Q3 2019 Earnings Call
Hello, Ladies and gentlemen, thank you for studying buying for New York Incorporated's third quarter 29, <unk> earnings Conference call. At this time all participants are in listen only mode. Today's conference call is being recorded I was out turned to go over to your host Ms. Jade, We associate Vice President.
Of Investor Relations if the company. Please go ahead Jade.
Thank anything.
Good evening and good morning, everyone Welcome Neil third quarter 2009, <unk> earnings Conference call.
Any financial and without or property in a press release RT today.
On a company I Arvind site on today's call may have meter we named <unk>.
Yeah sure about the board and Chief Executive Officer.
Mr., Stephen Fowle, Chief Financial Officer, and meet our setting.
A final.
Before we continue Pete can maybe right reminding that today's discussion will contain forward looking statements made under the safe Harbor provision that you and private Securities Litigation Reform Act of 1995.
Forward looking statements involve inherent risks and uncertainties as such the Companys actual results may be materially different from that view.
Okay.
Further information regarding risks and uncertainties, including a fine on the company with the electric purity and Exchange Commission.
The company does not assume any obligation to update any forward looking statements, except as required under applicable.
Please also note that news earnings press release, and this conference call include discussion audited GAAP financial information as well as audience Nongaap financial measures.
Please refer to news press release, which contain a country consolidation of the audio <unk> non-GAAP measures to comparable GAAP measures.
With that I'll turn the call if our CEO winning.
Please go ahead.
Oh, Okay. Yeah go ahead of time, that's intended to about doing roughly.
Hello, everyone and thank you for joining our call today.
These union differently do well I, even Joe Pooler switch and she about you'll sit still young yes, Papa USAID, yes, Bob Yes, Neil So, yes, you do darla pad and essentially.
Total units you take out in the deal.
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In the third quarter 2019, we delivered a total of 4000 to 700 and a 99 gets eight and yet the fix a vehicle [noise].
Increasing 35% from the second [noise].
Exceeding [noise].
Guidance, Brent minus 9%, we delivered 5000 under 50 pooled vehicles during October and November we estimate that the total do every all for Q4 well reach over 8000.
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The auto industry, it's still experiencing substantial stopped and it's under the easy sector, particularly dropped over 35% year on year in south and the second half off in 2019 after the easy subsidies reduce significantly.
The last over order backlog growth has accelerated that seem to September and this stressing order flow continued in the fourth quarter. The growth has been underpinned by three key factors strong competitive moves off already has a sick and its quality performance on the pricing.
Strong support from our user community and over sounds network expansion through the efficient at Neal spaces, I will discuss basis three factors a separate them next senior Baguette third party easier to go assuming when she took Yangon doldrums, well I'd say, it's slow compared to put us into the downturn.
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In August Neil ranked as the highest in new vehicle quality, among all brands and JD powers 2019, New energy vehicle experience index or study in December overt yet to six was selected by the most respected industry accident Chinese automotive industry.
To receive the screen Grant award as car of the year fourth achievements in innovation mobility and industry contribution. This demonstrates the strong recognition of a friend quality underperformance by users and industry.
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Ladies and gents with them the.
We would not have achieved to offer strong cells with result.
Without the support from of her passion night user community over vision has always been to shape. It joyful lifestyle by offering premiums Mark electric vehicles with the fact user experience since inception, we have been working through we can't wait to Butte, a vibrant user entered.
Right.
<unk> user community is thriving and a growing we now have users in 296, the cities across China, and 45% off new orders in 2019 were referred to by existing users you have been com won more than just a part of our unique brand identification.
But is emerging as a instrumental part of a new development.
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Actually the vibrancy and the support of over user enterprise has been remarkable and reaches Bob Young word of mouth referrals. As an example in the recent mountains acting on their own or quote our users have launched a promotional campaigns around China in support of.
Neil in 2019 more than 1000 to 300 user volunteers have dedicated their time voluntarily in your house newspaper Auto show an event to sharing their first hand experience to make more people understand new.
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She was all your questions I'll go back without attention figures since you guys, social sungard as well right for you.
