Q3 2020 Ehang Holdings Ltd Earnings Call
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Since we will follow at that time.
As a reminder, we are recording today's call. If you have any objections you may disconnect at this time.
Now I would tend to called low, but since you will get 10, managing director of the Blueshirt because Asia is Chen. Please proceed.
Hello, everyone. Thank you all for joining us from today's conference call to discuss the company's financial results for the third quarter. All Twentytwenty. We released the result early today. The press release is the variable on the company's website as well as from Newswire services on the call with me today are Mr. Huang.
<unk> Chief Executive Officer, Mr., otherwise, she chief strategy Officer, and the mystery child Pugh Chief Financial Officer before we continue. Please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U.S. Private Securities Litigation Reform Act.
Oh 1995 forward looking statement in won't hurt the risks and uncertainties as such the Companys actual results may be materially different from their petition expressed today further information regarding these and other risks and uncertainties is included in the Companys public filing with the FCC.
The company does not assume any obligation to update any forward looking statements, except as required under applicable law also please note non unless otherwise the state all the things you mentioned during the conference call on in Chinese RMB waste that let me now turn the call over to our CEO Mr., who watch it.
Mr who were speaking Chinese then always T.S. So at award would translate his comments into English. Please go ahead Mr. hu.
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Sure, Matt Youre, Amanda so she's trying to glass your washout true to you laid out your shop shifted idea well I will do the translation for Mr. Hu, Hello, everyone, I'm watching who founder and CEO of you home as a first mover in the global you an industry, we have already deliver over 100 units of yeah.
<unk> was six passenger grade autonomous vehicles or E vs cumulatively in China and in the World. We have completed near 10000 say flights worldwide with zero accidents. This is amazing accomplishment for such an innovative passenger grade a the old proprietary flow.
Redundancies safety systems have been 40 testified by the abundance of real flights now we're entering into the next day stage of development from a pure OEM provider professional products and technologies to our plants from operators setting necessary rules and the standard before commercial operations since.
To achieve this goal we still have a lot to do numerous save flights have laid a solid foundation for us to start at a mass production. We have just completed the public trial flights for verifying and demonstrating the U.M. use cases in Korea, which helps to generate new orders from the Korean markets.
Quality of our HBV is always remains our top priority since our current production facility can no longer meet the needs of the mass production.
We decided to build a new production facility in Guangdong with.
With an area of 40000 square meters and the planned the initial annual capacity of 600 per units passenger great age more important we will we established a complete set of industry standards and systems from design production and operations and we will devote ourselves to a design.
Moving and developing the infrastructure, including the automated the Verde boards, so as to gradually established an integrated operating system like about existing airports. This is also an important measure to ensure the safe operations of young to Onesix today, we have developed an.
Agreed with HIV technology platform with proprietary Directorate properties, leveraging our expense experiences and expertise in the fields of hardware software and supply chains, we will release more a TV models with different payload levels to meet the demands for me the whole and long haul flights.
Thus gradually expanding the operational range of autonomous air mobility.
In terms of new products, while we continue to accumulate each potential orders of that you have 216 F. Firefighting model, we are accelerating the official certification process.
Meanwhile, China's state console of hedge has also proposed to celebrate the industrial upgrade and the practical applications of firefighting unmanned aerial vehicles.
801, six aviaries, including the passenger version the firefighting version and the logistic version I expected to be key revenue drivers in the years to come.
In respect of policies and the regulations.
We are trying to push forward the process in China received an approval from the Civil Aviation administration of China for Air with MS certification powdered trial operation programs as early as 2018.
Recently, the CAC announced a 13 selected the Cds as a simple unmanned aviation experiment those loans.
Just the recently last week China's State Council also urged to crude you weigh m. development, each with a national strategies.
With the government to support and the relevant infrastructure upgrades, we will receive the airworthiness certification for each account onesix each with on 21 and it begins to provide commercial operations services.
The commercialization of for you and we will definitely be realized sooner than expected.
So, let let's embrace the future together.
Next our Chief strategy Officer, Edward Terry will provide operational and business updates. Thank you.
Well those were missed doses remarks, now let me cover some of our business achievements in the quarter of this year as Mr. Pool, just mentioned, we delivered a strong quarter with impressive business progress in solid financial results.
Net sales of our flagship passenger great Avi.
216 reached a 23 units to where the newly launched a year from 206 F. a firefighting version of 801 six.
This version is especially designed a JV for aerial firefighting solution, especially for high rise buildings in the recent the secular properties to buy the Chinas based comes from its stressed the need of information for emergency response to fires with application of elite technologies.
So we believe the launch of the homes was six AFE was the right time to meet the potential market demand.
With the operational attitude of up to 600 meters. The hunt Onesix AFE is superior to conventional extinguisher equipment before high rise buyers.
Given our large payload ear onto one six F is awards first Avi for aerial firefighting.
It can carry 150 metres of extinguishing foams and six fire projectiles in a single trip.
Okay close to management techniques allow us to operate the HBV in a fleet smoothed the remote ground control stations.
So far we see significant the market demands and strong interest from China's emergency management, the departments and fire departments at all levels.
In September.
We launched another new product you hoped Onesix channel.
Every or logistic a version of the 201 six.
This isn't a multi mode or ASV was a record the payload for short to medium haul air logistics in both urban and rural areas.
This model open up a more commercial opportunities so various urban and rural area logistically use is not a required frequent and appointed point deliveries, including large parcel deliveries the agricultural product transportation offshore transportation every emergency response.
And disaster relief et cetera.
Although the leading TV company, we are committed tweaks to new products and solutions to meet the high demand from east to solve problems and to empower our smart cities in China and overseas.
Moving forward, we have a robust new product pipeline and we will continue to develop more use cases to further accelerate the commercialization of Eylea technologies and air mobility solutions.
Moving to our business expansion.
We announced in July to set up a new production line in one day, you food to meet the increasing market demand for ABS.
This will complement to our existing facilities in one job.
With the local government support that you threw factory is expected to start production in the first half of 2021 with an initial capacity of 600 units per annum, especially for you hoped Onesix F.
That you from factory.
We will feature an R&D facility and our training center for Air Mobility. We are excited about this new project, which is expected to bolster our capability to meet the increasing demand for ABS in China.
In this quarter. We also made a several meaningful regulatory breakthroughs in July we announced one six was awarded especial flight operations. So he indicated by the transport Canada Civil Aviation.
With which trial flights of the 801 six have been permitted and are routinely conducted in Qubec Province, Canada.
This was the first of these kind permit to for periodic operations of passenger greet a lease in North America, which marks an important milestone in regulatory breakthroughs for 801 six international markets.
Furthermore, in August we were selected to join ambulant.
Hi International project supported by the International receivable Aviation organization, I, Q, which is developing a flying and good news for emergency medical uses.
On the first company in the low to launch and commercialize passenger grade a lease we will contribute then this is the hardware such as Rogers and motors to the EBITDA project we.
We are excited to join the queue supported and Mueller project, where we can work with industry leaders to from field. The mission of saving kriegel minutes emergencies by leveraging our unique technologies and the practical experiences.
Most recently, we continue to obtain service of significant favorable policies and the regulatory breakthroughs paving the way for our air mobility operations in China and globally.
For example in October the Civil Aviation are the ministration of China, or CE, CE approved 30 cities, including Beijing, Shanghai, So Joe et cetera to be in the unmanned the civil aviation experimental loans to accelerate the growth of the U.M. industry for various use cases, we.
On imported into force behind this initiative and supported several cities to obtained approvals.
