Q2 2020 NIU Technologies Earnings Call
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Ladies and gentlemen, today's conference Cold is due to begin in the next three minutes on Sunday lunch and remain on music cold lead to continue just doesn't buy we think you PV.
Once again today's conference call is due to begin in the next three minutes.
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[music].
Good day, ladies and gentlemen, thank you for standing by and walk in the New technologies second quarter Twentytwenty earnings Conference call.
This time, all participant and listen only mode. Later, we will conduct a question answer session and instructions will follow at the time as a reminder, we're recording today's call. If you have any objections you may disconnect at the start.
Now I will turn the call over to Mr., Jason Young Investor Relations manager of newer technologies. This young. Please go ahead.
Thank you operator, Hello, everyone welcome to today's conference call.
Nicole Good result for the second quarter plenty plenty.
Absolutely.
The presentation infinite spreads.
I've been posted on you Investor Relations website.
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Please note today's discussion will contain forward looking statement made under the safe Harbor provisions of the United.
<unk> Litigation Reform Act.
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Forward looking statements involve.
Certain assumptions and other factors.
Actual results may be materially differ from.
Today.
Further information regarding <unk> Becker is included in the company public filing.
Okay and exchange Commission.
Company the have nots.
Obligations to update and it's all looking thing.
As required by law.
Let me personally I'm, just calling discussions of certain non-GAAP and as a matter the presently continue.
Non-GAAP financial measures and a reconciliation of GAAP non-GAAP and that result on the call beginning today.
Oh for young Li and see I bought them into Hardy job now, let me turn the call over to yet.
[noise] think season and thanks, everyone.
Today.
We know the recovery in the China market in Q2.
Mark I was still some of whom do affected back over 19.
Performance in Q2 hours.
Reached 160000 unit.
Increase of 61% year over year, the blue in the China market reached 255000 units an increase of 81% year over year, while international market reached 5000 units decreased by 62% due to the impact over 19.
Despite the decline in overseas markets you too.
Me very very positive about <unk> performance in the second.
At the market gradually recover from the cool nights and upgrade.
No Q2, we continue to be all her leadership, the urban mobility via new product real all branding and marketing activities and the retail expansion.
So first the whole Q2 has very busy quarter slots and launching new products.
As I mentioned in the previous earning call we lost our Q I too.
He said.
Boxing electric bicycle product for the China market in 2020.
Three of our 2016 signature and one model with the technology and complying with the China New regulation.
The problem was held onto for online live streaming bills at Talbot platform.
She is a huge success with three mailings.
Right.
The two has to be I keep selling product knowledge electric bicycle.
Great.
That makes 50.5% of our sales in Q2 and its position as our high end electric bicycle product.
We also introduced the items.
Matt model on July 16.
This is slightly smaller compared with that too, but also inherited the finally see lifestyle and series using the same technology platform.
Two.
Also apply all innovation lightweight materials and that reducing the weight and that traffic, which allowed us to spend the battery capacity to 40 April 26 hours, while being compliant with the new regulation.
Now with this new Bader compassion use that as the longer drive range 200 kilometer.
These that drive bridge for the entire electric bicycle industry.
Also the compact form factor and that is also very friendly people with old Heights.
That comes with four model was pricing ranging from 38 99 to 55 million <unk> RMB, representing an entry level product for them as.
To this was the price range from 45 million <unk> to 61 night.
No. Besides spending all N series with two new model and too and that we also said that our goal was series with three new model GE zero Gtwoe and upgraded G. III.
She is zero is an electric bicycle B. Riley <unk> entry level product of the goal series targeting the end market wouldn't to driving option at wouldn't and the 60 kilometers priced at 22 90 927 nine IR.
Gee.
The design style of the gold abuse, but more compact and more practical wouldn't beauty vaccines and Adam Beatty.
She's there what levels as the JV to June 18th campaign, with a presale warm up and outline livestream event.
During the Lightstream event, we received close to 4 million views that 2 million like some JB platform and the entire lumps campaign January the total sales oil up close to 17000 units.
Trading our capability to penetrate the maintenance electric bicycle market.
We also love GE to an awkward jeep three under the goal what years, HM well and the July 18, respectively.
You too, it's an electric bicycle product larger than a few zero, which will drive ridge options at 68 kilometers price that thirtys by 90 939 million I RMB.
No cheap three is a pretty electric motorcycle products from our last few years GC announcement targeting cities with no restriction on motorcycles.
Bigger either side and that was faster speed up to 60 kilometer power.
It is equipped with three battery options and with the price range from 40 299 to six in the four nine RMB.
No with GE zero, she was G. Two and three Oh, you mean achieved before spectrum coverage from entry level electric bicycle to electric motorcycle with price range from 20, 299, RMB 2.99, R&D meeting it.
Wide range of consumers demand.
In park over the years will help us to expand our market ridge to lower tier cities.
But besides that new products, we continue to enhance our brand awareness via user activity based viral marketing and the target within marketing.
User activity based marketing we had two very interesting event in Q2 for a new fans from Shanghai spent 261 days riding along the entire quarter of China with total distance of 30000 kilometers our aren't you know.
And scooter.
During the trip.
Then go through the snow Monkton, we'll cross that go be desert and the childless the extreme cold temperature of minus 41 degree Celsius in the North East China.
So the story was published on weight Watchers, though he assumed was picked up by old major media's across China. He has achieved 35 million view on social media and 10 class Ti media coverage with hundreds of article nations.
No second to celebrate a new first anniversary a new fan from Beijing actually set a new miniature model Optum 20000 meters above sea level into them go there with the hot air balloon and made a we law top trading Hardie beds.
But we also achieved 41 million views and then we'd see 19 and lifestyle the lead.
Both of those activities demonstrated strong goal of our user 12 bread and helped us to father build our brand awareness and the brand reputation of crossing that consumer base.
Third to promote the writing we also launched a no held that node right campaign together with traffic and administrative departments across 10 provinces that cities with weight articles that though he has a question will be do.
This kind of paying generated 24 million views crosses platforms.
No those little efforts, we continue to be as our own site I'm sure. We do platform that go in Faisel wouldn't go in quarterly views increased to 47 dealings in Q2, a 23% rule for Q1 and acquire so to 4.5 million views in Q2.
Versus only hundred 90000, you Q1.
No internationally, despite the impact of coking 19 bars, we continue to key opinion leaders to the new crude team upgraders well worth to mention as the Spanish key opinion leader post on you too.
It's pulled achieved 1.7 million viewers, making you a hot topic is thing.
And to father he has the user experience that he gave called new users, we launched a new social feature our.
Called my writing journey.
Allowing users to quickly create a lot of format pictures with writing fuel path to easily shared and we chat and within the App.
More than 15000 journey has been created an population our new App community.
We'll continue to add more functions to our app as a means to increase user engagement and view rent roll.
So a lot of very popular hip hop life competition show called three tenths of China was lunch on July 18, you.
It was expected to be want the hottest shows for the summer in China, where we'll have to feature I never tightening in the spend the final and the final during the show as well as the ultimate advertising campaigns and the tender win the show is that its final stage.
