Q2 2023 EHang Holdings Limited Earnings Call
Speaker 1: Good day, ladies and gentlemen, and thank you for standing by. Welcome to second quarter. Twenty twenty three earnings conference call as a reminder. We're recording today's call. I will now turn the call over to Angie, EHAN's senior director and investor relations. Ms. EHAN, you may begin.
Speaker 2: Hello everyone. Thank you for joining us on today's conference call to discuss the company's financial results for the second quarter of 2023. The earnings release is available on the company's ARRA website. Please note the conference call is being recorded and audio replay will be posted on the company's ARRA website.
Speaker 2: On the call today we have Mr. Huaju Hu, our founder, chairman and chief executive officer, Mr. Xin Fang, chief operating officer, and Mr. Richard Liu, chief financial officer. The management team will successfully give prepared remarks.
Speaker 2: Remax the delivery in Chinese will followed by English translations. All translation is for the convenience. Thank you, Anni. Thank you for participating in our today's call.
We have established a joint venture with the Shire tourism and to deliver the first batch of our five units are beyond 2016 as aav's to this joint venture.
The customers tend to develop low altitude of tourism and <unk> project with the <unk> and haven't been late on occasion, a national fiber class tourist attraction and other synergy areas in northwestern China.
And plans to operate a minimum of a 120 units of <unk> within the next five years.
Moreover, Shenzhen position as a pivotal gateway for preparing China has an innovative low hour to duty economy has committed to shaping itself into a national low altitude economy development demonstration fee against this backdrop in July we inked a memorandum of understanding for a strategic.
<unk> partnership with the government about power and district.
Which is it changes aviation hub.
This collaboration is dedicated to jointly establishing the first the OEM operation demonstration Center names the wings of the Bay area at the OPEC went up their bonds Carter on and tourism landmarks.
We plan to develop the first <unk> commercial route initiate the operation of <unk> after obtaining its certificate.
And lunch Aero tourism, the size being experienced in services.
As a company and a greater Bay area, our cooperation with the Shenzhen power will serve as a crucial step in our poster certification operational plans.
We are pleased to see that in June of this year. The state Council of China officially issued interim measures for fly and management of <unk>. The.
The first special administrative reregulation of this kind in China.
This will quickly prepare the robust gross up the UAV industry, while expanding our market opportunities of the low altitude economy market.
It will also lay a good foundation for the commercial operations of our <unk> hundred 16 is after obtaining the certificate.
The Hunter 16 type certification project is approaching the finalized our 100 air mobility roots initiative, Chile operations also have achieved a fruitful results.
Along with our customers and partners. We have also developed a total of over 20 trial operation sites across 18 cities in China within the two years by the end of July this year.
More than 9350 secured operational top line Hello altitude, the tourism and <unk> have been conducted by <unk> hundred 16 as at these sites.
Which will pave the way for our commercial operations after certification.
Following obtaining the certificate Avi Hunter <unk> S. We will deliver the existing domestic other pipelines in a proper order with.
Have accumulated into more than 100 units.
In a global market, we maintain our proactive engagement within the U M industry in Asia, and Europe , cultivating potential customers and partners, while conducting AAV testing and demonstration flight.
In April of this year was inducted as a member of our Japan public and private committee for advanced Air mobility.
In June we have successfully completed a test site RV Hunter <unk> in Okinawa, making Japan first Alan helping flights, but a M and EBIDTA.
Recently, our <unk> hundred 16, <unk> successfully completed a test lines in Israel in Belgium.
Extending our ebay top VI bookings to as many as 14 countries around the world.
We are confident that as our operational scale and a flat number steadily grow and increasing number of our regulators customers and passengers will know more about and appreciate <unk> has a unique AAV technologies and products, enabling more people to enjoy a safe autonomous eco friendly.
And efficient air mobility experience, it will drive industrial innovations and changes and create more value for the society.
Next I will turn the call over to our CFO Richard Thanks.
Thank you <unk> Hello, everyone before I go into details. Please note that all numbers presented are your RMB for the second quarter of 2023.
Lies.
All percentage changes on a quarter over quarter basis.
Otherwise specified.
Retail analysis are contained in the earnings press release, which is available on our IR website.
I will now highlight some of the key points here.
In Q2, the total revenues were 10 million compared with $22 2 million in Q1.
Primarily from the delivery of five units of $2 six injectors to the joint venture resistance enlisted leading tourism operator in China.
