Q3 2021 NIU Technologies Earnings Call

November 22, 2021

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[music].

Good day, ladies and gentlemen, thank you for standing by and welcome to the New technology second quarter 2021 earnings conference call.

At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time.

A reminder, we are recording today's call. If you have any objections you may disconnect. At this time now I'll turn the call over to Mr. Jason Yang Investor Relations manager of New technologies. Mr. Yang. Please go ahead.

Thank you operator, Hello, everyone and welcome to today's conference call to discuss new technologies results for the third quarter of 'twenty or 'twenty one.

<unk> press release, corporate presentation, and financial spreadsheet Javier posted on youth investors Investor Relations website. This call is being webcast from our website.

A replay of the call will be available soon please note today's discussion will contain forward looking statements made under the safe Harbor provisions of the United States Private Securities Litigation Reform Act of 1995.

Forward looking statements involve risks uncertainties assumptions and other factors the company's actual results may be materially different from those expressed today.

Other information regarding the risk factors is included in the company's public filings with the Securities and Exchange Commission.

The company does not assume any obligation to update any forward looking statement, except as required by law.

Our earnings press release in this call include discussions of certain non-GAAP financial measures.

Yes release contains a definition of non-GAAP financial measures and the reconciliation of GAAP to non-GAAP financial results on the call with me today are our CEO Dr. Yung Lee Understaffed mist beyond Joel now, let me turn the call over to Yan.

Well, thanks, Jason and thanks to everyone for joining us on the call today.

So in the third quarter with strong growth again with our total sales volume, reaching 397000 units a 57% year over year increase making this our best quarter for sales in our history in terms of volume.

The sales volume in China market reached 392000 units, a significant increase of 60% year over year.

In the international market reached nearly 5000 down 11% compared to last year, primarily due to the shipping issues that you are all aware of that continuing to delay orders that would have received in the manufactured but cannot leave the factory and therefore cannot be booked as sales.

In the first three quarters of the year, how sales volume totaled 800000 units an increase of 77% compared with the same period last year.

Now the strong Q3 growth in the China market showcases the strength of our growth strategy, which includes the expansion of our product portfolio to cover a wide range of electric scooters and the rapid expansion of our retail channels and geographic footprint.

As mentioned in the last earning calls starting this year, we have launched five new vehicles under the new brand and assigned new vehicles, and the Golar Grand which enabled us to have a wide range of coverage of the consumer needs from mid to high end.

The new product design and also take into account the preferences of both male and female customers, allowing us to attract a wider range of customer group.

In the electric motorcycle class or entry model global at G. III has a starting price of RMB 306, 3699, RMB in our top of the range Engie MQ ITT has a price tag of RMB 20299, we have a total of eight series in 'twenty two.

Electric motorcycle product offerings.

For the electric bicycle class, we have our entry level <unk> T zero with the price of RMB 2499, and there are a couple of line model UQM starts with the price of RMB 8999, we have a total of 12 series and the <unk> 42 product offerings.

From the design style will have three series the GE asset see each with distinctive design still under the Golar brand and under the new brands we have.

Are you serious it was a unique look and style in terms of performance that we offer a wide range of 40 kilometers 200 kilometers on one charge for both electric motorcycles electric bicycles.

First of all the China regulations on electric bicycles over the past two five years, we have quickly dibaba a full product portfolio to cover the mid to high end market.

<unk> coverage was the key to fast growth in Q3.

And also set a solid foundation for future growth in 2022.

As we continue to expand our product portfolio. This year, while simultaneously expanding our retail store footprint across China rapidly Q3 is traditionally a peak season for sales, but a low season for store expansion. However at this time, we are able to cover our best sales quarter ever while.

Also adding another 320, new branded stores quite China, which is the one six ex ethylene expansion pace compared to Q3 2020.

As of September 30, we now have 2686 stores operating in China, We are well on track to have 3000 stores seeing outpatient by end of 2021.

These stores will serve as a foundation to drive sales growth for 2022.

Now moving away from sales for a moment I'm very proud of a milestone we hit as a company last month.

Tober 11th.

Our more than 2 million users helped us reach the 10 billion kilometre writing Mark.

The first time 10 billion kilometre has been recorded in two Wheeler industry history to celebrate this also milestone will launch a series of marketing campaigns with the slogan of feel a bit proud, we'll feel a bit new study in September and will run through the end of the year.

The breadth of new represent style technology on freedom allows spread values. We have selected a set of representative new users and share their story with new scooters over multiple channels.

This user seem Kruger photographers travel <unk> talk show host and others.

Stores showed how writing a new vehicle has helped them with their daily urban commute and make their lives a little better we'll feel a little bit pride proud with new.

This stories and videos have been broadcasting or social media channels, like Weibo and Wechat and on our web site and of course many of the Kols that <unk> has also created their own content around the theme I'll feel a little bit proud a bit new just further amplifying our message at rich.

In just a few short weeks of old dose have achieved nearly 100 million views more importantly, a helped to convey our brand value to our users and potential customers. The message positioned not just as the electric Scooter company, but also as a lifestyle brand.

Besides the user stories, we also launched a social media video Cam.

Pain with the feature video offer field, a little bit proud. The video has been aired across social media offline and also have been even showcase in as for the new James Bond film receiving more than half a billion views.

So considering you had more than 2 million users. We also engage our users with the treasure Hunt location based game, our app user receiver rapid ticket they write their new path the secret spot in their city.

Tickets can be redeemed footwear as prices like accessories and also enter the me too a lot of it for a 10 billion kilometre limited additions.

Our initial rollout in 10 cities over the past month more than 2 million digital rapid ticket have been collected by our users showing just how engaged our users are with our brand product and services.

Well, both user centric activities and marketing campaigns have improved our breadth awareness significantly in the China market and those campaigns, especially resonate with the Gen. Z users who are seeking brands that have deeper meaning unused commitment to style technology of freedom is something they value.

Greatly.

The combination of marketing campaigns with our continued retail store expansion sets us up for another quarter of growth here in Q4.

Yes.

Now looking at international sales for a moment here, our Q3 was a little below expectation as compared with the China market, but this is not a result of decreased demand as many of you are aware international logistics continues to create ever longer backlogs and we're not immune from it.

In fact, our book orders were 50% higher than what do we actually shipped and everything that's being shipped is typically on back order at any one point up retail across the globe.

Despite the low season in Q3 were in fact very optimistic with Q4 for the international market orders.

We're excited about tomorrow actually on November 23rd.

We will launch several new products at the largest two Wheeler shows globally held in Milan, Italy, including our most powerful 125 electric more pad. The <unk>. Our first 150, <unk> hybrid more pad, the <unk> and our upgraded E bike the peak.

And the two additional <unk> kick scooters, many of which will be shipped this quarter and in stores to kick up the fill season in February across Europe, and the Americas.

First in electric motorcycle multi classes, we will launch the <unk> <unk> will be the mark of new performance line.

<unk>.

We'll be anvil eczema is the first product launching our new <unk> series.

It has been redesigned inside at all with the top speed of over 100 kilometer per hour and exciting zero to 60 kilometer power truck time see under six seconds.

Stripping its gas powered rebels weed.

We believe this is the first electric more pet that can really compete on price and also a full manpower and the speed with petro competitions in the 125 DC class a multi <unk>.

In addition to the performance that <unk> has added a number of features that include a keyless ignition electric anti theft locking and all new TMT color dashboard customizable via the users that we have already received seven several thousand orders to be shipped in Q4 and NTT.