Estimate overall exposure over 200 million online and the 400 million views offline.
Not only this will provide brand awareness exposures. It will also help us to father. He has helped Brett images as a trending Brent leading the urban lifestyle.
Supported by the new products, the has customer engagement and brand awareness, we continue to expand our footprint through store expansions and new market and fees.
In China, New added 51 doors to solve them at 84 stores in Q2 with respect to accelerate a store opening pace in Q3 as a cover nike's situation recovered in China.
For the international market, we have increased our market coverage to 45 countries with three more at me South America.
Really the Dominican Republic, Peru, and Brazil will add an additional 40, a flagship on premium stores with total comes reaching 91 factor than previous doors versus 43 in Q1, despite the equivalent I can situation.
Now I'll turn to the cough over its hard to discuss our financial results Party.
[noise]. Thank you yeah, Hello, everyone. Our price release contains all the figures and the comparisons you need.
We have also have a little bit excel format of speakers to I buy side clearly they reference.
They review our financial performance keeping in mind that we're referring to the second quarter figures on that satellite and that all money trade secret RMP unless otherwise noted.
Our Q2 sales volume reached 160000 units increased by 61% year over year.
China sales would have increased by 81% I can result of Siemens recovering retail sales network expansion and new product launch.
Our China online sales, particularly worth highlighting online see it was continues to grow and accounted for 14% of total Q2 sales water compared with the 2% at the same period last year.
The key reason is that this year, we launched new products, such as to energy zeros through online platforms.
It's helped to mitigate the restriction from Cowen 19 for any peak offline Tibet and also offered a good opportunities for customers who are reluctant to go to offline stores.
International sales would have decreased by 82% due to divert impact from Cowen 19.
The lower international sales would have had a significant impacts on our Q2 financials.
For example in Q2, we had a lower ASP lower gross margin and also lower revenues from us as they start hot many of these line caused by the lower international sales.
We will discuss the impact in details later.
We also encourage you to keep in mind, what analyzing our financials.
Regarding product mix as we launched a new products I'm too she zero energy to model in the second quarter the product mix changed accordingly.
Then theories accounted for around 20% of total order.
Series, a convertible around 20%.
Are you serious accounted for 40% and the goal a series a convertible remaining 20% so.
The changes in the product mix effect to the other Q2 revenues than they had tea.
Total revenues increased by 21.6% to 645 million.
And with the guidance we provided earlier.
Revenues from scooters increased by 28% in total.
Auto Ridge, China market increased by 59% and international market decreased by 53%.
Our Q2 Scooter revenue was however negatively affected if I had a price discount we offer to do it and you put up a notch through E commerce platforms.
For example, we offered RMB 500, Fiftys comp, our new model cheese zero.
Each client because affected our revenue by approximately RMB 10 mini aggregate.
But it seems we offer the price discount we are able to save on sales and marketing spreads, which I will discuss later.
Revenues from a sensory spare parts and services decreased by 17% in total auto glitch, China market increased by 70%.
International market decreased by 70%.
The decline of international sales as Monday, due to lower spare parts sales to the sharing operators.
Here again, we encourage you to look out of China and international market. The separately forget about a picture of our business for this quarter.
Revenues for Scooter, Oh, a ASP decreased by 25%.
There are few key drivers for the decline.
First the lower proportion of scooter sales from international market.
The impact only at Ti is estimated to the 8.5%.
Second the lowest spare part sales from international market the impact on that he is it rounds of 6.5%.
Certainly the launch of low price model T. zero affected CST by around 6%.
The remaining footprint that as many due to change in production mix the other models.
He summary of the 25% E.S.P. declined 8.5% as due to the lower sales from international markets.
With the recovery of international market in the coming quarters. We expect this negative impact there will be much less going forward.
Gross margin was 23% 0.7 percentage points lower than this time last year.
The lower margin was mainly due to lower sales of scooter and a spare parts from international markets.
Not to be affected our marketing by around 5.5% in total.
However, what we are able to offsite majority of fashion active impact by cost savings on battery packs various components and warranty.
Our total operating expense excluding share based compensation were 82 million increased by 4 million of 4.6% year over year.
The increase was mainly caused by higher Ci and expense of 2 million for tax and the surcharge and a high R&D expense of five minute then they fall higher stuff costs.
Sales and marketing expenses, however decreased by three minutes.
Percentage of revenue the sales at American cents, excluding share based compensation was 6.6% compared with 8.7% in Q2 last year.
A decrease of 2.1% where the money because the moves online.
Product launch from online from offline to online as I discussed earlier.
We offered you expert paradox discounts to customers, which affected our revenues how do we save on sales and marketing sizes.
Going forward when they have similar approach for sales and marketing activities, especially with motive actually it was through online commerce platforms.
I will share based compensation expense warranty 11 million.
An increase of 8 million compared with same period last year due to the new grants to employees during Q3 last year and in Q2 this year.
Our GAAP net income was 57 million and adjusted net income was.
68 million, both a higher than Q2 last year.
Adjusted net income marketing was 10.5% higher than a 10.2% in Q2 last year, mainly due to the lower sales and marketing expenses.
We're pleased to they tend to profitability in this quarter. Despite continued impacts from Cowen Nike.
Turning to our balance sheet and cash flow.
We ended the quarter was RMB 1 billion in cash time deposits and the short term investment.
Our operating cash flow was positive 338 million because of improved profitability reduce the account receivable, reducing inventory and increased accounts payable.
Our pets expenditure, what's 59 million auto page 39 million for land use right acquisition 20 meaningful new store openings in China and international market as well as for additional machinery and R&D spending.
We had a very healthy balance sheets, and a strong cash flow in a second quarter.
No I tend to guidance.
We expect third quarter revenue to be in a range of 852 950 million increase of 30% 45% year over year.
The only reason earnings release, we also provides you with the update our July sales water.
China sales order improved by 64%, even though there were very bad weather conditions in China, the massive flooding affected our logistics and retail sales in July.
International sales volume grew by 56% year over year.
With that let's now open the call for any questions that you may have for us.
Operator, Please go ahead.
Certainly well, ladies and gentlemen, we will now begin the question answer session. If you're willing to ask a question. Please press star one on it kind of true and wait for your name to be now and just if you wish to cancel their Rick Fitz Please respond.
Once again at Star followed by one Josh Good question. Thank you.
Once again, if you wish to us.
Good question.
Ladies true Star, one unintelligible and Wakefield name to be announced if you wish to cancel a request leased respond or hash key.
We have the first question front line Vincent Yu. Please go ahead.
Yeah, and Hardy and Jason.
On the robust performance and thanks for taking my question.
Three questions first question is about the especially low product category and the related orders. So in July.
So close to 68000 units in China, Okay share with us which models such good luck has driven the strong gross which is about to keep books that are doing single question is about can you share.
Hey, with some comments on the cadence of the reopening of the international stores and how should we think about the international units, though score second half 2020, and still question is about how should we think about but trying to east grew to a U.S.P. or how to point really well we see meaningful.