Roger.
In light that the TCE process of 216 pressures is approaching began some deliveries are being expanded to be post tc per customers requests.
Gross margins stay at a high level, 62% in Q2.
A slight decrease of three seven percentage points from 63, 9% in Q1.
Despite this minor fluctuation our gross margin continued to be notably higher than the players of other clubs.
Electric transportation vehicles, such as those electric car companies.
This is largely attributed to our unique advantages and a global U M and <unk> industries.
In Q2, our adjusted operating expenses, which are operating expenses, excluding share based compensation expenses were $58 1 million compared with $50 1 million in Q1.
The change was mainly because of the increased expenditures related to the conforming aircraft and the compliance tests and the final demonstration and certification phase of the <unk> 2016 Digest type certification process.
The increase in marketing activities to enhance our brand awareness additional provisions for some long aging accounts receivable, etc.
As a result, our adjusted operating loss in Q2 was $51 3 million.
Paired with $34 3 million in Q1.
<unk> net loss was $51 8 million compared with $33 6 million in Q1.
Furthermore, we have kept optimizing our balance sheet with a prudent approach to cash and liquidity management.
As of the end of Q2, we had $167 million of cash cash equivalents and restricted short term deposits.
In July we have further strengthened our liquidity with a 23 million U S dollar equity investment via a private placement from some long term strategic investors.
Funding, we're hoping hence our liquidity and provide vital support for execution of the post certification commercial plans.
The next phase of growth.
This brings our cash reserves to $320 6 million as of the end of July .
And last as Walter mentioned earlier today is my last time, joining the earnings conference call at the company's CFO .
I would like to sincerely. Thank the bore <unk> and the investment communities for all your trust and support in the past few years.
It's been my Great honor to be part of the force to drive E hung from innovative technology startup into an industry, leading listed company in the past eight years.
Believe corner is an ideal successor as CFO to take <unk> to a new stage.
We will continue to serve as a senior adviser to the company and wish the company continue to greater success. Thank you.
That concludes our prepared remarks.
Let's now open the call for questions. Operator. Please go ahead.
Thank you.
Thank you.
As a reminder to ask a question you need to press star one on your telephone.
Your question. Please press Star one again, please wait for your name to be announced please standby, while we compile the Q&A roster one moment. Please.
Again to ask a question Thats Star one one.
Our first question comes from.
Brenda Jang with Goldman Sachs. Your line is now open.
Randy Your line is open you can ask your question.
Hi.
You can go ahead.
Your line is open you can ask your question.
Hi, sorry can you hear me now yes, we can thank you.
Great. Thank you. Thank you.
My first question is about auto timeline, all for the TCE because a we have a finish out of the testing. So just wondering how how long it will take a Florida production cycle and after we began the PUC on how soon we can expect on the full production of our factory. Thank you.
Okay.
Hi, Brenda this Richard Thank you for your question. So basically our team have been continuing working with with the CPUC expert team.
Very closely to finish the remaining procedures.
We charged back it to be completed soon and.
And the PUC will be issued accordingly.
Once the PUC issued.
This T C is expected to be.
The first of its kind.
In the EV total industry.
And.
In terms of timing, we will make an announcement at that time. So please stay tuned.
In respect of our production post Tc.
As you know that we had the production facility in the city.
We see an issue in Europe .
The 600 units of <unk>, two <unk> series products.
So basically after we.
The TCE.
Those of.
Capacities will be utilized.
To support the.
Good.
Post GC deliveries.
In the future.
Thank you Richard I have also another follow up question here for the second half outlook.
Power from the Tuesday powers could you also share about the end market demand for example for the tourism market recovery of Mr. Yossi. After you will see when the recovery ongoing for the second half. Thank you.
Okay.
So basically.
On the demand side, our existing order pipeline has cumulated.
Two more than 100 units.
In China.
This is this pipeline is expected to continue to increase.
To give us.
Some examples.
In our previous press release, we announced our cooperation with <unk> She tourism.
And this cooperation will further lead to a potential.
The demand for about 120 units in the future five years. Additionally.
Our strategic partnership we see both.
District.
<unk> of Shenzhen City is not only.
A very important step for our post GC commercial operations.
But also expect it to help.
January potential order demands gradually.
Sure.
As far as the tourism market.
Is concerned.
It is.
The continuing recovery and.
Increasing demands in the tourism market.