<unk> will be in stores in Europe and America as early as February It was a price tax of 5000 euros.

Besides the MTT Bill will be also debuted our first 150 <unk> equivalent hybrid more pet the <unk>. The <unk> combined the best traditional IC engines, and the lithium iron battery powered electric motors.

They come with 150, <unk> IC engine, coupled with a $2 four kilowatts, electrical motors, providing exhilarating acceleration that much superior to even the traditional 250 <unk> more test the <unk> position as the gateway vehicle for EV for two Wheeler enthusiasts, who have not made the transition.

And away from petrol it is still in development and will be available in Europe and America in late 2022.

Now with the addition of <unk> <unk> and also the upgrade M. GTS and argue our motorcycle we have provided a full coverage of motorcycles from 100 Cc 250, <unk> greatly expanding our traditional offerings sell 50 cc equivalent electric more.

Internationally, we believe this will further consolidate our leadership in the electric motorcycle market globally.

Now as we mentioned last earning call. We have entered the micro mobility market with the presale sub hour kicks Woodard product that take you out three hour into Google on July 13th.

After a successful run in the Gogo.

Didn't have received more than 15000 orders by the end of the September 30, Tomorrow and Ecmo in Milan will bring two new kick scooter product to the market something we call. It <unk> three Max which will be upgrade of <unk> pro is equipped with more powerful upgrade of 450 Watt motor.

And with a larger lithium battery capacities, which could easily reach a speed up three three.

335 kilometer power and have a dry range of 65 kilometers.

There is no mass market product like this in the market right now and we're excited about it will be priced at 949 euros.

We will also bring us even more economical kick scooter into the family called the <unk>. The case, who takes many design Q sub K three and it was more user customizable features the case will have a top speed of 25 kilometer per hour and the writing a range of 40 kilometers will be priced at a four.

<unk> hundred 99 euros and that was the sleek and stylish design that <unk> expected to become a favorite urban mobility commute or globally.

Okay tool will be shipped before the end of December 2021.

<unk> three K two would have a robust lineup of <unk> school their product with price starting at 499 euros up to 949 euros.

Have a portfolio of offerings that meet the budget of wide range of customers, who are looking for affordable solutions for their urban commute. We have already received many orders and we expect to ship more than 20000 units of kick scooters in Q4 to fulfill the first batch of orders.

We will also expand our offerings into the APAC market Tomorrow, and Ecmo, we'll launch our new <unk> product called <unk> that has established urban minimal design and is capable of extended right range of 100 kilometers. Thanks to its tool removable batteries the BQ I'll be.

And there are 500 euros, making it our most powerful and affordable commuter E bikes to hit the market in 2022.

The continued growth for E bike demand across Europe and Americas.

Exciting growth spot for us in both those markets and there was a product like <unk>. We think we can quickly tap into the demand over the next 12 months.

No. It was a kick scooters and E bikes to cover micro mobility market. We're also expanding our international sales channel. Besides the current 153 flagship and premium stores and sell them plus authorized dealers. We have also established our e-commerce presence on channels like Amazon and also offline channels.

Which will allow us to enter into consumer electronics toward like the media market in Europe, and the many cross the U S.

Supported by the diversified product offerings and channel expansions, we're quite optimistic with our international sales in Q4 and in 2022 P. M.

Now I will turn the call over to <unk> to discuss our financial results.

Yes.

Hello, everyone. Our press release contains all the figures and comparisons you need and we have also uploaded excel format seekers to our IR web site for your easy reference.

As I review, our financial performance, we are referring to this third quarter figures unless I say otherwise.

And all of that monetary segers, R&D unless otherwise noted.

Our quarter three sales volume reached 397000 units, representing a 58% year over year growth.

China sales volume increased by 60%, primarily driven by new product launches in the past two quarters and the continued retail network expansion.

One you E bicycle model.

And while upgrading in multiple cycle model three we're available on the market in quarter. Three these two models contributed around 60% of our total sales volume in the third quarter.

We opened 750, new stores in China during the first half of this year the newly opened stores not only contributed to our sales volume growth, but also played a critical role in promoting our brand and gaining market share.

Opened another 320, new stores in the third quarter, which will help us with further steady growth in the future quarters.

International sales of audio however decreased by 11% as a result of the continued challenges from international shipping.

With regards to product mix.

And serious accounted for 6% of total sales volume.

Curious accounted for 6% you serious accounted for 13%.

<unk> products accounted for 75%.

There are 75 from Goldman product.

41% was from the low price model G zero zero and zero remaining 34%.

Articles on motive with relatively higher retail price.

Increase the mixing Goldman product was due largely to two reasons.

First then you go off production launches in quarter, two and quarter three.

There will be a real G III and therefore have been very successful and drove quite a bit sales sales growth in quarter three.

During the third quarter company, providing promotional activities for the Golar serious products in order to encourage faster adoption of compliance E bicycles in China.

Total revenue increased by 37% to $1 2 billion slightly lower than guidance. We provided earlier, primarily due to the lower than expected sales from international markets.

Revenue from China E Scooter sales remained strong and increased by 45%.

Accessories spare parts and service revenue from China market also increased by more than 40%.

A decrease in international markets. We believe it's short term and we are looking forward to positive growth in the future quarters.

<unk> quarter, three declined by 13% year over year, let's look at the details in.

In China market, the scooter ASP decreased by 9% year over year chiefly due to the sales from those price model G 000, which accounted for 41% of total sales volume compared with 27% in the same time last year.

In international markets, the scooter ASP decreased by 18%.

Mentioned in the last two quarters earnings call the depreciation of U S dollar and the changing the way distributors placed orders are the key reasons for the decrease.

Compared with quarter, two our international Scooter ASP increased by 5%, if we take out the impact from <unk> scooters.

The increase is around 14% quarter over quarter.

The ESC of accessories spare parts and services was.

267 per scooter.

29% decrease mainly because of declining sales from international market.

<unk> margin was 20%.

Nine percentage points lower than this time last year as a consequence of weaker international sales.

This has reduced our margin by around one one percentage points. However, two percentage point decline was offset by the increasing margin and increasing proportion of accessories spare parts and services revenue from China market.

Therefore, net impact was <unk> nine percentage point decline.

Our total operating expenses, excluding share based compensation $143 million increased.

46 million or 48% year over year.

Increased cost by 25 million higher brandy and advertisement in sales and marketing expenses 11 million higher depreciation expenses of new store openings.

And $13 million higher staff cost.

As a percentage of revenue our operating expenses, excluding share based compensation was 11, 7%.

<unk> nine percentage points higher than quarter, three last year, mainly due to higher branding and marketing spending shares.

Our net income.

<unk> 2 million, a 15% increase year over year. The adjusted net income was $102 million.

Adjusted net margin was eight 3% one eight percentage point decline compared to the same period last year.

Mentioned above due to the 0.9 percentage point gross margin decline and increase from operating expenses as points nine percentage of revenue.

Turning to our balance sheet and cash flow, we ended the quarter with RMB, one 6 billion in cash deposits and short term investments.

Operating cash flow was positive 402 million much higher than our net income.

Our quad three capital expenditures with around 76 million, mostly related to capacity expansion of $26 million and new store openings of $50 million.

And now let's turn to guidance.

We expect fourth quarter revenue to be in the range of $840 million to $908 million, an increase of 25% to 35% year over year.

With that let's now open the call for any questions that you may have for US operator. Please go ahead.

Yes.

A reminder to ask a question you will need to press star one on your telephone to win.

Draw your question press, the pound or husky.

Once again, if you wish to ask a question press star and the number one on your telephone keypad.