In late November the General office of the State Council of the PRC issued a smoker, which urges to bring you am development into China's national strategies, and the formulate the rattling the policies standards and the legislations net.
The potential applications of firefighting easily vs were also emphasized by the state comes from either.
He reflects China.
Chinas government has great emphasis and the strategic support for the new UN industry and should the Lady a solid the regulatory foundation for the industry. We think at least will pave the way for China to become the world's largest anyway in industry market and for us to strengthen our.
Leadership and the growth momentum.
Notably our progress in overseas market is equally important.
In Asia, we obtained a special certificates of Air Force news or as a seed for the young 26 from Korean Ministry of land infrastructure and transportation in November a first SCC ever issued to our passenger great Avi in Korea from.
Furthermore, we have successfully conducted the maiden flights in the center of Seoul, tycoon and the Jeju Island, if for different use cases.
Including emergency medical services and area sales team.
This is a significant milestone marks our starting point to explore that you end market in Korea.
Moving forward, we will further expand the UN palace Pilar, the CD network and achieve regulatory breakthroughs in more countries and global organizations paving the way for global expansion. After the virus is contained.
To conclude we continue to deliver a solid performance in this quarter, we are optimistic about our long term.
From an outlook of the UN industry, and we believe our first mover advantage will enable us to drive robust growth in the near future.
Now I will turn it over to our CFO Mr. rich our little to provide the financial details for this quarter.
Rich our please go ahead. Thank you.
Thank you Edward and Hello to everyone on the call before I go into details about our financial results. This know that low numbers presented are in RMB and percentage changes refer to year over year comparisons unless otherwise specified.
Detailed analysis is contained in our earnings press release, which is available on our IR website.
Im going to highlight some of the key points here.
We achieved the highest quarterly revenue and gross profit in the company's history this quarter.
Total revenues were $71 million up 104.3% year over year.
With growth across the main revenue streams.
Our core business of Air mobility solutions represented 49% of the total revenues.
South of the home to 16, the Companys flagship technically we reached 23 units, including two units of the firefighting version.
Hum to succeed.
Compared with 18 units in Q3 non here.
Gross profit was $42 million up 120.3% growth margin reached as high as 59.2% up 4.3 percentage points from 54.9% in Q3 last year.
This was mainly driven by the optimization of cost structure of certain products and changes in revenue mix.
This reflects our comparative value, resulting from our leadership and the first mover advantage in the industry.
Adjusted operating expenses, excluding share based compensation increased by 41.2% to $37.9 million.
As a percentage of total revenue was 53.4% as compared to 77.3% in Q3 2019.
The increases were mainly due to higher R&D expenses related to the continuously strength and product development efforts and additional DNA expenses relative to public company operations and approve them provisions in light of proven IP development.
As revenues continue to ramp up there's operating leverage that supports our path towards operating profitability.
Along this line we have again achieved the quarterly adjusted operating profitability. This quarter. Following Q4 last year are.
Adjusted operating profit was $4.5 million compared with adjusted operating loss of 7.4 million in Q3 2019.
Adjusted operating margin was 6.4% compared to negative 21.2% in Q3 last year with.
We're further achieved 5.3 million adjusted net income with a net margin of 7.4% compared with adjusted net loss of 7 million in the same period last year.
Looking at our balance sheet and cash flow, we ended the quarter with roughly 243 million in cash cash equivalent and short term investments.
Overall, the financial results in Q3 was solid with record high quarterly revenues and gross profit and then we will achieve the second quarterly adjusted operating profit and net income. Despite the continued impact from the COVID-19 pandemic.
Now, let's turn to the outlook due to continuous current uncertainties surrounding the impacts and duration of the COVID-19 pandemic in China and international markets. We are adjusting our outlook for 2022 analysts the 50% growth in annual revenues.
Having said that we have become more optimistic and confident in our long term growth outlook given the increase in practical uses of and demand for a lease and a strong growth government emphasis on supporting the industry growth in the global you have markets, especially in China with.
With that we conclude our prepared remarks for today, let's now open the call for questions. Operator. Please go ahead.
Thank you.
And gentlemen, ill begin the question and answer session.
Three questions. Please.
And the number one and late seeming to be announced.
Cash for the request please.
Cash ski.
Once again pleased with.
And the number one.
That's the question.
First question comes from the line of Dan.
Yeah.
Well get family.
Hi, Mr who had already Richard Thanks for taking my questions from basically I have three quick questions.
The first one.
Could you share relative to.
Now the progress and hold a complement to you at Ford.
In terms of percentage were kind of.
Order contribution is coming from the current event.
And do we need to wait till the air worth it assertive Kate.
I think when you look at that next year's growth.
Before the mass production for the government.
My second question has to do.
Value.
Current Ralph.
We will assess model because we noticed added per quarter revenue.
Typically outgrow the low deval in growth per day.
So just wondering if theres any change to our business model.
Coin index, where the business mix and my last question is about the outlook.
It might be but could you. Please the color relative anti trust.
You're talking about outlook for next year, and probably specify what would be the key drivers for the question here. Thank you.
Thank you.
This is Eduardo I'll take your first question.
So regarding the progress of the government the project right. So.
So basically we secured debt.
Our ship.
As a tourist city governments, Spain quite low severe the other is the Ria and so far with the two projects.
Yes, so far from it.
We have started the pets flights and are pushing forward to the regulatory process or.
206.
Hey.
For the further simplification.
And the.
And also another project is in China.
Smarttv management.
Project Joel I, we are providing the cloud control center for the for the government and the so far as.
The project is going well.
Thank you.
Youre right.
Got what I thought.
Good question I'm sorry.
Mr Hope.
Hi.
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Total debt.
Thanks.
Okay.
John Coleman.
Yeah, the whole call about our price in level.
Hi, Josh non yet from the.
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Turning to GAAP.
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George out all the cash.
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Right.
Moving on I guess your question Debbie.
Hey, good morning.
That's right from your yield I don't want to hear from Fortunately day.
Okay and on the kind of that.
That's true.
Uh huh.
Let me just translate to watch.
What was that.
The third quarter actually we are experiencing a change at all.
Our business model or we added.
New model.
Current previously we have been working as the OEM provider.
We are setting our equipment.
But.
When you realize that too.
We are going to be operating our system and the equipment. So that is given a lot of these flight.
Data accumulated so far we we we are able to.
Provide the real operations by ourselves to our customers. This is just like.
100, a year ago, our volume in the Airbus a providing the new the whole do you.
Air Transportation with Us with hockey and however is so different from that we're not providing these two with the pilots we are providing the service to every normal person.
Without any flying at techniques. So that means we are going to lead our taking.
Taking the lead or to launch an operation model. Thank you.
Correct.
Yeah, well I think you had the call.
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I mentioned that form a share benefit each day.
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No not at all.
No one of the things.
On the day that innovation okay.
I'm afraid I'm going to cohort value very warm I sent back to the Chandler, Oklahoma index or tie from current color.
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Sure, Okay, well good morning, Joseph Bank.
Doug on the automotive value Kelly this is moving onto other occasionally for going into your answer real photo warmer soil units from the untried OCA for loans have presented to us.
Okay.
Okay.
Given the.
Our performance in.
Past few quarters, and we are realizing that.
The standards and operations.
Framework is very very important and so we need to all the range as the process and the standards or operations and actually we all customers has received our vs and they are trying to launch in the <unk>.
Operations.
But.
As our platform operating are we need to set the standard for them and so we are also working closely with the.
Setting the right the standard and so we believe that safety always remains our top priority and the so we need to add to the.
Centered right and so as to provide the safe service to the normal person.
Okay. Okay.
First question.
