Q2 2023 Niu Technologies Earnings Call
Speaker 1: Good day ladies and gentlemen, thank you for standing by and welcome to the new technologies second quarter 2023 earnings conference call. At this time all participants are in listen only mode.
Speaker 1: 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.
Speaker 1: Now I will turn the call over to Ms. Crystal Lee, Investor Relations Manager of New Technologies. Ms. Lee, please go ahead.
Speaker 2: Thank you, operator. Hello, everyone. Welcome to today's conference call to discuss new technologies results for the second quarter 2023. The earnings press release, corporate presentation, and financial spreadsheets have been posted on our Investor Relation website.
Speaker 2: This call is being webcast from our company's IR site as well, and a replay of the call will be available soon.
Speaker 2: Please note, today's discussion will continue forward the peace statement made under the Safe Harbor Provision of the US Private Security Lidication Reform Act of 1995. Forward the peace statements in most risks and certainties, assumptions, and other factors.
Speaker 2: The company's actual result may be materially different from those expressed today. Further information regarding the risk factors is included in the company's public following with the Security and Exchange Commission. The company does not assume any obligation to update any forward-looking statements, except as required by law.
Speaker 2: Our earnings press release and this call include discussion 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 2: On the call today with me are CEO Dr. Yan Li and CFO Ms. Fionn Jo. Now let me turn off the call to CEO Yan.
Speaker 3: Thank you everyone for joining us on the call today. So in Q2 2023 our total sales volume was 211,996 units.
Speaker 3: returning to the same level from one year ago, with a year-over-year slight increase of 1.5%.
Speaker 3: Specifically, sales volume in the China market has a small euro a year drop of 1.0% to 178,567 units. And the sales volume in the overseas market experienced a year-over-year 17.1% growth to 33,429 units.
Speaker 3: Total revenue in Q2 2023 was RMB 828.8 million, matching the level from Q2 2022 with a slight increase of 0.1%.
Speaker 3: For new Q2 2023 was a quarter to get back on the track of long-term growth through a focus on premium mass premium products as well as sustained effort to enhance our brand. In the China market the new products that launched in Q2 have demonstrated substantial growth potential.
Speaker 3: spreading our sales growth and generating extensive discussions on social media. Capitalizing on the momentum garnered from those new product launches, we also rolled out engaging user events.
Speaker 3: Those events incorporate our new products and collaborative effort with other brand partners, thereby positioning you not merely as a leader in urban mobility, but also as a pioneer in cultivating a desirable lifestyle.
Speaker 3: In overseas market were experienced a mixed results with sales of electric two-wheelers dropping by 68% year-over-year, while the macro-mobility sales increased by 48.5%.
Speaker 3: The decrease in the sales in electric tool in the market mainly due to the macroeconomic strength in Europe coupled with delay in our high performance product rollout.
Speaker 3: Using improved 125cc high performance product is now scheduled to roll out in Q3 2023 to fill in the current gap in product offerings and to stimulate growth.
Speaker 3: For the Southeast Asia market, we are loading all the battery swapping solutions with local operating partners.
Speaker 3: second half of this year. The expectation of new products being released also contributed to the year to year decrease in sales volume in Q2.
Speaker 3: Regarding to the micro-mobility market, we continue to see stable growth driven by the established product portfolio and the foundation we laid out with the current sales network.
Speaker 3: In this quarter, our award-winning micro-mobility product was sold through online channels during our anniversary sales and in offline channels covering major retail partners in the US and D-Europe.
Speaker 3: Now delving into the China's market performance. In Q2 2023, we rolled out new products in China market as planned and new products are proven to be a strong driving factor behind the growth.
Speaker 3: During the last quarter's earnings call, I introduced the new premium flagship product MQIL and the mid-end product G400 and G400T.
Speaker 3: The new products are well received by the market with great popularities.
