Q1 2024 EHang Holdings Limited Earnings Call
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Operator: Good day, ladies and gentlemen. Thank you for standing by.
Speaker Change: Good day, ladies and gentlemen, thank you for standing by and welcome to <unk> first quarter 'twenty 'twenty four earnings conference call.
Operator: Welcome to Ehang's first quarter 2024 earnings conference call. As a reminder, we are recording today's call. Now I will turn the call over to Anne Ji, Ehang's Senior Director of Investor Relations. Ms. Anne, please proceed.
Speaker Change: A reminder, we are recording today's call now I will turn the call over to Angie Yang Senior director of Investor Relations Ms. Anne. Please proceed.
Anne Ji: Hello everyone, thank you for joining us on today's conference call to discuss the company's financial results for the first quarter of 2024. The earnings release is available on the company's investor relations website.
Speaker Change: Hello, everyone. Thank you for joining us on today's conference call to discuss the company's financial results for the first quarter of 2094.
Speaker Change: The earnings release is available on the company's IR website.
Anne Ji: Please note a conference call is being recorded, and the audio replay will be posted on the company's IR website. On the call today, we have Mr. Huazhi Hu, our Founder, Chairman, and Chief Executive Officer, Mr. Zhao Wang, Co-Chief Operating Officer, and Mr. Connor Yang, Chief Financial Officer and Director of the Board. The management team will successfully give prepared remarks. Remarks delivered in Chinese will be followed by English translations. All translations are for convenience purposes only.
Speaker Change: Please note the conference call is being recorded.
Speaker Change: Audio replay will be posted on our company's IR website.
Speaker Change: On our call today, we have Mr. Andre who our founder Chairman and Chief Executive Officer, Mr. Chao Wang co Chief operating officer.
Speaker Change: And Mr. Conor Yang Chief Financial Officer, and a director of the board.
Speaker Change: The management team will successfully give prepared remarks.
Speaker Change: Relax deliberating Chinese will be followed by English translation ultra.
Speaker Change: Oh translation is for convenience purposes only.
Anne Ji: In case of any discrepancy, the management statement in a regional language will prevail. A 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 1995, forward-looking statements involving inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding this and other risks and uncertainties is included in the company's public filings with the ICC. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law.
Speaker Change: In case of any discrepancy the management statement in our regional language will prevail.
Speaker Change: Q&A session will follow afterwards.
Speaker Change: 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.
Speaker Change: Forward looking statements involve inherent risks and uncertainties as such the company's actual results may be materially different from the expectations expressed to date.
Speaker Change: Further information regarding this and other risks and uncertainties is included in the company's public filings with the D C.
Speaker Change: The company does not assume any obligation to update any forward looking statements, except as required under applicable law.
Anne Ji: Also, please note that all numbers are presented in RNRMB and are for the first quarter of 2024 unless stated otherwise. With that, let me now turn it over to our CEO, Mr. Huazhi Hu. Please go ahead, Mr. Hu.
Speaker Change: Also please note that O&M burgers are present today are in RMB and all for the first quarter of 'twenty 'twenty four unless stated otherwise.
With that let me now turn the call over to our CEO. Mr. <unk>. Please go ahead Mr. Hu.
Huazhi Hu: Thank you, Anne. Hello, everyone.
Speaker Change: Sure Jamie.
Huazhi Hu: Thank you all for attending today's Ehang Intelligent phone conference. I am very happy to share with you the progress of Ehang Intellectuals' company in the first quarter of 2024. In the first quarter, we continued to grow steadily in terms of sales and operations, showing our pioneering and excellent execution in the low-and-middle-economy EVTO field. After obtaining the EH216S model certificate last year, we continued to develop the production license, sales growth, commercial operation preparation, and product continuous optimization.
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Huazhi Hu: In October last year, after half a year of hard work, we successfully obtained the EH216S production license issued by the Chinese Civil Aviation Bureau this year, which means that our factory's production program and quality management system have been certified by the Chinese Civil Aviation Bureau's expert group and have the ability to continue mass production. As the world's first E-VITO company with three securities in one, our self-developed unmanned aerial vehicle carrier aircraft system EH-226S, from product design to production, and to the safety of single-seat departure and delivery, have all been fully verified and recognized by the Chinese Civil Aviation Bureau. This makes us have a global lead on the low-altitude economy E-VITO track and a competitive advantage. Since then, the Chinese government has continued to introduce support policies for the low-income economy.
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Huazhi Hu: China's low-income economy is facing unprecedented explosive opportunities. In March this year, the Chinese Ministry of Industry, Technology, Finance, Civil Aviation Bureau, and the Ministry of Foreign Affairs jointly issued a plan for the implementation of innovative applications of universal aviation equipment. , The goal is to form a trillion-level market scale in China's low-and-middle-income economy by 2030. This fully reflects the Chinese government's high appreciation for the low-and-middle-income strategic innovation industry. and for its sustainable development. Under the call of the central government, nearly 30 provinces and local governments have issued land and air economic development plans.
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Huazhi Hu: Accelerate industrial development, from urban planning, infrastructure construction, supply chain, production manufacturing, product procurement, scenic construction, commercial operation, etc. Support rich and capable low-cost economic innovation companies like Ehang. The number of orders from the government, police, and overseas customers continues to grow, and delivery is also steadily progressing.
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Huazhi Hu: In the first quarter, we delivered 26 EH-216 series products. The single-season delivery amount reached the highest in history. The revenue was more than twice that of the same period last year. In terms of operation, we are planning to build a low-cost economy in many cities in China. Since this year, our flight routes have not only covered many domestic cities but also extended to Oceania, Costa Rica, and Japan. We have successfully completed the first flight of EH216S in Latin America and the Middle East.
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Huazhi Hu: At this stage, we are also actively expanding the industrial chain and up-and-down cooperation.?? In February this year, we reached a low-cost economic strategy cooperation with Guangxi Group, and we will use the advantages of both sides in the field of smart manufacturing and electric travel products to cooperate and win-win. In April, we announced our strategic cooperation with Juwan Jiyan to jointly develop the world's first E-Vito super fast and ultra fast-charging battery. It is estimated that the charging time from 30% to 80% will only take 5 to 10 minutes.
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Huazhi Hu: 2000; This will make our unmanned vehicle EVTOL performance constantly improve to better meet the high-level operation of EVTOL aircraft in UAM scenarios. In addition, we have increased the internal flight test of the VT-30, which is in line with the first-generation VT-30. The preparation work of the VT-30 test flight application is also under way. Based on the EH216-S test flight experience, we will realize the same perfect commercialized system design and safety test flight of the long-haul flight capability VT30.
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Huazhi Hu: Thanks to Ehang's leading technology and marketing advantage in the unmanned driving e-vehicle industry as well as the strong industrial cooperation layout, we are confident to lead the UAM industry to rapid development and continue to occupy a leading position in the vast blueprint of the low-and-middle economy, and to enter an important stage in the commercialization and development of fast rail. We are very happy to welcome Mr. Wang Zhao, Chief Operating Officer of
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Huazhi Hu: She has more than 20 years of rich professional knowledge and operating management experience in the field of technology and culture, and will play an important role in the company's future business operations. Today, she also attended our telephone conference online. Next, Mr. Wang Zhao will introduce the specific operating situation of the first quarter. Thank you.
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Translator: This is the English translation of Mr. Hu's remarks. Hello, everyone.
Speaker Change: This is the English translation, Mr. Hersh on Max.
Translator: Thanks for joining the e-health conference call today. I'm excited to share with you Ehang's progress in the first quarter of 2024. We had continued steady growth in both sales and operations in the first quarter, demonstrating our first mover advantage and exceptional execution in a vital sector of the low-altitude economy. Since obtaining the type certificate for our Ehang 216S last year, we have been pushing forward with production certification, driving sales growth, preparing for commercial operations, and continuously optimizing our products.
Speaker Change: Hello, everyone. Thanks for joining <unk> conference call today.