Your first question comes from the line of Vincent <unk> CEO of Needham <unk> Company. Please ask your question.

Yes.

Let's look at Boddington.

Excuse me.

Once you go to Mexico.

Jim as you understand.

Thank you Stephane Paul.

Paul just to highlight social digitalization that ges.

So you.

No woman.

Okay.

We like to EBIT to achieve just said I E. The Eon woman.

I'll look at home.

She turns eagle.

Sure.

When we do highlight.

The other ones you should blame you typical MIT Cornell.

The woman and woman.

You cannot do.

Yes.

You sound like you suggested.

Well some teething pains until you shouldn't that you put coupons on the projects.

I can do it since you went south national.

Similar to the Q1.

But that's the magnitude on that.

Yes.

Are you buying panic.

Thank you.

Hi management, Thanks for taking my questions.

Any questions on these three topics one is cheap.

Obviously, it's been how do we think about the.

<unk>.

Then the shipping constraints.

Can you two impact.

Revenue in the next quarter and the how we think this block will be realized.

In the next few quarters and the second question is on the supply chain, how do we think about these resin cost.

And at the parks.

Our operations and good question.

I'd like to management experience.

All of that.

E scooter replacement cycle, especially on there.

That can be stopped.

Macro conditions. Thank you.

Okay.

Hey, Vincent I'd be doing my I'll answer this question in English.

I think first one with the with the shipping backlog I think Q3 has been a bit tough obviously for international Q3 used to be.

You look at it it's actually historically it has been a low season, because whenever it was shipped in Q3, it's actually going to be arrived in Europe and Americas.

Q4 actually.

Actually the winter season, it's actually low sales. So we're actually expecting Q4 shipping start to improve especially.

October October November stupid tough, but.

But we start seeing actually capacity start to empty out second half starting back in November and also December.

So we actually have a lot of orders and backlog and are supposed to be.

Go on the ship.

In December.

Both from the Middle cycle point of view electric motorcycle and also the you know the 20 plus thousand electric scooters.

I think that's where the.

For the international sales into mass shipment backlog it wouldn't be.

It wouldn't be necessarily a block issue in Q4.

Because demand side, we still see a strong demand.

For both motorcycles and also for the kick scooters.

Now on the.

The supply chain issues I think early this year the supply chain issues of what's really a shortage of chipsets.

Especially the important chipsets.

We had that impact a little bit of our business, but not significantly and then we were able to actually.

Redesign our MCU to own this stuff actually use the replacement the domestic China chipset to replace some of the input of ones and.

That actually helps you reduce the impact.

Right now it's actually the the Q3, it's nothing too much I think really we're looking at Q4.

And maybe next year, there might be pressure in turmoil.

Raw material prices in term of lithium batteries.

The first half of this year, we actually see.

The pressure enough from lithium battery, but from like all other stuff like copper steel so that actually impact the.

The cost for our chassis.

So the cost for tires the older stuff. So we actually increased the product price.

Basically April this year.

Offset those.

The raw material price increases.

Going into 2022.

We actually think there might be a chance there might be a case that the lithium battery.

Price will go up a bit.

Which many of you you guys have already observed in the market.

Because the EV industry in China is actually booming.

And so that actually will create cost pressure on our side.

And the remedy to that will be we're looking at.

Potential solution to increase the product in retail price as well as the exit factory price.

In early 2022.

To offset that.

And.

This is not really new to us. So in fact that you will look at you followed you for a number of years.

Every year, we increase our product prices by somewhere around 3% to 5%.

Even though the average ASP, sometimes declined because the product mix, but you look at the individual product wise the price actually goes up a lot of times it because because of the CPI also because we are actually used to offset the the.

Cost increases.

Lastly, with the.

The the policy induced.

Placement volume.

So we actually start to start seeing some impacts start to kick in for example in Beijing.

It start city by city early in the year as we see some provinces now like Beijing Beijing just.

Yeah.

Beijing actually in.

November 2018, they start to issue.

It did cause a temporary licenses until the April of 2019.

And then that temporary licenses is only good for three years, so actually start in November 1st this year.

VL Beijing actually.

This allowed the temporary licenses the yellow licenses actually driver yellow license electric scooter on the Street you Scooter would get confiscated and then you actually kind of like 1000 RMB fine.

So that actually drive a bit.

Retail sales in October as well as I think going forward, even the winter season for Beijing wouldn't be that code in terms of our sales because a lot of people actually need to buy a replacement scooters.

Starting for Beijing now then the second we start seeing for the entire drawdown province.

They are rolling out something similar.

That will actually will probably be impact starting this.

Basically this winter season locked on to the next spring.

So obviously you are.

Now going to see a huge jump like for three.

Three or four X jumping from a retail demand.

But.

It will still impact I think the oral market demand I think and this is one of the reasons that EBIT in Q3.

You are quite a bit golar products.

During our call you see the gold product represent 75% of our sales in Q3, all hands because those replacements allow those replacement not extremely high and many of them.

That's why our.

Product offerings start to really take up some of the market share starting in Q3.

Hopefully that addressed.

<unk>.

Yes, that's helpful. Thank you.

Your next question comes from the line of Gengsheng ESC ICC. Please ask your question.

Hi, Jason Hi, Stifel, and your communication and Congress to field too.

Thank you all I'll say.

I have two questions. The first is.

The Arizona salary.

We can see that the Allison.

Right.

There were some services that sounds great.

Great.

Different quarters.

No.

I wonder how much of the average selling price comes from overseas battery packs.

How much Oh.

Subsequent to that subscription service fee and also other salaries.

That was the houses we anticipate on the fourth quarter and also in the future.

And my second question is you can see that.

That's helpful.

And in theory.

Decrease a lot.

In the third quarter compared to the year.

So Ethan.

All the new product launch.

Oh man is focusing on high end models so of course.

How to look at.

The competitiveness of our new high end product.

And also a palm appears products keep.

Low prices.

In addition, the policy how much sales growth momentum.

There are such such products.

Nexium.

Okay.

I'll answer the first question and actually inquires really accessory and spare parts revenue was $90 million and services revenue was $15 million and.

You know as we mentioned the accessory.

Services revenue increased on the China market.

This quarter, we do see international market and that's why the accessory and services revenue declined in the international market, but with the recovery of the international sales in quarter four.

Jim mentioned and those kind of other revenues, where you will recover it with the same guy at the international sales.

We still rely on quite strong increase in the future quarters of this kind of revenue.

Okay.

I think for your second question, Yes, I think for Q3 as I mentioned that you basically the new branded products.

The group under.

Under new branded products actually the volume actually did decrease.

Really because.

Early in Q3 in the second half of the Q2.

Actually the <unk>.

Man.

<unk>.

We rule out like five new global products and that actually and with the marketing campaign really try to gain market share in the <unk>.

Part of our replacement customers.

I think that actually and if you look at our because our business is not exactly direct to consumer or business scope is actually we sell to distributors and distributor sell through retail stores and retail stores to consumers. So along those lines there are capital being used by the distributors on cattle being used.

By the retailers to some extent you can understand that as we have more new product <unk> EBITDAR by distributors and retailers. They only have a limited of capitals right. So.

Some of your capital will be occupied by the cooler product I think that's where it's actually create the capital training is done by the distributors on a global product left on it.

That actually created a temporary decrease on that meal secondly is actually.

We haven't done too much in turmoil in Q3, I haven't really rollout.

A new one.

The new product, except the end to us which is the upgraded version for them too.

