Q1 2024 Niu Technologies Earnings Call
Yeah.
Okay.
Good day, ladies and gentlemen, thank you for standing by and welcome to the New technology that's cool.
'twenty 'twenty four earnings conference call at this time, all participants are in listen I mean, like I said, 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 no.
Now I will turn the call exits and it's Crystal Li Investor Relations manager all New technologies basically please go ahead.
Thank you operator, Hello, everyone welcome to chair today's conference call to discuss <unk> Technologies' results for the first quarter 'twenty 'twenty four the earnings press release corporate presentation and financial spreadsheets has been poster.
Investor Relations website.
This call is being webcast from the company's IR site and a replay of the call will be available soon.
Please note today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S.
Litigation Reform Act of 90 95.
Forward looking statements involves risks uncertainties assumptions and other factors.
<unk> actual results may be materially different from those expressed today.
Further information regarding the risk factors as included in complex public filings with the security and Exchange Commission.
Company does not assume any obligation to update any forward looking statement, except as required by law.
Our earnings press release, and this call include a discussion of certain non-GAAP financial measures the press release content.
All non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results.
On the call with me today are always see Oh, Doctor yesterday, and CFO Ms Young.
Speaker Change: Now, let me turn the call over to <unk>.
[laughter].
Okay.
Thank you Crystal and Hello, everyone and thank you for joining us today in the first quarter of 2024 hour total sales volume was 129000 units.
Reflecting a year over year increase of 37%.
Notably our sales volume in the China market saw an uplift of 31% 210000 units well overseas market experienced the fast growth of 48% to 19000 units.
Total revenue of Q1 was RMB 500, or $4 7 million.
Marking a 21% year over year increase.
Q1, 2024 was a pivotal quarter towards realizing our long term growth trajectory.
In the China market, we continue to refine our product strategy concentrating on the premise segments.
We bolstered our competitive product portfolio, but you haven't seen our classic series and broaden its appeal to encompass a more diverse range of vertical user groups.
Key highlight of this quarter was the successful launch of the next T model.
That's T series characterized by its innovative design and advanced technology was met with substantial market approval. They contribute 25% of our total sales revenue in China market. This quarter underscoring the efficacy of our strategic focus.
Encouraged by the success, we're committed to persisting with this approach and excited about several upcoming product launches scheduled for Q2.
The overseas market hasn't met our expectations for regaining growth in the micro mobility sector. We have focused on expanding our sales channels to establish a strong foundation for product driven growth for the rest of the year.
We have increased our retail presence by partnering with leading retailers such as best buy media Mart, thereby expanding our physical footprint or a 1200 locations worldwide.
For our overseas even more pad in motorcycles, we have concentrated on exploring direct sales business models in key markets in Europe, and the United States.
But I believe those strategic efforts are setting a stage for substantial growth in the coming quarters.
Now, let's take a closer look at the China market, we have laid out our product development conduct a market activities things expanded sales channels in Q1 O in alignment with our core strategies for this year.
Our goal is to build a upper mobility brand focused on the premium market segment with diversified user needs.
Although we're proud of luxury manufacturers with W. And X series. This series continue that you file first the legendary scooter, one, but the element with a futuristic elements like magnetic transparent panels, our tenant lives.
Dispersion of signature Halo light.
T. The most premier scooter in this lineup.
Post the most advanced technologies to date.
The market received the next P series exceptionally well Mark you know initial venture into targeting young.
Demographics with scooter products.
To further expand our product lineup toggling the Gen Z demographics.
Having introduced the unplanned you Max into the market.
<unk> was officially launched in March at a starting price of RMB 404299 quickly, becoming a competitive product among the young University students.
Building on the momentum from next year and play we're launching another product the new Max completing our operating for the young consumers.
The <unk> is specifically designed for young writers in tier one to tier three Cds turned to lifestyle trends features a large form factor that he has both visual appeals and the radar comfort ideally for dynamic urban environment.
Performance Wise are you maxed out for a maximum rate of 160 kilometers on a single charge includes the Postbank drive mode for a rapid acceleration.