Speaker Change: <unk> progress in our first quarter of 2024.
Mr. Hersh: Continued steady growth in both sales and operations in the first quarter, demonstrating our first mover advantage and exceptional execution and a little sector of the low altitude economy.
Mr. Hersh: Following up turning the type certificate Flora Hunter 16, as last year, we have been pushing forward. The production certification driving sales growth preparing for commercial operations and are continuously optimizing our product.
Translator: After half-year's continued efforts since last October, we have secured the Production Certificate, or PC, for EH216F from the Civil Aviation Administration of China, or the CAC. This means our production process and quality management systems have been validated by the CAC experts for our capability of sustainable mass production.
Mr. Hersh: After half year continued efforts since last October we have secured a production a decade RPC for IH 2016 S from the civil Aviation and administration of China or the CEC.
Mr. Hersh: This means our production process and the quality management systems has been validated by the CEC experts for capability of sustainable net production.
Translator: As the world's first company to obtain EVETO type certificates, production certificates, and standard airworthiness certificates, our self-developed EH216S pedal-less passenger-carrying EVETO has been thoroughly validated and recognized by the CAC, from model design, to production, and to the safety and airworthiness of each unit delivered. This gives us a global lead and a competitive edge in the e-vehicle sector of the low-altitude economy. The Chinese government has continued rolling out supportive policies for the low-altitude economy, and the domestic market is now poised for an unprecedented boom.
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Speaker Change: Passenger carrying that all has been thoroughly validated and are recognized by the PUC from mono design to production and to the safety and air worthiness of each unit skinny legs.
Speaker Change: This gives us a glimmer lead and a competitive edge and even in our sector.
Speaker Change: Alex tiered economy.
Speaker Change: The Chinese government has continually rolling out supported policies on a low altitude economy and the domestic market is now poised to Wuhan and Precedented group.
Translator: In March this year, an Implementation Plan for Innovative Application of General Aviation Equipment 2024-2030 was jointly issued by the four ministries in China, which are the Ministry of Industry and Information Technology, the Ministry of Science and Technology, the Ministry of Finance, and the CAC. The plan outlines a development roadmap focused on unmanned, electric, and intelligent aerial vehicles and sets the goals to realize their commercial operations in urban areas for passenger transportation, logistics, and emergency rescue, with a target market size of trillions of RMB for the low-altitude economy in China by 2030.
In March this year and implementation 10 for innovative application of a general aviation equipment 2024 to 2013 was jointly issued by the Ministry in China.
Speaker Change: The Ministry of industry, and information technology that Ministry of Science, and Technology Ministry of Finance and the CEC.
Speaker Change: The plan outlines our development roadmap focused on the and then electric and intelligent aerial vehicles and set the course to realize scale commercial operations in the urban areas for passenger transportation logistics and emergency rescue.
Speaker Change: With our targeted market size of trillions of RMB for the low altitude economy in China by 2030.
Translator: This fully reflects the Chinese government's great attention to the low-altitude economy as a strategic emerging industry and injects strong momentum into its sustainable development. In response to the central government's initiative, nearly 30 provincial and municipal governments have rolled out their own low-altitude economy development plans in China, accelerating the industry's growth. These plans cover multiple dimensions, including urban planning, infrastructure development, supply chain, production, procurement, application scenarios, and commercial operations to empower innovative companies in the low-altitude economy industry like Ehang.
Speaker Change: This fully with back to the Chinese government's greater attention on the low altitude economy assess strategic emerging industry.
Speaker Change: <unk> strong momentum into its sustainable development.
Speaker Change: In response to the Central Government initiative, nearly 30 provincial and municipal governments have rolled out their own loan security economy development plans in China accelerating the industry's growth.
Speaker Change: These plans cover multiple dimensions, including urban planning infrastructure development supply chain production procurement application scenarios and a commercial operations to empower us to innovative companies in the low altitude economy industry like Ehealth.
Translator: We have been seeing a steady growth in order demands from government, scenic spots, and overseas customers, and our deliveries are also proceeding in a steady and orderly manner. In Q1, we delivered 26 units of EH216 series products, a record high for a single quarter in our history, with revenues more than double that of the same period last year.
Speaker Change: We have been seeing a steady growth in the oddity mounts from government fenix parts and overseas customers.
Our deliveries also preceding in a steady and orderly manner.
Speaker Change: In Q1 will have delivered 26 units of the <unk> product.
Speaker Change: A record high for a single quarter in our history.
Speaker Change: With revenues more than double that of the same period last year.
Translator: On the operational side, we are working on multiple low-altitude economy demonstration projects in various cities in China. So far this year, our flight footprint has expanded to multiple domestic cities and overseas regions like the UAE, Costa Rica, and Japan. We have successfully completed the Ehang 216S debut demo flights in Latin America and the Middle East. At this stage, we are also actively expanding our upstream and downstream cooperation in the industrial chain and continuously optimizing our product performance.
Speaker Change: On the operational side, we are working on multiple low oxygen economy demonstration projects and there're cities in China.
Speaker Change: So far this year, our flak footprint has expanded into multiple domestic cities and overseas regions not the UAE Costa Rica in Japan.
Speaker Change: We have successfully completed the <unk> 2016 as W demo flights in Latin America, and the meter east.
Speaker Change: At this stage, we're also actively expanding our upstream and downstream cooperation in the industrial chain and it continuously optimizing our product performance.
Translator: In February this year, we formed a strategic partnership with Guangzhou Automobile Company to collaborate on low altitude economy initiatives, leveraging each other's strengths in intelligent manufacturing and e-vehicle mobility production. And in April, we announced a strategic partnership with Greater Bay Technology to co-develop the world's first ultra-fast-charging, extreme-fast-charging battery solution for eVITO aircraft, which is expected to be charged from 30% to 80% in a short 5 to 10 minutes, with over 2,000 charging cycles.
Speaker Change: In February this year, we formed a strategic partnership with Guangzhou automobile company to collaborate on the Argentine economy initiatives, leveraging each other's strengths intelligent manufacturing on EBIT home mobility product.
Speaker Change: And in April we announced a strategic partnership with <unk> technology to co develop it the worst first ultra fast charging extreme fast charging battery solution for EBIT will aircrafts.
Speaker Change: Which you expected to be charged from 30% to 80% in a short five to 10 minutes with over 2000 and charging cycles.
Translator: This will significantly boost the performance of our pilotless vehicles, enabling them to meet the demands of high-frequency, large-scale operations for urban and mobility scenarios. Meanwhile, we are also stepping up internal flight testing of our VT-30 lift-and-cruise model and preparing for its type certification. Based on the experience we have gained from the Ehang 216S certification, the long-range VT30 product will also boost a comprehensive and commercially available system design and airworthiness. With Ehang's leading technology and airworthiness advantages in the pilot-assisted vehicle industry, as well as our collaborative industry layout, we are confident in driving the rapid growth of the UAM sector and maintaining our leading position in a promising low-altitude economy.
Speaker Change: This will significantly boost the performance of our panelists overdose.
Speaker Change: Enabling them to meet the demands of a high frequency large scale operations for urban air mobility scenarios.
Speaker Change: Meanwhile, we are also stepping up internal flight testing, although BT 30, please send crews model and improve Harry employees type certification.
Speaker Change: Based on the experience we have gained from the Hunter <unk> certification. The long range. We did 30 product will also boost our comprehensive and a commercially available system design and it wasn't us.
Speaker Change: Wendy has leading technology and <unk> advantages in Palo Alto <unk> industry as well as our collaborate to the industry layout. We are confident in driving the rapid growth of the U M sector and are maintaining our leading position in a promising low altitude economy.
Translator: As we are entering a critical stage for commercialization, we are excited to welcome Mr. Zhao Wang, our new Co-Chief Operating Officer, to join our management team, with over 20 years of experience and expertise in business operations for technology plus cultural tourism. They will play a vital role in driving our commercial operations forward. Today he's joined the call with us. Let's welcome Mr. Wang to share some insights on our Q1 operational performance. Thank you.