So I think that also create a little bit drag on the new product, but going forward I think in 2022.

We have planned actually.

Quite a number of.

New product under the <unk>.

<unk>.

Series and that will actually help to incur.

Increased not only the percentage and also increase the sales volume of new products. So actually.

You know quite promising on quite hopeful.

About 2022.

For the <unk> series.

Thank you.

Once again, if you wish to ask a question you will need to press star one on your telephone.

Your next question comes from the line of bin Wang of Credit Suisse. Please ask your question.

Thank you I've got two questions.

Your service income is that linked to your.

No <unk> global service, which means the cold box things laterally.

And that's really how far less revenue income that's why revenue of course, that's been Noah comparator quarter of course, so no no.

Product related.

We've seen any difference that's number one question number two.

Go ahead, Brian.

The market and then make upfront deal category because.

EMEA with Scott on your upcoming hybrid.

Product you've mentioned about CCC.

Hi, Bryce.

Engine.

Electronics quota different thank you.

Alright, So I think I'll address those two questions. One was the service income yes. Those are some of the global product are not doesn't have the smart Iot devices. So to the extent that we're in.

Not going to see what are your color connectivity income from both global products.

And it's not all for Golar power. It doesn't have the connectivity is there a portion of our core product, we will have what I'd call add on boxes.

Posters.

At the store so those go a product actually we're still able to charge the users to pay a connectivity fee.

Allow makola products so.

That may be addressed.

Some of the concerns here.

Second we didn't mention excel.

Personally but.

Really starting this year, we'll start getting service revenues from our assurance scooters. So we're getting about $10 per month per scooter not the entirety on the entire fleet.

Some operators, who havent start hasnt paid yet, but approximately or half the fleet fleet. So I mean as we have more.

Sure and vehicles deployed globally, you can see that income that revenue stream coming nicely.

I think thats the.

Two part of services.

Now.

On the on the new categories that I assume you are asking about the hybrid product, yes, the hybrid product our first attempt.

Would that be on this product actually tomorrow.

So.

Youre going to see the news on the design is actually a beautifully designed products.

What do we see is actually there is one part of motorcycle categories that we're not able to attack that's actually around 150 to 250, <unk> motorcycles that part a motorcycle still represent roughly about 30% of the market Europe and the United States, but.

The reason being that.

Actually require a longer driving range.

Or do you simply just do electric it will be too expensive for users by unless you go with that.

The industrial product, because the euro, which like 10000 euros even more.

So what do we have is this is actually a completely internal design technology that actually combining a combustion engine with an electric motor.

And that was even with the battery into it so actually will allow user to have unlimited driver and limited by the gas tank, but at the same time when you do a city come you will use more of the electrical motors such that it will actually give you a more environmental friendly internal usage.

Our gasoline usage per kilometer.

But this product will be probably available towards the second half.

Of the 2022. So this come out we're going to show the concept design on some of the technologies and the products still in development and will be ready in the second half of 2022.

Thank you.

Your next question comes from the line of Lee Chen of UBS. Please ask your question.

Good evening, Jason again.

Thank you for taking my question.

First is about the margin investors are concerned about the price of oil.

This year.

Which was most severe in the third quarter.

We noticed from mid November yeah, Yeah, and aim Oh.

<unk> raised prices by 5%.

So can I have your view on price war ended up impact margin trend in 2022.

This is my first question.

Maybe I'll answer your first one.

Talk a bit more on margin part it yet so.

To be honest I think about those two players had the Bobby in price War.

<unk>.

Yeah.

We are not engaging in price war, but we did a bit.

Marketing promotion our goal of products in Q3.

Because a lot of price were happened in a really low end, even with Oracle entry product at 2490, <unk>, we're still like product, we're not even at lower yet right. So.

So to some extent you will see our margins still much much higher than.

Yes. It is.

Margin.

And obviously.

They start to raise price in September we havent done that yet.

We haven't done that yet because we did a little bit in April that helped to absorb some of the cost and we will also carefully observing the market to see when the right time to increase the price, but as I mentioned earlier.

We observed the trend of lithium battery prices.

There is a likelihood that we're going to increase price in early 2022.

And we usually do that during the holiday season.

Chinese new year students, who have a less impact than small from the from the retail.

Yeah, I think that my comment.

Thank you already trends, though.

The factors okay.

Okay.

The margin I know there are a lot of moving parts, including the price of oil and also docomo.

Additive price also whats your general view 2022 margin because.

And so you do have some margin pressure in the quarter and what's your view on the fourth quarter in 2022.

So maybe.

Thank you some insights and then yes, we will add extra comments.

As Jim mentioned actually even though we consider about.

Retail price increasing the already 2022, we're still facing the higher raw material cost problem and that's really that we have made the cost optimization and <unk> initiatives began to show positive effects and that's why you didn't see any.

Huge margin loss in this quarter and those cost optimization initiatives that will bring benefits in the future quarters and with the strategy that we may increase.

The retail price was around 3% to 5%, which will not bring.

In fact, chief feedback from their customers I think we can still.

We made the.

Good gross margin.

And yes, yes.

I think thats part a.

Really.

Yeah.

Well on one hand, I don't see weakness.

A margin decline next year.

But on the other hand, I think we'll see.

A stable margin there was a slight increase.

Okay. Thank you and my next question about is it's about your the new product you just mentioned that you had prepared and lots of new products.

Including that kicked scooter.

Got it.

Motorcycles in 2022.

Ken because we are not really familiar with these new market segments can you give us more color like the sales guidance in 2022 or 2023.

Product line will become a significant contribution in terms of revenue.

In the next two to three years because.

Because I think some of the products are many.

For brand building, it's not for themselves.

Correct me if I'm wrong.

Yeah, I think let me put this way right.

I think it's too early for us to give our guidance is.

I think there are three categories. One we look at the kick scooters electric scooter.

Current marketed to spot.

From what I read.

Probably like a six to 8 million units per year. It depends on whether you can call. Some of the kids ones are not.

And this year.

6 million to $8 million.

Most of the United States and Europe.

So those two markets, where we do have a strong brand in terms of urban mobility.

I think this year, we initially we have our phase III.

And now with a K K.

K three Max in Q2, and potentially next year, we're going to have a couple more tickets grew a product that will give us a wide range of product that.

Help us to cover the entire part.

Product range spend for the that 6 million units of entire market the entire market six minutes.

So we're actually.

Quite optimistic with our growth in market scooter.

Now the E bike.

But it's also about 6 million units year, roughly about 80% are.

Actually yes about 80% in.

Europe and about to 15, 10% to 15% in United States.

So we have two E bike products. So far we have our <unk> zero, one we launched last year start to make some sales this year and we have our <unk> to be launched at come out tomorrow, but that product wouldn't be available for sale until Q1 early Q2 of 2022.

So, but as we will actually start to actually generate.

More product along the ebay categories.

But the tick scooter I E bikes, who have to dedicate team for it and were actually committed to those two categories. So I do think that there are volume our revenue generators.

Now.

With the other motorcycle product.

To put this way.

Just look at the European market.

Then the not just look at the electric and the entire European market.

It's about one 5 million units to 2 million units a year in term of motorcycles.

Charity or perpetual as this point.

And then within that.

The entire market.

50% or 100 CCP low.

And 50% are like 125 50 or above.

Our product offering used to be 50 CCP low.

<unk>.

It drives like a 50 kilometer power.

We start to have like a 70 ADC product like a <unk> 70, 80 kilometer power. So the N GT evil and also upgraded in GTS and also our product.

Both are at 90 kilometer power 100 kilometers or 120 kilometers.

