross profit | ¥ 570,774 | ¥ 383,425 | ¥ 112,982 |
STATUTORY RESERVES AND RESTRI_2
STATUTORY RESERVES AND RESTRICTED NET ASSETS (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statutory Accounting Practices [Line Items] | ||||
Profit appropriation made | ¥ 1,509 | ¥ 0 | ¥ 0 | |
Statutory reserve accrued | ¥ 92 | |||
Restricted net assets | ¥ 153,943 | ¥ 153,851 | ¥ 163,350 | |
PRC | ||||
Statutory Accounting Practices [Line Items] | ||||
Required maximum percentage of statutory surplus reserve to registered capital | 50.00% | |||
Required minimum percentage of after tax profits to allocate to statutory common reserve | 10.00% | |||
Maximum | ||||
Statutory Accounting Practices [Line Items] | ||||
Percentage of profit appropriation made to reserve fund required amount of registered capital | 50.00% |
RELATED PARTY BALANCES AND TR_3
RELATED PARTY BALANCES AND TRANSACTIONS - Balances (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) |
Amount due from related parties: | |||
Amounts due from related parties | $ 204,138 | ¥ 1,421,170 | ¥ 656,399 |
Amount due to related parties, current: | |||
Amount due to related parties, current | $ (2,121) | (14,769) | (10,695) |
Xiaomi Communication | |||
Amount due from related parties: | |||
Amounts due from related parties | 1,401,015 | 631,204 | |
Youpin Information | |||
Amount due from related parties: | |||
Amounts due from related parties | 9,845 | ||
Xiaomi Information | |||
Amount due from related parties: | |||
Amounts due from related parties | 7,669 | 9,727 | |
Xiaomi Technology | |||
Amount due from related parties: | |||
Amounts due from related parties | 7,442 | ||
Amount due to related parties, current: | |||
Amount due to related parties, current | (14,186) | ||
Hangzhou Yunyou | |||
Amount due from related parties: | |||
Amounts due from related parties | 5,143 | ||
Others | |||
Amount due from related parties: | |||
Amounts due from related parties | 2,641 | 2,883 | |
Amount due to related parties, current: | |||
Amount due to related parties, current | ¥ (583) | (345) | |
Xiaomi Mobile | |||
Amount due to related parties, current: | |||
Amount due to related parties, current | ¥ (10,350) |
RELATED PARTY BALANCES AND TR_4
RELATED PARTY BALANCES AND TRANSACTIONS - Transactions - Related party (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Related Party Transaction [Line Items] | |||
Sales to related parties | ¥ 4,281,005 | ¥ 2,816,995 | ¥ 1,778,640 |
Xiaomi Communication | |||
Related Party Transaction [Line Items] | |||
Sales to related parties | 4,271,135 | 2,798,824 | 1,773,595 |
Xiaomi Information | |||
Related Party Transaction [Line Items] | |||
Sales to related parties | ¥ 9,870 | 17,859 | 1,318 |
Xiaomi Technology | |||
Related Party Transaction [Line Items] | |||
Sales to related parties | 2,072 | ||
Others | |||
Related Party Transaction [Line Items] | |||
Sales to related parties | ¥ 312 | ¥ 1,655 |
RELATED PARTY BALANCES AND TR_5
RELATED PARTY BALANCES AND TRANSACTIONS - Transactions - Others (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
RELATED PARTY BALANCES AND TRANSACTIONS | |||
Loan provided to related parties | ¥ 5,143 | ¥ (8,000) | |
Investments disposed to a related party | ¥ 3,061 | ¥ 22,047 | |
Purchase from related parties | ¥ 12,183 |
RELATED PARTY BALANCES AND TR_6
RELATED PARTY BALANCES AND TRANSACTIONS - Additional information (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($)item | Dec. 31, 2019CNY (¥)item | Dec. 31, 2018CNY (¥)item | Dec. 31, 2017CNY (¥)item | |