Speaker Change: As we are entering a critical stage before commercialization.
We're excited to welcome Mr. Gerald Wong, our new co Chief operating officer to join our management team.
Speaker Change: With over 20 years of English experience and expertise in business operations for technology, plus cultural tourism.
Gerald Wong: We will play a vital role in driving our commercial operations Bullock.
Gerald Wong: Today, He has joined the call with US, let's welcome Mr. Wang to share some insights on our Q1 operational performance.
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Zhao Wang: Thank you, Mr. Hu. Hello, everyone.
Huazhi Hu: Thank you Mr Hu.
Zhao Wang: I'm honored to join Ehang as Co-Chief Operating Officer at this pivotal moment when our EH216S pilotless evacuator has achieved three certificates. These certificates mark a critical milestone in our commercialization journey. I am committed to driving the company's strategic deployment, market expansion, product sales, and commercial operations with full force. I work closely with the team to seize the massive opportunities presented by the trading RMB low-attitude economy and ensure that Ehang maintains its leading edge in the industry, maximizing business value for our company. I'm the fifth friend.
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Speaker Change: A critical milestone in our commercialization journey.
Speaker Change: I'm committed to driving the company's strategic deployment market expansion product sales and commercial operations that we had forecast.
Speaker Change: I work closely with the team to the massive opportunities.
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Zhao Wang: We delivered 26 units of EH216 series products in Q1, representing a 136-year-over-year increase and a 13-quarter-over-quarter growth after delivery volume. Normally, as part of a conditional purchase order, we had received from a UAE customer for 100 units of EH215 series products. The first batch of five units, including EH216, S, L, and F, had already been delivered in K1.
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Speaker Change: Representing a 136 year over year increase and a 14 quarter over quarter growth.
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Zhao Wang: In March... We partner with the Wuxi local government for UAM, securing a conditional purchase order for 100 units of EH216S. As part of it, the initial 10 units have been delivered in Q1 and the debut commercial flight demonstration ceremony is scheduled in May. Additionally, in Q1, our products have also been delivered to Hubei and Shanxi Province in China and Brazil in South America.
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Zhao Wang: Looking ahead, with increasing production capacity, we expect our product delivery volume in Q2 to far surpass that in Q1. Recently, the low-attitude economy has been taking off in China, further fueling the growth of our product demand after obtaining airworthiness certifications. Governments, enterprises, and overseas customers are all eager to introduce our advanced piloted vehicles to their local markets and are planning to develop a comprehensive low-added economy ecosystem, including infrastructure, funding, talent, and operations.
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Zhao Wang: In order to present the air taxi application scenario as soon as possible, we have been working on the set planning and construction work for dozens of evictos, takeoffs, and landing verticals in various places. Currently, our order book is robust.
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Zhao Wang: And our factory is gradually increasing production capacity to meet customer demand and support future sustainable growth. We are also actively exploring new customers and markets and pushing forward purchase orders and operational collaborations with domestic and international customers. On commercial operations, we are working closely with local governments in cities like Hefei, Guangzhou, Shenzhen, and Wuxi to co-create low-attitude economy demonstration projects, planning to deploy UAM operation demonstration centers, and planning to launch low altitude routes for urban air transportation.
Speaker Change: And our factory is gradually increasing production capacity to meet customer demand.
Speaker Change: Future sustainable growth.
Speaker Change: We are also actively exploring new customers and markets.
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Zhao Wang: As we are setting up these demonstration projects, we are also developing a rigorous operational system and rules, infrastructure standards, maintenance system, personnel training, and qualifications to ensure safe operations and set industry benchmarks. We are also expanding our international market at the DriftX event in Abu Dhabi. We showcased the diversity of our products and application use cases by displaying our EH216S, L, and F and our long-range lift-and-cruise VTOL VP30, which was its overseas debut.
Speaker Change: As we are certain of these demonstration projects. We're also developing a rigorous operational system and the rules.
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Speaker Change: We are also expanding our international market.
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Zhao Wang: With the support of our local partners, the EH216S successfully obtained approval from the UAE General Civil Aviation Authority and completed its first passenger carrying flight demonstration in the Middle East region. Meanwhile, we have also formed a strategic partnership with the Abu Dhabi Investment Office and renowned Fintech Group, a multi-level group, to facilitate our next phase of in-depth development in the UAE. In March, with the support of our partners AirX and Tsukuba Aviation, Japan's first UAM center was established in Tsukuba City, serving as an operational base for EH216S. As Ehang's Co-Chief Operating Officer, I am committed to driving our commercial operations full steam ahead. Next, I will turn the call over to our CFO, Connor. Thank you.
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Speaker Change: Meanwhile, we have also formed a strategic partnership with Bobby investment office.
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Speaker Change: Now I'll turn the call over to our CFO Conor.
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Connor Yang: Thank you, Mr. Wang. Hello, everyone. This is Conor.
Conor Yang: Thank you, Mr Wang and Hello, everyone.
Conor Yang: This is conor before I dive into details.
Connor Yang: Before I dive into details... Please note that all numbers presented are in RMB unless stated otherwise. Detailed analysis is available in our early press release on our IR website. I will now highlight some key points.
Conor Yang: Please note that all numbers presented are in RMB unless stated otherwise detailed analysis.
Conor Yang: Our available in our earnings press release.
Conor Yang: Our IR website.
Conor Yang: I will now highlight some key points.
Connor Yang: I'm pleased with the company's continued diligent execution as it led to us delivering stellar financial results for Q1 2024. We exceeded our quarterly revenue guidance of $58 million by over 6% and achieved positive operating cash flow for the second consecutive quarter. Most importantly, we secured the production certificate from CAAC, clearing the path for mass production of our EH216-S and setting the stage for accelerated growth. Total revenue in Q1 was $61.7 million, representing a substantial increase of 178% year-over-year and a 9.1% increase from the prior quarter.
Conor Yang: Im pleased with the company's continued diligent execution.
Conor Yang: It led to us delivering stellar financial results for Q1 2024.
Conor Yang: We exceeded our quarterly revenue guidance of $58 million.
Conor Yang: By over 6% and achieved positive operating cash flow for the second consecutive quarter.
Conor Yang: Most importantly, we secure the production certificate from C AAC.
Conor Yang: Clearing the path for mass production of our edge towards six.
Conor Yang: Yes.
Conor Yang: Setting the stage for accelerated growth.
Conor Yang: Total revenue in Q1 was 51 7 million, representing a substantial increase of 178% year over year and nine 1% increase from the prior quarter.
Connor Yang: These scans were primarily driven by higher sales volume of the ES216 series products. We delivered 26 units of EH216 series e-vital in Q1, over doubling 11 units in Q1 last year and compared with 23 units in the previous quarter. Growth margin remained consistently high at 61.9% in Q1, compared with 63.9% last year and 64.7% in the last quarter. The slight declines were mainly due to changes in revenue mix and increased costs per unit of the Airworthiness Certified EH216 product.
Conor Yang: These gains were primarily driven by higher sales volume of the Es to one six series products.
Speaker Change: We delivered 26 units of edge to one six series, even though in Q1.
Speaker Change: Over doubling 11 illness in Q1 last year and compared with 23 units in last quarter.
Speaker Change: Gross margin remained consistently high at 61, 9% in Q1, compared with 63, 9% last year and 64, 7% in last quarter.
Speaker Change: The slight decline were mainly due to changes in revenue mix and increased cost per unit of the air worthiness certified edge to our fixed products.
Connor Yang: Still, our high gross margin demonstrates our competitive edge as a frontrunner in the EBITDA sector. Our adjusted operating expenses, which are operating expenses excluding share-based conversation expenses, were $54.5 million, up 8.7% from $50.1 million in Q1 last year and down 15.1% from $64.2 million in the last quarter. The year-over-year increase was mainly due to increased... Self-Related Conversations, and the quarter-over-quarter decrease was primarily because of the lower expected credit loss expenses due to improvements in credit controls in Q1 2024.