All right because we can border when I can just tissue quota tissue product shows a will go to put you comfort, but that being important don't see later sold you heard you can give you some will continue to showing.
Intends off of South network expansion by the end of this year will open 48, new spaces and 22, new houses in 52 cities.
You know spaces, we're able to cost effectively and to meaningfully increase the number of sounds point in the market, which in turn helps drive new order.
This important binge eighties allows more potential users to see touch and feel over vehicles and truly enjoyed the superior driving experience over yes, eight and he has a six offer <unk>. Most importantly potential users. They can't compare first hand, the performance and the smart features of over.
Vehicles with those of the news a comparative models. The favorable comparison result, often leads to a new purchase and this has been a contributing four to two that so gains in recent months, we will continue strengthening our reseller network through adding more new spaces to expand over.
Coverage and improving the efficiency offer new spaces with more data and experience gained through other operations.
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So you mentioned that doesn't mean.
On December 28.
We how are we held to the third new today under the thing believing pattern in Shenzhen over 7300, Aneel users and the guest attended also tens of millions of people participated or through 55 parallel sessions at all online broadcast new users.
Deeply involved in the planning directing and execution offer new day to southern 19th showing passionate a rally powered that add code with the new its vision to be a user enterprise.
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Something up actually as a service or myself I shouldn't say the legitimately wed like to talk about equal to the leader contingency that youre quintuple should shift.
During the Neo today, we also announced a 100 kilowatt hour battery pack and a 20 kilowatt DC power at home all new models can upgrade to 100 kilowatt hour Terawatt hour battery pack, which will significantly increase the ranch performance of our product line since the launch of.
But 70 Terawatt hours battery pack in 2018.
Oh, the same size of our battery capacity has increased by 40% new makes a continuous investment on our swap technology and owns more than 1200 patients on the vehicle battery pack power swap and cloud that power swap technology enables user.
To continuously upgrade the battery and empowers meal to truly offered batteries as a service at the time goes more and more people were recognized the advantages of a news a unique under competitive power swap system.
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Additionally, we unveiled news a third production model that you see six a smart premium electric co pay as you deem which has a very spotty look and feel for young and a trendy astutely sense. It goes from there was 100 Carol meters per hour just 4.72nd.
And enjoys an easy range of up to 615 kilometers. We have also launched at the all new yes, eight a. both up to 188 improvement 4.9 seconds zero to 100 kilometer per hour acceleration and significantly improved the.
It is a range or to up to 580 kilometers, we believe that the all new yes, eight well have a much stronger competitiveness in the market.
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Would you want your team you find a young who came from that Neil pilot.
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Neil Palette news advanced driver assistance system becomes a full fledged more than 20 features and now available aneel pallet, including traffic Jane palette and highway pilot. It offers a more relaxing and the safer driving experience to date about.
Out half off of users have activated in Europe , how it.
In November 4th we announced over a strategic cooperation with.
Well by eyes to develop level for autonomous driving telcos teams from both sides have already started working together to explore the fastest pathways to leverage offer respective strengths to drop at the future product together.
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Sellaband acid and Sun since you're having jump you saw nickens automobile.
I would like to now give you an update on our cost control measures during the quarter. We've continued to to implement comprehensive cost control measures across the organization to improve operational efficiency at the end of December over global headcount will be less than 7000.
500, as a result of over cost reduction measures over third quarter SGN eight decreased 18.1% compared with the second quarter, even as others. So team is now trying to realizing higher levels of cells. Additionally, over R&D expenses decreased to 20.
1.3%.
Lean operations, so well continue to be over focus.
So where you Stephen full wafer size serious about who will assume then CFO , Steve and that's how we'll convenient will tell you until her cheese hurt and the mute your phone put a junior hopefully showing them how to chat room, where we're going to hold the cotton product and that just.
Finally, please.
Finally, I'm delighted to warmly welcome Mr. Steven some.
As our new Chief Financial Officer effective November 18th 2019, we look forward to working races, Steven and anticipate that he's a strong financial and operational experience impressive track record equity research and to reach automotive her background well.