For sure.
Are.
They are a key driver for our <unk>.
Ongoing revenue growth.
Additionally, our innovative products.
Are more in line with the customer needs in these scenarios, such as aerospace seating and apply experiencing sexual.
Compared to the traditional head counters.
Further we are about to.
Obtained at Tc.
<unk> commercial operation our be soon.
And since the beginning of this year.
More and more cities in China have been issuing.
Preferential policies.
To promote the development of.
What is called low altitude economy.
And unmanned aerial vehicle applications.
Which mainly include the AUM in the vehicles.
So this has also created a very favorable policy environment to a Saturday.
The debottleneck of.
This new industry.
To further give you an example.
The Center City Center City East.
As a CFO unmanned aviation pilot Zheng approved by the CPUC and Cindy C. D has been planning to issue.
Policies, such as regulation to promote low altitude economy industries. This year.
This is expected to become China's first as regulation to support.
The development of the low altitude economy sectors.
<unk> syndrome is measures to support high quality development offer low altitude economy.
Are expected to provide.
Strong support to the development of the industry.
Basically both initiatives are expected to bolster.
Our operations and revenue growth, whilst we commented on projects is in Gen <unk>.
As a company based in the Greater Bay area, we have abundant experience and the resources in the area.
Which will make our cooperation with the local cities more practical and viable.
Thank you Richard is very clear thank you.
Thank you one moment for our next question. Please.
The next question will come from the line of the Woof.
Dion Fang Securities. Your line is now open.
Hi can you hear my voice.
Yes, we can hear you. Thank you.
Thank you.
Yes, I have two questions. The first one is we noticed recently, China has published an enforcement, stating that certain unmanned aircraft will face on export of prohibition or will do whether it be any implication for our aircraft or hindered Tc process and the second question is kind of management team shed more light.
Potential application scenario that could be implemented in the near future. Thank.
Thank you so much.
Heidi.
This is Richard again.
I would take your question.
So basically for your first question I would like to see.
<unk> Suisse.
First of all.
Ehow as they internationally listed company.
We have always been strictly following the the actual related laws and regulations.
In China, and other countries, where we do business and adhering to the principle of the quality and the compliance <unk> bancorp's actual activities.
The recent new UAV related actual control policy in China.
Basically has no significant impact on our business, nor our TC process, because we have already been complying with the relevant export license requirements for Apple.
It has been going smoothly.
In addition, the spokes person of the Ministry of Commerce has just stated that.
Export control does not being as broad prohibition.
So as long as the UAV products exported at four legitimate civilian uses and the company followed a relevant procedures.
Understood.
Exploiting activities can be conducted normally.
And we we are dedicated to leveraging our.
Innovative technologies and products to serve the people around the world. The company had been taking strict and approved the measures in compliance management and customer restrictions in order to make sure. Our products are only used for legal civil uses.
And.
In respect to your second question as you know after our <unk> Dash S gassy as GC.
Our first per already we'll be focusing on.
So call it the low altitude tourism market.
We will continue to.
Came up with the tourism operators and partners.
As many as possible in China for operations.
In scenarios like aerial sightseeing fly experiencing etc.
Location wise initial wise such.
Such as.
The GSO ISI.
Cynic area.
Hertz.
The Sunshine.
Cynic area.
The Lake of Heaven of Tencent.
I think area and a symptom of which bay area.
Which were not previously.
Furthermore.
We will continue to leverage our ehm to 16 serious product platform to.
To explore other use cases, such as aerial logistics.
Emergency response.
Medical deliveries.
Aerial firefighting is central.
Yes. Thank you.
Thank you thank you Richard.
Okay. Thank you.
No more questions in the queue at this time, let me turn the call back to Ms. Ann for closing remarks.
Thank you operator, and thank you all for participating on today's call. If you have further questions. Please contact our IR farm that E mail or participate in our filing investor events during the calendar information provided.
Our website.
And we appreciate your interest and look forward to our next earnings call. Thank you.
Thank you all again. This concludes today's conference call. You May now disconnect everyone have a wonderful day.
[music].
Yes.
[music].
Okay.
[music].
Sure.
Sure.
[music].
[music].
Okay.
Okay.
Okay.
[music].
Yes.
Yes.
Yes.
Sure.
[music].
Yes.
Okay.
Yes.
Okay.
[music].
Okay.
Yes.
Yes.
Yes.