Speaker 3: The MQL has gathered significant popularity across all major social media platforms with this unique design that inherits the design from our all-time classic M series along with significant upgrades in performance and smart connectivity.
Speaker 3: The MQLL is designed with extra long range up to 170 km. And the industry leading smart technologies that support functionality like supercharging, smart dashboard with navigation display, smart lighting system that changes light setups with satellite sensors.
Speaker 3: It's fully integrated with the Apple's ecosystem that allows simple control through Siri.
Speaker 3: In just a few months since its launch, videos featuring the MQL has amassed more than 50 million views and 1 million comments and likes on Douyin. Additionally, it has been a trending topic on electric scooter categories on Xiaohongfu.
Speaker 3: On the mass premium product in June we launched the G400 and G400T and those are the two products that we took an innovative approach to use the same platform to build two bikes.
Speaker 3: The light motorcycle G400 electric bicycle G400T received positive feedback with almost 40 million views on the initial video highlighting the scooter's simplicity design and practical functionalities like large storage space.
Speaker 3: With the competitive pricing from RMB 4,599, a G400T has been met with considerable popularity in the market.
Speaker 3: Now, in success, it's response to our new product, naming is IMEQILG, 400G, 400T, is a testament to our commitment to the innovative and innovations and quality. Those products launch may accounted for over 60% of total sales volume in June , indicating their immediate popularity among customers.
Speaker 3: Our sales performance during the 618-year shopping festival was also outstanding with a grocery of 161% in sales revenue compared to the same period last year. Several of our key products featuring on top-selling list of major e-commerce platforms like JD.com and how about reflecting their wide acceptance of popularity,
Speaker 3: The strong performance across multiple products demonstrates the effectiveness of our product strategy to focus on premium and mass premium market and our ability to cater to the market's needs.
Speaker 3: Now in Q-quarter three this year, we launched F-400T, which is another demonstration to our commitment to bringing quality products to the market. The design of F-400T inspired by the fighter jets, along with the classic F-series Falcon Eye light.
Speaker 3: gives a sleek and stylish look. In purpose, all the smart functionalities that's new is known for, along with the unique power boost mode that allow riders to enjoy a speed boost for 10 seconds.
Speaker 3: This mode not only makes the city commuter easier, but allowing users to navigate through traffic effectively, but also as elements of fun to the right. The S400T went online through live streaming on August 8th with the pricing of $4,999. The new product live streaming has generated nearly 1 million views and received a nearly
Speaker 3: and the tea have already shown promising signs of popularity.
Speaker 3: As those products will only launch at NLQ2, their full-empower performance yet to be seen, we are optimistic that the growth driven by those new launches and the product will plan to release in the future with further boost our performance in the upcoming quarters and strengthen our market position.
Speaker 3: Leveraging the momentum from launch of a new product with an initial several marketing campaign at Ether at events is quarter. The marketing campaign will primarily conduct through online platform like Do-Yi and Xiao Hong Shu and together the campaign has gained over 1.4 billion views across platforms.
Speaker 3: Mover leveraging the new innovative and faster network to a launch more than 30 user events in 70 cities in first half, 2023. So those high user engagement event will have successfully brought diversity and creativity into the new user commitment. Our commitment to establishing you as a leading lifestyle.
Speaker 3: to construct the strengths of brand positioning by engaging strategic collaborations and participating in high profile events.
Speaker 3: A key highlight was our collaboration with the global Renault IP Kumamen. We hosted online live stream event inviting beloved Kumamen to a new story in Shanghai. And this event generated significant buzz and we planned to further capitalize this momentum by launching two new cross-kumamen scooters soon.
Speaker 3: In addition to co-branding activities, we also participate in exhibitions and events organized by leading lifestyle brands like North Space as Nicaracom.
Speaker 3: Our new scooters will showcase during the North Space Mountain Festival in Yangshuo and the Sniffer Council in Guangzhou. Those opportunities allowed us to present a new brand to a larger and diverse audience, both on-site and online. Through those initiatives, we have successfully positioned you as leader in urban mobility and a desirable lifestyle partner.