Speaker Change: Still.
Speaker Change: Our high gross margin demonstrates our competitive edge as a front runner in the <unk> sector.
Speaker Change: Our adjusted operating expenses, which are operating expenses.
Speaker Change: Building share based compensation expenses were $54 5 million up eight 7% from $50 1 million in Q1 last year and down 15, 1% from $64 2 million in last quarter.
Speaker Change: The year over year increase was mainly due to increase.
Speaker Change: Sales related compensation and.
Speaker Change: In the quarter over quarter decrease was primarily because of the lower expected credit loss expenses due to improvement in credit controls in Q1 2024.
Connor Yang: Adjusted operating loss was $12.6 million, a 63.4% improvement from $34.3 million in Q1 last year and a 49.5% improvement from $24.9 million in the previous quarter. Adjusted net loss was $10.1 million, a 69.9% improvement from $33.6 million in Q1 last year and a 54.4% improvement from $22.1 million in the previous quarter. Thanks to our prudent cash management and improved credit controls, we achieved positive cash flow from operations for the second consecutive quarter, further enhancing our balance sheet.
Speaker Change: Adjusted operating loss was $12 6 million, a 53, 4% improvement from $34 3 million in Q1 last year, and a 49, 5% improvement from $24 9 million in last quarter.
Speaker Change: Adjusted net loss was $10 1 million.
Speaker Change: Ah 69, 9% improvement from US is $33 6 million in Q1 last year and a 54, 4% an improvement from $22 1 million in last quarter.
Speaker Change: Due to our prudent cash management and improved credit controls.
Chip positive cash flow from operations for the second consecutive quarter.
Speaker Change: Further enhancing our balance sheet at the end of Q1, our cash and cash equivalents short term deposits and short term investment balances were $323 8 million.
Connor Yang: At the end of Q1, our cash and cash equivalents, short-term deposit, and short-term investment balances were $323.8 million. To date, we have received over US$55 million of gross proceeds from recent equity funding through an at-the-market offering. Furthermore, we have unused, uncommitted credit facilities of 131 million RMB with expiration in April 2025.
Speaker Change: To date, we have received.
Speaker Change: Over U S dollar $55 million of gross proceeds.
Speaker Change: Recent equity funding through an at the market offering.
Speaker Change: Furthermore, we have unused uncommitted credit facilities of 131 million RMB with exploration in April 2025.
Connor Yang: These further strengthen our liquidity position, as our EH216-S has obtained all three certificates ready for mass production and sale. Driven by favorable government policies and market enthusiasm, we are getting on a fast track to revenue growth and continuing improvement of our financial situation. We believe our diligent preparation for commercial operations equips us for maintaining this upward trajectory and will further foster ongoing expansion while capitalizing on our core capabilities to propel growth within the UAN sector. With that, we expect total revenues for the second quarter of 2024 to be around $19 million, representing an increase of over 800% year-over-year.
Speaker Change: This further strengthened our liquidity position.
Speaker Change: No.
Speaker Change: Our <unk> SaaS has obtained all three certificates ready for mass production in sales driven by favorable government policies ended market enthusiasm, we are getting our fast track to revenue growth and continuing in <unk>.
Speaker Change: <unk> of our financial situation.
Speaker Change: We believe our diligent preparation for commercial operations equip us for maintaining this uproar.
Speaker Change: <unk> and will further bolster ongoing expansion, while capitalizing on our core capabilities to propel growth within that sector.
Speaker Change: With that.
Speaker Change: We expect total revenues for the second quarter of 2024 to be around 19 million, representing an increase of over 800% year over year.
Operator: That concludes our prepared remarks. Let's now open the call for questions. Operator, please go ahead. Thank you.
Speaker Change: That concludes our prepared remarks.
Speaker Change: Now open the call for questions. Operator. Please go ahead.
Operator: Thank you. To ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A roster. Our first question comes from Ting Song with Goldman Sachs. Your line is now open.
Speaker Change: Thank you to ask a question. Please press star one and one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one and one again, please standby, while we compile the Q&A roster.
Speaker Change: Our first question comes from Ken song with Goldman Sachs. Your line is now open.
Ting Song: Yes, thank you for taking my question. So I want to check what our capex plan is for this year and in the long term. Given that we have received a PCE certificate from the government this year, do we have any plan to further expand our capacity to drive up our shipment for the long term? Thank you.
Ting Song: Yes. Thank you for taking my question so.
Thank you Chuck.
Ting Song: Capex.
Ting Song: And in.
Speaker Change: So given that we had received a P C.
Speaker Change: Government this year.
Speaker Change: Do we have any plan to expand our capacity.
Speaker Change: To China.
Speaker Change: To drive our collision.
Speaker Change: Thank you.
Zhao Wang: Yes, thank you. To meet the rapid business growth, we plan to expand the current production capacity in our Yunfu factory to the maximum capacity, and we plan to build a new headquarters. Also in Guangzhou, with multiple functions, including office facilities, take-off and landing infrastructure, research labs for batteries, power systems, command and control systems, all in one place. With that, our plan for capex is around U.S. $10 million for this year for the expansion.
Speaker Change: Yes, thank you to fulfill their rapid growth we plan to expand the current production.
Speaker Change: Has to be in Oregon factory shoe with a maximum capacity.
Speaker Change: Helpful.
Speaker Change: Quarters also.
Speaker Change: Also in Guangzhou with multiple functions, including offers that the seventies takeover lending infrastructure research labs for batteries power system command and control system all in one place.
Speaker Change: With that.
Speaker Change: Our plan for Capex at around USD 10 million for this year for <unk>.
Speaker Change: Thank you.
Operator: One moment for our next question. The next question will come from Cindy Wong with Morgan Stanley. Your line is now open.
Okay.
Speaker Change: One moment for our next question.
Speaker Change: Okay.
Speaker Change: The next question will come from Cindy Wang with Morgan Stanley. Your line is now open.
Cindy Wong: Hi, thank you for taking my question and congratulations on the splendid results. So, I have two questions.
Speaker Change: Hi.
Cindy Wang: Thank you for taking my question and congratulations on results.
Cindy Wong: So, first, I want to ask about the certification timeline. As we have a plan for TC, AC, and PC, when do we expect to receive the OC to kick off operations? And my second question is related to the older backlog. Can management update the current older backlog based on a binding purchase agreement? And how should we expect the delivery cadence throughout the year? Will there be any constraints or uncertainty on the capacity or supply side?
Cindy Wang: I have two questions first I wanted to ask about the certificate certification timeline.
Cindy Wong: Thank you.
Speaker Change: We have a Pam.
Speaker Change: TC AP MPC when do we expect to receive the Ob to kick up operations.
Speaker Change: And my second question is really get to the older backlog.
Speaker Change: <unk> updated our current order backlog.
Speaker Change: Binding purchase agreement and how should we look delivery cabins throughout the year.
Speaker Change: Will there be any comp trends, our uncertainty on capacity or supply side. Thank you.
Zhao Wang: As a manufacturer, Ehang Intelligence has been in the market for three consecutive years. Operation license is the operating qualification required by the Air Force to apply to the Chinese Civil Aviation Administration. Ehang Holdings is currently working with the Chinese Civil Aviation Bureau to develop the EH-216-S operating standard. After the Chinese Civil Aviation Administration finally publishes the relevant program documents, operators will be able to formally apply for operating licenses in accordance with the program.
Speaker Change: Young genome, so H&R Shang Aegean user hang Seng.
Speaker Change: Yes.
Speaker Change: I'm sure sung hoon Chi the theme.
Speaker Change: Zhong Sheng Zhong from Colombia.
Speaker Change: Thank you.
Speaker Change: Once you Johan.
