Q1 2023 Niu Technologies Earnings Call
Speaker 2: standing by. Welcome to the new technologies first quarter 2023 earnings release conference call. At this time all participants are in a listen only mode. After the speakers presentation there will be a question and answer session. To ask a question during the session you will need to press star 11 on your telephone.
Speaker 2: You will then hear an automated message advising your hand is raised. To withdraw your question please press star 1-1 again.
Speaker 2: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today. Wendy Zhao, IR manager, please go ahead.
Speaker 3: Thank you operator. Hello everyone. Welcome to today's conference call to discuss new technologies results for the fourth quarter 2023. The earnings press release, corporate presentation and financial spreadsheets have been posted on our investor relations website. This call is being webcast from companies on our website as well.
Speaker 3: Under replay of the call will be available soon.
Speaker 3: Please note that this discussion will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Security Dedication Reform Act of 1995. These statements involve risks, uncertainties, assumptions, and other factors.
Speaker 3: The company's actual results may be materially different from those expressed today.
Speaker 3: Further information regarding the risk factors is included in companies' public filings with the Securities and Exchange Commission.
Speaker 3: The company does not assume any obligation to update any forward-looking statement, except as required by law.
Speaker 3: Our earnings press release and this call include discussions of certain non-GAAP financial measures. The press release contains a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results.
Speaker 3: On the call with me today are our CEO , Dr. Yan Li, and CFO , Ms. Fionn Cho. Now let me turn the call over to Yan.
Speaker 4: Thank you, Airlines, for joining us on the call today. In Q1 2023, our total sales volume was 94,407 units, representing a year or year decrease of 42%. So this is basically sales volume in the China market dropped by 45% year or year.
Speaker 4: to 81,518 units and a sales in an overseas market dropped by 12% to 12,889 units. Total revenue in Q1 was RMB 417 million, a decrease of 27.5% year-to-year.
Speaker 4: Now the decrease in sales volume in the China market is primarily due to two factors. Firstly, the price increase caused by the rise in lithium battery cost last year and secondly the expectation of new product launches in Q2.
Speaker 4: In response to the lithium battery price hike in 2022, we increased prices by average 7% across our product in the China market in Q2 2022 to maintain a healthy margin. However, this led to a decrease in sales. The impact of rising prices on the sales volume continues in Q1 2023 this year.
Speaker 4: compared to the pre-price adjustment Q1 2022 on a year-over-year basis.
Speaker 4: For instance, our entry-level Goa Zero series, which targeted a more price-conscious market, experienced the biggest year-over-year drop in sales up near 90%.
Speaker 4: Secondly, the expectation of new product being launched in Q2 also contributed to the decrease in sales volume in Q1. Our distributors delayed orders in anticipation of new product launch event that we hosted in Q2, where we released the mid-end to premium products.
Despite the drop in sales volume, the retail sales number remained on par with Q1 2022 last year. Many of our retail partners choose to delay orders from traditional low Q1 to Q2 this year, given the on-time draw of our product in 2023.
Now for the China market, we focus on the premium series and high quality mid-end series. As the premium high-end flagship products have enabled us to improve our margin and strengthen our brand positioning, where our mid-end products have allowed us to reach a mass market and achieve volume. With this focus in mind, we have developed products that combine design, aesthetics, and technology-enabled functionalities.
to bring to the market.
In the previous earning call, I introduced the revolutionary high-end rather like electric bicycle SQI, and the newest addition to the most popular new series, the UQI Plus, which we launched in Q3 2022 last year.
Since their launch, both products have received recognition from both industry and our customers. The SQI won the Red Dot Design Awards Best of Best 2023, which is the highest owner that the Red Dot Design Awards can bestow. The SQI have also won the IAF Design Awards 2023, making it potentially the third product to win O-Major awards after legendary U-
that films, performance, are testnance to our and we were in pursuit of for creating a premium product that was resonant with consumers.
We also rolled out a B2 product which is the mid-end range form factor product, which has been very popular since its launch, accounting for nearly 30% of the mid-end series sales in the first three quarters since its launch. In Q1 2023, we recently made an upgrade to the popular models bringing a new look based on the original design. on the new pre sensation with thejet I've Turbine Blend fast, solid friend methods and performance like a
and bring out the old fashioned style from the minute appearance.