For safety and to onboard rights incorporate at Tcs, ensuring a secure and the type of experience across various urban tanks.
Now with the newest edition, our fluids product targeting the trendy young writers, it's not ready to put upcoming peak quarters.
Okay.
Another target group will aim to expand with our unique position of products is a female electric scooter writers.
This year, we released our first female focused scooter. The upgraded you want a you want <unk> features a new color scheme economic improvement he handles the seat position either to use smart functionalities and the option to include BBC amongst accessories launched at the beginning of March just in time for the International Women's Day campaign.
This model accounted for 12% of total sales volume for the entire quarter, despite being on the market for only one month.
Ready on the moment in terms of whether you want <unk>, we are continuing expanding our female focused scooters. The latest addition to our classic M series product line is a M best scooter tailored to meet the unique needs of female consumers in the premium market segments.
MS Scooter showcased the classic and amendments at that aesthetics with color schemes and face white admin green, creating elegant another clean style that distinguish yourself from other scooters in the market.
This quarter. It's also engineers, specifically to cater the distinct needs and preferences are female writers such as the track traction control system to ensure that a smooth riding experience due to frame system for enhanced stability and both front and rear disc brakes, offering an advanced level of $50.
We also expect to introduce another product specific tailored for female users in the coming days Oh series. The old series combine aesthetic design, a unique economics to address the special needs of female scooter writers.
We plan to release the OTR some July 1st through a livestream with top Influencers and I look forward to share more details after lunch.
Now with the introduction of en masse in all serious who will soon complete our product line targeting that premium female user segment of the market.
As I mentioned in my previous earning call building, our product portfolio to target various premium segments is a core component of our business strategy. This year I am pleased to share that we have already received some initial positive feedback with this strategy in place.
Speaker Change: Okay.
Now with our product strategy and focus we have been actively engaging continuous marketing and branding campaign to reinforce our brand identity.
Singly, we'd rather dynamic marketing campaign on the broadcast a mix of videos across iconic landmarks in six major cities significantly enhance our brand high end positioning and robust capabilities.
Kind of premium prominently featured next T. Our cutting edge flagship product, establishing as ideal vehicle for stylish urban commuters.
Then the next piece designed to address now with the new generally similar trend there you shouldn't uptrend centers the video showcasing key over centers like Beijing, Shanghai, and Guangzhou has captured the public's attention a massive total of nearly 200 million views.
Oh for any extra also center around the newly introduced product lines targeting a specific user demographics at the beginning of the year, but announced our cooperation with JD gaming a top performing esports team as their official electric vehicle partner with collaborators.
<unk> from Brent activities to product launch aiming to making a significant impact on the generation Z demographic, which align with our product focus.
To further bring up our product presence among the young users we have initiatives to collaborate with top gaming peripherals brand research last year, We released a co branded new Cross research as to our limited edition and this year, we're taking the partnership once that four to collaborate as reserves Brendan faster.
In may new join razor to host gaming events in various universities by presenting a read their new co branded scooters. So far that you bet has covered numerous reasons universities with 2000 events attendees. In addition during the period.
Widespread content on social media for more than 2 million views, we plan to carry out a serious upstream <unk> been throughout 2024.
With 100, plus universities to hosted events.
Now to engage a female demographic effectively we have launched a series of online campaign, specifically tailored to introduce scooter designed for female users in Q1 with our upgraded E scooters through livestream campaign life by prominent Influencer gathered a significant traction that position.
Speaker Change: At the top brands in the mobility category during the campaign period now.
Now throughout the launch of the flagship product. We continue on our online company effort with clapper was over 72 hours in the industry and create an approximate 200 pieces of high quality content, which generate 80 million views across various platforms.
Okay.
Now, let me turn into the overseas markets. This quarter, we have goodness of year over year growth up 48% driven by the micro mobility sector zero, a year a growth of 63%.
Speaker Change: Of course in the micro mobility sector as a combined result of private offering expansions in the sales channel lineup.
On the product portfolio prompt with the introduction of a particular area of full carbon fiber lightweight performance kick Scooter last year September would now have a comprehensive product lineup.