Speaker 3: and solidify our position as a go-to brand for urban mobility solutions.
Speaker 3: Now on the Overseas market, we deliver a mixed results of a sales of electrical two-wheeler's driving by 68% and a sales of micromobility categories increased by 48%.
Speaker 3: For the electric tool and market, we released the draw-up plan of the improved 125cc high performance product in the second half of 2023 to fill in the current vacancy in our product offerings in order to regain growth.
Speaker 3: We have experienced some challenges in lecture two of the markets this quarter, primarily driven by the economic slow down in our key European markets.
Speaker 3: The economic downturn combined with gaps, you know, our product portfolio in terms of I perform as electric scooters has added to the challenges.
Speaker 3: Another factor impact our performance is the increase in lithium battery price in 2022, which has continued to affect our sales this quarter in Europe .
Speaker 3: However, our international distribution partners are eagerly awaiting for the schedule of Q3 rollout of the performance-appquated high-performance scooters. They're also anticipating a pricing adjustment as a lithium battery price stabilizes and returns to normal levels.
Speaker 3: In the Southeast Asia market, however, we have observed a trend of rising demand in electric two-widdlers. We have delivered electric mobile battery swapping solutions with swap of batteries and battery charging cabinets.
Speaker 3: We're currently working closely with local partners in bringing this solution, allowing the operators to combine cell in the mole patch assies and renting the batteries, which practice was sustainable and substantially lower the upfront cost of purchasing electricity with mole patch.
Speaker 3: We plan to official to deliver the batter swapping solutions along with the first model that is compatible for battering swapping to our local South-South Asia partners in second half.
Speaker 3: Now, our micro mobility product has shown stable growth this year with a year or year increase of 48%. This growth has been driven by both our diversified product portfolio and our expanded sales network. Our current product offering cater to a wide range of market demand.
Speaker 3: We have high performance product that in $800, $900 price range, as well as entry-level options in a $300 to $400 range. This diversity allowed us to cater to a broader spectrum of customers' needs and preferences.
Speaker 3: Moving forward, we have planned to further diversify our product portfolio. I will be rolling on more product in second half 2023.
Speaker 3: Now we're pleased to share off Kickstarter products that receive significant attention and recognition. The KQI-2 and KQI-U's plus scooters will honor with the prestige IS design of Wars 2023 attestment to our commitment to innovative design and functionality.
Speaker 3: Fathers solidifying our standing in the industry, the KQI-3 Pro was selected as a gold winner 2023 of the New York Product, it's an awards. And the KQI-3 Max Scooter has been the recipient of the best electric scooter from Tom's Guide Award. Most recently, the right-er-so guide awards have named our KQI-3 Max Scooter as the best high-
Speaker 3: us to continue to expand our growth sales network. As of August 2023, new products are available in over 400 retail stores in the US and over 700 in Europe through retail partners.
Speaker 3: The sales network has laid a solid foundation for ramping of our product sales in the coming quarters. The sales network has laid a solid foundation for ramping of our product sales in the coming quarters.
Speaker 3: Now, other than expanding sales channel coverage, in this quarter, we're labelled as presence of online channels to successfully bring up sales. In June , we initiated a university sales campaign time for news, eighth, and anniversary. We launched a series of events from giveaway campaigns to special sales promotion to engage new and existing users.
Speaker 3: The anniversary sales can be in general total around 1.5 million views. Now in terms of marketing performance, we have continued to collaborate with influencers to strengthen our brand presence in the market. In the first half of 2023, we work with over 50 influencers who boost large fan base.
Speaker 3: Through a co-created content feature in new product, we have been able to generate over 1.2 million views. Alongside our influencer collaborations, we have also forged partnerships with local business to further expand our bread presence.