Now, building on the momentum generated by the product we launched last year, we released four new products in May during the annual distributor conference. They'll be launched into the market here to this year. The four product we risked in launch our MQIL, the 4G400 and G400T and the RQI. I'll share some of the product highlights with you.
First, we introduced the MQIL, the newest next-level flagship product that encourages the design of our all-time plastic M-series but with significant upgrading performance and smart functionality.
The M-Series is one of our two products that one, the07 major international development and mobility industry. The MQIL, the first major model we released, hoping to bring back the classic M-Series in the last few years.
Retaining the classic style, the new MQLL features significant improvements in the light design range, charging features, new smart control, writing ergonomics, and additional personalization features.
The MQ-L is equipped with new NH9.0 battery delivering an impressive 170-kilometer max range and the concharge 100-kilometer dry range in just over two hours.
In addition, the new MQIL bike equipped with the new Smart 5.0 with 20 Smart features to make the scooter an industry-leading smart vehicle.
Those include the new smart dashboard with navigation display incoming call notice, the new smart lighting system with automatic turning lights, the OKGO control system that is fully integrated with the Apple ecosystem allowing users to control scooter with just your Apple Watch co3.
Targeting the premium electric scooter users, the MQL is priced from RMB 4,999 to RMB 8,299. We have received more than 15,000 orders from our dealers within the first week of our launch.
Now for the mid and parallel lines, we announced the G400 and G400T. We took a innovative approach to use the same platform to build two vehicles. The G400 is the light motorcycle and G400T is electric bicycle. Both vehicles are built with the same modern design and chassis platform, combining design aesthetics and practical functionalities like large storage space.
Both of them are equipped with a full set of new smart system features. The G400-G400T is set to launch in early June .
We have also recently announced the Marker Long Chow first quad electric motorcycle R2I. The R2I has a top speed of 100 km per hour and drive-in jaw 119 kilometers. He cooked it with the 18 watt kilowatt motor. The R2I can accelerate to 50 km per hour within just 2.9 seconds. The R2I also incurred many of smart features.
The ARF is QI price R&D 332,980 R&D and one online through a livestreaming on May 20th.
The product perfectly suitable for model cyclists who plan to switch from petrol to electric for the faster acceleration experience with the pursuit of environmental friendliness in mind. Now we are confident that with this premium product we'll have introduced the market will not only increase sales, but also enhance our brand image and strength and our leadership in the highly electric.
launching 2022 has become a core part of a user center event planning strategy. Since the launching Q3 last year we have plans and host the over 80 events in 30 cities in China.
Now along with the product launch, we have outlined the series of marketing branding and paintings to our online social media, KOL collaborations, offline product launch events and PR. For online marketing, we invited over 150 KOLs and KOLC content creators with a large fanbase to generate content shown cases.
our new product. I would expect those content to gain over 150 million views throughout the launch of the event.
For the offline event, we are planning to host four official events and utilize our innovative ambassador network to support another 15 events bringing new scooters to the market.
We believe that with those marketing content and applying band-volgance-lifficant media exposure for the new products, Father strengthening our brand image as an innovative leader in the urban mobility scenarios.
Now turning into the overseas market, we have experienced a EOR year decrease of 12% in Q1 2023.
The electric multi-categorist saw significant 70% decrease, while the micromobility category enjoying a moderate 16% increase in sales.
The price adjustment made in Q2 2022 in response to the increase in the leading battery price continued at the impact on the electric multi-fills on compare year or year.
The international distribution partner have also been waiting for a planned performance upgrade for our high-end performance 125cc bikes in Q2.
Now for the European market, we're loading out the improved 125cc product in Q223 to very king gross.
In the Southeast Asian market, we are also developing a battery swap in an able solution with electric MOSFET swap-off batteries and a battery-harding cabinets.
This solution will be suitable for battery swapping operators to sell the MoPa chassis, but also charging the batteries on rental basis, lowering the upfront purchasing cost of electric MoPa in the region. We expect the drawout of solutions in 2nd half of 2023.