To further complete our product offerings in Q1, we launched the <unk> 300 series, which is the has to operate off the Poplar kick you out three series.
Designed for old urban turn use the serious featured a due to hydraulic suspension for better handling and even surfaces promising up to 60 kilometer range per charge.
<unk> $699. The <unk> 300 series was met with great popularity.
Paul: Hi, Paul its preorder appeared the Kimco has 300 will be officially made available in Q2. This year and we believe it will lift the sales award in the coming months.
Now with our comprehensive product lineup, we've made a significant progress in entering retail channels since the second half of last year laying out a solid foundation for the growth in <unk>.
United States market, while wall position in 800, plus best buy stores and are advancing our efforts to enter additional retailer like Lowe's home depot Walmart target Costco.
In Europe, our product display or 400 media markt stores in Germany, or 100, Polandri stores in France, and or hundred media Martin the core English stores the spin.
Working closely with our retail partners, our marketing campaigns to post stills, which proven effectively.
During the first quarter doing a pallet promotion with our terminal resellers, we witness our year over year growth of over 300% and scooter activation numbers in Germany.
To further expand our retail partnership we're actively moving forward with the new retail dealer, especially at decathlon in France Media Award in Italy and others.
Our retail network, especially a effort.
Paul: Aimed to double our retail footprint selling micro mobility product by end of 2024.
Now the electric two wheelers sector in Q1 marked by a significant transition in both our product portfolio and operating model across core business market in the USA and Europe.
Last quarter, we introduced the MTT 100, our Q1 excuse my models off which has garnered considerable rotations.
And the strategic spending.
Fill the gaps in the market.
Offering a comprehensive coverage of about 50 to 125 DC electric two wheelers.
The X Q I recently received the prestigious Red Dot Award in April this year, joining a few other new legendary product that have received this honor.
This product in concert a temporary logistic delays will anticipate they will be fully distributed in our targeted market by second quarter 2024, aligning perfectly with the peak sales season.
And during this quarter, we have made a significant adjustment to our business operations in overseas in several key market alongside our existing distributors, where you establish a local entities and operation team to manage the direct distribution to dealers. We believe those direct distribution to dealer model allow us to invest more heavily.
Local branding and our marketing effort is.
With strong customer relationships and increase our adaptability to local market fluctuations.
Although the operation changes require time to fully implement and direct to dealer model has turned the sales or revenue recognition period. We're confident that this strategy not only deepen our roots in the local market, but also drive substantial long term growth.
Aligned with our updated product offerings and the expansion of sales network, our branding effort in Q1.
Being actively pursued internationally, we're focused on both enhancing.
Right.
Yes.
Okay.
Sure ship.
With our sales network, including the distributors that dealers by sharing our plans for the upcoming quarters too.
To build and fortify our brand presence in Q1, we actively participate in major industry events.
Expo in Las Vegas motto readers in government, Germany, and sell them to true Leon France, those events significantly amplify our brand visibility.
Furthermore, we hosted a series of new connect events aiming at local media to sweeter pillars to showcase how do you choose to use our 2024 call.
Product lineup in Q1 was successfully carry out you'll see bad subtract that Italy, bringing together over 50 partners to provide commercial and technical information of our new products and test drive argue products.
Notably the local media partners, including clean right and more have published pass very positive reviews, our product refresh.
To continue the new connect series throughout the year your various locations demonstrating our commitment to build long term relationships with our partners in the core regions.
No as we concluded in Q1, we anticipate a continued growth in Q2.
For China market. The growth is driven primarily by introduction of new products and channel improvements, we have already witnessed great popularity of serious lumps in Q1.
In time to finish release of a premium product lines M. S. N O series in the coming weeks.
Furthermore, our comprehensive approach to expand channel through both the physical stores and online platforms ensures that we have broadened our market footprint, while meeting the diverse needs of our customer base.
Paul: Yeah.
Actively expand our sales channels to improve offline coverage, oh tier cities to support products.
There was additional new stores the key focus for 2024. It means an improvement of same store sales by leveraging a combination of online to offline traffic.