Speaker 3: Now other than the partnership, New has the active-lit participating events, exhibitions, worldwide, making the global appearances showcase our products and brand values. We're participating in North America's largest electric vehicle festival, the electrified expo in Los Angeles, the 7th Cisco.
Speaker 3: And it was planned to go to Expo in New York and the AMI later this year. We're currently preparing to make product appearances of a few of our key products. Some of the largest consumer electronics ratios, such as EFA and ECHMA. And we're looking forward to share the details in a few months.
Speaker 3: Now as a promoter of sustainable leaving for all, we are dedicated to providing our customers with more environmental friendly smart urban vehicles to make a positive impact on the environment. We're spreading the ideas of sustainable leaving through not just our product, but also our daily operations.
Speaker 3: In this quarter, we continue with the RENEW, a global sustainability initiative designed to renew our planet as part of an Earth Day campaign. In this year's Earth Day Cleanup event, we attract participants across Bali, Nepal, Guatemala, Hawaii, Dominican Republic.
Speaker 3: to go on three writing new scooters and promote environmental friendliness lifestyle.
Speaker 3: Now looking ahead to the second half of 2023, we remain optimistic for both our China international market. The China market has already shown signs that we've recovered this quarter largely proven by the launch of our new products. We anticipate the growth in sales will continue into Q3 as we begin to deliver those new products to the market.
Speaker 3: Our focus on the premium market has also enhanced our brand recognition thanks to our branding and marketing activities.
Speaker 3: However, we're also currently facing some temporary disruptions in some arachycities due to some regulatory changes.
Speaker 3: For instance, regular changes in electric bicycles in Guangzhou and other cities who proposed limited use of electric bicycle on the main road during rush hours could potentially affect ourselves in the short term uncertainties.
Speaker 3: Now, regarding to the overseas market, we anticipate regaining growth in the electric two-wheeler categories as we roll out our high performance electric moped in Europe and introduce our battery swapping solution in South Asia in the second half.
Speaker 3: However, due to uncertainties in the macroeconomic factor, we expect the growth may take time to fully manifest in our sales performance.
Speaker 3: Conversely, for the micro-mobility categories, we are confident that we can maintain healthy, stable growth through our continuous channel expansion and brand recognition building supported by our established product portfolio. We also plan to release major product portfolio upgrades later this year, which we believe will drive both sales volume and margin improvement over the long term.
Speaker 2: Now I will turn the call over our CFO FIA. Thank you, Ian. And hello, everyone. First, before I started to talk about our financial performance, we are pleased to announce that our 2022 ESG report is also being available on our IR website today.
Speaker 4: Our smart electronic tool will vehicles provided a clean alternative for urban mobility that makes cities more livable and sustainable when compared with traditional ICU vehicles and electronic vehicles which continue to conject the road.
Speaker 4: New has a unique opportunity to play a people to grow in driving the trends through the design and manufacturing of high performance electronic motorcycles, motor paths, bicycles and kick scooters.
Speaker 4: Our diverse diversified product portfolio directly addresses the global shifts in consumer preference.
Speaker 4: As of today, we have sold modern 3.8 million scooters across the globe and able-e-users to cover a distance of nearly 20 billion kilometers.
Speaker 4: This collective effort has resulted in a sustainable reduction of carbon emissions by nearly 4.8 million times. And for more ESG-related information, please feel free to find a full 2022 ESG report on our IR website. And now back to financial.
Speaker 4: Please note that our press release contains all the figures and comparisons you need. And we have also uploaded several format figures to our IR website for your easy reference.
Speaker 5: He is a butterfly.
Speaker 4: During the second quarter, our company achieved a total sales volume of 212,000 units. Of this figure, 175,000 units was sold in China market, while the remaining 33,000 units was sold overseas.
Speaker 4: Over 60% of the sales volume in China contributed by our new launched products. Our MQI model stands out contributing about one third of the total sales volume, G400 and G400T offers multiple purpose-scooter choices to our consumers.