Related Party Transaction [Line Items] | ||||
Loan provided to related parties | ¥ 5,000 | |||
Realized gain from investments | $ 262 | ¥ 1,822 | 261 | ¥ 2,373 |
Purchase of intangible assets | $ 1,701 | 11,845 | 52,017 | ¥ 88 |
Hangzhou Yunyou | ||||
Related Party Transaction [Line Items] | ||||
Loan provided to related parties | ¥ 5,000 | |||
Recognized impairment loss | 5,640 | |||
Loan interest rate | 15.00% | |||
Xiaomi Communication, Information, Technology | ||||
Related Party Transaction [Line Items] | ||||
Receivables from the sales of products and services | ¥ 102,687 | |||
Huaying Fund | ||||
Related Party Transaction [Line Items] | ||||
Number of long-term investments disposed | item | 0 | 0 | 1 | 5 |
Realized gain from investments | ¥ 31 | ¥ 284 | ||
Hefei Huaheng | ||||
Related Party Transaction [Line Items] | ||||
Purchase of intangible assets | ¥ 11,321 |
NET INCOME PER SHARE (Details)
NET INCOME PER SHARE (Details) ¥ / shares in Units, $ / shares in Units, ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2019CNY (¥)¥ / sharesshares | Dec. 31, 2018CNY (¥)¥ / sharesshares | Dec. 31, 2017CNY (¥)¥ / sharesshares | |
Basic net income per share calculation Numerator: | ||||
Net income for the year attributable to the Company: | $ 82,622 | ¥ 575,196 | ¥ 340,046 | ¥ 167,682 |
Less: Deemed dividend to preferred shareholders | 209,752 | |||
Less: Undistributed earnings allocated to participating preferred shares and nonvested restricted shares | 352 | 2,450 | 12,210 | 80,291 |
Net income attributed to ordinary shareholders for computing net income per ordinary shares-basic | $ 82,270 | ¥ 572,746 | ¥ 113,490 | ¥ 46,120 |
Denominator: | ||||
Ordinary share - basic | shares | 243,648,186 | 243,648,186 | 211,873,704 | 67,777,592 |
Basic income per ordinary share | (per share) | $ 0.34 | ¥ 2.35 | ¥ 0.54 | ¥ 0.68 |
Diluted net income per share calculation | ||||
Net income attributed to ordinary shareholders for computing net income per ordinary shares-basic | $ 82,270 | ¥ 572,746 | ¥ 113,490 | ¥ 46,120 |
Add: adjustments to undistributed earnings to participating securities | 117 | 648 | 3,519 | |
Net income attributed to ordinary shareholders for computing net income per ordinary shares-basic | ¥ 572,863 | ¥ 114,138 | ¥ 49,639 | |
Denominator: | ||||
Ordinary share - basic | shares | 243,648,186 | 243,648,186 | 211,873,704 | 67,777,592 |
Effect of potentially diluted stock options, restricted stocks and RSUs | shares | 12,310,986 | 12,310,986 | 13,160,946 | 8,514,309 |
Weighted average ordinary shares outstanding used in computing net income per ordinary shares - dilute | shares | 255,959,172 | 255,959,172 | 225,034,650 | 76,291,901 |
Diluted income per ordinary share | (per share) | $ 0.32 | ¥ 2.24 | ¥ 0.51 | ¥ 0.65 |
Series A Preferred Shares | ||||
Basic net income per share calculation Numerator: | ||||
Less: Accretion of Shares | ¥ 177 | ¥ 3,762 | ||
Less: Undistributed earnings allocated to participating preferred shares and nonvested restricted shares | 4,521 | 48,753 | ||
Series B-1 Preferred Shares | ||||
Basic net income per share calculation Numerator: | ||||
Less: Accretion of Shares | 368 | 3,127 | ||
Less: Undistributed earnings allocated to participating preferred shares and nonvested restricted shares | 126 | 1,361 | ||
Series B-2 Preferred Shares | ||||
Basic net income per share calculation Numerator: | ||||
Less: Accretion of Shares | 4,049 | 34,382 | ||