For aid to greater value for the company and over shareholders Senate Dibenzoates that Paul differently to the highway yet.
With that please.
I will now turn the call over to Stephen to provides the financial details for the quarter. Stephen. Please go ahead.
Given.
Well I'll go over some of our financial results for Q3 2019 to be mindful of the length of this call.
Jeff financial highlights here, Andrew encourage listeners to refer to our earnings press release, which is posted online for additional details.
Our total revenue in Q3 2019 were 1.8 really RMB.
Represent an increase of 21.8% from Q2 2019.
Our total revenues of.
Of two parts.
Core sales and other sales.
No sales this quarter was 1.7, beyondbio, representing an increase of 22.4% from Q2 2019.
Create new vehicle sales over last quarter was mainly due to the increase.
Fixed volume, resulting fund expansion of our built at work.
As we continued at Neal spaces and increase the referral rate how existing users.
Other fields in this quarter were 103.4 million.
Representing an increase of like 9% for last quarter.
The decrease the other field was mainly attributed to the sales increase in Cogs in pounds, which was in line with improvement of Green host sales.
Cost of the all in this quarter was 2.1 beyond.
We present increase of 2.3% for last quarter.
Increasing cost of sales.
Meaning due to the increased sales and offset but including Q2 accrued recall costs.
In relation to accomplish voluntary coal.
4803, new vehicles long on June 27, 2019.
Gross margin this quarter was back to top 1% Compella was back to sort of 3.4% in last quarter.
More specifically.
We commodities in this quarter was negative 6.8%.
Well the waste active.
On the 4.1% in last quarter.
Improved recall margin was mainly due to the recall costs in last quarter as mentioned.
R&D expenses in this quarter were one point hopefully RMB.
Representing a decrease of 21.3%.
Last quarter.
Regarding the unchanged compared with Q3 2018.
Including non-GAAP share based compensation expenses R&D expenses were one point open on be representing a decrease of 21.7% from Q2 2019.
Ladies of 4.9% for Q3 2018.
The decrease in R&D expenses over last quarter.
Primarily attributed to that testing expenses incurred.
Third quarter operating year 60, this prolonged in June .
Yes, Jim expenses in this quarter were 1.2 billion RMP.
Present, a decrease of 18.1% from Q2 2019.
Decrease all 30.3% from Q3 2019 18.
Excluding noncash share based compensation expenses, that's Gen X transit.
1.1 been RMB, representing a decrease of 17.4% from Q2 2019.
On a decrease of 15.6%.
On Q3 2018.
With the Crazy extra expenses.
Last quarter.
The primarily driven by the companies of all cost saving measures in marketing and other supporting functions.
Loss from operations in this quarter was 2.4 biamby represent a decrease of 24.3%.
Q2 2019.
The decrease.
14.3% from Q3 2018.
Excluding share based compensation expenses.
non-GAAP adjusted loss from operations was 2.3 billion RMB, representing a decrease of 25.
4% from Q2 2019.
The craze of 1.6% from Q3 2018.
Sure based compensation expenses in this quarter were 70.4 minute.
We are presenting a decrease of 23.6% from Q2 2.9 team and a decrease of 83.7% from Q3 2018.
The decrease is share based compensation expenses over last quarter.
Was primarily due to this part of the share based compensation expenses that are recognized you within the Ochsner Richard Yes.
Our net loss was too far beyond being in Q3 2019.
Representing a decrease of 3.3% from Q2 2019.
The decrease of 1.3% from Q3 2018.
Excluding share based compensation expenses.
Adjusted non-GAAP net loss was to put fog in RMB in Q3, 2019, representing a decrease of 23.2% from Q2 2019.
An increase of 3.1% from Q3 2018.
Let loss attributable to Neos autumnal shareholders in Q3 2019.
2.6 million RMP.
Present, a decrease of 2.9% from Q2 two stock mining.
The decrease of 73.8% from Q3 2018.
Excluding share based compensation expenses.
Accretion on redeemable non controlling interests to redemption value.