Returns.
Other expense or channel team I won't take you off.
One question I understand your current question regarding Oh.
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Toss back from them.
Next year.
Yes.
I'm, referring to our latest the press release.
Operating the latest loans.
We tried to stay council.
We are currently assessing the situation, but definitely this.
Flow will diminish.
Cumulated on the future demand and which will lead to more orders in the future.
Thank you.
Okay got it.
Thank you very much management team. Thank you.
Thank you.
Next question is from the line of Vincent Yes.
Needham and company. Please go ahead.
Thank you management for taking my question I have three questions are the from.
This one is about the governments support and the the regulation so with regard to the securities by the State Council PRC have how do we see any progress made in the revenue.
Regulatory from.
In terms of like the subsidy or incentive for manufacturers and my second question is about the margin trends post Colgate with the new firefighting products line as we have already stopped selling these paula.
And my third question is actually above the guidance we.
Actually we we being the beginning of the year. We set we will have the guidance is at least 200%. So obviously doing the due to the cold that we see in this earnings we set that we are going to make a lower into 250% like still pretty high number, but a big difference compared that with the new.
A member we previous that so I'm wondering.
So wondering for like is that just orders got delayed so we were going to have it.
Like.
Adjusted EBITDA in the.
Your next year.
National.
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Or any other reason.
Switching away from confines have adjusted waiver from when you when do you see going to recur.
Jim It's obvious now mutual Jupiter from state.
No John during such as that will that will mature the.
Just a day.
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Yes.
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Yes.
Yeah from yet Dicello. Thank you slip or are you just see.
Good day.
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You talk to your net.
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Yeah.
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Sure.
True yes.
Yes.
Okay. So for your first question, maybe I'll I'll I'll explain.
So it's very clear that so we see more and more positive attitude our messages sent by the government, including you know the CCC understand Oh, no Oh I see recently selected 30 cities to be based element.
No city or Almond aviation.
Zone in China and specifically.
Yes.
We had the connection with the three of them and this award give us a good opportunity to apply our Holland I think and also these are.
<unk> expense.
Oh process for certification and more importantly.
Last week, we had to the state Council's suffered our quickest stress the three points. One is that it did specifically mention that Julie and development day on to be a national strategy in China I understand that the government a few.
The average because.
Net Korea, and Japan, all countries I will elevated that leaves you and well take into their national strategy, and so China or that the government is very good to hear that come into realize Lisa Palmer and also the.
The potential for this industry, so after including you and.
And each with a national strategy this low.
Be a very important critical factor for the department of the whole industry and understand that we are the industry leader and so we should be a key beneficiary of these positive trends and secondly to specifically mention that.
Okay.
The acceleration from that of.
Of the legislation or the Uribe in China, given the fast development industry and so we understand that.
Pools.
Just like you framework, we will do more code for the industry and the third.
Specifically mentioned that before the fire fighting and emergency service.
Hi, not when we need to adopt the technology of the UBI and just at the right time, we launched the firefighting version of Antoine fixed so which come just to meet the demand for such a product and so three outward the points of that like housewares.
Suffer.
Our very positive messages for it.
Thank you.
On the discovery channel I'm going to take.
Second question.
In respect of our gross margins, we have seen our growth margin maintained at a stable level off from.
80% Pos since we started the commercial delivery in the first half of last year if.
If you look at other electric co transportation technology products, such as non electrical cars, our gross margin is much higher.
So our English back off our new model of finding model.
The gross margin is expected to be in line with Oh, we got off from.
Other existing models.
And the overall is expected our gross margin.
Well be maintained at a similar level of 50% path going forward.
And your third question on the basically.
We adjusted the 2020 annual revenue guidance, mainly because the extended impacts October 19 pandemic.
Cost delays not is a development.
Mainly including ours.
So our CEO misinformation come from.
Handset and infrastructure is needed for operational service.
On some of our customers have been developing the infrastructure, including a vertical.
The original plan was to complete infrastructure and in Q4.
Due to the extended coli.
Wholly dependent.
If I'm out the infrastructure has being delayed resulting postponed.
From a pickup from products into next year.
Second are.
We really the fire fighting model at the handoff on July after that has attracted from interest from emergency management departments and high finding from customers actually theres, increasing number of potential orders in discussion.
However, because this is such a requirement.
Carlos.
Restaurants per.
Certification before officials Nols.
The back.
We have been trying to salary the certification process after.
After the release in July in order to recover from loss due to the the virus outbreak.
And aim to get it before the year end.
As the a and E. coli outbreak research now.
Now it is expected.
Net accretion.
We completed an EPS next can too so.
So the south plan out cease fire.
Operating model in.
Robin 20 has.
Onto next year.
And third at the beginning of the year.
It was planned for the European markets to generate important business lead and our revenues for.
For the school, we not only from a local operating teams, but also upping on the flight permits.
I talked to one in Norway and established partnership with two.
Two Spanish cities.
But the most severe from.
That makes situation in Europe hindered our business execution.
Although in Q3, we had hi, how fast to speed up the execution to make up for the time lost the rebounded.
Ensenada rebounded and in Europe.
No hindered us again so.
So to sum up based on the book.
Thats great valuation, we adjusted the.
The guidance for pro from purpose average.
So that it is expected to be a temporary situation.
As our CEO point out.
Based on our on your department, especially the latest breakthroughs.
Breakthroughs of the Chinese governments policy that strategies.
We are more confident in.
In the company's sustained long term fast growth prospects.
Okay. So I'll answer the question. Thank you.
Yes, very much thank you very much.
Thank you.
Next question is from the line of Ivan loans Wellington Management. Please go ahead.
Hi, Good evening, Hi, Ed Wood I missed.
Yes.
Thanks for doing that.
So so maybe going back to a few questions before and just trying to understand your business model.
Can you can you kind of give us a sense of how are you.
Begun yet.
Kind of following up.
Come on control Center model.
And how that is impacting your kind of receivables. So if I do look at your outstanding receivables at the end of the quarter.
Quite a substantial increase from the corresponding period. So I just wanted to understand how your business model.
Moving.
What are your credit.
I think the last time, we spoke.
To manage the command control expense.
Like six months, and then transfer or kind of.
The.
The local government.
And then things equal from there. So can you just kind of explain and give us some background.
Yes.
Thank you.
Okay fine Okay. Let me translate these are thrown missed the one day you will take that question.
Apple does not.
Okay.
So that leaves about going from <unk>.
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From Gallagher, sorry, more strength.
Hi chip.
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The patient or yours, how come off a couple of years.
Okay.
There's a lot from it.
Got it okay.
Okay.
I'd say that the force so.
So far.
We are not saying that were going to change our business model. We just added new business to our existing platform. For example, previously we were OEM provider a we didn't match true.
Right.
EBITDA.
So after we understand that we now we have been true operating a these are platforms by ourselves.
Hi from that so we we are changing from from a pure or airline a manufacturing company into an operating company so sort of true.
This model with integrated.
Oh warmer dryer tragedy, a woman from Victor.
Hopefully not a charge or whatever I said again going out the door.
Your dog or current interface from real short.
Provisions I, usually she's there from an old will like what they do and convert o'donnell's personal book.
ER are taught us reorder from your current current.
Current jolt home to organize receiving from Helen.
And the second we realize that the value of would you argue that were providing the individual or customized.
Transportation mobility services to each day.
From somewhere during the day COVID-19.
Many countries are the public with transportation has been suspended due to the operating cost of hours a day.
But the individual.
Mobility, a touch location becomes an important so yeah, providing.
The mobility service to individual.
Yes. So this definitely shows the value of flow of all companies of all products.