Our recovery will.
Quite a difficult I used up all she attends the digital Akiva beaches wants to keep losing about talking about you know what's you know it's something that's going to eat you should tell you woman that you could you guys just sort of course will not come element she opens up well they're much logic.
Joining me on but you know okay. So all the patients out cheeky not issue that we don't to go.
Well go when do you should volume and what do you have quite a number that they ship why you go to you. The switching she's don't know Im just wondering how you take.
Thank you I'd almost seven in yen. So what do you does take a unit sales just that we build up it sounds like just why almost seven years up we'll need to go. Yes, then John just you or multi kind of like doesn't mean that you should actually was really come about what's going to reach an always on the Patricia thanks.
Yeah. Thanks listen that's me a answer you did the first a question for the key drivers for the July sales volume growth. There's a few new product launched in July firstly on that and that is like that to the basketball category new product, it's very much welcomed by our customer into a lot.
Matt Plunkett news to a long 10% of our sales volume fulfil in Atlanta market.
Another key takeaways.
Let's see how large that vosa jeez their own in second quarter also lots of GE to both of them out of that took a bicycle. They also the teach laterals for which a lot sales more than girls so related.
Threeq he put key new products setting the growth.
The second question I'd like yet to come on top.
I think for the of International Barker basically I think.
We do have a pretty good expectish into my Q3 in Q4, partially because one older stores are Oh, our stores opened.
So far in order to countries. So it looks like it's back to the business.
And the second we do after that because our cost 19 situation that actually across the globe.
People start to prefer would have called the individual urban mobility computing device, which is our basically our product can you know products the electric more pad and electric scooters falling under so that was actually a good sign to actually to drive sales and the lastly, I think we.
Also.
Turning to go out in the second half of this year you. All are you will be our first electric.
Well, that's power system electric bicycles or E bike under sort of a European categories as E. Bike. So that product will be who are most likely in Q4. This year and that will also help hub.
How about into drop a little bit fills in Q4 and actually also over to the 2021.
So not too bad thing right now as.
Purposes, and the were also start to see orders from sharing operators as well as we just recently you've actually got obviously, a few orders from shareholders really to expand their Sharon operations in Europe, I think due to a similar basically phenomena that we are.
They are they're very similar phenomenon as due to a cop 19 situation people start to using the individual committee vice weathers owned or shared.
A lot and one more thing we realized with mission the previous call actually where you are they are the new rental program in July in Europe, and this program is actually a threat that that users can actually when you scooter from participated dealers our weekly basis.
It's a daily basis, so far we will have more than hundreds of dealers participates.
In this new rental program and we think this is actually it will also help to sort out to lower the would have called the entry barriers and to keep people you, but I wouldn't call a a cheaper way to try out a new scooter first before making a purchase decision.
So those are older few things that we're really working hard to to get the international market back on track.
Yes, so that that so my question for questions three on that.
The other hardie to answer that true for the for the scrutiny at Ti or let's first talk about the second quarter here at Ti. So overall assay declined by 25% and as I mentioned, the 8.5% it because lower international sales.
Since July you'll see we have already seen recovery or international market a sales in July our international market sales grew by 65 to 60, 56% kinda market. It goes around 64%. So they are growing at a similar seed. Therefore in Q3 also you know where many of the yeah. We believe is 8.5% or not.
There anymore. So you could take this 8.5% off of this at 25% have cable you remaining 17%. That's me have a when they love for the remaining of the year, but when we look at that he has teeth, we need to separate them into three categories like the China would had P. Second it overseas scuderia seats, and certainly as I said.
They spare capacity for the overseas that T., we believe it to continue to be strong in that in the second quarter I will oversee the school has increased by more than 20% is a very strong growth for the remainder of the year because of the.
Order book, we believe away as he will be at least the same as last year, even as I say growth.
The the China, ANSI, However will decline because of the launch of Golar theory achieved zero energy to their prices are lower than the them use their it also the M.S. you may launch the product into life also had a lower ASP become Harris Ams Relaunching. The second the quota so for China Scooter, we are thinking anywhere between 15.
Potential 18% yet the.
Decreased in the third quarter for those that repair cost. There. This is the Easter. This part we have some uncertainties minute because of the overseas.
Thank you operator, how much spare capacity older. Some that are currently for our Q3 or four customers have been quite conservative in this part leading shot I think where the S.T. So the overall products will decline for the second how busy M&A because of the changing product mix.
My answer to your second question.
Can't remove the next question.
Thank you Hello.
Yes. My next question that comes from the line of being Wong Please cohort.
Question number one in start up on a gross margin I Trust fund across much of quite stable. If possible can you provide to teach them about be costs go to gross margin and you something close to <unk> and second it's about a service.
So just any more often you show in the gross margin we can't its painting a second quarter.
The second one is that you mentioned not to the.
No material in the past the car I'll pass it to cross the keep trying to put a margin stabilization only about how much fronda a little bit Pos how much from the Uh huh.
[laughter] that's number one question.
Yes, I found out shopping compensation.
Your phone that is why is pretty big during the first half as I've mentioned that you actually Oprah mall in the second quarter. This year can I assume this number will be an assembly in the future come kept talking my team.
How should we think about less jump as a conversation. That's the second question [laughter], otherwise Olive garden, you actually provide oh, but a good number came provider.
First the two weeks after August.
What's the trial, but its high gross somebody said I'm trying to because covered I think are so I'll keep actually tried to find a school starts to avoid puppets competition and to see they see the keytruda will struggle will continue to be strong because about trying to scoping I think it seems echo can show, so which means.
It goes maybe lower [laughter].
The reason why you have for second half Oh, sorry, so called the oldest 30% to 45% cross which is below not.
54% teamed up to nine so could you spend of coastal just because the benefits nor led us to number. Thank you.
Sure. Let me first I'll do pricing on the on the gross margin definitely alliqua Mckee, whether it be stable.
Two.
Oh, Yeah, the keys library.
Maybe I can.
Right.
Yeah.
For the market occupancy.
And for our.
It takes off.
Logistic costs.
Second alter the across.
720.7.
Apparently.
Uh huh.
Okay and increased by two front that we just haven't lost.
Great.
Treatment that so this is Uh huh.
Who knows.
Okay.
That's an area that cost.
He is very similar to what do we happen to while also.
To lock is relatively stable for the Soviet Bloc pardon me.
All right so only about 30%.
70, 80% private.
Let me because in this quarter, we have a service revenue coming from walks bottom and protect you may recall April why the R&D. So they talked about and for new products that they put plans last next year, but because of the whole 19 that protect has to be suspended therefore, even though we have the same value we have seen car.
Additional costs money for stuff caused me to say the team for their for their for project. That's one track our service.
So they said.
<unk>.
This is mark.
Barack life and specifically on the raw material how much we save on that if we compare with our Q2 real material acumen cost at least a Q2 last year, our past resell costs actually declined by around 10% and to the battery pack and CMS also have a few percentage decline overall.
So the battery pack the overall battery pack, including both pathway. So yeah, Matt and attack had a decline of 8% everything here at same time lots and yet the other components on the scooter also have around 4% how stop overall if you calculate.