Less: Undistributed earnings allocated to participating preferred shares and nonvested restricted shares | 1,319 | 14,220 | ||
Restricted Shares | ||||
Basic net income per share calculation Numerator: | ||||
Less: Undistributed earnings allocated to participating preferred shares and nonvested restricted shares | ¥ 2,450 | ¥ 6,244 | ¥ 15,957 |
NET INCOME PER SHARE - Anti-dil
NET INCOME PER SHARE - Anti-dilutive Securities Excluded from Calculation of Diluted Net (Loss)/Income Per Ordinary Shares (Details) - shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Shares issuable upon exercise of share options, restricted stocks 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 | 294,352 | 705,407 | 12,683,366 |
Restricted Shares | |||
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 | 1,042,234 | 11,657,620 | 23,450,173 |
Series A Preferred Shares | |||
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 | 71,641,792 | ||
Series B-1 Preferred Shares | |||
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 | 2,000,000 | ||
Series B-2 Preferred Shares | |||
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 | 20,895,523 |
LEASES - Lease Costs Included i
LEASES - Lease Costs Included in Statements of Operations (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Lessee Disclosure | |||
Long-term leases that were classified as a financing lease | ¥ 0 | ||
Future lease payments for lease that have not yet commenced with | ¥ 79,828 | ||
Lease term for lease that have not yet commenced with | 5 years | ||
Lease Cost | |||
Operating lease cost | ¥ 30,788 | ||
Sublease income | (1,382) | ||
Total lease cost | ¥ 29,406 | ||
Lease expense | |||
Lease expense | ¥ 11,423 | ¥ 6,741 |
LEASES - Cash Flow from operati
LEASES - Cash Flow from operating leases (Details) ¥ in Thousands | 12 Months Ended |
Dec. 31, 2019CNY (¥) | |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows from operating leases | ¥ 26,733 |
Operating leases | ¥ 112,513 |
Weighted average remaining lease term, operating leases | 3 years 9 months 4 days |
Weighted average discount rate, operating leases | 5.21% |
LEASES - Maturity Analysis (Det
LEASES - Maturity Analysis (Details) ¥ in Thousands | Dec. 31, 2019CNY (¥) |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
2020 | ¥ 33,928 |
2021 | 29,174 |
2022 | 23,545 |
2023 | 23,703 |
2024 | 11,893 |
Total lease payments | 122,243 |
Less: imputed interest | 13,084 |
Present value of lease liabilities | ¥ 109,159 |
LEASES - Future minimum payment
LEASES - Future minimum payments (Details) ¥ in Thousands | Dec. 31, 2019CNY (¥) |
Future minimum lease payments | |
2019 | ¥ 16,333 |
2020 | 6,648 |
2021 and after | 3,171 |
Total | ¥ 26,152 |
SUBSEQUENT EVENT - (Details)
SUBSEQUENT EVENT - (Details) - CNY (¥) ¥ in Thousands | Apr. 23, 2020 | Dec. 31, 2018 |
Subsequent Event [Line Items] | ||
Bank borrowings | ¥ 20,000 | |
Subsequent Event | 2020 BankLoans [Member] | ||
Subsequent Event [Line Items] | ||
Bank borrowings | ¥ 882,000 | |
Maturity term (in years) | 1 year | |
Interest rate (as a percent) | 3.33% |
FINANCIAL STATEMENT SCHEDULE _2
FINANCIAL STATEMENT SCHEDULE I CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY - BALANCE SHEETS (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) |
Current assets: | ||||||
Cash and cash equivalents | $ 259,002 | ¥ 1,803,117 | ¥ 1,441,802 | |||
Term deposit | 96,969 | |||||
Prepaid expenses and other current assets | 9,675 | 67,358 | 58,247 | |||
Amounts due from related parties | 204,138 | 1,421,170 | 656,399 | |||