Adjusted net loss attributable to New York shut ordinary shareholders, a long GAAP basis was 2.5 billion Palm Beach.
Basic and diluted loss per 80 as in Q3 2019.
For both 2.48 R&D.
Oh for the pod sense.
Excluding share based compensation expenses and accretion on redeemable non controlling interests to redemption value.
non-GAAP adjusted basic and diluted net loss for Mds for both 2.8, RMB all 33 cents.
Our balance all cash and cash equivalents restricted cash and short term investment was 2.1 put opening RMB as of September stock is to stop 19th.
And now for August Aldo.
But I mentioned for the fourth quarter two some mines.
The public sector.
And we've always to be over 8000 vehicles.
We are presenting increase of approximately 67% from Q3 2019.
Lets come all six patch fourth quarter total revenues to be approximately 2.8 spin on b.
This whatever it is an increase of approximately 53% from Q3 2019.
Before we started Q and recession overlap to give you a thought that update about financing project.
We have made significant positive progress.
It's been I think project.
However, the project as the ongoing.
And well not at Liberty to disclose any confidential information at this point.
Therefore during today's call, we understand that with a lot be able to disclose any specific information or answer any questions regarding the financing projects.
Where do we what is called further information.
The project reach a stage that was subject to our this cold obligation.
Well I'll turn the call over operator to protect our current a session.
Thank you ladies and gentlemen, we will now begin to question answer session. If you wish to ask questions. Please press star one on your telephone and wait for your need to be a downs. If you wish to cancel your requests please press the pound or heskey.
For the benefit of all participants on today's call. Please limit yourself to question said, if you have additional questions. Please reenter the queue.
Okay.
Your first question is from been one from credit Suisse. Please go ahead.
She company into high so we will now LNG on T. of engine in Jakarta, Indonesia that on the San Sebastian It sooner. He may two months, we entered our name additional you one China tuition leadership, so to your military essentially module shipments how about on me some should soon I see about how the Shanghai.
The first question.
CP issuing im what's the progress CB and do not too many consumer number three quarterly results post not just go to remember full quarter, if I think.
Thank you finished.
[laughter] feel when can you just wondering Nick.
So just seems to shut Sonic again, something we can.
If I wonder how much identical Sheila.
The European continent, social digital concessions to hot summer domestic conclusions biomass facility.
Jenny and R&D costs going forward.
[noise] [noise] Sidney I won't be yeah, okay. Thank you.
First I would start with the CP question.
As everyone knows and Tennessee and William.
Has signed contract rates.
Neil too so for 200 million gusto not phebe.
In third quarter condensate be has already been closed so the 100 million gets donor from Tencent is already.
In our Q3 report.
And also 90 booked for many years store numbers received from winning the red mud pump in the U.S. donors are being processed and the transactions were close soon.
Perhaps other reminder, the key CB terms.
Investor could be could find them at announcement on September 15 Fips.
Let's let me move onto the second question of Mommy's about their sustainability and our cost contributing.
Efforts.
Yes, yes, right, we have done a lot of efforts to for cost savings.
We are in the process of financing paralyzing, our twotwenty budget.
We expect the R&D efficiency to significantly improve.
They aren't expenses to be further reduced in 2020 .
We will share more information in our Q4 earnings call.
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So intense after the headcount.
Starting from this year, we have already initiated mining operation Andrew said to make sure. We can improve the efficiency, we did some layoffs and the restructuring our phone for organizations at the beginning of this year, we have around 9000, and they're not hunker people, but.
By the end up this year. We believe we can conclude had completing 7500 some of them are now in the legal process, but we believe it by the end of this year. These numbers should be lower than the 7009 to 500, we think that this is going to be beneficial to our broken out for the.
Our next year and at the beginning I have also mentioned that lean operation. It's just a refocus entities will continue to build refocusing the future value I wish I am sort us. So Joe you lived through digital I'm going to also comes with somebody that's cool for human Sony Namal nuclear bonuses. So they go to the juggle single can go sell either.
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[noise]. Your next question is from David Chan from Morgan Stanley . Please go ahead.