The weighted average it contributes to a lot of 5.6% cost out. So that's the this is really the key driver to how about two or making sure our costs money was relatively stable.
So this is.
Something first question you second the country, it's a share based compensation the share based compensation, mainly because last thing here in the second in the.
Third quarter in August we are the most of the board approved additional share based compensation for the management team or so for those some of the key employees that strike all strike Oh, I see see a caused by a one 4 million.
You, maybe Q2 last year the.
We see is around 4 million per quarter.
Because of the SPT became the August last year, that's right. That's what I've, often a 60 cents I, rather pulmonary and in April this year, because some of the I'm pleased there share based compensation pre IPO shabby conversational ready for relapsed it sort of company decides to a grant that them additional.
Share based compensation customers, who watch for additional four years. That's also drive up the cost by around 3 million. So this is the majority of that Cc Wei branded and if there's been any of the Lady luck at any given the for the share based compensation to increase so that's the other way with second question.
Two.
Yes.
I think for the Augusto form of growth, we're looking at a more do multiple factors here. The first factor will you know we should actually the plot side is actually the back to school right. So with.
It was cut back to school I didn't know actually quite positive.
You know they do a catalyst to the market, where we think we can actually will drive the warm cool.
I think the second is actually I think being just mentioned you look that they see our guidance which is actually.
Your or your growth.
So.
Thing you mentioned.
<unk>.
What was it is for the second quarter, though the guidance on the on the third quarter higher 30%.
It's actually higher than the second quarter, So I think that.
What do we think that backs school, how about second it's actually.
Along with our new product, we look at the as I mentioned the GE too.
The T zero that GE to the G III.
Older products basically with the first the cheese zero at GE to now mid June.
It's actually in July so everything all those products will kick in the fact of this new product will kick in approximately in Q3. This year. So typical them when first announced a new product. They usually you know we have our own ramp up here. It and also a ticket rafi problem assets over the market.
Before we start to assess the product I really rough sales. So I think those new products will help in terms of dry last August.
And a lot free I think with.
A phenomena, we observe as I mentioned in the call where we've achieved zero now we start early sign off T to where it was easier and you too.
Also helped us to penetrate would have called and lower tier cities.
The market were used to be we do have a perfect product for those markets and that actually helped US you know I think was our store expansions in Q3 of those also will contribute in term of the Q3 girls.
Just to ask to yet come in August.
And even the first half of August I was.
One of them growth I mean has at least the same speed and what do we delivered in July and the second half of office. They expect a wooden growth will accelerate then they'd be costly saket.
New school thing promotion activities from Monday, some from today, nobody that traditional Vodafone Ah yes. So that's.
So two questions on August and says when it goes.
Yeah.
Oh, sorry.
For the quarter kind of owning 30 to 45, which was well below the.
If people Didnt Tonight pockets, but.
It's mainly because of the S. T. I mean are they decided because we launched a g. zero GE tools and that they are they asking whether it's lower than average ASP. So they will track down there, but the water will still be quite a quite a strong.
Okay must feel well on a cold we'd actually pattern because I noticed the company the whole trying to catch rate on increased by 45% scoping out team.
Just to the coldest he impact Oh Hell lumpy that police poet because companies tend to be better can show a minute trying to thank you.
Yeah I hope.
I didn't capture the food question, but hopefully I can't answer I think basically now with the Carbonite T. impact with we saw who impact in Q1, a little bit in Q2, but as the now I think for China were back you know effectively I think we're safe to say, we're back to what it caught a pre.
<unk> overnight team market condition, or even better because of colonizing actually drive quite a lot of people to choose not to take public presentations I really start to move to electric bicycle product in China. So I think in China market, where actually a better position.
Maybe a better positioned than the pre carbonite seems situation.
I think that was one the results. We keep you know we're loading all you know multiple new products line. There's no no last quarter and also in July and really tried to take advantage of this and capture the smack market growth.
I think a similarly I've been in Q3, we expect to you know to add more stores, where the Coca Cola Delighting, our Q1 store adds or store expansion.
Was that part you know because the money construction site washing construction were shut down so we're not able to open a lot of stores, but now we have quite a bit you know stores ready to be open in the backlog, which will happen in Q3, so that will help on the China situation.
Now on the international situation I think is actually back to normal, but the only thing Whitley International situation. As Q3 has traditionally has being a slow quarter for international spectra, Europe, where people taking vacations still we expect to you know to actually to getting a.
You know it faster growth in Europe.
In Q3 to really make up a guide for Q2, but having said that keep in mind Q3. Typically you know there are people taking vacations in Europe, so little bit sluggish into my retail.
Okay, I guess so much.
Thank you we have risen expressed in some line, especially one that please go ahead.
Moving to actually and Hardy, there's just one they speaking from C.S.U.C. So first of all congratulations on the strong sounds despite the impact from phone numbers, that's very inspiring for sure.
So personally I have three questions Tom.
Financials and some other sectors.
The first question just about the S.P. able to spare parts.
This was wrong like 800, R&D to second quarter of 2009 chain.
And then jump to like slight homes R&D.
Just a quarter and they increase to telephone, creating swissquote twentytwenty, even with the coffee notching impact in China. So what could be the driver that makes the key differentiators that spare parts yes.
Steer the surface first question and then there's actually a question. This all the on the new regulation instead of looking here, where we define the tubular industry in China. So it seems individual since you started I mean do French law enforcement distress for instance, Beijing assumes we has one more restrictive burn much wash.
Hi, it's not taking that regulations Jewish people now.
How do you view the the enforcement in those informing quarters. That's it that's the second question and nine the last question and the sort of question all the impacts on the sharing economy. So I'm looking forward do we do we think the writing up the sharing economy, where leach we're not giving.
Tumor cells in the future or wheel or new becomes the key decreased hires for this industry. That's all my questions. Thanks.
Sure sure thing. Thanks, Let me answer your first question about a spare parts S. T. I think it when you need to first talking about the total revenue for Saturday spare parts and services I think the revenue come from two thoughts why it seems from China market.
The revenue coming from overseas money.
So even though in the second order our total revenue from this came from its pedigree reduced it by 17%, but we see that into international markets that was the China market kind of market actually grew by 77 zero, 70% overseeing message part by 77 zero attachment so in China, we view or.
Copper is a average that people scooter their prices actually they actually I actually I stable so other than clients for the fluctuations, meaning coming from overseas market.
Overseas markets with a key driver for our revenue in this category ace to actual pottery and some spare possibly those two sharing operators in overseas markets. Both your Oh sister U.S., Yeah. Yeah of course 19 in the US continue to affect U.S. company to effect to Europe. Therefore.
He has much less a spare parts so as to the overseas market. So that's really.
Who contributes to the population health.
C. We think this will continue for probably the next well too caught Oh, we hope that become more more more or less stable. That's my question to first question I'd like to guess.
Two questions.
So I think they I think on the only regulations enforcement.
You know actually agree with you we do out there are different CBS actually apply a different.
I wouldn't call.