Total current assets | 630,937 | 4,392,452 | 2,857,456 | |||
Total assets | 743,306 | 5,174,743 | 3,258,481 | |||
Current liabilities: | ||||||
Accrued expense and other current liabilities | 50,598 | 352,249 | 213,975 | |||
Amount due to related parties | 2,121 | 14,769 | 10,695 | |||
Total current liabilities | 356,489 | 2,481,800 | 1,387,692 | |||
Total liabilities | 384,550 | 2,677,155 | 1,448,903 | |||
Equity | ||||||
Additional paid-in capital | 212,431 | 1,478,902 | 1,373,577 | |||
Accumulated retained earnings | 130,801 | 910,612 | 340,046 | |||
Accumulated other comprehensive income | 15,956 | 111,081 | 97,141 | |||
Total equity | 358,756 | 2,497,588 | 1,809,578 | ¥ 228,164 | ¥ 30,179 | |
Total liabilities and equity | 743,306 | 5,174,743 | 3,258,481 | |||
Class A Ordinary Shares | ||||||
Equity | ||||||
Ordinary shares | 8 | 57 | 36 | |||
Class B Ordinary Shares | ||||||
Equity | ||||||
Ordinary shares | 14 | 98 | 115 | |||
Parent Company | ||||||
Current assets: | ||||||
Cash and cash equivalents | 57,256 | 398,604 | $ 65,839 | 458,371 | ¥ 34,470 | ¥ 40,518 |
Term deposit | 96,969 | |||||
Prepaid expenses and other current assets | 58 | 402 | 3,782 | |||
Amounts due from related parties | 76,625 | 533,449 | 314,658 | |||
Total current assets | 133,939 | 932,455 | 873,780 | |||
Investments in subsidiaries | 229,085 | 1,594,844 | 963,064 | |||
Total assets | 363,024 | 2,527,299 | 1,836,844 | |||
Current liabilities: | ||||||
Accrued expense and other current liabilities | 24 | 166 | 4,564 | |||
Amount due to related parties | 3,790 | 26,383 | 21,365 | |||
Total current liabilities | 3,814 | 26,549 | 25,929 | |||
Total liabilities | 3,814 | 26,549 | 25,929 | |||
Equity | ||||||
Additional paid-in capital | 212,431 | 1,478,902 | 1,373,577 | |||
Accumulated retained earnings | 130,801 | 910,612 | 340,046 | |||
Accumulated other comprehensive income | 15,956 | 111,081 | 97,141 | |||
Total equity | 359,210 | 2,500,750 | 1,810,915 | |||
Total liabilities and equity | 363,024 | 2,527,299 | 1,836,844 | |||
Parent Company | Class A Ordinary Shares | ||||||
Equity | ||||||
Ordinary shares | 8 | 57 | 36 | |||
Parent Company | Class B Ordinary Shares | ||||||
Equity | ||||||
Ordinary shares | $ 14 | ¥ 98 | ¥ 115 |
FINANCIAL STATEMENT SCHEDULE _3
FINANCIAL STATEMENT SCHEDULE I CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY - BALANCE SHEETS (Details) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Ordinary shares, par value | $ 0.0001 | ||
Ordinary shares, authorized | 405,462,685 | ||
Class A Ordinary Shares | |||
Ordinary shares, par value | $ 0.0001 | $ 0.0001 | |
Ordinary shares, authorized | 9,800,000,000 | 9,800,000,000 | |
Ordinary shares, issued | 91,459,708 | 57,303,093 | |
Ordinary shares, outstanding | 91,459,708 | 57,303,093 | |
Class B Ordinary Shares | |||
Ordinary shares, par value | $ 0.0001 | $ 0.0001 | |
Ordinary shares, authorized | 200,000,000 | 200,000,000 | |
Ordinary shares, issued | 156,060,279 | 184,376,679 | |
Ordinary shares, outstanding | 156,060,279 | 184,376,679 | |
Parent Company | |||
Ordinary shares, authorized | 200,000,000 | 200,000,000 | |
Ordinary shares, issued | 156,060,279 | 184,376,679 | |
Ordinary shares, outstanding | 156,060,279 | 184,376,679 | |
Parent Company | Class A Ordinary Shares | |||
Ordinary shares, par value | $ 0.0001 | $ 0.0001 | |
Ordinary shares, authorized | 9,800,000,000 | 9,800,000,000 | |
Ordinary shares, issued | 91,459,708 | 57,303,093 | |