Those are actually really to attack attack the other 50% of the market, which was 150 above we never had a product in that market.

So it's a white space for us.

You can see.

Those market actually I do think those products are also revenue generators.

Oh, sorry.

Okay. Thank you.

Okay.

As there are no questions. Thank you seeing no more questions on the queue. Let me turn the call back to Mr. Li for closing remarks.

Well. Thank you operator, and thank you all for participating in today's call and for your support we appreciate your interest and look forward to reporting to you again next quarter our progress.

Thank you.

Thank you all again this concludes the call you may now disconnect.

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Good day, ladies and gentlemen, thank you for standing by and welcome to the New Technology second quarter 2021 earnings Conference call.

At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions 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'll turn the call over to Mr. Jason Yang Investor Relations manager of New technologies. Mr. Yang. Please go ahead.

Thank you operator, Hello, everyone welcome to today's conference call to discuss new technologies results for the third quarter 2021, the earnings press release, corporate presentation and financial spreadsheet Javier posted unused investors Investor Relations website. This call is being webcast from company's IR website.

A replay of the call will be available soon.

Please note today's discussion will contain forward looking statements made under the safe Harbor provisions of the United States Private Securities Litigation Reform Act of 90 95.

Forward looking statements involve risks uncertainties assumptions and other factors the company's actual results may be materially different from those expressed today.

Information regarding the risk factors is included in the Companys public filings with the Securities and Exchange Commission.

The company does not assume any obligation to update any forward looking statement, except as required by law.

Our earnings press release analyst call include discussions of certain non-GAAP financial measures.

Yes release contains a definition of non-GAAP financial measures and the reconciliation of GAAP to non-GAAP financial results on.

On the call with me today are our CEO, Dr. Yan Li and the CFO Mr. Beyond Joel now, let me turn the call over to Yan.

Well, thanks, Jason and thanks to everyone for joining us on the call today.

So in the third quarter, we have seen a strong growth again with our total sales volume, reaching 397000 units a 57% year over year increase.

This is our best quarter for sales in our history in terms of volume.

The sales volume in China market reached 392000 units, a significant increase of 60% year over year.

The volume in the international market reached nearly 5000 down 11% compared to last year, primarily due to the shipping issues that youre aware of that continuing to delay orders that would have received in the manufactured but cannot leave the factory and therefore cannot be booked as sales.

In the first three quarters of the year, our sales volume totaled 800000 units the ink.

<unk> of 77% compared with the same period last year.

So the strong Q3 growth in the China market showcases the strength of our growth strategy, which includes the expansion of our product portfolio to cover a wide range of electric scooters and the rapid expansion of our retail channels and geographic footprint.

As mentioned in the last earning calls starting this year, we have launched five new vehicles under the new brand and assigned new vehicles under the <unk> brand, which enabled us to have a wide range coverage up consumer needs from mid to high end.

The new product design and also take into account the preferences of both male and female customers, allowing us to attract a wider range of customer group.

Yes.

In the electric motorcycle class our entry model global at G. III has a starting price of RMB 306, 3699, RMB in our top of the range LG <unk> ITT has a price tag of RMB 20299, we had a total of eight series in 'twenty two electric motorcycles.

Product offerings.

For the electric bicycle class, we have our entry level <unk> T zero with the price of RMB 2499, and there are a couple of line model UQM is not with the price of RMB 8999, we have a total of 12 series and the 42 product offerings.

From the design style will have three series the key asset see each with distinctive designs under the Golar brand and under the New brand. We had the Niu series. It was a unique look and style in terms of performance that we offer to our range of <unk> 40 kilometres 200 kilometers on one charge for both electric.

With motorcycles electric bicycles.

These are all the China regulations on electric bicycles over the past two five years, we have quickly dibaba a full product portfolio to cover the mid to high end market.

<unk> coverage was the key to fast growth in Q3.

And also set a solid foundation for future growth in 2022.

Also adding another 320, new branded stores quite China, which is the $1 six ex ethylene expansion pace compared to Q3 2020.

As of September 30, we now have 2686 stores operating in China, We are well on track to have 3000 stores in operation by the end of 2021.

These stores will serve as a foundation to drive sales growth for 2022.

Now moving away from sales for a moment I'm very proud of a milestone with here at the company last month.

Tober 11th.

Our more than 2 million users helped us reach the 10 billion kilometre writing Mark.

The breadth of new represent style technology and freedom alone spread values. We have selected a set of represented new users and share their story with new scooters over multiple channels.

This users to include the photographers travel <unk> talk show host and others.

Stores showed how writing a new vehicle has helped them with their daily urban commute and make their lives a little better we'll feel a little bit pride proud with new.

This story and the videos have been broadcasting or social media channels, like Weibo and Wechat and on our web site and of course many of the Kols don't Plc's has also created their own content around the theme I'll feel a little bit proud a bit new just further amplifying our message and rich.

Just a few short weeks of old dose have achieved nearly 100 million views more importantly, a helped to convey our brand and value to our users and potential customers. The message positioned not just as the electric Scooter company, but also as a lifestyle brand.

Besides the user stories, we also launched a social media video Ken.

Campaign with the feature video are fulfilled little bit proud. The video has been aired across social media offline and also have been even showcase in ask for the new James Bond film receiving more than half a billion views.

Now considering you had more than 2 million users. We also engage our users with the treasure Hunt location based game, our app user receive a rapid ticket if they read their new path the secret spot in their city.

This ticket can be redeemed footwear its prices like accessories and also enter the mid to later <unk> 10 billion kilometre limited additions.

Well, both user centric activities and marketing campaigns have improved our breadth awareness significantly in the China market and those campaigns, especially resonate with the Gen Z users who are seeking brands that have deeper meaning.

<unk> commitment to style technology of freedom is something they value greatly.

The combination of marketing campaigns with our continued retail store expansion sets us up for another quarter of growth here in Q4.

Yes.

Now looking at international sales for a moment here, our Q3 was a little below expectation as compared with the China market.

But this is not a result of decreased demand as many of you are aware international logistics continues to create ever longer backlogs and we're not immune from it in fact, our book orders were 50% higher than what do we actually shipped and everything that's being shipped is typically on back order at any one.

Our point of retail across the globe.

Despite the low season in Q3 were in fact very optimistic with Q4 for the international market orders.

We're excited about tomorrow actually on November 23rd.

We will launch several new products at <unk> the largest two wheeler shows globally held in Milan, Italy.

<unk>, our most powerful 125 cc electric more pad the <unk>, our first 150, <unk> hybrid more pad, the <unk> and our upgraded E bikes <unk> and two additional <unk> kick scooters, many of which will be shipped this quarter and in stores too.

Because the sales season in February across Europe, and Americas.

First in electric motorcycle multi classes, we will launch the <unk> will be the mark of new performance line the MGE deal will.

It will be Anvil eczema is the first product launching our new <unk> series.

Has been redesigned inside at all with the top speed of over 100 kilometer per hour and exciting zero to 60 kilometer power truck time see under six seconds or so.

Stripping is gas powered rebels weed.

We believe this is the first electric more pet that can really compete on price and also a full manpower and the speed with petro competitions in the 125 DC class a multi.

In addition to the performance that <unk> has added a number of features that include a keyless ignition electric anti theft blocking and all new TMT color dashboard customizable via the <unk>.

This app will.

<unk> already received seven several thousand orders to be shipped in Q4, and NTT <unk> will be in stores in Europe and America as early as February was the price tax of 5000 euros.