Enforce it differently you know top Cds, what do we observe basically like top 20 top 10 to 20 feet actually top 20 cities, we're talking about Beijing, Shanghai Hum, Joe nine seeing even when Joel.
Those cities on and Hum, Joe those ones I admit and a full Joel and have grown Georgia those ones actually the force is very strictly.
And so in those cities actually owning the electric bicycle products are being so yeah.
After the top and those fees, Rob Rob to represent about you know traditionally into a market size there roughly about 6 million units a year in from a market size all of that 30 million units total market size annually.
And then after that 20 cities I think we're still seeing a handle it uses Cds do you see source the electric bikes gurus and obviously there are also cities actually the allow electric motorcycles actually allow motorcycles. So that's the kratos that didn't fall under the.
I wouldn't call the electric bicycles are being sold I was actually motorcycles and.
Little by little bit hobby, and this is actually each morning, Forsman first of all regardless of which cities. This important it's actually very strictly on manufacturers.
Basically for the product manufactured provide the the product has the either complying with the electric bicycle or electric motorcycle there could be a different you know third through product, which should not.
Not complying with either regulations.
Let me factoring prospective new I mean other manufacturers. This part of wish it are either electric bicycle electric motorcycle.
They are being sold as electric bicycles for electric motorcycle.
I think only the city's sit here a little bit lose on this our cities doesn't required people to get license plate Onebillion electric bicycles for electric motorcycle, that's where the horsemen little bit loose but.
No I think you gave it really long so for sure question here, but I think as time passes you're gonna see you gonna see more more says its going to enforce the rules. You know for example last year, we didn't see Sri June basically third tier cities and towns really forces, but this year.
He told basic this.
The Street will actually start offering required people to get license plates on you guys are bicycles.
Right because.
You know basically April may this year, so you're going to see a more and more cities actually will apply the policy I think though the result is lower because it requires quite a bit administrative effort to establish would recall that license plate for cortical you know given the local topic management to set up post good.
Right because to get like no license plate recognition.
They take time, but I think within a couple of quick couple of years or so you're going to see what I did he got to you know before strictly.
She was very soon so not only cheered snobby the central government and also we need to sometime to lobby the local governments asking them to manage the [laughter] limitations.
The other part of the lobbying it's really that the locally administered government actually.
I.
I wouldn't call I have to task force.
Okay.
Yeah. So it is basically where they turn off the wall. It you know when you do this now do we have the task force rates you don't you didn't do a lot here because they didn't feel like they have the task force ready to go.
To come with what are called the implementation of it and this is here to doors ready joined the call because the more sandy.
I'm sure operation Yeah. We also have there you know some stirring up mostly due on pure three or tier four tier five cities. For example, you know I visit us any culture change also I see a lot of shares what are your electric bikes kosher is there once deployed by how low there once deployed by late one.
Are there any electrify Scotia operators.
We think that's actually complement.
As as part of solution for urban mobility little impact to our business.
Because all our products are mitt and too high end product.
Actually look at the bikes that sure enough are deployed they've been very simple it doesn't even have we'll call it display.
Minimum plastics is simply to let you get by so we think you know if there's massive up those being deployed those cities actually the market segment got hurt the most probably on the low end side.
Huh.
I see so, especially the one wouldn't have.
Patchy overseas or single source tier cities.
We are having a more amongst all that's alright.
Right like spring 2000.
16, 17 with when they would go question 2016, 17 wouldn't wouldn't be whatever Sharon bicycles hit it right.
Currently the shared electric bicycle.
You know sort of.
Operation to may be allowed to run the longer distance, but.
You know, it's a it's service same market right.
All right.
Okay.
Right. That's the answers all my questions. Thanks, that's really an FX Hardy alright. Thank you.
Thank you we have your next question from blindness, Alex Potter. Please go ahead.
I guess a question or two questions maybe on on margins. The first one going back to gross margin obviously, the the cost control or that you mentioned was you know was really strong.
I was wondering if you could elaborate specifically.
On why battery costs and why these components costs are coming down is this a function of just cost cuts from your suppliers is it because you now have more scale and you're able to negotiate better pricing like what specifically is driving the cost declines and is it sustainable so.
That's question number one.
Question number two is on the mix of E. Commerce, I know that theoretically at least your E commerce sales should be higher margin.
Then youre sort of traditional in store retail sales was this a driver of of the gross margin outperformance in the quarter as well or how how would you quantified the impact there on margins. Thanks.
Sure.
Ecstatic that for the for your first question on the gross margin the way, how we negotiated with our supplier there that's in the beginning of the year, we have way our volume anniversary on the price and Oh, So weird way our volume based that these comps. So does the mall. They purchased from then the lower discount they can.
I guess on them of course of it it was a key driver by White, we'll see there's lots of whatever came off another benefit for cost savings.
And then go back to the negotiation annuity or the beginning of the did any of that you're definitely we need to have a expectation about raw material for manufacture battery cells that have special based on that exact patient we negotiated with our suppliers in China because of them not a classic build up for TV segment also because.
Declining or some of the raw material cost therefore, while we negotiated with our supplier in the very beginning the year Wilson Inculturated quite aggressive a packet applied for a full for the if there is part of the components screenshot. There's two key drivers one key driver is the overall market, how we see the capacity indifferent.
On that how we see the hospitals all material give us the for the for the year secondly, it really depends on the wasn't normally the mall or what do we have the lower is that the more discount weekend. If you follow our supplier, but this is honestly you first question for the second question, you're definitely right and E commerce or cost money nobody should be higher.
Then the sales through offline if you're talking about the same production model, but in the second quarter. Unfortunately, the E Commerce that China is not a key driver for the stable across marketing, mainly because well be launching new products online. We also gave these costs are on the new products there.
Therefore in the second of Hot actually I wouldn't Commerce cross market was lower than last year, mainly because of the discount we provided to consumers.
But the United but I'm not the other side, we are able to save on the sales and marketing expenses.
Going forward, if we can continue to solve the grows on the ecommerce platform with a stable price no more normal discount and definitely E. Commerce platform will be about the key contributor for the market growth going forward. This in my other to your second question.
Just a little bit.
On the the margin part on the cost cuts.
So besides the scale you know the I knew negotiations I think there's one more thing with in the electric bicycle category that we actually have they're very interesting because there was it wouldn't call a 55 kilograms of weight limitation. So there's a quite a bit in a way for intermodal.
Lightweight materials for example, you will reduce the chassis swayed by half a kilo, but at the same time, we're able to you know as that hot killer weight to the battery pack. It will allow us to use a lower density batteries, but achieved the same battery come past.
And by doing so you know we have observed new cases that we actually able to save hunter or to 200 RMB per scooter basis. If you looked at this oh squared off four or 5000.
R&D. This is basically 5% savings. So this is actually due to you know to figure out where.
This is simply the math question, what do the math question, where the total way is restricted by kilo. So were trying to reduce the way and we're just trying to increase the way and such that give me a lower cost product at the same performance. So there are few triggers or innovations. We're also doing on back to my which actually helped quite a bit.