Hi.
Thanks for taking time to host it call.
Just two quick question from ISI.
First question, it's about a sales for the Intel Kniffin next year.
A quarter is out there to now, yes, and Jeff touching arty.
So just want to.
Get your thoughts about evolving here is for next year, because our year six gen patches to solve they sell since holiday this year.
Because of the combative backend success, which had a strategy.
But the for next year, what Weve tried to afraid of all that upside.
Because I think the competition in the market, we're catching more intensive.
Meantime, saying were going to launch has seen night I, usually 600 involvement of could pay in general is smaller than that of four door FCB and tower, yes, eight just by the rest an upgrade I think all at the market is relatively nature.
Second question is about the.
The channel strategy.
Because he just share.
Following target for nearly story newer space by end of this years, so if there's any target.
For our channels to expansion for 2020 , and what we've been more reasonable.
Headcount.
To support a high Def SLS network. So what do you go into Shunshun wage.
Just share menu on this summer tentwenty to.
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I would like to take your questions Stein from September although the market is still quite challenging and soft but over order backlog for the yes, eight and use it six has been ramping up.
In the past a two month.
Production orders. It every day can reach over 400 and this trend has been increasing if you read the news as you can see that we have already so all that show cards. So we believe this woman thing going to continue in the future not a woman. She is it than we did I kind of.
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Oh speaking, we believe offered part accept positioning isn't quite right. Although the market is quite dynamic in the path to corridor, we have missing some competitive modules for example out in E Com makes it easy QC.
They haven't really the their price and that they started to sell cars in the kind of market, but after the users compare offer products and together with their project normally they will buy other products. The kids other products, it's more competitive compare with those models.
Especially in over specific market segment that is around that 300 to 400000 studies that that segment for the year six Andy is eight literally in the mid sized Supreme and SMB market, we are quite competitive because.
We are ranking after the top 10 this is the including the I see an easy.
We believe in the future they users well things already a six cents I guess are the right choices for they wanted by a car pricing around that 300 to 400000 range.
Overpowers swap technologies and offer superior services, and we can bring the word of mouth in the markets and the order situation is actually much better than our expectation, we think a basic great Salisbury Saudis because the other part dr. competitiveness and all that great service.
They can how about two when the reputation in the market.
For the next year, just south of where we're quite confident about a year to fix for example in Beijing and Shanghai, If you want to buy a card that either meet size. It's.
Around that 300000 due to 400000 right [noise].
Oh, yes, the six they've already ranked at the top five so that is why were quite comprehensive peace itself at the moment things going to continue for the yes. It six.
Oh, Yes AIDS that is the all new yes, either what started its livery and around April next year.
Then on you, yes, eight has significantly improved to the range and we have already boost up to 188 improvement I'm. The only thing yes eight.
They use expectation for an owner you say is actually quite high and that is why would leave it that you guess age will also chief if I could go to south performance.
Right now currently yes.
We're also doing very good in the market.
You know that the we have already from the current USAID and that we have a no inventory left.
We believe that starting from next year that that was offered the U.S. eight well also sorry.
If you look at a specific a market segment for example to five and the GE out he model X Overperformance intelligence and to the smart features as well as over seven to our more compelling I'm here with those friends.
Right now has the movies poverty easy fixes that is the new smart to pay as you V. The feedback is very good fronda markets and right now I cannot share with you about a specific orders we have received.
But the of office leasing is actually quite good we will start the delivery of 86 in September next year. So the southeast it takes its not going to significantly impacted the overall it sounds number for the next year.
I was speaking we are quite confident about.
I can't say down the easy fixing their specific a market Sacramento respectively.
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Lung, who like the woman cigarettes, I am from William Kobe volume quarters. It appears yet and I'm going to go can go sodas, you'll uncontrolled LDL woman 70 Thunder hydrous on them to go shows along with a quota.
In terms of stem cells. This strategy, we focus on three aspects.
The first one answer to continuously improves on that project and as I said. The second one is that was like a to make sure over users can be offered brand ambassador and a we can improve their south number ways.