In Q1, we conducted over 6000 livestream sessions on platforms, such as Tmall, JD com and shopping through.
Notably the newly entered <unk> livestream platform has positioned us as a top three brand.
In this category, indicating a successful online to offline conversion model that were planned to scale up further.
In Q2 would have a serious of product launch event plan to utilize the online in upstream sales network, which will be our channel focus for the coming quarters.
As we enter the peak sales season.
Paul: So it's kind of a pain such as six month online shopping festival, we aim to drive further same store growth.
With the product portfolio enhancement of sales expansion. We believe we are well positioned in China market for the rest of the year. However, also up there a macro sluggish market trend in Q2, and then where it remains.
Cautious about potential growth in our China market in Q2.
Speaker Change: For the overseas market, we will maintain a positive outlook in the micro mobility segment with anticipated <unk> growth throughout the year supported by our comprehensive product portfolio.
That is still network the introduction of <unk> 300 series promise to lift sales volume in the coming months.
Our significant progress retailer channels.
Has laid out a solid foundation for growth in 2024.
In our effort on additional retailers since this key market.
Now in the overseas motorcycle market was adjustment product offerings operation strategy, we're confident to regain growth by Q2. The recent introduction of those new product gathered a comfortable attention a strategic review of the market caps.
Speaker Change: We anticipate the distribution of the youth product in the target market by Q to align with the peak sales season.
Additionally, the establishment of a local entity style pushing team to manage direct to dealer distribution will allow us to invest more heavily in local branding and marketing effort.
We're now working with over 100 dealers in our direct sales network and we plan to continue of course numbers throughout the year.
So in summary, <unk> to focus on product innovation targeted market campaign robust channel expansion, both domestically and international position us well for the continued growth we're confident in our ability to improve sales actually our business objective in the upcoming quarters.
Now I'll turn over the call to our CFO, Dr. Joel to talk about financials.
Thank you Yan and Hello, everyone. Please note. Our press release contains all the figures and comparisons you need and we have also uploaded excel format seekers to our IR website for easy reference.
As I review, our financial results I'll be referring to the first quarter heaters, unless I say, otherwise and all monetary figures are RMB if not fine.
Again, just mentioned our total sales volume for the first quarter was 129000 units up 37% compared to the same period of last year and 110000 units with Sony in China, while the remaining 19 salary endless sold overseas.
Over 50% of ours sales volume in China was contributed by the new product launch this quarter.
And the total revenue for the first quarter amounted to $505 million increase up 87 million or 21% compared to the same period of last year and China revenues were 445 million accounting for 88% of the total revenue.
This quarter revenue was $393 million a year over year increase of 28, 8% and this increase was mainly due to the increasing the sales volume and partially offset by a decrease in revenues per scooter.
China Scooter ESP with RMB 3568.
Year over year decrease of four 7%, while our quarter over quarter increase of 11% compared to last quarter.
And a year over year decline E. S. P was mainly due to a changing product mix within the premium serious.
Last Q1, our revolutionary high end electronic bicycle the F series.
<unk> achieved in the market with a retail price range of RMB 8999 to 9999 and contributed 6% of the sales.
While this quarter, we introduced our flagship product the NXP with a wider retail price range from RMB 6299 to 7999 and 12499 all above <unk>.
<unk> 26 per cent of this quarter is sustainable.
And the overseas revenue was $660 million accounting for 12% of the total revenue this quarter revenue, including in motorcycles mopeds kick scooters and E bikes amounted to $49 million compared to 53 million in the same period of last year the deal.
Kris was mainly due to the decline in the sales of electronic motorcycles animal pets, and partially offset by the increased sales of kick school there Mike.
In micro mobility revenue was around $443 million up 10% year over year, the overseas food or ESG decrease from RMB 413, 8% to RMB two $5 77.
The year over year as the sales off the Kia scooter with the lower Asps increased.
Our entry level K, one and K.
Speaker Change: Theory.
However, compared to the fourth quarter.
Speaker Change: 2023, the ASP increased to 18% quarter over quarter.