As well.
Great very good thing that's that's very helpful.
Thank you we have or next question it from the line there for Brinci and please go ahead.
Thanks for taking my question a there's essentially in from six to two securities. So I have caused a a couple of questions about the new products. So we just.
No. These oh, yeah I'd be is also releasing new products. The title it says that you'd like to Pat Pat.
What's your I was wondering what's your point of view about beds in each market and when exactly where youre new product launch and your opinion whats that's what size outlets markets will be in the future.
I have another question about the or the new brand go but can you tell us what's the approximates gross profit margins of Oh, the sum of Goldman Sachs.
Well so so it seems your line is actually talk quickly talk about a first I assume you mentioned this is power system bicycle over the call the satellite or E bike basically two leases you can sure this product category.
So our products, we actually announced.
At a C. S. This year in January you you be easier ones.
At.
This product is targeted European the United States market.
The reason, we target to Europe, and the United States market because of market size is huge.
Basically the fight fight mainly units year market with average retail at peak of 25 I'm sure U.S. dollars.
And that the market has been doubled in the last three years and expected to be doubled during the next three or four years.
So I think is actually and for us to get into that market is actually also very simple. It uses motor. The only thing has the is required to the power sensors, but you talked about design frame, we have all that capability internally.
The only caveat with that product for Europe is the power system bicycle in Europe, there's anti dumping policy from Europe against China. So that our product has to be locally manufactured he Europe. So we actually able to secure a local manufactured partner in Europe and the book how.
To help us to produce that product in Europe.
Oh, we this product a little bit late this year, because the carbonite cheese situation, our acumen couldn't get to Europe, there being a lot of outside negotiation checking the sale desktop so go live that delayed.
Hopefully, we should be able to get this product all the during the second half and it will drive a huge future growth, whether Europe and the United States market.
This particular products, we don't think that Prada actually had a market in China, a particular, because China people actually the power system bicycle is not as friendly as our electric bicycle products, so consumers, who actually pretty for electric bicycle first over the power sister ones where.
You actually required to paddle a bit before you actually have the power output.
So hopefully that will answer the that need bike market power system bike market on a go well on the go what Brad before I hand, tomorrow or two Hardy on the gross margin. So we don't view go up as the second brand was do you go after school a serious I know you.
That will help to leverage our existing sales channel and also leverage our brand awareness, but on a gross margin outlet Hardy to answer your question there yeah for cone, what we have a quite wide range of models from Keith you see GE zero to a T. Two with different despite that it's just give you a range the gross margin 40.
For into products and the coolest theories anywhere between 13% 22%.
Many of which model, which acts as I talked about.
The answer to your second question.
Okay. Thanks, Hardy sense, Yeah, I guess for a time.
Thank you.
Thank you.
Showing no more questions in the queue, let me turn the call back to Mr. Lee for closing remarks.
Alright. Thank you operator, thank you all for participating on today's call and for your support.
So it really appreciate your interest and we look forward to reporting to you again next quarter our progress. Thank you.
Operator.
Thank you.
Thank you all again that concludes the Colin you may disconnect now thank you good day.
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Good day, ladies and gentlemen, thank you for standing by and walk in the New technologies second quarter Twentytwenty earnings Conference call.
I think it's been I listen only mode.
We will conduct a question answer session and instructions will follow at the time.
I am I know, we're recording today's call. If you have any objections you may disconnect at this time.
Now I will turn the call over to Mr. chasing young Investor Relations manager.
This young please go ahead.
Thank you operator, Hello, everyone. Welcome <unk> conference call to discover New technologies result for the second quarter plenty plenty.
Propylene <unk> corporate presentation.
Brad.
I've been posted on you Investor Relations website.
<unk> being web.
From a copy of our website a replay of the call will be available.
Please note todays discussion will contain forward looking statement made under the safe Harbor provision so you're not even private Securities Litigation Reform Act 1995.
Forward looking statements involve risks uncertainties assumptions and other factors the company actual results may be materially different from low expressed today.
Well that information regarding the rate back or is equal days in the company public filings with the Securities and Exchange Commission.
The company does not assume an obligation to update and therefore looking statements except as required by law.
Our earnings press release on this call equal discussion of certain non-GAAP and as a matter.
Absolutely continue.
That's an agent Nongaap financial measures and a reconciliation of GAAP non-GAAP and have resolved.
On the call with me today, I will be Yourselfer Gallery, and Seattle, It's a hearty job now let me turn the call over to yet.
[laughter].
[noise] kind of think season and thanks, everyone.
On the call today.
We have all of the recovery in China market in Q2, well you know worsening market I was still formats.
Got it back over 19.
Non performance in Q2, our total built before you reach $160 per unit.
The increase of 61% year over year the oil in the China market reached 255000 units increased from 81% year on year Lovington national market reach despite all the units decreased by 62% due to the impact of will cover the 19.
Despite the decline in the or marketing Q2, Wagner me very very positive about <unk> performance in the second.
At the market gradually recover from the cold the Nike outbreak.
Now in Q2, we continue to be all our leadership the urban mobility you'd be a new product real all branding and marketing activities and the retail expansion.
So first of all Q2 has being a very busy quarter slots and launching new products.
As I mentioned in the previous earning call. We lost our 10-Q I too I'm amazed seven our flagship electric bicycle product for the China market in 2020.
That's great up over 2016 signature and one model with how could they technology and complying with the China New regulation.
The product launch was held onto for online live streaming they'll all platform.
The huge success with three milling viewing them like.
Since then and to have the I keep selling products now, reflecting bicycle category, representing 50.5% of our sales in Q2 and its position as our high end electric bicycle product.
We also introduced the Q1 [laughter] or I know that model on July 16.
I'm not in the slightly smaller compared with that too, but also inherited the finally lifestyle and theory using the same technology platform and too.
Well I already novation lightweight materials on that reducing the way up and that chassis, which allowed us to spend the bad outcome path to 48 volt 26 hours, while being compliant with the new regulation.
The new battery capacity, that's not the longer drive range out 200 kilometer.
Leads the driver engine for the entire electric bicycle industry.
Also the compact form factor and that local their friendly for people with all heights.
And that comes with four model with pricing ranging from 30 899 to 55 million nine RMB.
Representing an entry level product.
Well I'm too with the price range from 45 million 1961 I'm not.
No I'm spending I'll ask series with two new model and two and Oh.
Also said that our goal of theories with three new model Jeez zero GE to an upgraded G III.
GCU inside electric bicycle being volumes.
The level product of the goal what theories targeting the end market wouldn't to flybridge option.
And 60 kilometers price at 22, 90, 927 nine IR.
Gee, you turn to the design dial up the goal what views.
More compact and more profitable wouldn't building vaccines and Adam babies G. There what was launched at the JV through June 18th campaign was a presale warm up and online livestream events.
The livestream events.
The close to 4 million views that who minimum like some JV platform and the entire launch campaign January total oil up close to 17000 units that's trading our capability to penetrate the meet many lectured bicycle market.
We also loud GE to an awkward at least three under the goal what theories.