Together with the solutions, we're also actively expanding stores and developing partnerships with local operators and enhancing factory assembly capacity and self-sufficientation.
Despite being in the low season, our micromobility categorized you experienced a a matter of 16% your year growth in Q1 2023.
We have already established solid foundation with our product of folio, sales channel development and the marketing and branding activities. With this foundation, we expect a micromobility category to continue to drive high quality growth in the coming quarters.
In Q1 2023, we launched the KQI-1 Pro as a addition to our kick-schooler product offers.
The KQI1 Pro features a patented defaulting mechanism added to the original KQI1 sports case scooter. With the newly added KQI1 Pro, we have complete the product offering that covers a wide range of product from high-end $900 price range to the entry level of $300 price range.
The established kick scooter product mix have generated a high-wheel growth since its launch. Beyond the growth in sales, our kick scooter product has received a prestigious award such as the IFD-9 award that New York Product did not award. Our KQI-2 and the KQI-U's plus one, the IFD-10 award's 2023, and the KQI-3 Pro was selected as a golden linear.
As a goat winner of 2023 of New York Product Design Awards has the only product in the vehicle technology category. Additionally, New was awarded the Writers Choice Award 2023 as the best scooter company by the Micromobility World. With the market presence who have built throughout the Micromobility products,
While for our current focus is on sales channel expansion on the target market. As of May 2023, new products are available in your products in 500 retail stores in the US that are over 400 in Europe throughout retail partners such as Best Buy and Medium
The sales network has laid a solid foundation for ramping up our product sales in the upcoming quarters.
In addition to the Philchene expansions, we continued collaborate with influencers on product marketing campaigns to further establish our presence in the market. We have worked with over 300 influencers across various platforms to showcase our kick scooters and a multi-tank. And their content gathered more than 40 million views.
only to their broad of rich and white acceptance. Our product have also been featured in placing multiple TV shows like movies and movies.
We're pleasantly surprised to see our product appear in movies like Murder Mystery 2 and TV shows that do very much show and the prices are right. We're pleasantly surprised to see our product appear in movies like Murder Mystery 2 and TV shows that do very much show and the prices are right.
In conclusion, regarding to the overseas market, we anticipate it's sustainable growth driven by our strategy to diversify our product offered beyond electric two-wheelers and expanded into geographic regions beyond our primary European market.
Despite a temporary load-quarters due to thin analysis, we see gross potential stemming from our diversification strategy based on product offerings and the increasing brand recognition.
Now looking forward to we target to regain growth throughout 2023 in both China International market. Gradually recovery from the next and impact of price increase and delay product launching in 2022, we have put a focus strategy in place for product development, brand marketing and sales channel expansion. In the China market, our strategic product positioning have generated growth opportunity for
Ron Rebundt from last year's starting in Q2 2023. For the overseas market will anticipate returning to a fast-force path through a product and geographic exp??.
In the Electro II will affect with the product ready for releasing our respective markets, we believe we will see a sales ramp up in the near quarter. As for the micro mobility sector with a comprehensive product offering extensive sales chain on coverage and the growing ground awareness, we expect this factor, this sector to experience a faster growth in the both sales world and the market.
As I review our financial results, I'm referring to the first quarter figure figures on that side, say otherwise, and all money reviewers are in R&B's not-so-size. During the first quarter, our company achieved a total sales volume of nine worth of units. Of this figure, 81,000 units was sold in the Chinese market.
While the remaining 13,000 units were sold overseas.
And the sales performance in China is mainly driven by the premium nighting series and mid-end gova series, which are counted for a significant percentage of the sales volume. Those two series represented 94% for the total sales volume for the quarter.
which is a notable increase compared to the 70% shares in the same period of last year. In terms of the overseas sales, we continue to experience stable and year-over-year growth in micro-mode and ERT sales. Total revenue for the book quarter amounted to 417 million with the back team.
amount is just $300.5 million, representing a 33% increase. This decline of primary due to the by-the-degree in sales volume of entry-level service is discussed earlier. However, we've changed in products and mix, particularly with the introduction of the high ESPSQ line model.
revenue including the motorcycles in MoPAD, Tix-Coupers and Bikes amounted to 53 million compared to 66 million in the same period of last year. This declined primary due to the lower sales volume of the MoPAD and the MoPAD motorcycles. However, there was a significant growth in micro-mobility revenue which
in the sales volume. And this impressed results were largely driven by the high end KQI3 series, which accounting for two thirds of the total key scooter sales.
