Huami, a wearable high-tech device maker that is part of Xiaomi’s ecosystem, may have mixed feelings about its second-quarter results which showed that the company enjoyed modest growth in revenue and shipments but suffered a dramatic drop in profits.

For the three months through June, Huami generated 1.1 billion yuan ($161 million) in revenue, representing a year-on-year increase of 9.5%, and shipped 8.9 million wearable products in total, including smart watches, smart bands and ear buds, compared with 8.3 million shipments in the same period in 2019, according to the company’s quarterly earnings report.

Yet the figure for Huami’s quarterly net profits plummeted 85% year-on-year to 13.3 million yuan, which could be blamed on significant growth in expenses. During the quarter, Huami’s spending on marketing and R&D amounted to 71.3 million yuan and 117.2 million yuan, up 76.6% and 25% year-on-year, respectively, the financial report showed.

However, there was some good news for Huami. The firm announced the second generation of its proprietary artificial intelligence smart device chip, the Huangshan 2, which will power new health-focused products set to hit the market in the first quarter of 2021.

Contact reporter Ding Yi (yiding@caixin.com)

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