Okay.
Yes.
[music].
Yeah.
Yes.
[music].
Okay.
[music].
Okay.
Okay.
Okay.
[music].
Okay.
Okay.
Okay.
Okay.
Okay.
[music].
Yes.
[music].
Okay.
Okay.
Okay.
Okay.
Yes.
[music].
Yes.
Okay.
Thanks.
Yes.
Okay.
Okay.
Okay.
Okay.
[music].
Yes.
Okay.
Yes.
Okay.
Okay.
[music].
Alright.
Okay.
Okay.
Okay.
Sure.
Okay.
Sure.
Okay.
[music].
Okay.
Thanks.
Thank you.
Yes.
[music].
Okay.
[music].
Yes.
Sure.
Okay.
Okay.
[music].
Okay.
Okay.
Okay.
Okay.
[music].
Yes.
Thank you.
[music].
Sure.
Okay.
Okay.
[music].
<unk>.
[music].
Yes.
Yes.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
[music].
Okay.
Okay.
[music].
Okay.
Yes.
Okay.
Okay.
Yes.
[music].
Okay.
Good day, ladies and gentlemen, and thank you for standing by welcome to enhance second quarter 2023 earnings Conference call.
As a reminder, we are recording today's call I will now turn the call over to Angie enhance senior director and Investor Relations Ms. <unk> you may begin.
Hello, everyone. Thank you for joining us on today's conference call to discuss the company's financial results for the second quarter of 2023 and the earnings release is now available.
Well on the company's IR website. Please note the conference call is being recorded and an audio replay will be posted on the company's IR website.
On our call today, we have Mr. <unk> Hu, our founder Chairman and Chief Executive Officer, Mr. <unk>, Zhang Chief operating Officer, and Mr. Richard <unk> Chief Financial Officer.
The management team will successfully prepared remarks remarks, it delivered in Chinese will followed by English translation. All translation is for convenience purposes only.
In case of any discrepancy.
<unk> statement.
<unk> language will prevail.
Q&A session will follow afterwards.
Before we continue please note that today's discussion will contain forward looking statements made pursuant to the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 90 95.
Forward looking statements in Bobby herein to risks and uncertainties as such the company's actual results may be materially different from the expectations expressed today.
Further information regarding these and other risks and uncertainties is included in the company's public filings with SEC.
The company does not assume any obligation to update any forward looking statements, except as required under applicable law.
Also please note that O&M Bruce present data on your R&D and therefore, the second quarter of 2023 unless stated otherwise.
With that let me now turn the call over to our CEO . Mr. <unk>. Please go ahead Mr. <unk>.
Sure Andy.
Got it.
<unk> hundred element and cannot be able hopefully.
India will fade horticulture Lasalle globally.
Thank you Olivier.
In the house healthy.
Well, Linda I annual Congress, whereas Ashok Gucci Schulhauf drug Russia didn't hold.
And again good luck.
Johan <unk> loyalists sure, yes, sure favorable growth.
<unk> also the Russian issue right.
Fiscal quarters, and hopefully looking chair the political eagle the Homebase should appear there.
Yesterday, <unk>, Hong Kong pushing leave that vehicle.
<unk> home, our union year from Columbia, <unk> come to shortly.
Our efforts in HOKA injunction to Eli.
Lead homebuyers tragically, we have for law will not put a condensed winner Julia <unk>.
Tony I'm sure one June Tylenol, Chengdu dental India run yet truly that Luke talked demand on closure on that one.
Mokobo closer to the phone proxy towards El Dorado and Mr. Yan Tricia, the Uruguay proven youll either <unk>.
<unk> hundred <unk> a question on Rialto.
Putting assure you Honda Toyota for me.
Builders are good <unk>.
Yes, sure hung in Germany.
Chance, what Leila consumable.
Archie with Hollywood, Chicago urine, Josh infusion, while Michelle torrential shortly we're in Josh.
<unk> income.
Sure <unk>.
The good feeling not pushing canceled or pushed candidly.
<unk> hundred Agencia Brasil.
Pharmacy.
Hey, guys, how about joining us.
Tissue.
This year's law element <unk> Hematology culture will help guide <unk> retrofit, what our future rather nicely in the back.
In commercial banking chemical using Google Cleveland Undrawn.
A woman Sonya Harvey you booking volume.
Does he downstream junction, let the Arecibo through.
When they might go forward with yet.