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Speaker Change: So I'm glad you don't want me, how do you see a joined Truecar sung hwan Cho Monsieur.
Speaker Change #100: Sean John Quealy Undrawn.
Speaker Change #100: Sure.
Speaker Change #100: Joe.
Translator: Thank you for your question. This is the translation of the answers to your first question.
Speaker Change #101: Yes. Thank you for your question. This is Derek operation of the answers to your first question.
Translator: Ehang as a manufacturer has obtained the TC, AC, and TC, while the OC, which is the operating certificate, is to be obtained by the air operator by submitting an application to the CDC and receiving the relevant qualifications. And currently, Ehang is in cooperation with the CDC to formulate the operating standards of the Ehang 216F. After the CDC issues relevant regulatory documents, air operators can formally submit their OC application, based on the rules.
Speaker Change #101: The manufacturer has to obtain.
Speaker Change #101: <unk>.
Speaker Change #101: PC and PC.
Speaker Change #102: Well, the Oc, which is the operating certificate.
Thank you operator.
Speaker Change #103: In an application to the CEC and did you receive.
Speaker Change #103: Vince qualifications and concrete.
Speaker Change #103: In operational weakness EEP to formulate operating centers of the east.
Speaker Change #103: Yes.
Speaker Change #104: Just the issues relevant regulatory documents the air operator, it's Cam formerly <unk>.
Speaker Change #105: <unk> application baked out there Ross.
Zhao Wang: Customers who purchase one item in batches will sign a framework agreement with the company, and the number of pre-ordered items will be as high as hundreds. [inaudible] We sold 26 items in the first quarter, and they are the first batch of customers. There will be more orders in the following quarter.
Speaker Change #105: Cheering on cargo you saw on the co pay program fluid chancel, Hangzhou ICD eating that truly outweighed got offshore back down.
Qi: Thank you Qi.
Speaker Change #107: Sure sure John Edwards enzyme <unk>.
Speaker Change #107: John.
Speaker Change #108: Yes, we'll either chunks.
Speaker Change #109: Once again easy to Joe who will actually do Jim.
Speaker Change #109: <unk>.
Speaker Change #109: <unk> Jones will gently.
Speaker Change #110: We are now.
Zhao Wang: For your second question, customers with intentions for bulk purchases will sign framework agreements and pre-orders with us, and the quantities will reach up to hundreds of units. These will be converted into funding formal orders in batches, based on the customer's business development needs and the market expansion progress, following a planned and paced approach. The 26 units delivered in the first quarter are all part of the initial batch orders from these customers, and the conversion volume of these orders will gradually increase by 70%.
For your second question, our customers with intention.
Speaker Change #110: Purchases will bring you a couple of women and their pre August with us.
Speaker Change #110: And our quantities will reach out through hundreds of units and this will be converted into funding formal auto batches based on our customer.
Speaker Change #110: Element.
Speaker Change #110: And the marketing.
Speaker Change #110: Progress I'll.
Speaker Change #110: Following the pandemic paced approach.
Speaker Change #111: Did you.
Speaker Change #110: <unk>.
Speaker Change #112: Units delivered in the first quarter are all part of the initial batch of orders from these customers.
Speaker Change #112: The commercial volume of these orders will gradually increase in subsequent quarters.
Zhao Wang: In terms of guidance, we will provide extensive guidance. The expected revenue for the second quarter is about 90 million RMB. The company's judgment on performance management is based on the progress of the quarterly business, the conversion of pre-orders, and the addition of pre-orders. At present, the company's orders are sufficient, and production capacity is expanding with order synchronization. In terms of production capacity, we have obtained the production license for DH216-S, and we have the quality of mass production. In terms of supply chain, we also have a relatively good relationship with Huazhi Holdings. [inaudible]
Speaker Change #113: So we hear from you.
Speaker Change #113: <unk>.
Speaker Change #114: <unk>, So you have a uhm.
Speaker Change #115: D G.
Speaker Change #116: Do you see the year with Xinjiang <unk> manager issues.
Speaker Change #117: Issues on inbound.
Speaker Change #117: Absolutely.
Speaker Change #117: Now breaking down.
Speaker Change #118: Thanks for that.
Speaker Change #119: Got it.
Speaker Change #119: Okay.
Speaker Change #120: H guys, sometimes Hugo <unk> downtime.
Speaker Change #120: When we only had a comment or me Dr functional excellence.
Speaker Change #120: On EMEA will come down.
Speaker Change #121: Good morning Julien.
Speaker Change #121: Sure.
Zhao Wang: We will provide a quarterly revenue forecast. Revenues for the second quarter are expected to be approximately 90 million RMB.
Speaker Change #121: We will provide arguably revenue forecast revenues for the second quarter.
Speaker Change #121: To be clear.
Speaker Change #121: Similarly netted nearly RMB the company's assessment of their performance guidance is based on the progress.
Zhao Wang: The company's assessment of the performance guidance is based on the quarterly business progress, the conversion of intentional orders, and new orders. Currently, the company has a sufficient order book, and the production capacity is expanding instantly with the order quantities. In terms of production capacity, we have already obtained the production certificate for the Ehang 260S, qualifying us for its mass production. Regarding the supply chain, we have a relatively mature and sufficient supply chain. At present, we do not see any significant bottlenecks or uncertainties in production capacity and the supply chain. That's very clear. Thank you.
Speaker Change #121: The conversion of the international orders and new orders.
Speaker Change #121: Currently the company has sufficient auto book and the production capacity is expanding with the auto quantity.
Speaker Change #121: In terms of the production capacity, we have already obtained the productions that we gave before.
<unk> hundred 60 <unk>.
Speaker Change #122: Ali buying us mass production regarding.
Speaker Change #123: Regarding the supply chain, we have a relatively mature and distributions.
Speaker Change #123: Present, we do not see any significant bottlenecks.
Speaker Change #123: Uncertainty in our production capacity.
Speaker Change #123: The supply chain.
Speaker Change #124: That's very clear thank you.
Speaker Change #125: One moment for the next question.
Speaker Change #124: Yes.
Operator: One moment for the next question. The next question comes from Yu Chen with Haitong Securities. Your line is open.
Speaker Change #126: The next question comes from New Chen with <unk> Securities. Your line is open.
Yu Chen: Thank you for taking my question, and congratulations on the good performance in the first quarter this year. I have two questions. The first one is regarding the operation. I would like to ask a question about the operational routes. How many operational routes are we planning right now? And the second question is, could the management team shed more light on new orders the company received in recent months? Thank you.
Speaker Change #126: Okay.
Yu Chen: Thank you for taking my question and congratulations.
Yu Chen: Performance in the first quarter this year and I have two questions. The first one.
Speaker Change #128: Regarding the operation I would like to ask a question about the operational rigor.
Speaker Change #129: How many operational roots, we are planning right now.
Speaker Change #130: And the second question is.
Speaker Change #131: Could management shed more light on new orders the company received in risks.
Speaker Change #132: In recent months thank you.
Speaker Change #133: Yes, yes, yes.
Zhao Wang: [inaudible] Currently, we are in Guangzhou Huangpu District, Shenzhen Bao'an District and Luohu District, Hefei Baohe District, Wuxi Liangxi District, Japan Zhubo, and many other UAM operations sites.
Speaker Change #134: One woman.
Speaker Change #135: Bongo uncle shoot syndrome, <unk> hurdle, which you both.
Speaker Change #134: Okay.
Speaker Change #134: You will see don't see issue.
Speaker Change #136: But drew book only a dog.
Speaker Change #137: Joanne game on that Jim.
Speaker Change #138: Social ambien, Jeremy tightened in Shanghai.
Speaker Change #138: Okay.
Speaker Change #139: Well, John John assumes social agenda.
Speaker Change #138: Yes.
Speaker Change #138: Soon.
Speaker Change #140: <unk> 12 Evansville.