Paul and the through like 18, respectively.
Gee too is that electric bicycle product larger than in FY zero with to drive range options at 68 kilometers price that there is by 90 939 million I RMB.
Algae three is a good electric motorcycle product from our last year's G. III announcement targeting cities with no restriction on motorcycles.
It's bigger inside and then with faster speeds up to 60 kilometer power.
It is equipped with three battery options and when the price range from 40 299.649 RMB.
Now with GE zero. She wants you to at the peak three Oh, you mean achieved the full spectrum coverage from entry level electric bicycle to electric motorcycle with price range from 22, nine I RMB 264, nine I R&D meeting and.
Wide range of consumers demand.
It's hard to what you're it will help us to expand our market ridge to lower tiers TV.
Not besides the new products, we continue to enhance our brand awareness via user activity based viral marketing and targeted marketing.
Oh user activity based marketing we had two very interesting event in Q2 for a new fans from Shanghai spent 261 days riding along the entire board of China with total distance of 30000 kilometers aren't you know.
In scooter.
During the trip.
Then go through the no mountains, we'll cross that will be desert and the childless the extreme cold temperature.
Minus 41 degree.
In the North East China.
The story a little published on we won the lean and then picked up by all major media Sunquest, China. He has achieved 35 million view on social media and 10 club Ti media coverage with hundreds of article nations.
No second to celebrate a new first anniversary a new fab from Beijing actually set a new miniature model Optum 20000 meters above sea level in that kind of go the with the higher balloon and have made a we law capture anything Hardie Vince.
But we also achieved 41 million views and then we see 9 million like some believe.
Both of those activities demonstrated strong all of our user 12 bread and held up father build our brand awareness and the brand reputation of crop in mass consumer base.
Third to promote the writing we also launched a no held them no right campaign together with traffic and administrative department across 10 provinces that cities with weight articles that though he and the question will be do.
This kind of pain generated 24 million views cropper platforms.
No that third we continue to be as our own site. Shortly the platform that go in Faisel Windowing quarterly view increased to 47 dealings in Q2, a 23% roll over Q1, and the question of 4.5 million views in Q2.
Versus Oneq hundred 9000, new Q1.
No internationally, despite being Taco coping 19 bars, we continue to key opinion leaders to the new crude team Upgraders well worth to mention is the Spanish key opinion leader post on new too.
Hey, Paul achieved 1.7, Newman view, making new a hot topic in Spain.
And to father, he has the user experience that engage all new users, we launched a new social feature our App called my writing journey, allowing users to quickly create a long format pictures with rising fuel path to easily Sheraton, we chat and with me in the App.
More than 15000 journeys has been created an population our new App community.
We will continue to add more functions to our app and the mean to increase user engagement and view rent roll.
So lot of very popular hip hop like competition show called three tenths of China was long term to like 18 you.
It was expected to be one the hottest shows for the summer in China, where we'll have to feature I love a tightening in the semifinal and the final during the show as well as the ultimate advertising campaigns and the tender win the show is that its final stage.
Estimate overall exposure over 200 million online and the 400 million view offline.
Only this will provide brand awareness exposures. It will also help us to further enhance our brand image as a trending Brent leading the urban lifestyle.
Supported by the new products, the hence customer engagement and brand awareness, we continue to expand our footprint through store expansion.
New market and fees.
In China, New ads is 51 doors to solve them at 84 stores in Q2 with respect to accelerate store opening paid in Q3 at the Carbonite can situation recovered in China.
The international market, we have increased our market coverage to 45 countries with three more AD in South America, mainly the Dominican Republic, Tofu, and Brazil will add an additional 40, a flagship on premium stores with total comps, reaching 90 ones actually been premium stores versus.
43 in Q1, despite the equivalent I can situation.
Now I'll turn to the call we're targeting to discuss our financial results Party.
Thank you Yeah, Hello, everyone. Our press release contains all the figures and the comparison you need.
We have also OPTILOAD excel format, the speakers to eye on that side clearly the reference.
I really level financial performance keeping in mind that we're referring to the second the quarter figures unless as they ought to light and that all money Tracy guys RMP unless otherwise noted.
Our Q2 sales volume reached 160000 units increased by 61% year over year.
Sales would have increased by 81% I can result of Pimavanserin covering retail sales network expansion and new product launch.
Our China online sales, particularly worth highlighting online sales continues to grow and accounted for 14% of total Q2 sales volume compared with the to present at the same period last year.
The key reason is that this year, we launched new products, such as to energy zeros through online platforms.
It helps to mitigate the restriction from Cowen 19 for any peak offline Tibet and also offered a good opportunity for customers who are reluctant to go to offline stores.
International sales volume decreased by 82% due to divert impact from Cowen 19.
Lower international sales would have had a significant impact our Q2 financials.
For example in Q2, we had a lower ASP lower growth marketing and also lower revenues from us as we start hot many of these line.
By the lower international sales.
We will discuss the impact in details later.
We also encourage you to keep in mind when analyzing our financials.
Regarding product mix as we launched a new products and to GE zero energy to model within the second quarter the product mix changed accordingly.
Theories accounted for around 20% of total order.
M. series, a convertible around 20%.
You theorists accounted for 40% Pensacola theorist accounted for remaining 20%.
Changes in the product mix affected our Q2 revenues and they have.
Total revenue increased by 21.6% to 645 million.
In line with the guidance we provided earlier.
Revenue from scooters increased by 28% in total auto, which China market increased by 59% and international market decreased by 53%.
Our Q2 Scooter revenue was however negatively affected by the time did comp we offer to do and a new product launch through E commerce platforms.
For example, we offered RMB 500, fiftys comp on new model cheese zero.
Such clients become affected our revenue by approximately RMB 10 mini aggregate.
But a seasonally over the past these comp.
So to save on sales and marketing events, which I will discuss the data.
Revenues from our sensory spare parts and services decreased by 17% in total auto Lynch, China market increased by 70%.
International market decreased by 70%.
The decline of international sales Monday, due to lower spare parts sales for the sharing operators.
Here again, we encourage you to kind of China and international market. The separately forget about a picture of our business for this quarter.
Revenues per square meter ASP decreased by 25%.
There are few key drivers for the decline.
First the lower proportion of scooter sales from international markets.
Impacts Aliansce team is estimated to the 8.5%.
Second the lowest fare sales from international markets the impact our assay is around 6.5%.
Certainly the launch of low price model T zero affected CSP by around 6%.
The remaining focused on Monday due to change in production mix modems.
In summary of the 25% SP declined 8.5% is due to the lower sales from international markets.
With the recovery of international market in the coming quarters. We expect this negative impact there will be much that going forward.
Brought marketing was 23% 0.7 percentage points lower than this time last year.
The lower marketing was mainly due to lower sales of scooter and a spare parts from international market, which negatively affected our marketing by around 5.5% in total.
However, what we are able to oxide majority of Sachin activity impact by cost savings on battery pack various components and warranties.
Our total operating expense excluding share based compensation were 82 million increased by four meeting or 4.6% year over year.