That doesn't have the third one is it to continuously expand ourselves network.
So this does not work for them in a home kindler Neal space certainly occur.
Thank you Michel sort of two minutes volume, although we continue until fourth in down a plus our new spaces numbers to hold an apartment easy last quarter. So a mill space or the cause on one of the fees on both sell the reason quarter I'm sure. Some union of Oh woman settlement you saw no move because most of the Chengyun newbuilds.
Indeed, so from a new house, John Neale space, you want them go down by Telco. Your Internet continue lesions of she's out some you know I'm, hoping that the sop to also be food water to good disease. So from an easier easier time for the full guy focal easier trigger.
To that seem to find attitude Asia concertos who's the forgot.
With me and said that don't tend to put us in Virginia, we don't sort us a meal space couldn't see the push into the thing down bully pulpit orders in galvanizing line.
Oh, no Neil space, the higher Youre familiar partner. So no one is a yield and session loan growth Sigurdson because I'm a show is a fifth and gold the.
So it's a formula quota we publish into the development example.
Our mission that its reasons I don't I chose Lukas into the all New York, who hold it sounds good.
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New space.
Oh significantly help resolve itself.
The future right now we have been working with sovereign yields based partners to set up at the new spaces and improve the coverage over off over South point.
Model than aerospace is quite efficient.
We believe by the end up for next year, we should be able to halfway around the 200, a new houses and then you spaces or together because at the end up this year, we have already got over 70, New houses and then you face combined with an increased amount of the new spaces or we can cover that tier.
Yes, two or three cents other remote places.
We have already accumulated many experiences intense up the newspaper operations.
So we think it this is not going to significantly affect over headcount because it will heavily rely on the partners to work together with us. Although we will have over okay. So I'm excited to support other partners in the news basis right now we have to users into onto the Nike 60 cities with their 10 no expansions.
We believe over its out there for the next or it's going to be very solid.
Sure. Thank you.
Your next question is from the ones from C or you see see please go ahead.
Even in a Steven or William energies digitally speaking of phones. This issue congratulations on students enrolled at so.
And the vehicle delivers units a quarter, that's a really news I'm a record high.
Stephen is actually a answered parcel my questions and I have two follow ups on the first of all beat us even just give a garden. So 2000 units University was quarter.
The higher quarter over quarter increase and what we see vector factors.
Ah that drives it shows up and all the specs are sustainable from the quantities and would that be possible they could reduce backlog or older.
Right now and the second question will be about that per store delivers it was met or we don't just mentioned we have now a rough 70 spaces.
Mm Hmm.
Fortunately, because well be sold per store uppermost in first quarter.
Yes. This consistent doesn't mean that for a 200, new spaces next year they'll be able to deliberate installing these laws promos. Thank you I would actually my question your willingness to your Finjan.
And the ones, who don't go fall off the ones you wouldn't you sure.
Nuances that you do get changed Botching young Haji good people because you just got to financial goal beholden to the to cheat again she booking.
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Juggling humanistic one well thank you and the Trentwood me understand that she should say Oh, so people how to watch into what else tool, but that I mentioned at the end for sure deleveraging social let's take a surgical procedure room in yen youre down by doing what they thought it would you be dormant national I should benefit.
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And with how does how many who I know you've kind of how to the nearer to the time to know how are you really have a feed on China. So you should one woman who have used to do a deal can you need to ship Hello.
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Thanks for question at the beginning I have already mentioned the sickest starting from the September of the order and the delivery have thing witnessing very strong momentum they face mining two to three factors. The first one answer that competitiveness off all their product on the same answer the second one as a.
Word of mouth enter the user refer over the third one it's 10000 network expansion among all they said three factors that product competitiveness is a one off the most important factor.
As you can see new has already established at the premium brands successfully in the mines in the mainstream premium market that is a around a 300002 to 500000 price range and you can see that to the premium market players that have already launched as some.
Products for example, last year Jaguar launch there I pay Saturdays here, you see E com, but after they released their product that we can see the prices around the three or 600 to 700000 after compared their products together with other products and normally they use it to both think offer product they smoke.