Translator: So your first question concerns the operational route. Currently, we have multiple UEM operation sites under construction in Guangzhou's Huangpu District, Shenzhen's Bao'an and Mohu District, Hefei's Baohe District, Wuxi Liangxi District, and Tsukuba in Japan. And these sites are being prepared for the establishment of commercial operation routes. We are currently engaging in facility construction, test flights, personal training, and certification applications.
Speaker Change #141: So your first question regarding the operational group.
Speaker Change #142: Our country, we have multiple patients.
Speaker Change #143: Site construction.
Speaker Change #143: Construction in Guangzhou Guangzhou.
Speaker Change #143: Shenzhen Bottler and local district court.
Speaker Change #144: Okay Salford district.
Speaker Change #144: C suite and to go back in Japan.
Speaker Change #144: These are being prepared for the establishment of commercial operation.
Speaker Change #144: We are currently engaging in priority construction.
Speaker Change #144: Right.
Speaker Change #145: And does the vacation application.
Zhao Wang: In March this year, we received 100 orders of DH216-S from the local government in Wuxi City. In the first quarter of this year, we delivered 10 of them. In the second quarter, we have added orders from Shaanxi, Hunan, Wenzhou, Zhuhai, and other places, as well as purchases from Xinjiang, Hainan, and Guangdong. The delivery will be steadily promoted and improved. For your second question, please pay attention to the order execution situation and delivery date.
Speaker Change #145: Yes.
Speaker Change #145: With us on the agenda for Java.
Speaker Change #146: That is on coating.
Speaker Change #147: And yet easy to Egypt, Delta, which you don't see John.
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Speaker Change #148: When Joe Drew Hi, David in that.
Speaker Change #148: Adversity.
Speaker Change #149: Why don't these Hugo <unk>.
Speaker Change #149: Meanwhile, our Hudson that dogs.
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Speaker Change #151: <unk> seen done sequencing allergic level.
Zhao Wang: We are. We have received an intention and purchase order from the Wuxi government for 100 units of Ehang 216 as of this March. And they delivered 10 of these in the first quarter. In the second quarter, we have added orders from Shanxi, Hunan, Wenzhou, and Zhuhai, as well as purchase intentions from Xinjiang, Hainan, Guangdong, along with several overseas intentions. The deliveries will proceed steadily and orderly, with a gradual increase. Updates on other executions will be released continuously; please stay tuned.
Speaker Change #151: Sure.
Speaker Change #152: For your second question, we haven't received that.
I appreciate your thoughts on the Wuxi government.
Speaker Change #153: 100 units.
Speaker Change #153: March and delivered 10 updates in our first quarter and second quarter, we have added orders from Jacky.
Speaker Change #154: When Joe and Joe as.
Speaker Change #154: As well as the purchase intentions.
Speaker Change #154: Hi.
Speaker Change #154: So along with several patients.
Speaker Change #154: Deliveries grow pretty steadily on orderly with a gradual increase.
Speaker Change #154: Dates on Ara executions will be released to continuously.
Speaker Change #155: Thank you.
Speaker Change #156: One moment for our next question.
Speaker Change #157: The next question, we have is from Ron Zhao with T. F. Your line is now open.
Operator: One moment for our next question. The next question we have is from Rongjiao with TF. Your line is now open.
Rongjiao: Hi, thank you for taking my question. First, congratulations on the company's outstanding performance. So I have two questions.
Ron Zhao: Alright. Thank you for taking my question first congratulations on the company's outstanding components. So I have two questions. The first one is that all the company has received preorders from overseas customers like.
Rongjiao: The first one is that I noticed the company has received pre-orders from overseas customers, including those from Southeast Asia and the Mideast. So could you please update us on the progress of EHQ1-6 overseas airworthiness certification? And also, how is local regulatory acceptance? And the second question is: could you please summarize the customer types for Q1 deliveries? Are they mainly government customers? And also, what is the proportion of overseas deliveries? Thank you.
Ron Zhao: Including those phones.
Southeast Asia, and India. So could you please update us on the program to an overseas air worthiness.
Speaker Change #159: <unk> holidays.
Speaker Change #159: And also.
Speaker Change #159: How is the local regulatory acceptance.
Speaker Change #160: Second question to add on.
Speaker Change #160: Could you. Please summarize the customer types for cure deliveries are they mainly government customers and also what is that.
Speaker Change #160: A proportion of RBC.
Speaker Change #160: Okay.
Speaker Change #161: Thank you.
Zhao Wang: Thank you for your question. I will answer the first question, and I will let the CEO answer the second question. We are actively pushing forward with the validation of the type certificate for our EH216-S in overseas countries, which will enable us to meet the demand from international owners and lay the groundwork for further expansion into local markets. We know that the CAC has signed a bilateral agreement with many countries' aviation authorities around the world.
Speaker Change #162: Thank you for your question I'll answer the first question and ill, let <unk> answer the.
Speaker Change #163: Second question.
Speaker Change #164: We are actively pushing forward with the validation of that type certificate for our <unk>.
Speaker Change #165: And obviously country.
Speaker Change #166: Which will enable us to meet that demand from international odor and lay the groundwork for further expansion into a local market.
Speaker Change #165: No.
Speaker Change #167: He has signed up bilateral agreements with many countries.
Speaker Change #167: Aviation authorities around the world based on the types of duplicate already issued by the CIC. We're also coordinate.
Zhao Wang: Based on the type certificate already issued by the CAC, we also coordinate mutual communication between the CAC and aviation authorities in Southeast Asia, Latin America, and the Middle East, such as Brazil, Thailand, and Indonesia. Therefore, the VTC is an administrative process that is simpler than obtaining a type certificate from zero to one. But before VTC is obtained, we can still deliver our products to overseas customers for their local use for testing, training, and certification. For example, we delivered five EH216 series products to customers in the UAE in the first quarter. We will accelerate the VTC certification process to further expand into international markets.
Speaker Change #168: Mutual communication between the C AAC and aviation authority.
Speaker Change #168: Southeast Asia, Latin America, and Middle East, such as Brazil, Thailand, Indonesia, and the UAE.
Speaker Change #168: D C.
Speaker Change #168: Is an administrative process.
Speaker Change #168: Similar then appending the types of it.
Speaker Change #168: Zero to one but before we do see is a pen.
Speaker Change #169: And deliver our products to overseas.
Speaker Change #169: There are local users for testing with training and certification for.
Speaker Change #169: For example, we have that delivered by <unk> to one six.
So the customers to the UAE in the first quarter.
Speaker Change #169: It will accelerate the EPC certification process.
Expand into international market.
Zhao Wang: I'll put that out there everyone. We can see that the demand and orders of domestic and foreign customers are increasing. With the announcement of the Chinese government's guidance on the development of the geospatial economy, in the first quarter, we delivered 26 EH216 series of products. The government's purchasing power is relatively high. 20%
Speaker Change #169: Hello.
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Speaker Change #171: While non core now.
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Speaker Change #171: So well done.
Speaker Change #172: Hi, Rod cohort Zambia.
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Speaker Change #172: Tom.
Speaker Change #173: Got it in terms of downhole, Steve O'neil Julio.
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Speaker Change #174: <unk> you.
Translator: [inaudible] We are seeing an increase in negotiations, demand, and orders from domestic and international customers. Following the Chinese government's release of the guidelines for the developing low-altitude economy, we delivered 26 units of the Ehang 216 series in the first quarter, and a significant portion of these deliveries were government purchases, with approximately 23 percent going to overseas customers. And the target application scenarios include urban passenger transport, low-altitude tourism, logistics, emergency firefighting, and other industry applications. Thank you.
Speaker Change #175: Your second question, we haven't seen that increments in negotiation now.
Speaker Change #175: From domestic and internal international customers and following the Chinese government's relief.
Speaker Change #177: Well that would be my.
Speaker Change #176: You'll articulate economy.
Speaker Change #176: 2016.
Speaker Change #176: Sure.
Speaker Change #176: Yes.
Speaker Change #176: Right.