The increase was mainly caused by higher GE and expense of 2 million Floteks NSR touch and high R&D expense of 5 million then they fall higher staff cost.
Sales and marketing expenses, however decreased by 3 million.
As percentage of revenue the sales at unlocking cents, excluding share based compensation was 6.6% compared with 8.7% in Q2 last year.
The decrease of 2.1% was amended because they moves online.
I will put up launch from online from offline to online as I discussed earlier.
We opened two expert products these cost to customers, which affected our revenues.
He stays on sales and marketing expenses.
Going forward when they have similar approach, both sales and marketing activities, especially with multi about sales through online commerce platform.
Our share based compensation expense was 11 million an increase of 8 million compared with same period last year due to the new grants to employees during Q3 last year and in Q2 this year.
Our GAAP net income was 57 million and adjusted net income.
68 million, both the higher than Q2 last year.
Adjusted net income margin was 10.5% higher than a 10.2% in Q2 last year, mainly due to the lower sales at Inox incentive.
We have leased to attend to profitability in this quarter, despite continuing impacts from Cowen 19.
Turning to our balance sheet and cash flow.
We ended the quarter was RMB 1 billion in cash.
And the short term investment.
Our operating cash flow positive 338 million because of improved profitability reduce the account receivable reduce the inventory and increased accounts payable.
Our pets expenditure, what's 59 million auto page 39 million for land use right acquisition, Plenti meaningful new store openings in China, and international market as well as for additional machinery and R&D spending.
We had a very healthy balance sheet and a strong cash flow in the second quarter.
No I tend to guidance.
We expect third quarter revenue to be in a range of 815 to 950 million increase of 30% 45% year over year.
The earnings earnings release, we also provide you with the update our July seems water.
China sales volume grew by 64%, even though there were very bad weather conditions in China, the massive flooding affected our logistics and retail sales in July.
International sales volume grew by 66% year over year.
With that let's now open the call for any questions that you may have for us.
Operator, Please go ahead.
Secondly, ladies and gentlemen, we will now begin the question answer session. If you're willing to ask a question. Please press star one kind of true and wait for your name to be down.
If you wish to cancel their request leased fish bond.
Once again, it's star followed by one to ask your question. Thank you.
Once again, if you wish to cost.
Good question.
Please press star, one unintelligible and great FINAME to be down just fewer wished to cancel a request please respond or hash key.
We have the first question from line.
Vincent Yu. Please go ahead.
Yes, and Hardy Adam Jason Congrats on the robust performance and thanks for taking my question.
Two questions first question is about the expansion low product category at the good I get more than.
In July.
So close to 68000 units in China can you share with us which models such good luck has driven strong gross which is about 60 cents.
Well single question is about can you share.
Some comments on the cadence of the reopening of the international stores and how should we think about the international units that will score Cigna half 2020, and so question about how should we think about that China is good.
Yes feet or second half two point really well, we see meaningful recovery.
A quick quite a big.
She has lengthened digital Akiva BJ wants to keep with a much talking about.
No one knows something that's going to keep the should tell you. What means that you guys. You guys. Just from a quick example, mcalmont she doesn't that will be much will take the.
John you do a lot, but you know a piece on the beach Archie not issue that we don't you're.
Well go once you should why or what do you.
Thanks, and I'm going as they ship why you could yield the twitching she told no.
Just wondering how you take.
Okay.
Well they seven in yen. So we'll deal with particular unit sales just that we build up it sounds like display will Miss out on you end up we'll need to juggle. Yet then John just you all know what kind of like that the me on that you should actually we're really talking about good music always enough.
Thanks.
Thanks, Vince and let me also you have to the first a question both the key driver for the July feels little growth. There's a few new product launched in July firstly on that and that's exactly the tactical pedigree and you'll put out it's very much welcomed.
Our customer into a lot I must continues to a long 10% of our sales volume for people in the panel market.
And a lot of key talking.
Let's say over the last levels GE, they're all in second quarter also losses due to both of them onto that take a bicycle. They also the key driver for which a lot. There was one of them girls. So internally. They lost three keep looking you put up setting the growth.
The second question I'd like you had to come on top.
I think for the of international market basically I think.
We do have a pretty good expectation into my Q3 in Q4, partially because one older stores are.
Our stores to open.
So far in order countries. So.
Looks like noise is back to the business.
And the second we do after that because I'll call from 19 situations that actually Krasik goal people start to prefer would have called individual urban mobility computing device, which is our basically our cloud our cat products the electric malt at an electric scooters.
Falling under so that was actually a good sign to actually to drive sales and the lastly, I think we're also.
Turning to go out in the second half of this year you. All are you will be our first electric.
Well, that's called power Lexus bicycle or that need bank and there is about the European categories that you'd buy so that product will be will most likely in Q4. This year and I will also help up how helping to drive a little bit built in Q4 and actually also will go over to the 2021.
So not to that I think right now as.
Where pastas and the were also started seeing orders.
From the sharing operators that small as we just recently actually gotten opting in few orders from shareholders really to expand their shouldn't operations in Europe, I think due to a similar basically phenomenons that we observed they are they're very similar phenomenon as due to the call Tonight.
The situation people start from using.
Individual committee life weathers owned or shared.
And last and one more thing we draw with mentioned the previous call actually what Youre out. They are the new rental program in July Europe, and this program is actually threat app that users can actually win new scooter from participated dealers on a weekly basis.
Daily basis, so far we will have more than hundreds of dealers participates in this new rental program and we think this actually it will also help to sort of to lower the would have called the entry barriers and the good people you live a will be called a a cheaper way to twice.
A new school, there first before making a purchase decision.
So those are older few things that were really working hard to to get the international market back on track.
Yes, so that in my question for questions three on the Ft Harden to answer that sure for the for the scrutiny at Ti, Let's first talk about the second quarter, yet team. The overall ASP declined by 25% and as I mentioned, the 8.5% it because lower international.
Sales.
Since July with the we have already seeing recovery of international not going to sailing in July our international market sales grew by 65 60, 56% telemarketing calls around 64%. So they are growing at a similar speed. Therefore in Q3 also in the remaining of the yet with the mid 80.5% or not.
Is there anymore. So you take this 8.5% of out of the 25% have cable you remaining 17% that may have a mini lap for the remaining of the year, but when we look at the as team we need to separately them into three categories like the China would have a second it overseas.
Steve and certainly in necessitates that hot seat.
Oversees the ASP, we believe it will continue to be strong industry in the second quarter I will oversee the would have increased by more than 20%.
Very strong gross it's sort of any of the year because of the.
Order book would be obviously, we will be at least the same as last year. Even ahead of that so I think growth.
The China ANSI high but will decline because of the launch of Golar theory achieved zero energy to their prices are lower than the them use daily also the M.S. launch the product into lot also has a lower ASP become have is mtwo relaunching the second quarter. So for China Scooter, we are thinking.
And 15% to 18% ASP.
Decrease in the third quarter for that reason Americas. There. This is the there they probably have some uncertainties minute because of the overseas.
Operator, how much they're cut the oldest on that.
Currently full hour a Q3.