Oh on there I don't know one bedroom.
Good day.
Oh come true on the tight OTO idle Oh, I have a job that that's having some weather.
Do you feel that television total loans.
Digital the launch in that how could you know enough energy.
Well I mean, it's in jail.
So far we have fewer five come on comfort core centers in China and Meanwhile.
We are building a new one in Europe I've had my job specifically so Steven.
Given these Concord whore centers, we are able to manage the operations of all our ABTS, a very well value.
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Inputs engine.
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Yes.
Ah So August command control centers actually help to improve our the management of all age not only into the house why pick up the other NVS.
To be applied in different use cases, such as per the highway inspection like environmental protection.
Pepper and to help realize the smart city management.
Function so.
We are going to be where the more common core centers are not only in China, but maybe in Japan and Korea in future. So all these common control centers affirmed good integrated network. So so that we are able to match the operations of our.
Well.
Oh sure that's true yes.
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The translation.
Okay from your Jose Davinci, GAAP, Hi, Vince you don't him highlight how the cash flow.
My mother from dual channel, our public guidance, how little units come true.
All good stuff from high warmer to creep up here.
From actions you live in a ship debt.
Carol have felt the Yahoo lateral petrophysical share, but how much how true on commodity.
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Thats helpful anyway.
The town of artisanal flow to put.
Okay tenderness history on it.
And specifically in China, we are comfortable we are operating a hour your contractor.
Coding the lending manual path and the reports et cetera, so with more.
Oh, sorry infrastructure being built as we are going to build a more complete network and I saw that the individual customers or passengers can use our service more convenient.
So you're probably right.
No woman the notion that from alpha comfortable holding operating across the lateral I don't know the yield only a three day traction outside of the true accounts or someone they said.
The unions are true intercultural guy coming from.
Good day.
Got it on at all.
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Jim you want to Notionally non true.
So in the future.
Revenue from to see more oil on the more of our income uncomfortable centers being viewed.
Different.
And so this will not only improved operations or how what happens or what.
But also cash how code to improve the smart city management for the local governments and which you might generate from more revenue is for us.
From a site one another.
Good day Kinda lot about party.
From mail from or somebody else or whatever.
A level whatever channel Oh interface and telephone.
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Ah So actually if you look at our business model and then with the revenue and net so there is nothing to be reduced from our previous structure we didn't.
Cut any of our existing services.
But we are going to add these sell operations.
Service.
Okay.
Yeah Okay.
I don't mind the follow up just on this one so so can you sort of in an ideal situation lets say for example, when you're working with the government.
Let's see you build the infrastructure you manage the cc or commodity controls and go for six months when windows receivable start flowing in.
Is it off the handing over.
What is the usual sort of you know business films that's one.
And the other one is more kind of a.
Question on Smart city, there are other companies.
In China, and he said he spoke on people from control.
And they're doing basically.
Video based I.E. I sort of integration the smart cities, where for example traffic management is managed by stationary cameras for example.
But they're also talking about a control center based on kind of fixed camera.
This means across various key parts of the city.
How do kind of local governments seek about multiple solutions. They go from mobile solution like yours.
Are you talking to companies like this to kind of come up with a better and more integrated solution. If you can kind of give us an insight and how this is playing out with the government's that'd be great.
Okay. Let me translate the question first and children's book.
Okay.
She was a cause for that you guys are up your assortment of course order value.
Actually we don't see on Monday, So wondering if everybody gets a whole knowledge about EPS I know that.
For our undertook a usual so true.
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Current alternative semantics entrepreneur Whos here from more Metro Center.
Okay.
Our culture, one they should range.
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Hello.
Uh huh.
Okay I missed the who will answer your first so regarding.
Specifically our project Joe.
For building or at least the current control center, we will get the white in all four of our revenue from the government. Therefore building this commodity onto our standard and the second were going to true the service fees for operating this command control center or the government and so basically.
And there are true portion. So revenue was or is all fixed income Alco revenue was a four or a record or services and the second.
Adam more services true more specific on our special use cases, and a true to generate additional revenue from that.
From a highly you own more share so you'll shanteau from coming from Michael My overcome daughter, Fiji double from Wassa I O'neil.
All in all geographies you if they did very well from a return from.
The book.
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Come true.
Format.
Total are going up people from when a patient.
Yes.
And Additionally, a the government may consider purchasing or a lease from us not only the Johan twice six passenger everybody to some industrial applications.
For example, the freedom and that will be one of the functions out of the government will need and it showed Meanwhile, we are also going to provide as a training services or the government debt, which may generate additional revenue.
How does your guidance you might use as well.
Let me translate your second question I fear of wouldn't use will take a onetime daughters, and that's certainly true gluttony from a traditional seasonal.
From July by net.
Does resonate CEO is volume share where does it all so essentially the wassa, how many on putting those sort of psychological gensets YOD attention. If you want an awful lot much of what the watches accommodate a woman day on the wins either as a percentage.
The revenue like central net.
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Moving on average.
Sales and EBITDA of or will there be from or not all that you show.
Just one month or restaurant, where how hurdle well there from a record number for the real simple if at all.
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I don't have kind of mentioned that Oh.
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Well I mean, if if your trends.
And you're not familiar I'll, just I'll notice I'm wondering.
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As Roger what you show me that's true.
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Oh on the words, you better with our true religion I wondered on the immuno Dopey I don't know, who your chart or percentage or something.
Well.
So first we see there are big differences between hour ill Ah you Avi asthma, the management the model and the other static.
Camera model for example, or the.
One of the applications in areas that are four four hour contract for centre in San Juan and hurdle.
A major function is a four these are far from.
We are fighting for Forrester firefighting prevention, and so normally you cannot rely on static camera per detector. The forest fires and if so how are you. We these are 85.
Hi for the portal and the inspection and the detection of fires and the wife for the fire as being effective weapon to send all firefighting version.
Easy to put out the fires. So this is something that or not.
Oh possible by the normal Smart City management the systems. So this is our unique application.
Vacation.
Okay. Okay.
Okay.
Thank you very much and thank you.
Okay.
Thanks.
Thank you and seeing no more questions in the queue.
That's an affinity for closing remarks.
[noise] [noise] feedback.
Oh, Thank you operator, and thank you all for participating on today's call and for all your support we appreciate your interest and look forward to reporting to you again next quarter on our progress.
Thank you all again this concludes the call you may now disconnect.
[music].
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Good day, ladies and gentlemen, thank you for standing by and welcome to the <unk> third quarter 2020 earnings conference call at this time, well what do you suppose somebody could only mode. Later, we'll conduct a question and answer session and instructions will follow at that time.
We are recording today's call. If you have any objections you may disconnect at this time.
I would say the cold or with the GE will get Chang managing director of the Blueshirt do they share. This Chen. Please proceed.
Hello, everyone. Thank you all for joining us on today's call from call. It to discuss the company's financial results for the third quarter. All Twentytwenty. One release. The result money today. The press release is available on the company's website as well as well on newswire services on the call with me today are Mr. Huang.
<unk> Chief Executive Officer, Mr., otherwise, she chief strategy Officer, and the mystery child Pugh Chief Financial Officer before we continue. Please note that todays discussion will contain forward looking statements made on the the safe Harbor operations, all the U.S. Private Securities Litigation Reform Act.
1995 forward looking statements involve being hard to risks and uncertainties as such the Companys actual results may be materially different while the expectations expressed today.
Further information regarding these and other risks and uncertainties is included in the company's properties fighting with the FCC. The company does not assume any obligation to update any forward looking statements except as required under applicable law also please note that all that's otherwise the state all the thing.