Due to the higher proportion of kick footers revenue, which has an ASP around 1.4 to 1.3 of the emo cycle and emo path, the blended ASP for all the scooter decreased by 8% to one of these 3.1, sorry, 4.1.3.8.
The revenue from accessories, spare parts and services amounted to $59 million, marking a 13% increase compared to the first quarter of last year. And this world can be a primary attribute to the expanding popularity of our NINU Application Service subscription.
And the fourth quarter rose margin increased by 2.6 PPT year over year, reaching a 21.7%. And this improvement was driven by various factors, including 0.9 PPT increase in kick-shooter rose margin, 0.8 PPT improvement in product mix and price increase in domestic margin.
Among the total expenses, selling and marketing expenses reached 72 million, slightly rising by 2 million year over year, primarily due to the increase in depreciation and observation expenses.
Research and development expenses amounted to $35 million, reflecting a reduction of $7 million as we have successfully lowered the cost and improved the efficiency in this area. GMA expenses were $50 million, $19 million higher, and $2.5 million higher than the previous year.
and we have made a provision for credit loss for 21 million. However, if we exclude this provision, G&A expenses decrease by 6% compared to the previous year.
With the expansion of our state's over-existing with the scale of accountability available, which served as the basis for calculating the best that provision, had also a world of autonomy, and we have observed the European consumer sentiment to remain co-cautious.
leading our distributors to request extended payment terms due to the weak retail sales. Despite increasing credit loss provisions for overdue payments in an approved matter, we maintain an optimistic outlook on receivable collections in the future.
as our partners are in sound financial positions and have continued making payments during this period. The OPAC says percentage of revenue increase primarily due to the lower revenue base.
In the first quarter, our net loss was 16 million with net margin of negative 14.5% under the GAP measurement.
compared to the net loss of 29 million with the net margin of negative 5.1% at the same period of last year.
Turning to our balance sheet and cash flow, we ended the quarter with $8.60 million in cash, restricted cash, term deposit and short-term investments. Our operating cash flow amounted to $66 million, primarily driven by a seasonal settlement of $95 million in payments to the upstream suppliers.
However, we successfully decreased our operating cash health roll by $101 million compared to the first quarter of the previous year. Thank you to many, we appreciate the improvements in credit terms with our suppliers.
Our capex for the first quarter amounted to 16 million, reflecting a decrease of 44 million compared to the same period of last year. And this reduction can be attributed primarily to the decrease in the opening of new stores in China.
Since the second half of last year, our channel strategy in the Chinese market has shifted from the rapid storage expansion to the same-score sales performance.
related to COVID and the
And now let's turn to the guidance. As we enter the peak season and launch our new products, we are aiming to get back to the growth track and expecting the second quarter revenue to be in the range of RMB $828 million to Bahrain $Lim,mittal and undue $3. Till dailyre
representing a year-old year flat to 15% increase. And please be aware that this outlook is based on the information available for the date and reflects the company's current and preliminary expectation, which was subject to change due to the uncertainty to relating to a various factors.
And with that, let's now open the call for any questions that you may have for our operator. Please go ahead. Thank you. As a reminder, to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced.
To withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A queue.
We'll now go ahead with our first question.
Our first question comes from the line of Yeiting Chen from CICC. Please go ahead, your line is open.
Hello, my first question is the number of our channels has decreased in quarter one, and how should we understand this trend and how should we look forward in the whole year about the number of our channels.
This is actually reflected to the status in 2022. Because towards the end of 2021, we actually add about 1600 stores in 2021. And the money of the stores actually target to lower tier cities where the entry level...
are being sold. And then in reality, I think in 2022, with the lithium battery price went up significantly.