Speaker Change #176: A significant portion of deliveries are.
Speaker Change #176: Government purchases.
Speaker Change #176: Approximately 23% going to the estimate.
Speaker Change #176: Target applications include urban passenger checkpoint, Hello attitude of tourism logistics and emergency firefighting and other industries.
Speaker Change #178: Thank you.
Speaker Change #178: Okay.
Speaker Change #179: One moment for the next question.
Operator: One moment for the next question. The next question comes from Jun Ci. Your line is now open. Thank you.
Speaker Change #180: The next question comes from June <unk> with <unk>. Your line is now open.
Jun Ci: Thank you, Mr. Hu, Mr. Wang, Mr. Yang, and Mr. Ji for taking my questions. And congratulations on the good result and on obtaining PC this quarter.
Speaker Change #181: Thank you, who don't want going forward.
Speaker Change #182: For taking my question.
Speaker Change #183: Congratulations on the good result, and obtaining PC this quarter.
Jun Ci: And I have two questions. The first one is: we are also concerned about bottlenecks during production. So are there any bottlenecks in the supply chain? And what is the domestic production rate of EH216S?
June: I have two questions. The first one is we are also concerned about.
Speaker Change #185: The bottlenecks during production so are there any bottlenecks in the supply chain and what is the domestic production late.
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Speaker Change #186: <unk> does it cause you concern.
Speaker Change #187: Dr. Jacob Suen.
Speaker Change #188: As you know <unk> mentioned, one just going back on the GTO mill Kendall.
Speaker Change #189: Okay. That's good GDP women that you got.
Speaker Change #189: What we can see similar metrics.
Speaker Change #189: Yes.
Kim: Thank you Kim.
Zhao Wang: As a result, we have established a long-term partnership with suppliers on the supply chain in terms of the eco-system of domestically mature UAVs and electric vehicle supply chains. We have maintained close cooperation with multiple suppliers to ensure the stable supply and high quality of EVITO products and parts. At the same time, we are actively looking for better suppliers to diversify our supply chain and reduce the risk of relying on a single supplier.
Speaker Change #191: Steve will then it's also the Lindsay Hall didn't notice vertical and then Theres some that Tc Oman.
Speaker Change #192: One is on the boomers.
Speaker Change #193: Sounds good.
Speaker Change #194: Well my towards alcohol Amazon box that is mirrored.
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Speaker Change #196: Got you now.
Speaker Change #197: Also with me is <unk> yielded the boomslang Shaw.
Speaker Change #197: Well, John the tanker owners.
Zhao Wang: We have not seen any bottlenecks in the supply chain so far. Most of the parts of the EH216 series products have been expanded. Our key core components, including the control system, motor, and battery, are all in line with each other.
Speaker Change #197: Yes.
Speaker Change #197: Conoco.
Speaker Change #197: Jim.
Speaker Change #198: Yes sure <unk>.
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Translator: Your first question, based on the developed UAV and electric vehicles. We have established a long-term partnership with suppliers on our... We maintain close cooperation with multiple suppliers to ensure stable supply and high quality for our individual components. At the same time, we are also actively seeking high-quality suppliers to diversify our services and reduce the risk from dependency on any single supplier. Currently, we do not see any bottlenecks in the supply chain.
Speaker Change #200: Well first question based on the developed a UAV and electric vehicle supply chain system in China, We have established long term partnerships with suppliers and our supply chain.
Heng close cooperation with multiple suppliers to ensure stable supply and high quality, while our EBIT don't component.
Speaker Change #200: At the same time, we are also actively seeking high quality suppliers to diversify our supply chain and reduce risks from dependency on any single supplier.
Speaker Change #200: Current rate, we do not see any bottlenecks in the supply chain.
Translator: And most of the components for the Ehang 216 series have been localized. Our key components, including the control systems, motors, and batteries, are all produced domestically. We will receive stable deliveries from our suppliers and maintain stable cooperation with them.
Speaker Change #200: And in most of the components, whether you have two <unk> has been normalized.
Speaker Change #200: Our key components, including the control system Motors and batteries are all produced domestically will.
Speaker Change #200: We receive stable deliveries from our suppliers and maintain stable operation with them. Thank you.
Jun Ci: Thank you, and I have a second question. In order to achieve the quarterly and annual break-even points, how many EH216 units need to be delivered? Thank you. My second question is... Let me translate. My second question is, if we want to achieve a balance between the season and the year, how many R6S products do we need to deliver during the season and the year? Thank you.
Speaker Change #200: You.
Speaker Change #201: Thank you and I had a second question.
Speaker Change #201: In order to achieve quarterly and annual.
Speaker Change #202: Breakeven point, so how many.
Speaker Change #202: Me.
Speaker Change #203: 216 units.
Speaker Change #204: It will be delivered thank you.
Speaker Change #204: Yes.
Speaker Change #204: Sure.
Speaker Change #205: Our findings.
Speaker Change #206: Thank you Hugo.
Speaker Change #207: Do the invoicing will mcdowell dug out that you're doing in Brazil.
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Zhao Wang: Based on our current cost structure and the trend of business expansion, we estimate that we can achieve annual break-even points on a non-gap basis, which is excluding the share-based compensation expenses by delivering around 200 to 250 units of EH216 products per year. So from a quality perspective, for example, in the first quarter, we delivered 26 units, and our non-gap net loss narrowed to just RMB 10 million. So, with our current order book and production capacity expansion, we are confident that we can achieve non-gap break-even in the near future. Thank you.
Speaker Change #207: <unk>.
Speaker Change #209: Thank you based on our current cost structure and the trend of that business expansion. We estimate that we can achieve annual breakeven point as a non-GAAP basis, which is excluding the share based compensation expenses.
Speaker Change #209: By delivering around 200 to 250 units of <unk> to one six products per year.
Speaker Change #209: No.
Speaker Change #209: And from a quarterly perspective.
Speaker Change #209: Sample.
Speaker Change #210: Last quarter, we have delivered 26 units and our non-GAAP net loss has narrowed to adjust RMB 10 minutes.
Speaker Change #210: With our current order book and production capacity expansion, we are confident that we cannot chip non-GAAP breakeven in the near future quarterly.
Speaker Change #211: Thank you.
Speaker Change #212: One moment.
Speaker Change #213: One moment for our next question.
Speaker Change #213: Yeah.
Operator: One moment for our next question, and the next question comes from Zisan Zhuang with, Huatai, your line is now open.
Speaker Change #214: And the next question comes from Jason Zhang with <unk>.
Speaker Change #215: <unk> Your line is now open.
Zisan Zhuang: Hello, management team. Thank you for taking my question.
Hello management team. Thank you for taking my question.
Zisan Zhuang: We noticed that the company sold EH216S through live streaming on the Taobao platform in the first quarter. Did you see any new demand generated from this Taobao event? Will the company sell directly to end users in the future? My second question is, could the management team share more about the company's thoughts on EVOTO battery solutions? When can the fast-charging battery develop with GVT?
Speaker Change #216: They noticed that at the company and saw the th two Wang.
Speaker Change #217: Through <unk>, Jamie on Pablo transform engraft first.
Speaker Change #218: Contact the.
Speaker Change #219: The OSA Nino demand agenda, Richard Baum less top of event.
Speaker Change #219: All the companies they are directed towards the end user in Russia.
Speaker Change #220: Second question.
Speaker Change #220: Could the management team.
Speaker Change #221: How about other companies' thoughts you both all battery producers Wang Canada faster charging battery developer, though with JBT.
Zhao Wang: Let me answer the first question first. This is a very good question. C, The purpose of this Taobao Live 2.16 sales event is to introduce a new type of aviation technology to the public, such as corp, unmanned driving, man-to-man, and e-vehicle. It also shows that it can be purchased and eaten by this user.
Speaker Change #222: Yourself with Opdivo and <unk>.
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Speaker Change #223: Well, Mr. John Cobb eligible arnaldo the central corridor.