<unk> <unk> <unk> CFO .
<unk> <unk>.
Our outlook on that long geographies here through <unk> China.
Molly easier poultry.
Thats right.
Challenging downhole, while many of you who you'll feed how lillian negotiate.
That you don't see again <unk> easy to quarter, two nausea as issued on <unk> I mean, that's kind of an overhaul.
And Thats year, one caligula announcements from Illumina in Canada.
Continue with some color woman valued on him.
What is particularly accordingly.
Gaucher pompe truly to ensure <unk>, telling you Julia either Trent <unk> CFO .
Todd Hornbeck holiday, if I may sound, along we'll do that.
Jimmy This article fulltime the sample.
<unk> gone through a doctor means here Damian.
That's how widely totally know Gwen Chicago.
Chicago Gulf liquidity format, you can wheel travel essentially on its conclusion yet.
And then suddenly the ghostly your fleet how sure.
Between Washington.
Newly acquired <unk> Lollipop.
Even without the harmful Sean you guys seem to go to <unk>.
That makes sense, the Apple retail new enduring a buyer.
<unk> she hasn't sample Julie.
Horseshoe dances retirement going from a go to Gwen we're going through our five senses inflow, that's what I've got one for Glenn at home guidance here. It sounds like what you're finding that Lee <unk> flow through the <unk> yet.
Well many of your valuation I believe I'm sure Lou <unk>.
Alright.
And viewing POC and toll elderly.
Bill Djs, that's how widely <unk>, you'll travel essentially an attrition tenure settling intrusion.
I will go through the holiday and chemicals through dialog will say Apple plus how gogo boardwalk robot.
Yet only from Meda.
We will have widened up youll see Amazon is EMEA, what see that Kona.
Good luck.
Minor leaguers synergy.
Tom in.
Tell me a woman fills England fountain Jojo.
Is it at that.
Below is the English translation of Mr. <unk> remarks.
Hello, everyone. Thank you all for joining our conference call today.
Today Zero Tricia exciting news with you about our type certification of <unk> 16 S. And then are the vehicle system that we have successfully completed all of the planned cast and the trial site in Alaska phase of demonstration and a verification on la <unk>.
And also completed the definitive cause certifications that test by the CEC.
This is the last milestone before attending attached certificate and also the result of the unwavering efforts of Ehow team.
Since the time when the CEC officially accepted Jan 2016, as TC application in January 'twenty, 'twenty, one hour and yellow drilling efforts has spanned over 30 months.
Throughout this journey, we have overcome various challenges and finally successfully completed over the substantive task.
Ranging from battery and armament material stress electronics shop to where data link to ground control station.
We have sufficiently proved that he had 2016 as Mr safety standards and are worsening requirements by the CEC.
For scientific approaches Marianne go demonstrations rigorous testing at a continuous optimization.
This marks a significant achievement not only for <unk>, but also indicated and precedented advancement.
With me a certification for the entire <unk> industry.
Furthermore.
Other ongoing TC project of <unk> aircraft to our knowledge ours is the worst first DTC program for <unk> and <unk> vehicles.
I would like to express my gratitude to the Cec's officials and the review team as well as the Companys airworthiness certification team for their unwavering efforts and are persevering spirits.
It is their professionalism exceptional technological expertise and our collaborations that have led us to our impressive achievement today.
Also I would like to thank our investors and so many supporters for their patients throughout the process.
I believe the remaining procedures will be finished very soon before the official authorization of the type certificate.
It will pave the way for our commercial operations in the next stage in our second quarter, taking into consideration all the internal and external devices with managed our product delivery in a controlled manner, the Florida Canyon cap certificate.
<unk> 2016, as AAV products were delivered in Q2.
Total revenues were 10 million RMB gross margin stayed around 60% I believe we will have an excellent financial performance after the certification.
Doing a certification period, we secured a round of about $23 million strategic investment in July .
Following the 10 million U S dollar strategy, taking investment from <unk> West coaster, new area in our first caught up this year.
This has further enhanced our liquidity finally im glad to take this opportunity to announce that Conor Yang the director of our company as a board and as chairman of the audit Committee will take over the position of CFO of the company.
Effective on September one.
He served as the CFO at several listed companies, including our media downtown Tokyo etcetera.
And he also serves as a director at several well known companies such as Etsy Tangshan travel etcetera.
Conor has more than 30 years of extensive experience in financial management Investor Relations capital markets and corporate governance.