Ordinary shares, outstanding | 91,459,708 | 57,303,093 | |
Parent Company | Class B Ordinary Shares | |||
Ordinary shares, par value | $ 0.0001 | $ 0.0001 |
FINANCIAL STATEMENT SCHEDULE _4
FINANCIAL STATEMENT SCHEDULE I CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY - STATEMENTS OF OPERATIONS (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Condensed Income Statements Captions [Line Items] | ||||
Cost | $ 624,050 | ¥ 4,344,512 | ¥ 2,705,885 | ¥ 1,554,194 |
Gross profit | 210,828 | 1,467,743 | 939,450 | 494,702 |
Operating expenses | ||||
Selling and marketing | 26,139 | 181,975 | 96,538 | 44,026 |
General and administrative expenses | 35,689 | 248,462 | 213,973 | 114,880 |
Research and development | 61,884 | 430,822 | 263,220 | 153,827 |
Total operating expenses | 123,712 | 861,259 | 573,731 | 312,733 |
Operating loss | 87,116 | 606,484 | 365,719 | 181,969 |
Interest income | 4,809 | 33,478 | 11,595 | 3,003 |
Net income | 82,360 | 573,371 | 336,320 | 167,095 |
Parent Company | ||||
Condensed Income Statements Captions [Line Items] | ||||
Cost | 8 | 55 | 414 | |
Gross profit | 8 | 55 | 414 | |
Operating expenses | ||||
Selling and marketing | 459 | 3,198 | 4,271 | |
General and administrative expenses | 7,264 | 50,572 | 99,881 | 57,898 |
Research and development | 1,607 | 11,191 | 42,167 | 6,984 |
Total operating expenses | 9,330 | 64,961 | 146,319 | 64,882 |
Operating loss | (9,338) | (65,016) | (146,733) | (64,882) |
Interest income | 987 | 6,868 | 2,185 | |
Other loss | (100) | (699) | ||
Equity in earnings of subsidiaries and VIEs | 91,073 | 634,043 | 484,594 | 232,564 |
Net income | $ 82,622 | ¥ 575,196 | ¥ 340,046 | ¥ 167,682 |
FINANCIAL STATEMENT SCHEDULE _5
FINANCIAL STATEMENT SCHEDULE I CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY - STATEMENTS OF COMPREHENSIVE INCOME (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Net income | $ 82,622 | ¥ 575,196 | ¥ 340,046 | ¥ 167,682 |
Other comprehensive income, net of tax | ||||
Foreign currency translation adjustment | 11,274 | 60,357 | (3,175) | |
Unrealized gain on available-for-sale investments and others, (net of tax effect of nil, RMB 1,554 and nil for years ended December 31, 2016, 2017 and 2018, respectively) | 383 | 2,666 | 14,684 | 9,484 |
Comprehensive income attributable to Huami Corporation | 84,624 | 589,136 | 415,087 | 173,991 |
Parent Company | ||||
Net income | 82,622 | 575,196 | 340,046 | 167,682 |
Other comprehensive income, net of tax | ||||
Foreign currency translation adjustment | 2,002 | 13,940 | 75,041 | (3,175) |
Unrealized gain on available-for-sale investments and others, (net of tax effect of nil, RMB 1,554 and nil for years ended December 31, 2016, 2017 and 2018, respectively) | 9,484 | |||
Comprehensive income attributable to Huami Corporation | $ 84,624 | ¥ 589,136 | ¥ 415,087 | ¥ 173,991 |
FINANCIAL STATEMENT SCHEDULE _6
FINANCIAL STATEMENT SCHEDULE I CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY - STATEMENTS OF COMPREHENSIVE INCOME (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Unrealized gain on available-for-sale investments and others, tax effect | ¥ 620 | ¥ 2,250 | ¥ 1,554 |
Parent Company | |||
Unrealized gain on available-for-sale investments and others, tax effect | ¥ 0 | ¥ 0 | ¥ 1,554 |
FINANCIAL STATEMENT SCHEDULE _7
FINANCIAL STATEMENT SCHEDULE I CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY - STATEMENTS OF CASH FLOW (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Cash Flow from Operating Activities | ||||