He said the MTT Bill will be also debuted our first 150 <unk> equivalent hybrid more pad the <unk>. The <unk> combined the best traditional IC engines, and the lithium iron battery powered electrical motors.

<unk> was 150, <unk> IC engine, coupled with the $2 four kilowatts, electrical motors, providing exhilarating acceleration that much superior to even the traditional 250 <unk> more test.

<unk> position as the gateway vehicle for EV for two Wheeler enthusiasts, who have not made the transition away from petrol. It is still in development and will be available in Europe and America in late 2022.

Now with the addition of <unk> <unk> and also the upgrade M GTS and the <unk> model cycle. We have provided a full coverage of motorcycles from hundred Cc 250, <unk> greatly expanding our traditional offerings now 50 cc equivalent electric more patent.

Internationally.

We believe this will further consolidate our leadership in the electric motorcycle market globally.

Now as we mentioned last earning call. We have entered the micro mobility market was the pre sales up our kicks woodard product the <unk> III into Google on July 13th.

After a successful run in the Gogo.

Didn't have received more than 15000 orders by the end of September 30, Tomorrow and Ecmo in Milan will bring two new kick scooter products for the market something we call. It <unk> three Max which will be upgrade of <unk> III pro it is equipped with a more powerful upgrade of 450 Watt motor.

And there was a larger lithium battery capacities, which could easily reach a speed up three three.

335 kilometer power and have a dry range of 65 kilometers.

There is no mass market product like this in the market right now and we're excited about it will be priced at 949 euros.

We will also bring even more economical kick scooter into the family called the <unk>. The K two takes many design accused of Q3 and it was more user customizable features the K two has a top speed of 25 kilometer per hour underwriting a range of 40 kilometers will be priced at a four.

<unk> hundred 99 euros and with the sleep has established design. The K two weeks are expected to become a favorite urban mobility commute or globally.

<unk> will be shipped before the end of December 2021.

With the phase III and the <unk> will have a robust lineup of kick school their products with price starting at 499 euros up to 949 euros.

We will also expand our offerings into the APAC market Tomorrow at X amount, we will launch our new <unk> product called <unk> that has established urban minimal design and is capable of extended right range of 100 kilometers. Thanks to its tool removable batteries the <unk> will be.

And there are 500 euros, making it our most powerful and affordable commuter E bikes to hit the market in 2022.

Continued growth for APAC demand across Europe, and Americas is exciting growth path.

In both those markets.

And there was product like <unk>, we think we can quickly tap into the demand over the next 12 months.

Now with the peak scooters and E bikes to cover micro mobility market. We're also expanding our international sales channel. Besides the current 153 flagship and premium stores and sell them plus authorized dealers. We have also established our e-commerce presence on channels like Amazon and also offline channels.

Which will allow us to enter into consumer electronics toward like the medium market Europe and many across the U S.

Supported by the diversified product offerings and channel expansion, we're quite optimistic with our international sales in Q4 and in 2022 P. M.

Now I will turn the call over to <unk> to discuss our financial results.

Yes.

Hello, everyone.

Our press release contains all the figures and comparisons you need and we have also uploaded excel format seekers.

IR web site for your easy reference.

As I review, our financial performance, we are referring to the third quarter figures unless I say otherwise.

All of that monetary figures RMB unless otherwise noted.

Our quarter three sales volume reached 397000 units, representing a 58% year over year growth, China sales volume increased by 60%, primarily driven by new product launches in the past two quarters and the continued retail network expansion.

<unk>.

One you E bicycle model CEO.

And while upgrading in multiple cycle model G III, where available on the market in quarter. Three these two models contributed around 60% of our total sales volume in the third quarter.

We opened another 320, new stores in the third quarter, which will help us with further steady growth in the future quarters.

International sales volume, however decreased by 11% as a result of the continued challenges from international shipping.

With regard to product mix.

And serious accounted for 6% of total sales volume.

Curious accounted for 6% youth serious accounted for 13%.

<unk> products accounted for 75%.

Out of the 75 from Goldman product.

41% was from the low price model G zero zero and zero.

<unk>, 34% was from other goes on motive with relatively higher retail price.

The increase the mixing golar product was due largely to two reasons.

First then you go up productive launches in quarter two early quarter three.

Zero Zero G. III Ephor has been very successful and drove quite a bit sales.

Sales growth in quarter three.

Second during the third quarter company, providing promotional activities for the Golar serious products in order to encourage faster adoption of compliance E bicycles in China.

Total revenue increased by 37% to $1 2 billion slightly lower than guidance. We provided earlier, primarily due to the lower than expected sales from international markets.

Revenue from China E Scooter sales remained strong and increased by 45%.

Accessories spare parts and service revenue from China market also increased by more than 40%.

A decrease in international markets. We believe it's short term and we are looking forward to positive growth in the future quarters.

DXP in quarter, three declined by 13% year over year, let's look at the details in.

In China market, the scooter ASP decreased by 9% year over year chiefly due to the sales from low price model G 000, which accounted for 41% of total sales volume compared with 27% in the same time last year.

In international markets, the Scooter ASP decreased by 18% as mentioned in the last two quarters earnings call. The depreciation of U S dollar and the changing the way distributors placed orders are the key reasons for the decrease.

Compared with quarter, two our international Scooter ASP increased by 5%, if we take out impact from <unk> scooters.

The increase is around 14% quarter over quarter.

The ESC of accessories spare parts and services was 267 per scooter.

29% decrease mainly because of the decline in sales from international market.

Gross margin was 20%.

Nine percentage points lower than this time last year as a consequence of weaker international sales.

<unk> has reduced our margin by around one one percentage points. However, two percentage point decline was offset by the increasing margin and increasing proportion of accessories spare parts and services revenue from China market.

Therefore, net impact was <unk> nine percentage point decline.

Our total operating expenses, excluding share based compensation were $143 million increased.

$46 million or 48% year over year.

Increased costs by 25 million higher brandy and advertisement in sales and marketing expenses.

At $11 million higher depreciation expenses of new store openings.

And $13 million higher staff cost.

As a percentage of revenue our operating expenses, excluding share based compensation was 11, 7%.

<unk> nine percentage points higher than quarter, three last year, mainly due to higher branding and marketing expenditures.

Our net income.

<unk> 2 million, a 15% increase year over year. The adjusted net income was $102 million.

The adjusted net margin was eight 3% one eight percentage point decline compared to the same period last year.

Mentioned above due to the 0.9 percentage point gross margin decline and increase from operating expenses as 0.9 percentage of revenue.

Turning to our balance sheet and cash flow, we ended the quarter with RMB, one 6 billion in cash deposits and short term investments.

Our operating cash flow was positive 402 million much higher than our net income.

Our quarter three capital expenditures with around $76 million, mostly related to capacity expansion of $26 million and new store openings up $50 million.

Now, let's turn to guidance.

We expect the fourth quarter revenue to be in the range of $840 million to $908 million, an increase of 25% to 35% year over year.

With that let's now open the call for any questions that you may have for US operator. Please go ahead.

Reminder, to ask a question you will need to press star one on your telephone to withdraw your question press the pound or husky.

Once again, if you wish to ask a question press star and the number one on your telephone keypad.

Your first question comes from the line of Vincent <unk> CEO of Needham <unk> Company. Please ask your question.

ICT boddington.

Excuse me.

Well, the <unk> Ultimate Eagle Demerger, who sounds.

Okay.

That's just the highlight social with a <unk> two shares so having each woman.

Backlog okay.

The EBIT to which you said I think the Indian woman.

I'll look to them.