The revenue from accessories spare parts and services amounted to 63, million% to 7% increase compared to the same period of last year due to the increase of spare parts sales in China market.
And the gross margin for the first quarter with full it was 18.9% two points H ppt lower than the same period of last year, and 0.1 ppt lower than the previous quarters.
This decline was mainly due to increasing the proportion of kicks cooler sales overseas.
Along with the lower margin for E scooters in China in China, we changed our product mix to focus more on the wider price range of the premium market as I mentioned earlier.
Additionally, we allocated the part of the gross margin to our distribution channels, which further reduced the companys overall gross margin.
And talking about operating expenses, the first quarter opec's, what $165 million.
Presenting a four 6% increase compared to the same period of last year.
Selling and marketing expenses were 105 million up 33 million year over year, primarily due to our overseas business expansion, which resulted in a higher after sales services and rental expenses as well as the higher advertising and promotion expenses international market.
Research and development expenses amounted to $29 million down 6 million year over year.
Mainly due to a 5 million decrease of share based compensation and staff cost.
G&A expenses were 31 million down 20 million year over year, mainly due to a decreasing the bad debt provision of $20 million.
In the first quarter, we had a net loss of 55 million with the nice lost margin of 10.9% under the GAAP accounting.
Compared to a net loss of 60 million for the same period of last year and an adjusted net loss was $49 million.
Turning to our balance sheet and cash flow. We ended the quarter with 1190 2 million versus 860 million last year in cash restricted cash term deposit and short term investments.
Our operating cash inflow amounted to 34 million.
And we expect the operating cash flow to remain healthy afterwards at the payment terms to our suppliers exceed our invoice and payment terms.
Capex for the first quarter amounted to 21 million, reflecting an increase of 5 million compared to the same period of last year and this can be accurately which is primarily to an increase in the opening of new stores in China.
And now let's turn to the guidance, we expect in the second quarter revenue to be in the range of 912 million to $955 million.
An increase of 10% to 20% year over year.
And please be aware that this outlook is based on the information available as of the date and reflects the company's current and preliminary expectation, which was which is subject to change due to uncertainties related to various factors.
With that we'll now open the call for any questions that you may have for US operator. Please go ahead.
Thank you 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 ensure your question. Please press star one and one again please.
By while we compile the Q&A queue.
Yeah.
Yeah.
Once again that style, one and one on your telephone.
If you'd like to ask a question to withdraw your question. Please press star one and one again.
Yeah.
Okay.
Please standby, while we compile the Q&A queue.
Okay.
Okay.
Yeah.
Okay.
Yeah.
Speaker Change: Okay.
We will now take our first question.
Please standby.
Our first question comes from the line of <unk> Chen from C. ICC. Please go ahead. Your line is open.
Okay.
The line of <unk> Chen is now open. Please go ahead with your question.
Yeah.
Yes.
Once again the line of <unk> Chen is open. Please go ahead with your question.
Oh, sorry I.
So my first question is about the.
About the gross margin.
We have seen that the structure of the pro Dex.
Increased quarter on quarter, because the propulsion of.
Three new products in <unk>.
<unk> quarter on quarter, but the gross margin didnt improve a lot quarter over quarter could you. Please explain the reason.
Yeah.
This is a PR.
Regarding to the gross margin compared to the last quarter actually you know that there is a major difference.
We see the quarter over quarter differences that would change that.
Speaker Change: Today, our sales policy that we share in the war.
Gross margin with our distributors to regain the Chinese market and also reinforced Eric belief in the newest product while in the meantime, we also.
Speaker Change: Changed.
The partnership already in the way that we use to cooperate with our distributors that we are a.
Responsible responsible for all the marketing and promotion expenses.
Great apes lifted with their with the retail.
Speaker Change: From the retail side. This year since we are sharing more gross margin with our distributors and we are going to reduce our marketing expenses and subsidies.
The retail channel.
To maintain a healthy.
By country ability marching all the operating margin.
Speaker Change: Before the tax.
This is a this is a common practice with our competitors and also with engaged a good time to reinforce our sales channel with our <unk>.