As I mentioned during the conference call I in Chinese RMB waste that let me now turn the call over to our CEO Mr. watch it Mr. Cool with speaking Chinese then always T.S. So at award would translate his comments into English. Please go ahead to Mr. Cool.
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Sure, Matt you woman that show she's trying to watch your washout true to you laid out your shop. She said our job well I'll do the translation for Mr. Hu Hello, everyone I'm watching <unk> founder and the CEO of you how as a first mover in the global U.M. industry, we have already deliver over 100 units of yeah.
<unk> was six passenger grade autonomous vehicles or east cumulatively in China and in the World. We have completed near 10 sold it say flights worldwide with zero accidents. They see is amazing accomplishment for such an innovative passenger grade Avi all proprietary.
Redundancies safety systems have been 40 testified by the abundance of real flights now we are entering into the next day stage of development from a pure OEM provider professional products and technologies to our platform operator are setting necessary rules than the standard for commercial operations since.
To achieve this goal we still have a lot to do numerous they flights have laid a solid foundation for us to start to the mass production. We have just a compete to the public trial flights for very fine and demonstrating the U.M. use cases in Korea, which helps to generate new orders from the Korean markets.
Quality of our HBV is always remains our top priority cease all college production for city can no longer meet the needs of the mass production.
Decided to build a new production facility in why don't you force.
With that Eylea or a 40000 square meters and the planned initial annual capacity of 600 the units passenger growth even more important we will we established a complete set of industry standards and systems from design production and operations and we will devote ourselves.
Moving and developing the infrastructure, including the automated the Verde boards, so as to gradually establish an integrated operating system like about existing airports. This is also an important measure to ensure the safe operations of you hoped was six today we have developed.
Integrated Avi technology platform with proprietary intellectual properties, leveraging our eastern experiences and expertise in the fields of hardware software and supply chains, we will release more avi models with different to pay low levels to meet the demands for me the whole at long hole flow.
Thus gradually expanding the operational range of autonomous air mobility.
In terms of from new products, while we continue to accumulate cash will change orders off that you have won six EPS firefighting model. We are celebrating the official certification process may.
Meanwhile, China's stays closer with hedge has also proposed to celebrate the income.
That's true upgrade and the practical applications of firefighting all manned aerial vehicles.
Yeah, Hello, Onesix Avi.
Including the passenger version the firefighting version and the logistic version I expect it to be key revenue drivers in the years to call.
In respect of policies and the regulations.
We are trying to push forward the process in China received an approval from the civil aviation administrator of China for Air with MS Certification Pirates and trial operation programs as early as 2018.
Recently, the CAC announced a 13 selected the Cds as a.
Evil amend aviation experiment those loans.
Just the recently last week China's State Council also urged to include you weigh M. development, each with a national strategies.
With the government to support and the relevant infrastructure upgrade we will receive air with this certification for you hoped was six each with about 21.
Begin to provide commercial operations services.
The commercialization of for you and we will definitely be realized sooner than expected.
So, let let's embrace a future together.
Next our Chief strategy Officer, Edward Street will provide operational and business updates. Thank you.
Well those were missed doses remarks, now let me cover some of our business achievements in the quarter of this year as Mr. Xie just mentioned, we delivered a strong quarter was impressive business progress in solid financial results net sales of our flagship passenger great Avi young ones.
Thanks reached the 23 units to where the newly launched a young to Onesix AFE the firefighting version of Onesix.
This version is the especially designed a before aerial firefighting solution, especially for high rise buildings in a recent the secular properties to buy the China safe comes from its stressed the need of information for emergency response to fires with application of elite technologies.
So we believe the launches that was six AFE was the right time to meet the potential market demand.
With the operational attitude of up to 600 meters. The homes Onesix AFE is superior to conventional extinguisher equipment for high rise buyers.
Given the large payload 801 six F is a words first TV for aerial firefighting.
It can carry 150 leaders of extinguishing foams and six fire projectiles in a single trip.
Okay close to many many techniques allow us to operate the HCV in the fleet. So the remote ground control stations.
So far we see significant new market demand and strong interest from China's emergency management, the departments and fire departments at all levels.
In September.
We launched another new product you hope Onesix Hello.
Every or logistic a version of the 201 six.
This is a multi mode or HCV with a record of payload for short to medium haul air logistics in both urban and rural areas.
This model open up a more commercial opportunities so various urban and rural area logistic. The use is not a required frequent and appointed point deliveries, including large parcel deliveries agricultural product transportation offshore transportation every emergency response.
And is off to relieve et cetera.
Although we are the leading easy company, we are committed tweaks to new products and solutions to meet the high demand for leased to shoulder problems and to empower our smart cities in China and overseas.
Moving forward, we have a robust new product pipeline and will continue to develop more use cases to further accelerate the commercialization of ASV technologies and air mobility solutions.
Moving to our business expansion.
We announced in July to set up a new production line in one day, you to meet the increasing market demand for east.
These will complement to our existing for cities in Guam Jones with low.
Local governments support you from the factory is expected to start production in the first half of 2021 with initial capacity of 600 units per annum, especially for you how to Onesix Caf net.
Uhhuh factory will feature an R&D facility and our training center for Air Mobility. We are excited about this new project, which is expected to bolster our capability to meet increasing demand for ABS in China.
In this quarter, we also made a several meaningful regulatory Brexit news in.
In July you homes Onesix was awarded a special flight operations, so indicate by the transport Canada Civil Aviation.
With which trial flights a day.
<unk> was six have been permitted and I routinely conducted in Qubec Province, Canada.
This was the first of these kind permit to for periodic operations of passenger agreed a lease in North America, which marked an important milestone irregular to rate breaks loose for 801 six international markets.
Furthermore, the August we were selected to join and good luck.
Hi International project supported by the International receivable Nvsion organization, I, Q, which is developing a flying and good news for emergency medical uses.
On the first company in the low to launch and commercialize passenger great a lease we will contribute the necessary hardware such as Rogers and motors to the EBITDA project we.
We are excited to join the Ikea supported and Bill or project, where we can work with industry leaders to from field. The mission of saving kriegel minutes emergencies by leveraging our unique technologies and practical experiences.
Most recently, we continue to obtain service of a significant favorable policies and the regulatory breaks those paving the way for our air mobility operations in China and the globally.
For example in October the Civil Aviation are the ministration of China, or a CE CE approved 30 cities, including Beijing, Shanghai, as Joe et cetera to be the Ahmed the civil aviation experiment to loans to accelerate the growth of the U.M. industry from various use cases, we.
On imported into force behind this initiative and supported several cities to obtained approvals.
In late November the General office of the State Council of the PRC issued a soccer, which urges to bring you am development into China's national strategies, and the formulate rather than the policies standards and the legislations.
The potential applications of firefighting way vs were also emphasized by the State Council E.
He reflects China.
Chinas government has great emphasis and the strategic support for the new UN industry and should the Lady assaulted the regulatory foundation for the industry. We think at least will pave the way for China to become the world's largest to you and the industry markets and for us to strengthen our.
Leadership and the growth momentum.
Notably our progress in overseas market is equally important.
In Asia, we obtained especial certificates of Air Force news or as a seat for the young Onesix from Korean Ministry of land infrastructure and transportation in November 1st SCC ever issued to our passenger great Avi in Korea from.
Furthermore, we have successfully conducted the made them flights in the center of Seoul, Nike and the Jeju Island, you for different use cases.
Including emergency medical services and area sales team.
This is a significant milestone marks our starting point tweaks pool that you end market in Korea.