Speaker 4: In terms of the overseas sales, the Kixquda reached 30,000 sales units, which accounted for over 90% of the total sales, international sales, representing an increase of 45% year-end, 179% quarter over quarter.
Speaker 4: The China Coeur Revenue worth 639 million increased 7.1% year over year, and this increase was mainly driven by the strategic optimization of premium product mix.
Speaker 4: year. This world of AFD is due to the launch of our new models whose retail price range was R&B 4599 to 829, depending on the front portion.
Speaker 4: You will pass.
Speaker 4: While the micro mobility revenue still shows significant growth in momentum, reaching 90 million of 127% quarter over quarter and 33% year over year. The overseas scooter is being decreased from R&B 5122 to R&B.
Speaker 4: The revenue from accessories, spare parts, and services amounted to 75 million, marked a 11% decrease compared to the same period of last year. And this behind was mainly driven by the overseas battery pack sales reduction, as we mentioned in previous quarters. The second quarter world's margin increased by 2.8 PPT year-over.
Speaker 4: 3PP may be due to the decreased cost of electronic to winners and kick holders.
Speaker 4: One thing to be noticed is that our growth margin has reached a record high and we plan to pass this part of game into channel and still network to support our partnership.
Speaker 4: Our second quarter, OPEX, amounted to $199 million, representing a 14.9% increase compared to the same period of last year, and Sallian marketing expenses were $110 million, representing a $17 million increase year-over-year.
Speaker 4: Priority due to our overseas micro-mobility business expansion, which resulted in increases in promotions, logistics, and rental expenses.
Speaker 4: Research and development expenses amounted to 41 million, representing a 3.2 million decrease year over year. Primarily due to a decrease in that cost of 2.1 million and a decrease in system.
Speaker 4: system development professional fees of 1.7 million. G&A expenses were 48 million, representing a 12 million increase year-over-year, while a 2.4 million decreased quarter-over-quarter. We have made a provision for credit loss of 33 million. However, if we exclude this provision, we will not be able to provide credit loss. We will not be able to provide credit loss. We will not be able to provide credit loss.
Speaker 4: G&A expenses decreased by 48% compared to last quarter and decreased by 50% compared to the same period of last year.
Speaker 4: With the expansion of our international operations, the extent of accounts receivable, which forms the basis for computing bed-deb provisions, has correspondingly increased.
Speaker 4: despite prudently raising provisions for credit odds on overdue payments.
Speaker 4: 50 cash term deposit and short term investment. Operating cash flow was positive- 217 million compared to negative 33 million of same pill last year and negative 36 a 66 million last quarter.
Speaker 4: The bridge improvement was primarily due to a federal credit terms with our suppliers and that is the management.
Speaker 4: Our capex for the second quarter amounted to $15 million, remaining stable for the past five quarters. And now let's turn to guidance. We expect the third quarter revenue to be in the range of RMB $1.15 billion to $1.33 billion, representing a year-over-year flat to a 15% increase.
Speaker 4: Please be aware that this outlook is based on information available as of today and reflects the company's current and preliminary expectations.
Speaker 1: Thank you. If you'd like to ask a question, you will need to press star1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star1 and 1 again.
Speaker 1: Please stand by while we compile the Q&A queue.
Speaker 1: Our first question comes from the line of Yeting Chen from CICC. Please go ahead.
Speaker 4: Hello, congratulations for your earnings result in the second quarter, 23. I have three questions. The first one is, could you please give us a breakdown of the revenue guidance of the third quarter, 23?
Speaker 4: this is my first question. So, yeah, here you are asking about the breakdown of the third quarter, right? And you get guidance, right?
Speaker 4: This is my first question. So yeah, can you are asking about the breakdown of the fourth right? Did you get guidance, right? Yes.
Speaker 4: All right, so actually, we don't give the details of the guidance. Actually, we expected the civil's volume in the third quarter that we may expect in the two around more than 10%.