He can see our entry level product percentage record drops significantly from representing used to be 38% of the sales volume drop to almost a single digit percent volume. So that's where in some of the cities or some of the places where
Those stores have become unassustainable. So we actually took the action approach and then You know sort of off my the stores. I think that's what happened now going forward I think typically in Q2 and Q3 is the peak seasons. We're doing expect We will actually increase number stores. I think you know
Looking at this year, I think we'll go back to Ansura A sales store expansions trend, public queue for this year when it's actually coming to a low season sales. Okay, thank you very much. And my technical question is about
As we all know, maybe the two wheeler industry is witnessing the price for. So how do you view the price for? And we'll join the price for.
So yes, I think this year we do observe there's a price war with the big players competing, and basically competing in the low end market, basically below the, in reality, basically below the $3,000, below the $2,500 R&B.
sectors. I think the reality is we don't have
we don't actually have the product in that range, in that price range. So I think we're less effective at the price war.
We don't actually have the product in that range, in that price range. So I think we're less affected by the price war.
So I think our focus is still sort of at the, either what I call the end market and the premium market, that mid and market basically product price above 3,500 RMB, 2,500 RMB and the premium market are the product price above 5,000 RMB.
I think in those price ranges, I think in reality they are less price for.
in those parts we're interested in, in reality, there are less parts for involved.
Okay, okay. Thank you very much.
Thank you, we'll now move on to our next question.
Our next question comes from the line of Jing Chan from CICC. Please go ahead. Your line is open. Your line is open.
A how the B in the fam, the jes that driven like the some 20 Josh can even went you sho. And now the artit, do the soci. You should te negotiating between neither to runa, not you. How you me a happple counches in the chankeking.
If, on the other hand, not quite,????, will be another situation to wash away their?ers, their main strategic social security.
So this is my first question. Seeing that our income guidance, revenue guidance in the second quarter was very positive. We achieved young year post growth. And at the same time in May, we also released several new products. So what is the feedback from our dealers and the market after the product listing?
and how do we expect the domestic self-volume recovery in the second quarter and third quarter. In addition, now we have other new products to be launched in the second half of the year and what are their main market segments target.
So, I guess you still tell I'll respond in English as a.
for the general audiences. I think one with the new product, with the four new product, I think the ML is already out. The G400, G400T, we haven't really announced the price or accepted taking orders yet. But with our first product, the MQL, we actually got a huge response from the dealers.
from the consumers and from the market and even from the social media. So I think that's even the first week within the first week. So I think that from the dealers are committing almost like more than $15,000 units.
And so we're actually in the rush out. I think the issue looking at it in the month basis is probably somewhere on 30,000 or 40,000 units ordered. But where actually the issue we have is right now it's actually need to run public production.
I think that was so, this is a good response from the market. I think the reason it has a good response with the market because it comes from a legendary product. It's an M series, our orange and orange announced in 2016.
basically was the all-time award winner product. So we actually have people yelling out, saying they want to have something product that looks like M, but actually that's also compatible with the new China new standard. I think that.
That's what that is. Now the...
Now, the...
going forward to Q2 and Q3, I think we have two or three products in the pipeline. So basically we're looking at this year with product, product coming out in May, June , July , and August and potentially September . So I think...
So I think that's the layout of it. We have quite a few new products. Most of those products are going to focus on one, the premium end, and the second, the mid-end, with potentially one entry-level upgrades.
I think that, so we actually, I think we're very optimistic, we're very confident with the new product offers.
I think this actually reflects how, you know, how we forecast our Q2 earnings.
Having said that, I think it's the risk with the respond the market itself, we do take a more cautious view. One is whether I think in terms of our market sizing, we take a cautious view in terms of the market. It does the industry.
observed some sort of, at least some of the provinces will observe like a market slowdown because the product replacement happened last year. And the second, I think the previous question mentioned with the price war, we do see it's happening at low end but we don't know whether actually we extend to the mid end prices.
So there's something we take cautious view. On the positive note, it's...
There is a trend where we do see the lithium carbonate pricing came down quite a bit from the peak of last year, which means there will be a double pressure on the lithium battery prices.
which means that with the lithium battery crisis coming down, the percentage of lithium scooters has the oral percentage of the electric scooter, so the China, that percentage will start to come back up. And that's where our target market mainly.