Moving forward, we will further expand the U and policy Pilar the CD network and achieve regulatory bricks through it was a more countries and global organizations paving the way for global expansion. After the virus is contained.
To conclude we continue to deliver a solid performance in this quarter, we are optimistic about our long term.
From an outlook of the UN industry, and we believe our first mover advantage will enable us to drive robust growth in the near future.
Now I will turn it over to our CFO Mr., which are new to provide the financial details for this quarter.
Rich our please go ahead. Thank you.
Thank you Edward and Hello to everyone on the call before I go into details about our financial results. Please note that all numbers presented are in RMB and percentage changes refer to year over year comparisons unless otherwise specified.
Detailed analysis is contained in our earnings press release, which is available on our IR website.
Im going to highlight some of the key points here.
We achieved the highest quarterly revenue and gross profit in the company's history this quarter.
Total revenues were 71 million ups, 104.3% year over year.
With growth across the main revenue streams.
Our core business of Air mobility solutions represented 49% of the total revenues.
South of the home to 16, the Companys flagship technically we reached 23 units.
Including two units of the firefighting version.
Hum to 16.
Compared with 18 units in Q3 last year growth.
Gross profit was $42 million up 120.3% growth margin rich as high as 59.2%.
4.3 percentage points from 54.9% in Q3 last year.
This was mainly driven by the optimization of cost structure of certain products and changes in revenue mix.
This reflects our competitive value, resulting from our leadership and the first mover advantage in the industry.
Adjusted operating expenses, excluding share based compensation increased by 41.2% to.
$37.9 million.
As a percentage of total revenue was 53.4% as compared to 77.3% in Q3 2019.
The increases were mainly due to higher R&D expenses related to the continuously strength and product development efforts and addition, OTN expenses related to public company operations and the proof than provisions in light of coordinating involvement.
As revenues continue to ramp up there is operating leverage that supports our path towards operating profitability.
Along this line we have again achieved the quarterly adjusted operating profitability. This quarter following Q4 last year.
Adjusted operating profit was $4.5 million compared with adjusted operating loss of 7.4 million in Q3 2019.
Adjusted operating margin was 6.4% compared to negative 21.2% in Q3 last year were.
We further achieved 5.3 million adjusted net income with a net margin of 7.4% compared with adjusted net loss of 7 million in the same period last year.
Looking at our balance sheet and cash flow, we ended the quarter with roughly 243 million in cash cash equivalent and short term investments.
Overall, the financial results in Q3 was solid with record high quarterly revenues and gross profit and we will achieve the second quarterly adjusted operating profit and net income. Despite the continued impact from the COVID-19 can damage.
Now, let's turn to the outlook due to continue as current uncertainty surrounding the impacts and duration of equipment I think economics in China and international markets. We are adjusting our outlook for 2022 at least a 50% growth in annual revenues.
Having said that we have become more optimistic and confident in our long term growth outlook given the increase in practical uses and demand for a lease and the strong growth government emphasis on supporting the industry growth in the global you have markets, especially in China.
With that we conclude our prepared remarks for today, let's now open the call for questions. Operator. Please go ahead.
Thank you, ladies and gentlemen, I will begin the question and answer session.
<unk>.
Three questions. Please.
Cleaning.
The cash.
Heskey.
Once again please.
The number one.
That's the question.
First question comes from the line.
Yeah.
Family.
Hi, Mr who had a weighted Richard thanks for taking my questions from basically I have three quick questions.
Hi, the first one.
Could you share let that out of the progress and hold a carbon price here.
You have flawed.
In terms of percentage for coin.
Hold your contribution is coming from the current event and we need to wait till the end what assertive Kate Hi, finger you can get that next years.
For the mass production for the covenant.
My second question has to be.
Out.
Current Ralph.
This model because we know that you said that per quarter revenue.
Typically outgrow the wall to wall and growth for the year.
So just wondering if theres any change to our business model.
Coin index, where the business mix had my last question is about the outlook.
It might be but could you please comment on the pits.
20.
What you're talking about outlook for next year, and probably specify what would be the key drivers for the question. Thank you.
Thank you.
This is Adam I'll take your first question.
So regarding the progress of the government the project right. So.
So basically we secure debt.
Our ship.
As a tourist city government space why is this a via the outer years.
And so far with the two project.
So far so good.
We have started the test flights and not pushing forward the regulatory process or.
Six.
Hey.
For the further simplification.
And.
And also another project in China.
Smart management.
Project, you heard Joel I, we are providing the cost control center or the or the government and the so far.
It's going well.
Thank you.
Uh huh.
Right.
Yeah.
Huh.
My question I'm, sorry, if I missed.
Hi.
Well I mentioned that we've had from Gallagher.
Oh.
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Okay.
Okay.
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Yeah.
Thank you financial reporting.
Income from my thought.
Yes.
Come from John Coleman.
Good day.
Sure, we know whats out all the cash.
That's your Golden Hill Court on John.
If you hold it but you got no credit history.
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Right.
Right right.
Well I think that's your question Debbie squash.
That's true.
Anyone else.
I don't know what kind of deal.
That's true.
Uh huh.
Let me just translate the Watson I missed of course that.
In the third quarter, a actually we are experiencing a true.
Hence.
Our business model or we.
New book.
Because previously we have been working as the OEM provider, we are setting our equipment, but.
But.
When you realize that too.
We are going to be operating our system and the equipment. So that is given a lot of these flights.
They are not cumulative so are.
We we we are able to provide.
Provide the real operations by ourselves to our customers.
This is just like.
100, a year ago, our volume in the Airbus a providing the new the whole you.
And our transportation with us without.
And however is so different from that we're not providing value to the pilots we are providing the service to every normal person.
Without any fly at economics, so that means we are going to lead a.
Taking the lead or to a launch of the operation model. Thank you.
Well I think you have to call.
Organic I hopefully hopping on channel.
Just a woman's from that I have ever seen.
Sure Okay.
I don't know that alter at all and then thinking about on a day.
Okay. So your thought on that.
All right I'm going to Copenhagen.
I want to share right and that's your platform and giving guidance or tysons corner.
Hi, Bill.
I'm not going to go to the bottom or share.
I would say the low mass effective.
And from what I mean, how true each that's I guess I'm wondering can builder, okay, settling a true we live.
Got it okay, I'm going to touch from.
And finally on the value.
Kelly. This is 301 other things are going for sure.
Sure.
On the soil use from that.
Hi, just a woman's have presence in north Anna Torma.
Okay.
Given our.
Our performance.
Past few quarters, and we are realizing that.
The standards and operations.
Framework is very very important and there so we need to alter your average.
Process and the standards for operations and actually we are all customers has received all.
Our.
And they are trying to launch in the operations.
Good day.
I'll now pass from upgrades or we need to set the standard for them and so we are also working closely with the.
C C.
Setting the right the standard and so we believe that safety always remains our top priority and the so we need to add to the.
Centered right and so as to provide the safe service add to the normal person.
Okay. Okay.
Good question.
Richard.
That's very true on team I won't take you off.
Third question honestly.
And your current question regarding any.
Toss.
Toss back from them.
Next year.
Income as a.
I'm, referring to our latest the press release.
Operating the latest some commodity surprises stay console.
We are currently assessing the situation, but definitely this is.
Hello.
Given the low you got.
Future demand and which will lead to more orders in the future.
Thank you.
Okay got it okay clear. Thank you very much management team. Thank you.
Thank you.
Next question is from the line of Vincent Yes.
One company.
Go ahead.
Thank you management for taking my question I have three questions. The first one is about the common support and the the regulation. So with regard to the secured released by the state accounts Oh PRC have how do we see any progress made in the.