Comparative it that's why they choose and new products.
Anyway to sort of core or whatever you can yoga tenda hazards with lower than the 200000 that can see randecker.
Jinyan the cigarettes have onion to the didn't put a due solely on shutdown pencil woman could you kind of decided on a proven throughout this year de blended in onto it was that.
It's going to you are you put your 240 hotels hedges on humans are identified through our your hidden Valley Ali doesn't do a country food or the Sucampo whoever will have the Tesla has a better initiates it.
Turning to sort of pipe to see that this is how sources on single its ammonia in the tenants you could it took a joan throughout 2000 1 billion, who got a year that we don't start with him in time and she's or we can now.
So you said there was a moment you can centralizing some attention as you read as this is how I also saw USANA to maximize it reduces our analysis on Johnson, that's having spent around yeah no woman in ways that suddenly being woman steel to go the change in 2000, Incent goods or this is only meager something holiday guppies, either see our way.
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They did solution, we see a woman, who said that I tell them how to fit our machines in the two sure no particular sold on a 10000 push also the schuessler woman's to figure out your season to take a two to wait for the quarter switching able to put that most convenient egotism bank, who does all that I'd sum up to solve was beam.
Okay, and our Youre Cook, yet your teams and need attempts in Tula sneaker since the Bauma, how the bulk of Tesla told to let John Kuzdal Armando Senator Gautam with all your big Blue Shelby, though to somebody else Appeasing motor Sionko woman, yet see how one simple Suzanne sound waves appetite to that's lower metro where someone has appealed since.
Neither to adhere puzzling to me on either I'm going to trigger shipments.
Please somebody's home health systems engine.
[noise] I think that there's a very important trend we should pay attention to starting from the second quarter. After this year. They easy thousand has declined because of the subsidy reduction this happens to choose those are commercial vehicles.
And to the lower and easy, but for the test that and neo and other brands focusing on the consumer market over cells that woman thing is actually quite good. We believe it the users are quite advocated a boundaries and I see east and photos users.
Are they prefer easy.
That is why we believe we should have a reasonable share for the meat and the large size.
To be segment that is around 300000 due to 400000 market segment.
That segment should have a run.
Well around the 1 million unit valliant ends up themselves.
In the last of Monsees I understand that there are many concerns about the news operations that you can see Neil is developing a very healthy way and that this is mainly because of her product. The competitiveness enter the word of mouth from of users and the strong execution from lover teams.
That is why we are quite confident about our future south and the words believe we can keep and even increase it they supplementing the future next year intends after that competition landscape I don't actually see any very competitive pardon accessed from BMW Audi machines and has that.
Right now people are now getting familiar with it that has them out of three made in China and the if you compare that model three was off airport active we believe our contact is still very competitive and we don't actually <unk> belong to the same segment or with the test My mother three.
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Moving to tell you go near space that angle quota lengthened bottom tier two and a big ones are going into two minutes ago sold on switching condition, where you know a woman or will you can do it because she is the certainly say mean suited union to guardians of the title for the natural as you can see that sodium.
That's now you mentioned about the sell to pursue older sounds it for the new space and then you how should we think are we cannot simply evaluations that you factor for the annual spaces are now how safe by saying, how many south we kind of kids in wants to because I haven't mentioned that 45% off.
The new order is actually coming from our existing users that Neil space. It should be quite good for offer south improvement, especially for those places without a new houses.
We cannot simply evaluated that number after that so saying in those in new spaces in my Dream, there's kind of a calculation because for most often you spaces that we opened in the fourth quarter. So it means that we need to accumulate more data to understand the they effectiveness offer their new space.
Yes.
In a you tend to have the China market actually is a quite thick. So for a lot of it usually they may have never setting a new port access or even using the pattern. So that is why we think a newspaper should be quite good facet to promote other products in those places and people can actually touched on a few other part.
But after we accumulate mortality experience intended for the new space operation, we can share more information with you.
[noise]. Thank you.
Okay.