T tangible.

We'll make sure we.

How are you.

Think about that now.

The other ones you should blame you typical NIM going up on me.

A woman Pamela.

He said I do E Mail me.

You sound like you said, you'll see it come back to school selling.

Keep in mind that until you said that you.

C G.

And it sounds like I do it since <unk> one.

Self pay channel.

About two months since I joined the Q1.

<unk> <unk>.

Well you're buying mechanic.

Thank you.

Hi management, Thanks for taking my questions I have.

One question on these three topics one is well along.

Overseas business, how do we think about that.

The shipping constraints.

Well continue to impact our.

Revenue in the next quarter into how we think the backlog will be realized.

In the next few quarters and the second question is on the supply chain, how do we think about these running costs.

And at the ports.

Our operations and good question.

I'd like to management's curious.

On the.

East can do replacement cycle, especially undercut that can be stopped.

Macro conditions. Thank you.

Okay.

Hi, Vincent.

You'd be doing.

Answer this question in English.

I think first one with the shipping backlog I think Q3 has been a bit tough obviously for international Q3 used to be.

Also you look at it it's actually historically has been low season, because whenever it was shipped in Q3, it's actually going to be arrived in Europe and Americas.

Q4 actually.

Actually the winter season, it's actually low sales. So we actually expect that Q4 shipping start to improve especially.

Kober October November stupid tough, but.

But we'll start seeing actually capacity start to empty out in second half starting back in November and also in December.

We actually have a lot of orders and backlog and are supposed to be.

Go on the ship.

In December.

Both from the Middle cycle point of view electric motorcycle and also the 20 plus thousand electric scooters.

I think that's for the <unk>.

For the international sales team from our shipping backlog it wouldn't be.

It wouldn't be necessarily a block issue in Q4.

Because demand side, we still see a strong demand.

For both motorcycles and also for the <unk>.

Now on the.

The supply chain issues I think early this year the supply chain issues with what's really a shortage of chipsets.

Especially as the input of chipsets.

We haven't <unk>.

Pack, a little bit our business, but not significantly and then we were able to actually.

<unk> redesigned our MCU the older stuff actually use the replacement the domestic China chipset to replace some of the important ones and the.

That actually helps to reduce the impact.

Right now it's actually the Q3, it's nothing too much I think really we're looking at Q4.

And may be next year, there might be pressure in turmoil.

Raw material prices in term of lithium batteries.

The first half of this year, we actually see.

The pressure enough from lithium battery, but from like all other stuff like copper steel so that actually impact the.

The cost for our chassis also the cost for tires to other stuff. So we actually increased the product price.

Basically April this year to offset those.

The raw material price increases.

Now going into 2022.

We actually think there might be a chance there might be a case that the lithium battery.

Price will go up a bit.

Which many of you guys already observed in the market.

The EV industry in China is actually booming.

And so that actually will create cost pressure on our side and the remedy to that would be we're looking at.

A potential solution to increase the product retail price as well as the exit factory price.

Early 2022.

To offset that.

<unk>.

This is not really new to us. So in fact, you will look at you followed you for a number of years.

Every year, we increased our product price by somewhere around 3% to 5%.

Even though the average ASP, sometimes declined because of the product mix, but you look at the individual product wise the price actually goes up a lot of times because because the CPI also because we actually used to offset the cost increases.

Lastly, with the.

The policy induced.

Replacement volume.

So we actually start to start seeing some impacts start to kick in for example in Beijing.

It starts city by city early in the year as we see some provinces now like Beijing Beijing just.

Beijing actually in.

November 2018, they start to issue.

What do you call the temporary licenses until the April of 2019.

And then that temporary licenses is only good for three years, so actually start in November 1st this year.

CBL Beijing actually.

This allowed the temporary licenses the yellow licenses actually drive a yellow license electric scooter on the street you screwed over complicate it and then you actually kind of like 1000 R&D fine.

So that actually drive a bit.

Retail sales in October as well as I think going forward, even the winter season for Beijing wouldn't be that code into more sales because a lot of people actually need to buy a replacement scooters.

Starting for Beijing now then the second we start seeing for the entire drawdown province.

They are rolling out something similar.

That will actually will probably be impact starting this base.

Basically this winter season pass on to the next spring.

So obviously youre not going to see a huge jump like for AG.

Three or four X jumping from a retail demand.

But.

It will still impact I think the overall market demand I think and this is one of the reasons that EBIT in Q3.

You are quite a bit golar products.

During our call you see the gold product represent 75% of our sales in Q3, all hands because those replacements allow those replacement not extremely high and many of them.

That's why.

Product offerings start to really take up some of the market share starting in Q3.

Hopefully that addressed.

<unk>.

Yes, that's helpful. Thank you.

Your next question comes from the line of Gengsheng ESC ICC. Please ask your question.

Hi, Jason Hi, Stifel, and your communication and Congress to field too.

Thank you Jose.

I have two questions first.

The Arizona topic salary.

So we can see that the Allison.

Of that one.

And services.

Okay great.

Different quarters so.

I wonder how much of the Amazon comes from Oversea battery packs.

How much from.

From the subsequent subscription service fee.

Also other assemblies.

And also how do we anticipate on the fourth quarter and also in the future.

My second question is you can see that.

The sales volume of <unk>.

And in service.

So long.

So quarter compared to the year.

So.

And all the new product launch.

Oh man is focusing on high end models so of course.

How to look at.

The competitiveness of our new high end products.

Also a follow up here is product keep.

Low prices.

In addition, obviously help our sales growth momentum.

Sure.

Such such products.

Yeah.

Okay.

I'll answer the first question and actually enquired radiant accessory and spare parts revenue was $90 million and services revenue was $15 million.

Yes.

As we mentioned the accessory.

Services revenue increased on the China market and this quarter Windows, the international market and that's why the accessory and services revenue declined in the international market, but with the recovery of the international sales in quarter four as Ian mentioned.

And those kind of other revenues, we will recover it with the same guy at the international sales.

We still rely on quite strong increase in the future acquirers of this kind of revenue.

Okay.

I think for your second question, Yes, I think for Q3 as I mentioned that you basically the new branded products, which will be group.

And the new branded products actually the boom actually did decrease.

Because.

Early in Q3 in the second half of the Q2.

Essentially the.

<unk> June.

We rule out like five new Cobra products.

And that actually and with the marketing campaign really try to gain market share in the.

Product replacement customers.

I think that actually and if you look at our because our business is not exactly direct to consumer or business goes as actually we sell through distributors and distributor sell through retail stores and retail stores consumers. So along those lines there are capital being used by the distributors and capital being used.

By the retailers to some extent you can understand that as we have more new product <unk> EBITDAR by distributors and retailers. The only have a limited of capitals right. So.

Some of your capital will be occupied by the goal of products I think thats, where its actually create the capital training is done by the distributors on a global product less.

That actually created a temporary decrease on that secondly is actually.

We haven't done too much into MAU in Q3, I haven't really roll out the <unk>.

A new one.

The new product, except the end to ask which is the upgraded version four <unk>.

So I think that also created a little bit drag on new product, but going forward I think in 2022.

We have planned actually.

Quite a number of.

New product under the <unk>.

<unk>.

Series and that will actually help to.

Increased not only the percentage and also increase the sales volume.

New products. So we are actually.

Quite promising on quite hopeful about 2022.

For the <unk> series.

Okay. Okay. Thank you.

Once again, if you wish to ask a question you will need to press star one on your telephone.

Your next question comes from the line of bin Wang of Credit Suisse. Please ask your question.