Regulatory fronts.
In terms of like the subsidy or incentives for manufacturers and my second question is about the margin trends post colgate's, we set new firefighting products line as we have already stopped selling these products.
And my third question is actually above the guidance we.
Actually we are we in the beginning of the year, we set we will have the GAAP.
This is a 200% so obviously doing the due to the colgate's we see in this earnings we said that we are going to make a lower at the 250 per cent X do pretty high number, but a big difference compared that with the net number we previous that so I'm wondering.
So wondering for like you that just order that got delayed so we were going through habits.
Like a risk you get from the.
Your next year.
International.
We.
Or any other reason.
Cynthia we'll conclude thanks, how about you Sue will then when do you what do you see going to recur.
Jim it's obvious.
Now he is low Jupiter.
Non cash on during such as that will that will mature the debt.
Good day.
Hello.
So some debt.
Yeah Yeah.
Yes.
Yes, the wendy's requirement growth model.
Good day.
Yeah.
So on the true.
Your cash.
Michael true not to go with free cash.
Yes.
You mean from yet the follow up can you just.
Good day.
Tendency.
Yes.
No.
You talk to your net.
The good momentum volume that just on the teachers.
So.
Because.
This is you go to the other two shops dollar since youre in ways, you've last release will be share concordance leave you hanging with which.
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Sure.
Sure Yes.
Yes. Please.
Okay. So for your first question, maybe I'll I'll I'll explain.
So we're clear that so we see more and more positive attitude, our messages and by the government in coding.
You know the CCC understand Oh ill for example.
He recently.
Selected the 13 cities to be the experimental city or amend the aviation.
Zone in China and specifically.
Yes.
We had the connection with guidance the three of them and this will give us a good opportunity to apply our bank.
Great and then also these.
<unk> expense.
Oh process will start indication and more importantly, just last week, we had to the state Council's Southern Europe, which is stressed the three points. One is that it specifically mention that as you add development day on to be a national strategy, China understands outlook.
Linda from you.
The average because there.
Net Korea, and Japan, both countries have rule.
The weighted at least.
Well, taking two of their national strategy and so China.
The government is very good to hear that government realized Lisa Palmer and also the.
The potential for this industry so after including.
Into the national strategies will be.
Very important critical factor or that department to all the whole industry and understand that the we are the industry leader and the so we should be a key beneficiary of that.
The positive trends and secondly, the specifically mention that it hurt the acceleration from that of the legislation or the you Avi in China, given the rapid development of industry and just so we understand that.
Pools Legislative framework, we will do more or.
For the industry and the third.
You mentioned that before the firefighting and the emergency service in China.
We need to adopt the technology.
And just the right time, we launch the firefighting version of per year.
Onesix. So we can just meet the demand or such.
And so three outward the points of that because we're so suffer.
Very positive messages or.
Thank you.
On the discovery channel I'm going to take.
That's true.
I call car gross margin lapsing upper margin maintained at a stable level off from.
50% Pos non since we started the commercial delivery in the first half of last year.
If you look at other electric co transportation technology, such as non I'd electrical cards, our gross margin is much higher.
So our English back off our new model fighting model.
The gross margin is expected to be in line with with.
Not all from the other existing models.
And the overall it is exactly our gross margin.
Well be maintained.
Some of the low 50 per cent path going forward.
And your third question on the price.
We.
We adjusted EBITDA.
2020 annual revenue guidance, mainly because the extended impacts offer co 19 pandemic.
Cost delays not visit development mainly.
Mainly including ours as our CEO Mr. Hu mentioned.
Handset and infrastructure is needed for operational service on some of our customers have been developing the infrastructure, including the.
Our deposits.
The original plan was to complete the infrastructure.
In Q4.
Due to the extended.
Ah Dick on the operating constructor has being delayed resulting post farm.
From a pickup of our products into next year.
Second.
We really the fire fighting model at the handoff from July after that cash.
Attracted strong interest from emergency management departments and high finding is customers are actually there is increasing number for potential orders in discussion.
However, because this is such a requirement.
Carlos.
Yes from a mess.
Mass certification before official snows.
The back.
We have been trying to my salary of the certification process.
After the release in July and non it to make up the from loss due to the the the virus outbreak.
Our aim to get it before the year end.
As the.
Colby outbreak research now.
Value this expected syndication.
The company that Alex.
Next can too.
So the south plan off lease.
Operating model.
2020 has postponed to next year.
And started at the beginning of per year.
It was planned for the European markets to generate important businesses need and our revenues for.
For the school, we not only from a local operating cash, but also appearing on the fly permits.
The one in Norway and established partnership with two.
Two Spanish cities.
But.
Severe from Pemex situation in Europe hindered our business just curious.
Although in Q3, we had type how fast to speed up the execution to may come from the time loss.
The rebounded.
No the rebounded in.
In Europe.
No hindered us again so.
So to sum up based on the latest revaluation.
The.
The guidance for per from purpose.
So that it is expected to be a temporary situation.
As our CEO point out.
Based on our on your development, especially the latest operating.
Thanks, Bruce of the Chinese governments policy strategies.
We are more confident.
In the company's sustained long term across growth prospects.
Hopefully so answering the question. Thank you.
Yes, very much thank you very much.
Thank you.
Next question is from design of our then low any Wellington management. Please go ahead.
Hi, Good evening, Hi, Ed Wood, Hi, Mr. Richard.
Thanks for doing that.
So so maybe going back to a few questions before and just trying to understand your business model.
Can you can you kind of give us a sense of how you from.
Beginning.
Uh huh.
Kind of following up.
I'm on control Center model.
And how that is impacting your guidance receivables. So if I do look at your your outstanding receivables at the end of the quarter.
Quite a substantial increase from the corresponding period. So I just wanted to understand how your business model is evolving.
It does I think the last time, we spoke.
Kind of manage that come on controlling expense.
Maybe like six months, and then transfer kind of.
The.
The low government.
And things take off from this and could you just kind of explain and give us some background.
Your business.
Right.
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No okay.
These are thrown his number one day you will take that question.
Does not.
Okay.
So hendi the material input from.
Hi.
Phil Gallagher Shyam or share doesn't want me.
Sure.
Well, that's true tone on the true.
She she is from New York interface, either true level.
You'll see the vision or youre going from.
Okay.
General.
Got it.
Okay I will translate the first.
First.
We are not saying that the wet AMD change our business model, we just added.
Oh goodness to our existing platform from sample previously we were OEM provider a.
We didn't.
That's true operations.
It's up by ourselves. So we understand that we now we have been true operating.
These are platforms by ourselves.
Hi from that so we we are changing from crop up sure.
Airline a manufacturing company into an operating company. So some of the true business model with integrated.
Oh, well that's true mentioned your woman from.
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You hopefully not a job or whatever so again good luck.
Moving to our current interface from real short provisions I, usually she's there.
Total labor day here.
Moving on to also.
Our our catastrophe order from you have current automobile.
Joe from two women I foresee moving up $20 per se.
And the second we realize that the value of.
Hi, good that were providing.
Individual or customized.
Application mobility services to individuals from somewhere during the day COVID-19 in.
In many countries.
Okay. Good transportation has been suspended due to the operating costs the virus.
But the individual.
Mobility touch location becomes important so yeah, providing.
The mobility service to individual.
So this definitely shows the value of flow of.
From a company of our product.
Oh, I'm, sorry, I don't know one veteran Jamie low for both good from adult.
Oh come through on that site.
Total Io book.
From a job.
I mean, it sounds like you feel that channel Gogo vision to hit older loans in my pocket, you know enough energy.