Improved all the new product in there in the appropriate.
Our distribution channel. So this is the main differences.
If we see the world's Marty quarter over quarter change and with their gross margins are you already changed just as I just explained.
On top of there.
Speaker Change: Sales policy change in China.
The main reason is that the proportion of <unk> sales overseas.
<unk> contribution is more than last year.
Thank you and my first question is about the period.
This is because the the.
Selling expenses in Q1 is still high.
So where we see the downward trend of the.
Selling expenses ratio in.
Quarter, two and three and four so will you give us guidance.
The selling expense ratio.
Okay regarding to the selling and marketing expenses actually when we separate the buyback elements out there. They are fund admin expenses in the domestic market as a percentage of revenue.
Has been reduced by this quarter by around 2% to 3% of the suite of two to three ppt as percentage of revenue while in the meantime, there.
National.
The selling and marketing expenses in the international market is still at a high level.
Just S J.
Just as I just explained that we keep going to invest in the brand recognition the channel building in the domestic in the overseas market and Thats why those kind of expenses.
Two as percentage of revenue our effort.
As scooters expenses is kind of like a fixed expenses.
Cannot be.
It cannot change to the various parts.
Sales volume in the international market is still is still at a relatively lower level and we expect those kind of expenses to be changed at the various expenses once our sales volume could be reached to above three three.
Hardware solvent to around 500000, and then those kind of expenses could be.
It could be much lower per scooters.
And this is the main reason why the selling and marketing expenses steel at the at.
At this higher level.
We hope we we expect heat this year salary and marketing expenses as a percentage of revenue will become a law.
Lower quarter over quarter and up to now we see that is still on the track on the tracks. So next quarter. When we released our financial figures the overall salary and marketing expenses as a percentage of revenue will be reduced compared to this quarter.
Oh I understand.
Thank you very much.
So his question is about the retail stores in 2023, we have seen that.
The decrease of our retail stores in China.
So we have seen the we have seen that our sales volume.
To start to grow again, so do you have spend in <unk>.
In Q4 about the retail stores in China.
Will we increase the volume of retail stores in China in this year.
Yeah, I think thats right, so where we're looking to expand the number of stores. So if you look at Q1 this year.
So we actually in Q1 this year, we have the numbers the store count actually have increased.
Hum.
But lesser hunters.
About 20 or 30 stores.
Doors that because many stores actually construction and they haven't really finished construction.
No.
Speaker Change: We're looking at basically adding.
A few hundred stores in Q2 and in Q3 and Q4. It depends I think Q3 is usually a peak season or is it still adds will be actually less.
Q4 will continue to expense stores.
I understand.
We are very much and then my last question is about our sales target in 'twenty four because Cleveland.
Turning to the key.
<unk> core.
We keep the guidance about it this morning infantry for them, which means we are we we.
We're targeting Q.
<unk> more than 1 million units.
Speaker Change: In.
<unk> hundred 84, so we are we keep the target.
As a.
At present.
Or lower that or improve.
Alright, I think thats, the point, where we still keep the target and so basically what we're still looking for.
Speaker Change: 1 million plus units.
Including China, and also in Queen China and overseas altogether.
Okay. So so do you see.
So where we see that the gross.
The more strong China market or from the overseas market.
Because it's.
Gross.
Our gross percentage I think that will actually come more from the overseas market.
Because overseas markets start with a lower base last year the overseas markets.
You know roughly about 100000 units going to power growth percentage.
I expect that you actually will see more from the overseas market, but in terms of the volume absolute oil number grows you will see more from the China side.
Okay. Thank you.
Speaker Change: Thank you for your time, that's all my questions.
Thank you.
Speaker Change: Once again to ask a question you will need to press star one on one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one and one again.
Please stand by while we wait for further questions.
Okay.
Speaker Change: Yeah.
Okay.
There are no further questions at this time, so I'll hand, the call back to C.
Thank you Yan Li for closing remarks.
Well. 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 standby.
Okay.
Speaker Change: [music] okay.
Speaker Change: Great.
Speaker Change: Okay.
[music].