During the three years he served as a director of our board. He has a profound understanding on our confidence in the company.
We warmly welcome Conor to join our management team.
I believe he will definitely take it into a new level.
Richard Liu has tendered his resignation from the CFO position due to his personal reasons.
Which will be effective at the end of August .
Although he will serve as the senior adviser to the company contributing his expertise to our continued success.
On behalf of the board of Directors and management team I would like to thank Richard for his tremendous contributions to the development during his eight year.
Tenure with us.
In addition, we have also welcome to Mr. Winkle al as our newly appointed a director to the board and also as the chairman of the Audit Committee and a member of the compensation Committee. Mr. Allow has over 30 years of experience and expertise in financial management and accounting.
And has served as a CFO and a finance executives, our bearish listed companies and industry, leading companies, including Robertson's perfect load, all baby and mother et cetera.
He also has 10 years other oddity experience and Pwc and look forward to working together with <unk> and Mr. <unk> to take you into a new stage.
Next I will hand over the call to our Chief operating officer Mr. Haynesville. Thank you.
Sure Jeff was all Goofy Hall CRT, the woman that associate Chinese <unk> Huegel Internet also yes, sorry, one of ITG Hypo Sundar finance you very helpful.
Ladies and all that sort of Halloween <unk> jets with a diesel.
G genius saia will meet its onboarding agenda deals yet. So it is also possible to see that you will Chengdu, although contest to ease the whole DRG the woman, who don't just use some back with you.
So long haul wholesale dealer herds are also please hydrogel philosophy will Johnson <unk>, Johnson and Qi <unk>, yielding GE has been cancelled <unk> Neil woman.
Hi, Jen <unk>.
Alright, I will hand, Pollo unit rates.
<unk> will now will be <unk>.
So.
Sometimes the weights on what the quantity of Tulsa in part on the total book.
At about <unk> <unk>.
Thank you John .
P&G.
And then sends a hung us O'neill saw that the bonds usable chesil Sandy <unk> got also to use that bond when it <unk> look like.
<unk> also got physical gold total units of <unk> launch it's Lee.
Hi, Russell <unk>, Jose, Sorry, Hi, Aldo Esso Cheetah Hawkeye G E.
<unk> told.
Solvay timelines you the CEO Johan.
Since the Bon tons of enrolment of volumes Youre welcomed the quadrant.
Well, maybe you havent gotten kind of doing our newly opened <unk> does the bundle up what were willing to offer whole Giovanni the deepwater I mentioned are probably willing to answer <unk>, reaching one it doesn't guarantee.
These would you be willing to offer how old you are talking about Genco model, what are you going to need us with LG.
John Lee Walnut Johan <unk>, ending downhaul gauges.
So it has all the high and low guidance Sebastian Hopper gallons that are being installed one.
Womens condom cellphone places as you, possibly can get you that our home products.
GSO Jinyan Geordie.
Daniel will Miss Yes couple of other ones I don't go so Bob Houghton as with a couple on <unk>.
Well I'll do you only offers into yen yields LNG.
Lee once a year, which is not much after that Johan.
So the punchline easily.
Well I mean, she is the hardest on <unk> yet.
Hi, Hello, guys, which is our whole women's I'll shoot the Yahoo will need to factor in that.
Pot-walloper ebay bought out.
What is it all <unk>.
So she is a Yahoo also digi GT is how you are most hung up model.
<unk> heard of all by being a leader first of all yes.
Tidiness Juliet women's Eldorado, presenting goldman's, although uncertainty huddle with Abbvie.
Do you have a women die Rubens Hausen <unk> la.
<unk> telecom.
Shinji, Yes, hi, CD at a rate that you said you hope it is single like us really so the woman that illegal pachinko <unk> charge of both Astro suitable jobs.
So it is all of them are using more of a Dr. <unk> Zhang.
<unk> Dot Qian Wang Copel <unk> E <unk> hundred.
Good Lord and seasoned guys with our Undrawn, so the bundle calzada Commvault <unk> yet.
Jorge It's housing you can go.
Ladies service on that goodwill that's awesome.
So I mentioned a moment associated with one liter just all tied with it.
Yes.
Below is the English translation of Mr. <unk> remarks.
Thank you Mr Hu and Hello, everyone. During the second quarter as we continue to make progress in the final stages of the Hunter 16 F type certification. We have also been actively exploring new business opportunities and a cooperation on both domestic and international fronts.