I mean, that's all.
So far we have fewer five come uncomfortable centers in China and Meanwhile.
We are building a new one in Europe, I don't specifically so.
Given these come on Comscore centers, we are able to manage the operation of all our lease.
Well well smartly.
That's it from another hit all the loans from a thought ayodele made growth.
Hi, or more.
Loans inputs engine.
Hi will.
Yes.
Joe the wrong inputs from interest for total non auto hit or the non income.
Hi, Matt right cash flow.
Turning to come true.
Beautiful Buffalo.
Although the shouldn't high our idle piling in the Wattenberg.
Hi, Jim.
That sounds wonderful clean floor level.
Culture foretelling ownership.
I will share about from going into that almost three years.
Okay.
Okay.
All right I know.
Well I don't know Union.
Yes.
So August command control centers actually help you.
Who are the management or our view not only into the hockey stick to the other.
Yes.
To be applied in different use cases, such as per the highway inspection like environmental protection.
Network and to help realize the RCC management.
Function so.
We are going to be able to more come uncomfortable centers not.
Not only in China, but maybe in Japan and Korea in future. So all this come on Hong Kong centers affirmed good integrated network. So so that we are able to manage the operations of our well.
Cultural of effect from that.
Yes, I went from having a few she joined us from just a woman.
Hi, there lead the translation.
Okay from your whole figure that you don't mean high debt.
Hi that part part of cash flow.
My mother from global Channel, our public cash outlays leaders come true.
Hello, Good production high performance, you'll creep out here.
Jimmy I stepped into how to fill up that.
Hello, Patrick that physicians.
True automotive D.
Okay. That's USA.
That's helpful anywhere from one July for Teleflex flow to Pandora, Okay, and on a true story on it.
And specifically in China, we are cooperating we are.
Operating a hour your contractor, including the lending manual path and the reports et cetera, so with more Oh fuck infrastructure being built.
We are going to build a more complete from network and so that's where the individual customers or passengers can use our service more conveniently.
So you're probably right I never candle woman the notion that from alpha comfortable holding off once you increase the lateral I don't know the yield ultimately accrete a true.
Scientists of drill accounts are sound.
Total debt ultra.
Okay.
Good day.
Good day.
From 200 comes from.
No.
You Wonder Notionally not true.
So in the future.
Revenue to see more and more of our income uncomfortable centers in fuel price.
Different people.
So these were not only from coke operations or how to one passenger but.
But also cash how to improve that possibly management for the local government and which you might generate from more revenue is for us.
From a silent on that.
Good I can kinda loans particle.
From mail from Ellis or whatever.
Or whatever cash all or nothing from Joel ill note.
That's really from the true okay.
The whole nickel related to hit those are weighted isn't future without it.
Please come down a quota share.
So actually if you look at our business model and the revenue mix. So there is nothing to be reduced from our previous structure.
Didn't cause any of our existing services.
But we are going to add these.
These sales operations.
Service.
Okay.
That's all.
I don't mind the follow up just on this one so so can you sort of in an ideal situation lets say for example, when you're working with the government.
Let's see you build the infrastructure you manage the cc or commodity controls and for six months when windows receivable start flowing in is.
Is it off the handing over or.
What is the usual sort of.
Net films that's one.
And the other one is more kind of.
A question on Smart city.
There are companies in China, I recently spoke on people from control.
And they're doing basically.
Video base I O E sort of integration with smart cities, where for example, or traffic management is managed by stationary cameras for example.
But they're also talking about a control center based on kind of fixed camera.
Placements across various key parts of the city.
How do kind of local governments think about these multiple solutions. They go from mobile solution like yours.
Are you talking to companies like this to kind of come up with a better and more integrated solution. If you can kind of give us an insight on how this is playing out with the government's that'd be great.
Okay, let me translate or that I can't force.
Joe This is what.
Okay.
Shows our cash flow that you guys are going to.
Before moving to which order.
Actually we don't see all non before we're making.
The weighted to hold.
For our hundreds of usual, especially true.
So from that.
Couldn't reach out.
Let me.
Current alternative semantics entrepreneur Whos here from more Metro Center.
Potential value our commercial operations.
So from a GAAP on there.
Hi, Jason.
Yeah.
For the quarter. Please.
Hardware from warmer weather.
We will now partial quarter one.
Sure.
Let me go.
We're not only from real quick portion.
Portion in a different way.
What your true John.
From.
Our total share no woman net.
Moving to warm and I think the loans.
The railroad into the flow.
With that digital channel.
On a per gallon.
Digital and regular.
Yeah.
Okay I missed the who will answer your first so regarding.
Specifically our project Joe.
For building this the current control center, we will get the one off for us.
Our revenue from the government. Therefore building this contract for standard and the second were going to try the service fees for operating this.
Income from a center for organic element and so basically.
There are true portion so revenue was or is a fixed amount of revenue was a four or a record or services and the second we're going to add more services to more specific or our special use cases, and a true true generator or additional revenue.
From that.
From a highly you own more shares or you'll shanteau from color from Michael might look a lot of Fiji double from Washington.
Target.
Thank you David.
From a return from.
Okay.
That's true.
Oh, I'm, sorry from it before Jim or are they from.
In terms of melanoma.
Please go back.
Out of low portal.
We're going to keep going from one of the patient so I'm wondering if.
And Additionally, the government may consider purchasing more leads from us not only the Johan twice six passenger everybody some industrial applications.
For example, the three D.
I will be one of the functions out of the government will need and it's so Meanwhile, we are also going to provide as a training services.
For the government debt, which may generate additional revenue.
How does your guidance from that users will let me translate your second question I fear of wouldn't be usual anchorwoman, nor does it certainly essentially flat from a traditional seasonal.
So you don't don't Heidi Gillette, Wyoming that does run today. He is on volume share weighted on several potential by the Wassa, how many important sort of slow down Colorado Gensets YOD day.
So if you want an awful lot much of what the losses will accommodate a woman day on the wins.
Pennsylvania Central.
Central much hot non joint venture to retrofit on balance sheet here.
Chosen to either dollars or will there be from or not.
Just one month, but I felt warehouse hurdle warmer.
I'm in for the real simple if at all.
As shown on how to how the tenant mix.
Hello, John.
How about I mentioned it was about a two day.
The final volume made him.
12, if as your terms little Mahendra Rao from value, obviously, others I'm wondering if the volume.
No our culture shellfish you saw now okay im going to 175 tenants.
Net Roger when you show me.
In order to not value.
On the words, you naturally shareholder dollars LPG out of it.
Moving to chart or one or two of those are you know.
Hello.
So first we see there.
Big differences between.
Our channel.
Usually the asthma Sci management, the model and the other static.
Camera model for example that.
One of the applications and I really is that for four hour car car for sanitary Shonkwiler hurdle.
A major function is a four these are from firefighting or forester firefighting prevention and so normally you cannot rely on a static camera.
Correct.
The the forest fires and so our or.
Our ABTS temp price for the portfolio and the inspection and the detection of buyers and the wife for the buyer has been impacted web into send all firefighting version.
Avi to put out the fires. So this is something that.
Not.
Possible buys.
By the normal smartly day management the systems. So this is our unique.
Application.
Okay. Okay.
Okay.
Thank you very much and thank you.
Okay.
Thanks.
Thank you and seeing no more questions in the queue.
The call back to the value for closing remarks.
[noise] feedback.
Thank you operator, and thank you all for participating on today's call and for all your support we appreciate your interest and look forward to reporting to you again next quarter on our progress.
Thank you all again this concludes the call you may now disconnect.