So I think that will actually help us a little bit. Basically on the Q2 and Q3, especially Q3. Thank you, Sancti. And the,
So my second question is about how is the offline distribution network expansion of our kick scooter. And the self-volume of kick scooter in the first quarter is not very high. So from a.
is our annual sales targets and how to look forward to the quarterly performance in the future. So I think one with the kick schoolers as May today, we have, we were being to.
400 plus offline channels in the United States. I think those are mainly the Best Buy, Best Buy mainly, and also Walmart. And then we are also in about 400 plus channels in Europe .
is a typical sort of the medium R, ECI, those ones. I think the, so in term of offline channel expansion, I think that's completed. Now with the Q1 this year, I think the issue with the Q1 has also been traditionally has been a low quarter into my peak schooler sales.
So I think that's why you do see the Q1 year-on-year increase significantly.
So I think that's why you do see the Q1 year-on-year increase significantly.
Second, it's the also because I think what happened is I think one minor detail I didn't mention at the call is with the typically with our you know with the MOPED I think what happens when the MOPED distributor order it takes a month a month and a half to ship the MOPED.
to Europe . That's where you know you should be in Q1, you start to see in sales in Q2. With the kick scooters a lot of you know a lot of actually our current business model is actually we have kick scooter inventories in Europe . So there is you know low season is actually low season. You don't see this for like three months.
business grow about 2 to 3x whether we land at 3x or whether I landed with a 2x I think it really depends on how we perform in Q2 and Q3 and also depends on how I think the oral market responded
I think historically in the past the oil market has been saying the market is growing at a double digit, but this year I think we also take a cautious view. But regardless I think from our point of view even we do about 3x that's only 300,000 unit sales compared to overall markets of about 4 million units.
So we're still a very, very small player. Even when we do about 300,000 sales out of that 4 million units you're talking about, we really did 7% of market share. Still a very small market player there. Which means that we do have a tremendous growth potential.
Okay, thank you. Thank you very much for your detailed answers, and this is all my questions. Thank you.
Thank you. Thank you. We'll now move on to our next question. Our next question comes from the line of Scarlett G from Credit Suisse. Please go ahead your line is open.
other product models. And my other question is, would you keep your full year 2023 target in both the sales volume and the sales revenue? Because if I add up the first quarter revenue and the guided second quarter revenue.
It totally accounted for around 30% of the whole year revenue target. Any actions you would like to take to realize the targets or would you like to change? Thank you.
So I think just respond to the quick address on the revenue percentage question. I think this year we're looking at it's actually a – you will look at this year sort of a rebounding case where the Q1 –
this year compared with last year Q1 with the drop because it was the last year Q1 with pre-price increase.
So that was a fair comparison. We expect to really have Q2 start to get back to the gross momentum and with Q3 and Q4 looking for a quite significant growth over the last year.
I think this is also related to how our new product is rolling out. You know with the first new product rolling out in May, which means, in mid-May, which means actually only able to impact about half of the Q2. Where Q3 and Q4, you're going to see...
So a full impact of the new product coming out. So I think that's on the China side.
A similar thing in the international side as well, where I think really as I mentioned earlier the Q1 with the kick scooter is low season, so I'm sure it's the euro year growth, it's only like what, 16% less. Here really the co-year you look at 2x or 3x growth.
a downward momentum last year and also a
a product roll off schedule. That's where you you know we expect to see a faster growth in the second half of this year versus the first half.
Okay, thank you very much. My other question is that can you share the order flows in hand for the other product models and for the new product, new launch products, when will you start to deliver? Okay, thank you very much.
But I think you know currently I think what we see is actually about roughly about 50% orders from actually the
the newly launched models and 50% from the existing models.
I think that's what we see in May. So we don't have a forward-looking tune because there are two new products coming out, the G400 and G400T coming out in early June and how that reflected the orders.
And that's what we see in May. So we don't have a forward-looking tune because there are two new products coming out, the G400, G400T coming out in early June , and how that reflected the orders. OK, got you. Thank you very much.
Thank you. Once again, as a reminder to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again.
There are no further questions at this time so I'll hand the call back to CEO Dr. Yanli for closing remarks. Thank you all for participating.
and bye.