To establish a solid groundwork for the upcoming posters or vacation operations.
After the initial signing of a cooperation framework agreement with Sealy Tourism, Shenzhen listed leading tourism major brands in China in March of this year.
Our collaboration move forward in the second quarter.
We have established a joint venture with Shire tourism and to deliver the first batch of our five minutes I'll be hand to <unk> to this joint venture.
The customers plan to develop low altitude of tourism NTIC project with the <unk> and haven't been later location and national fiber glass tourist attraction and other synergy areas in northwestern China.
And it tends to operate a minimum of 120 units of <unk> within the next five years.
Moreover, Shenzhen position as a pivotal gateway for preparing China's innovative low altitude economy.
As committed to shaping itself into a national low altitude economy development demonstration fee against this backdrop in July we inked a memorandum of understanding for a strategic partnership with the government about Bowen district, which is Shenzhen aviation hub.
This collaboration is dedicated to jointly establishing the first the OEM operation demonstration center named the wings of the Bay area at the Ob went out that boeing's catch on and tourism Denmark's.
We plan to develop the first David on commercial initiatives.
Initiate validation Avi <unk> S. After obtaining a certificate and lunch era tourism the size being experienced in services.
As a company and a greater Bay area, our cooperation with the Shenzhen will serve as a crucial step in our poster certification operational plans.
We're pleased to see that in June of this year. The state Council of China officially issued a interim measures for fly and management of <unk>.
<unk> the <unk>.
Firstly special administrative escalation of this kind in China.
This will quickly per pad the robust gross out the UAV industry, while extending our market opportunities at the low altitude economy market.
It will also lay a good foundation for the commercial operations of our <unk> thousand 16 S. After obtaining the certificate.
As the Hunter 16 type certification project is approaching the finalized our 100 ml ability roots initiative, Chile operations also have achieved a fruitful results.
Along with our customers and partners. We have also developed a total over 20 trial operation sites across 18 cities in China within the two years by the end of July this year.
More than 9350 secured operational top sides for low altitude of tourism and <unk> have been conducted by <unk> 16 as at these sites.
Which will pave the way for our commercial operations after simplification.
Following obtaining the certificate Toby Hunter <unk> S over delivered existing domestic other pipelines and our Papa odder.
We have accumulated into more than 100 units.
The global market, we maintain our proactive engagement within the <unk> industry in Asia, and Europe , Callaway can potential customers and partners, while conducting AAV <unk> demonstrations like in April of this year with inducted as a member of the Japan public on the private economy.
For advanced and mobility.
Julien we have successfully completed a test site RV hand 2016 as.
In Okinawa, making Japan first Allan Hoffmann slides, but and then to EBIT.
Recently, our <unk> hundred 60, <unk> successfully completed a test lines in Israel and Biogen.
Extending our ebay top flight bookings to 14 countries around the world.
We are confident that as our operational scale and the flat numbers steadily grow and increasing number of our regulators customers and passengers will know more about and appreciate <unk> has a unique AAV technologies and products, enabling more people to enjoy a safe autonomous eco friendly.
And inefficient and mobility experience.
It will drive industrial innovations and the changes and create more value for the society.
Next I will turn the call virtual our CFO Richard Thanks.
Thank you Shing Hello, everyone before I go into details. Please note that all numbers presented are in RMB and now for the second quarter of 2023, unless stated otherwise all percentage changes on a quarter over quarter basis, unless otherwise specified.
Our analysis are contained in our earnings press release, which is available on our IR website.
I will now highlight some of the key points here.
In Q2, the total revenues were $10 million compared with $22 2 million in Q1.
Primarily from the delivery of five units of <unk> to <unk> to the joint venture resistance enlisted leading tourism operator in China.
John .
In light that the TC process of <unk> two <unk> is approaching the end some deliveries have been extended to the post Tc per customers requests.
Gross margins stay at a high level, 62% in Q2.
A slight decrease of three seven percentage points from 63, 9% in Q1.
Despite this minor fluctuation our gross margin continued to be notably higher than the players of other types of electric transportation vehicles, such as those electric car companies.
This is largely attributed to our unique advantages in our global <unk> and <unk> industries.
In Q2, our adjusted operating expenses, which are operating expenses, excluding share based compensation expenses were $58 1 million compared with $50 1 million in Q1.