Thank you I've got two questions.

Your service.

Is that linked to your.

No ambush alternate global service, which means the cold box things that naturally.

Revenue income that's why revenue of course, that's been Noah compared to the quarter of course, so no no.

Different products.

Okay.

The difference is number one question number two.

Can you give that breakup.

The market and then make all from deal category because.

EMEA was that kicks quota on your upcoming hybrid.

You mentioned about <unk>.

Hi, Bryce.

Engine.

Tony.

So next quarter. Thank.

Thank you.

Alright.

Ill address those two questions. One was the service income yes. Those are some of the Golar product are not doesn't have the smart Iot devices. So to the extent that we're not going to see what are your color connectivity income from those global products and.

It's not all go up how that doesn't have the connectivity is there a portion of our core product, we will have what I'd call add on boxes.

Post that.

At the store so those core product actually we're still able to charge the use to pay connectivity fee.

Allow me a global product so.

That may be addressed.

Some of the concerns here.

Second we didn't mention excel.

<unk>, but.

Really starting this year, we'll start getting service revenues from our assurance scooters. So we're getting about $10 per month per scooter not entirely on the entire fleet.

Some operators, who havent start haven't paid yet, but approximately or half the fleet fleet. So I mean as we have more.

<unk> vehicles deployed globally, you can see that income that revenue stream coming nicely.

I think that.

Two part of services.

No.

On the on the new categories that I assume you are asking about the hybrid product, yes, the hybrid products our first attempt.

Would that be on this product actually tomorrow.

So youre going to see the news on the design is actually a beautifully designed products.

The reason being that actually require a longer driving range.

It's simply just do electric it will be too expensive for users by unless you go with the sort of the industrial product zero, which like 10000 euros even more.

So what do we have is this is actually a completely internal design technology that actually combining a combustion engine with an electric motor.

And that was even with the battery into it so actually will allow user to have unlimited driver and limited by the gas tank, but at the same time when you do a <unk>, we will use more of the electrical motors such that it will actually give you a more environmental friendly internal usage.

Our gasoline usage per kilometer.

But this product will be probably available towards the second half.

Of the 2022 so.

<unk>, we're going to show the concept design on some of the technologies and the products still in development and will be ready in the second half of 2022.

Thank you.

Your next question comes from the line of Lee Chen of UBS. Please ask your question.

Good evening Jason.

Thank you for taking my question.

Oh the margin.

Investors are concerned about the price of oil.

This year, and which was most severe in the third quarter.

We noticed from mid November Yeah, Yeah Amer.

Uh-huh raise price by 5%.

So can I have your view on price war and does that impact margin trend in 2022.

This is my first question.

So maybe I'll.

First on the answer to talk a bit more on margin part of it yes.

Yeah to be honest I think about those two players had the involving price war.

And.

<unk>.

Yeah.

We are not engaged in the price war, but we did a bit marketing promotion our goal of product in Q3.

Because a lot of price war happened in a really low end, even with Oracle entry product 24, 99, we're still like mid end product, we're not even at lower yet right. So.

So to some extent you see our margins still much much higher than.

Yes.

Margin.

And obviously.

They start to raise price in September we havent done that yet.

We haven't done that yet because we did a little bit in April that help to absorb some of the cost and we will also carefully observe the market to see when the right time to increase the price, but as I mentioned earlier.

What we observe the trend of lithium battery prices.

There is a likelihood that we're going to increase price in early 2022.

And we usually do that during the holiday season.

Chinese new year students, who have a less impact from the from the retail.

Yes, I think Thats my comment.

And can you already stressful.

Factors Okay.

Okay.

The margin I know there are a lot of moving parts, including the price of oil.

Moderately priced so whats your general view on 2022 margin because.

So you do have some margin pressure in the quarter and what's your view on the fourth quarter in 2022.

So maybe I.

Give some insights and then yes, we will add extra comments.

And as Jim mentioned to actually even though we consider about D.

Retail price increase in the Army 2022, we're still facing the higher raw material costs. The problem and that's really that we have made the cost optimization and those initiatives began to show positive effects and that's why you didn't see any.

Huge margin loss in this quarter and cost.

Cost optimization initiatives that will bring benefits in the future quarters and with the strategy that we may increase.

The sale of the retail price was around 3% to 5%, which will not bring.

In fact, chief feedback from their customers I think we can still.

We remain the <unk>.

Good gross margin.

And yes, yes.

Yes, I think that's about it.

Really.

Yeah.

Well on one hand, I don't see weakness.

A margin decline next year, but.

But on the other hand, I think we'll see.

A stable margin with a slight increase.

Okay. Thank you and my next question about it's about getting a new product you just mentioned that you had prepared and lots of new products.

Including that kicks.

But you'd have to check.

<unk> cycle in 2022.

Ken because we are not really familiar with these new market segments can you give us more color like the sales guidance in 2022 or 2023.

Product line will become a significant contribution in terms of revenue.

In the next two to three years, because I think some of the products mainly for brand building, it's not for themselves.

Correct me if that's wrong.

Yeah, I think let me put this way right. So I think it's too early for us to give out guidance, but.

I think there are three categories. One we look at the peak scooters electric scooter the entire market to spot.

I think from what I read.

Uh huh.

Probably like a six to 8 million units per year. It depends on whether you include some.

<unk> ones are not.

And this.

This year, so 66 million to $8 million.

Most of the United States and Europe.

So those two markets, where we do have a strong brand in term of urban mobility and I think this year. We initially we have our phase III and now with the.

K three Max in Q2, and potentially next year, we're going to have a couple more tech square products that will give us a wide range of product that.

Help us to cover the entire product range spend for the that 6 million units of entire market the entire market six minutes.

So we're actually.

Quite optimistic with our growth in market this quarter.

The E bike.

<unk> is also above 6 million units year, roughly about 80% are.

Actually yes about 80% in.

Europe, and about 15% to 15% of the United States.

So we have two epi products, so far we have our <unk> or one.

We launched last year start to make some sales this year and we have our <unk> to be launched at <unk> tomorrow, but that product wouldn't be available for sale until Q1 or early Q2 of 2022.

So, but as we will actually start to actually generate.

More product along the epi categories.

<unk>.

Next quarter I E bikes, we will have to dedicate team for it and were actually committed to those two product categories. So I do think that there are volume our revenue generators.

Now.

With the other motorcycle product.

To put this way you can just look at the European market.

Then the not just look at the electric the entire European market.

It's about one 5 million units to 2 million units a year in term of motorcycles majority are perpetual as this point.

And then within that the entire market.

About 50% or 100 cc below.

50% are like 125 50 or above.

Our product offering used to be 50, CCP low basically CCP, though means.

<unk> is like a 50 kilometer power.

We start to have like a 70 ADC product like a <unk> 70, 80 kilometer power. So the IMTT Eagle and also the uptick upgraded and GTS and also our product.

Both are at 90 kilometer powered 100 kilometer 120 kilometers.

And those are actually really to attack the other 50% of the market, which was 150 above we never had a product in that market.

So it's a white space for us.

You can see.

Those market actually I do think those products are also revenue generators.

Oh, okay. Okay. Thank you.

Okay.

As there are no questions. Thank you seeing no more questions on the queue. Let me turn the call back to Mr. Li for closing remarks.

Well. Thank you operator, and thank you all for participating in today's call and for your support we appreciate your interest and look forward to reporting to you again next quarter our progress.

Thank you.

Thank you all again this concludes the call you may now disconnect.

Q3 2021 NIU Technologies Earnings Call

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