Speaker 4: the Chinese sales volume increase and the proportion of the domestic sales volume versus the overseas sales volume will be around 85% versus 15%.
Speaker 4: of the schoolers. This is the schooler revenue. And we also expected around 8% to 10% non-schooler revenue for our services and spare parts and accessories. And altogether those.
Speaker 4: This is our expectation regarding the quarter three revenue.
Speaker 4: Okay, thank you. Actually, we expect the new products released in the third quarter and the second quarter to who feels volume keeps going in the third quarter. And my second question is about the reason for the growth profit margin in the
Speaker 6: And can it maintain in the high level in the third quarter?
Speaker 4: sales channel and also the retail stores. Normally our domestic growth margin will stay at a even higher level of the growth margin compared to quarter two. Since you know in quarter two we are a new product only launched half of the quarter.
comparative advantages in the retail market. So, so that, you know, we will get a even higher world smart team. This is before we made any sales policies to support our sales channel distributors and also the retail stores.
which may, you know, the most possible way that our growth margin and growth margin will fall into the range of 22.5 or something around this growth margin range. We will expect the quarter-three growth margin.
Okay, very clearly. Thank you very much. And my last question is about what is your opinion on development of electric motorcycles?
overseas especially in Europe and the Southeast Asia because we have seen that the consumers demand was weak in the past several seasons and so I wonder what is your opinion about that especially on the consumers demand not to be
Great. No, I think that's a good question. So we had to look at this market from, so I think we had to separate the European market and the South-East Sea market.
So we actually observed data in the European market, the electric scooter, what we call the electric motor pad and electrical motorcycles.
The actual sales has been declining in the first half this year versus this last year. I think this is exactly what you mentioned. It's a weight economy and the electric has been compared with petrol. Electric is a bit more expensive and it's a big item purchase. We're looking at a natural electric motor cycle.
basic about 5,000 euros, you know, anywhere between 4,000 to 5,000 euros. So it has been weak. So we're actually being cautious about, you know, how that market, the outlook of that market going forward. The upside for our case is...
If you look at the first half of this year, we actually didn't do well in Europe . Well, one is because the economy is weak and second is, we didn't really, our 125cc motorcycle upgrade didn't get to the market in the first half of this year. So that particular product line will be in the market second half of this year.
So even though the market is weak, but we're missing like, really we're missing one big chunk of the product. And with that product coming in, that will actually help us in terms of European market, even in a weak market.
Now, Southeast Asia is very different. So you know, last year we put a tremendous growth in Southeast Asia, I think we doubled in Southeast Asia. And when we look at this year, the Southeast Asian market, when we look at Thailand, when we look at Indonesia, those markets have been growing. So, and we actually have products more.
a suitable product for Southeast Asia. The particular product will be rolled out second half of this year, supporting the battery swappings. So I think from, if I had to take sort of the forecast we can this year, we're probably looking at a better growth in the Southeast Asia because the market's growing. We're loading our new products in Southeast Asia, more suitable for that market.
where the European market economy is weak, but we do have a 125 cc upgrade product to offset that weak economy.
Thank you very much. And one more question. I just want to know where the number of channels domestic will grow in first quarter and the first quarter.
I think the look at the stores gross. I think basically in the second half of this year, we look at the promote stores. I think whether it's happening in Q3 or later half the Q3 versus Q4, I would imagine that should more on the Q4. I think the current planning is more on the Q4 than the Q3.
A lot of times it's not fully new source, it's converting source from other brands.
and it's actually very difficult in the hot seasons.
So Q4 is usually the season where you see store start switch and a new store build out. So I think that's what I'm in line with our plans for Q4.
Thank you very much. That's all my questions.
Thank you.
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There are no further questions at this time so I'll hand the call back for closing remarks.
All right, thank you, operator, and thank you all for participating on today's call and for your support. We appreciate your interest and look forward to reporting to you again next quarter on our progress. Thank you.
This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.
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