Net income | $ 82,622 | ¥ 575,196 | ¥ 340,046 | ¥ 167,682 |
Share-based compensation | 7,918 | 55,128 | 134,709 | 62,787 |
Changes in operating assets and liabilities | ||||
Prepaid expenses and other current assets | (4,660) | (32,444) | (5,748) | (32,985) |
Accrued expense and other current liabilities | 12,386 | 86,221 | 119,887 | 45,572 |
Amount due to a related party | 585 | 4,074 | 5,757 | (281) |
Cash Flow from Investing Activities | ||||
Amount due from related parties | (110,744) | (770,976) | (45,116) | (109,756) |
Purchase of term deposits | (385,028) | |||
Proceeds from maturity of term deposits | 13,929 | 96,969 | 288,771 | |
Proceeds received from loans provided to third-parties | 973 | 6,772 | 5,578 | 1,000 |
Cash Flow from Financing Activities | ||||
Net proceeds from initial public offering | 657,062 | |||
Exercise of share options and restricted shares | 134 | 933 | 3,486 | 89 |
Payment for repurchase of ordinary shares | (8,157) | |||
Net proceeds from the secondary offering | 7,069 | 49,214 | ||
Deemed dividend to shareholders | (652) | (4,538) | ||
Cash and cash equivalents at beginning of the year | 1,441,802 | |||
Cash and cash equivalents at end of the year | 259,002 | 1,803,117 | 1,441,802 | |
Parent Company | ||||
Cash Flow from Operating Activities | ||||
Net income | 82,622 | 575,196 | 340,046 | 167,682 |
Equity in earnings of subsidiaries | (91,073) | (634,043) | (484,594) | (232,564) |
Share-based compensation | 7,918 | 55,128 | 134,709 | 62,787 |
Changes in operating assets and liabilities | ||||
Prepaid expenses and other current assets | 341 | 2,373 | 8,625 | (14,284) |
Accrued expense and other current liabilities | (637) | (4,436) | (5,507) | 10,043 |
Amount due to a related party | 721 | 5,018 | 4,489 | (8,500) |
Net Cash provided by (used in) Operating Activities | (108) | (764) | (2,232) | (14,836) |
Cash Flow from Investing Activities | ||||
Amount due from related parties | (31,427) | (218,791) | (196,158) | 21,646 |
Investment in subsidiaries | 325 | 2,263 | (10,056) | (9,772) |
Purchase of term deposits | (385,028) | |||
Proceeds from maturity of term deposits | 13,929 | 96,969 | 288,771 | |
Proceeds received from loans provided to third-parties | 145 | 1,007 | 3,578 | |
Loans provided to third party | (2,406) | |||
Net Cash (used in) provided by Investing Activities | (17,028) | (118,552) | (301,299) | 11,874 |
Cash Flow from Financing Activities | ||||
Net proceeds from initial public offering | 657,062 | |||
Exercise of share options and restricted shares | 134 | 933 | 3,486 | 89 |
Payment for repurchase of ordinary shares | (8,157) | |||
Net proceeds from the secondary offering | 7,069 | 49,214 | ||
Deemed dividend to shareholders | (652) | (4,538) | ||
Net Cash provided by Financing Activities | 6,551 | 45,609 | 652,391 | 89 |
Net decrease in cash and cash equivalent | (10,585) | (73,707) | 348,860 | (2,873) |
Effect of exchange rate changes | 2,002 | 13,940 | 75,041 | (3,175) |
Cash and cash equivalents at beginning of the year | 65,839 | 458,371 | 34,470 | 40,518 |
Cash and cash equivalents at end of the year | $ 57,256 | ¥ 398,604 | ¥ 458,371 | ¥ 34,470 |
FINANCIAL STATEMENT SCHEDULE _8
FINANCIAL STATEMENT SCHEDULE I CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY - CONVENIENCE TRANSLATION - Additional Information (Details) | Dec. 31, 2019¥ / $ |
Foreign currency exchange rate | 6.9618 |
Parent Company | |
Foreign currency exchange rate | 6.9618 |