Your next question is from phase funds from Goldman Sachs. Your line is open.
Hi, Tom Whelan Alfonzo. Thanks for the opportunity you are eight Saudi Bald Guy that's how many yes eight two we have for December and also moving into 2020, how do we think about the normalized run rate for yes age.
Yes, it's on battery price or what's the outlook. That's thirdly, if you can comment on the cash outflow. So is there a quarterly also target the CEO and she I've always tried to manage it appears as towards the 2 billion outflow for quarter three theater, B, which you would think harder about cutting cost. Thank you.
Okay.
Sure well paying jobs.
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Got it could be do you see well me a husband goes in kind of chooses cigarette yes, a ton of on a CRO Q3, something today figure demand the resumption to that to someone else not me and the Honda, Yes, It a who your service because of job we shouldn't see on assumptions half with what he thought you could you know you would seem to me that down.
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South Africa, Yes, eight is estimated to be around 1300 and to four intersects issue the over 6000 to 700.
Over the years AIDS compare with the third quarter the cells in the fourth quarter has been picking up and that we are very happy to see that yet.
[noise] gaining momentum in the markets.
Starting from April next year were going to Delever. The all new yes, eight and Lisa Yes, eight is going to be well positioned in the market is to bring over users.
Okay. So based on thank you for your constraints and yes, I think lookup investors.
However, there are a closer look at our cash flow.
First of course really to take every meal efforts to for cost savings not our pace homework.
But if we move obviously for an automaker.
The best way to have a good cash flow is to sell more costs. So although the cash is tight but thanks to our John all done delivery momentum.
The cash flow Bonfils actually is very healthy.
This is very from the fundamentals of our business.
And of course, if it would have been our balance sheet.
We will need additional capital onto it which is positive cash flow.
We will have the market as I just said when we close the cash is project.
In and.
I would say.
With that cannot support from those ongoing financing projects for the sales trends and cost measures.
We believe the company will have to timber development and operations. So in short first savvy second financing served.
Various John sales.
Thank you.
That's great. Thank you.
We have our next question from all go from you B.S. Please go ahead.
Yeah, Hi, Thanks for taking my question I have two questions.
First one is up I saw the conference price environments.
What.
[noise] Qatari T.D. afraid levels do we expect.
Positive fall cost March on vehicles cells onto my second question is just to double check caught Betsy honesty by end of September already reflected sometimes some 200 billion.
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Oh, sorry, I compared to the additional for Q2 Q on Q3, I do see really they are increasingly fee increase off on long time.
You did hear so long term borrowings.
How should I will still declines or just want to double check.
Honestly, it's already reflected state.
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Thanks folks had strength intense effort a gross margins. This has always been over imports into tasca for 2020.
We need to consider they said from three affect the first find yourselves and the pricing. The second one is it about it up on cost reduction, especially the battery cost and that the next winds up out of our product portfolio.
By focusing on those are three aspects or we can.
Take some measures to improve the gross margin.
I think it's for the next year, we should be able to achieve a positive gross margin for the whole here, but if you ask about specific quarter over the specific amounts so were not really sure at this moment, because we need to either they said comprehensively regarding the cells and the battery cost reduction the phone cost reduction and.
The efficiency improvement.
Oh scenario, if and when he said.
And talking so question in terms of the 100 million your stoner Phebe Frontends and if you review our allotment on September fares have treat it has two tranches first 100 U.S., meaning just on a full 360 day. So it's a short term.
Borrowing so we booked 50, meaning your stoner our short term borrowings and also they are the flight 50.
Meaning your stoner.
He is our three year therapy. So we booked that 15 million gets donor our long term borrowings.
Yes, Thanks Paul.
Oh.
Thanks.
Thank you.
We don't have any other questions I suffered a little bit presenters. Please continue.
[noise], Okay. So I. Thank you everyone for attending our conference call. This quarter I mean look forward to see you and a hearing from you next quarter and happy new year happy New year, having you yeah everywhere.
I'm quite a lot.
Ladies and gentlemen that does conclude their call for today. Thank you for participating you may all disconnect.