Speaker Change #224: Yes, sure Copel Werent, Joshua you baseball season.
Speaker Change #225: First of all you base it on human clinical might be.
Speaker Change #225: That's it.
Speaker Change #226: So how do you coefficient being thoughtful assumes LNG, which Antoine coaching actually you John.
Zhao Wang: [inaudible] C-class passengers can use the AirTaxi app to buy tickets and take a seat. In the future, C-class passengers can buy aircraft naturally. Not only can it be used for daily travel, but it can also be used directly in the AirTaxi app when the aircraft is not in use. Based on our autonomous driving system, we became RoboAirTaxi and won first place.
Speaker Change #225: H.
Speaker Change #227: Steven Suncorp <unk> should go Cubbies.
Speaker Change #227: We lack is on your <unk>.
Speaker Change #227: Vacancy.
Speaker Change #228: Yes, please I pushed through <unk> <unk>.
Speaker Change #229: From Stifel.
Speaker Change #230: Robo taxi.
Zhao Wang: For your first question, that is a very good question. People are paying attention to whether our aircraft can be sold to the CNU. Our Taobao live-streamed sale event for the Ehang 216 was primarily aimed at introducing and educating the public about this new type of autonomous passenger eVITO aircraft and, at the same time, demonstrating that they can be purchased and used by end consumers. However, to provide well-rounded low-altitude flight operations services and to enrich usage scenarios, our current customers are still primarily government and enterprise, and users can purchase tickets and rides via the AirTaxi app.
Speaker Change #229: Sure.
Speaker Change #231: So your first question that is a very good question as people are paying attention to whether all aircrafts you can be so did to their end users our top outlet so events for the <unk> six was.
Im late aimed at introducing and educating the public about the new type of autonomous passenger aircraft.
Speaker Change #231: And at the same time, demonstrating that they can be purchased and used by the consumers.
Speaker Change #231: However to provide well rounded low altitude flight operation services and to enrich his age.
Speaker Change #231: Scenarios, our current customers are still primarily government and enterprises.
Speaker Change #231: And users can purchase tickets in line via the <unk> App in.
Zhao Wang: In the future, end consumers will be able to purchase the aircraft individually. Not only can the aircraft fulfill their daily travel needs, but it can also be integrated into the air taxi operations when it is not in individual use. Based on our autonomous driving system, these aircraft can become the robo-air taxi and generate operational revenue.
Speaker Change #231: In the future and to consumers will be able to purchase the aircraft individually not only Canada optical feel they are deep cover mi. It can also be integrated into the air taxi operations system when are not in the individual use.
Speaker Change #231: Based on our autonomous driving system. These aircraft can be can become the global air taxi and that generates operational revenues.
Zhao Wang: Second, we have been actively exploring various EVETO battery solutions to further improve the performance and efficiency of our products to achieve the best balance between safety, cost, and efficiency. We will focus on the energy density, power density, heat management, and cycle life of the battery and continue to optimize and improve the performance of EVITO products in the shipping, delivery, and charging markets. For this reason, we have been cooperating with industry-related battery companies for many years and continue to study the battery system that is suitable for EVETOL and Xinjian Energy Cooperation R&D's Gu Tailin.
Speaker Change #232: Yes, Eric warranted or major city council or <unk>.
Speaker Change #232: <unk> will take over the top consumer.
Speaker Change #233: Curious with your insurance, but Saudi standards within the reduction.
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Speaker Change #235: Posted by Shlomi Sushi op petition debate all the time in the Hong Kong book back book soon there Chicago sooner in Belgium.
Speaker Change #236: With us on it is somewhat dangerous yet Tanya.
Speaker Change #236: Sure, Yes, Youll see all you based on the answers as usual.
Speaker Change #236: In general yes.
Zhao Wang: Yijin Yu, Juwan, and Jiyan have jointly developed a fast-charge and fast-release battery, which is ready for testing. The new battery has a larger capacity, faster charging, is safer, and will significantly improve operating efficiency. For your second question,
Speaker Change #236: Sure.
Speaker Change #237: <unk> will go down quite a bit.
Speaker Change #238: Sir G social.
Speaker Change #239: Cindy answers, we've now gone back to them they are going back to an answer yet John Bob with your golf game.
Zhao Wang: For your second question, we have been actively exploring various innovative battery solutions to further improve the performance and efficiency of our products, and we will strive to achieve the best balance between safety, cost, and efficiency. We will focus on the battery energy density, power density, thermal management, and cycle life, and continuously optimize and enhance the performance of our EVETO product in terms of range, payload, and charging. To achieve this, we have been racing with batteries in the industry for years, continuously researching new battery technologies suitable for e-vehicles.
Speaker Change #240: For your second question.
Speaker Change #241: <unk> been actively exploring various ebay.
Speaker Change #241: <unk> battery solutions.
Speaker Change #241: To improve the performance and efficiency of our product.
Speaker Change #241: We strive to achieve the best balance between the safety cost and efficiency.
Speaker Change #242: We are focused on a battery energy density power density thermal management, and a circle of life and to continuously optimize and enhance the performance of our email product in terms of range payload and charging time.
Speaker Change #242: To achieve this.
Speaker Change #242: Big breaking with either of these in the industry.
Speaker Change #242: Continuously searching for new battery technologies beautiful or metals.
Zhao Wang: Both our solid lithium batteries developed by INX and our rapid charging and discharging batteries developed by Greater Bay Technology have entered the testing phase. These new batteries, with larger capacity, faster charging speeds, and enhanced safety, will significantly improve our operational efficiency. Thank you.
Both our Salt Lake BPM battery developed by the inks and our rapid charging and discharging batteries.
Speaker Change #242: Wafer based technology has been engineered testing phase.
Speaker Change #242: These new batteries with larger capacity faster charging fee any cancer therapy will significantly improve our operational efficiency.
Speaker Change #242: Sure.
Operator: One moment for our next question. The next question comes from Ting Kai with Zongzi. Your line is now open.
Speaker Change #243: One moment for our next question.
Speaker Change #244: The next question comes from Ken Cai with Zonked out your line is now open.
Speaker Change #244: Okay.
Ting Song: and Hello Management Team, thank you for taking my question, and I also have two questions. The first one is, what are the main uses of the ATM offering, and what are the plans for human capital investment as the company grows in size? And my second question is about the pipeline for the new type of in-vehicle aircraft. Can you share more about the latest progress of VT-30? Thanks.
Speaker Change #244: Yeah.
Speaker Change #245: Hello management team.
Speaker Change #246: Thank you for taking my question and I also have two questions.
Alan: The first one is what Alan Thank you state of the ATM offering.
Alan: What are the plans for all human capital investment.
Alan: And girls from site.
Alan: And then my second question is about the pipeline of the new tab of regional aircraft.
Speaker Change #248: Can you share more about our progress of later.
Alan: Thanks.
Speaker Change #249: Thank you I would think.
Operator: I'll take the first question. Sorry, go ahead, okay?
Speaker Change #250: Oh I'll take that first.
Speaker Change #249: Sure.
Speaker Change #251: Oh, sorry go ahead.
Zhao Wang: Yeah, I'll answer the first question. Yeah, thank you for your question.
Speaker Change #252: Yeah I'll answer the first question, yes. Thank you for your question.
Zhao Wang: On the ATM offering, we have raised more than 50 million US dollars through the ATM so far. And, you know, we can secure more funds to support the company's growth, to enhance our financial flexibility and strengthen our balance sheet, and to better withstand market changes and challenges. These fundraisers will provide us with more resources to invest in expansion of the sales team and the commercial operations, R&D, and our production capacity.
Speaker Change #253: On the ATM offering that we have great.
Speaker Change #253: Over 50 million U S. Other ATM, so far and.
Speaker Change #254: Uh huh.
Speaker Change #254: We can secure more fund to support the company's growth to enhance our financial flexibility and strengthen our balance sheet.
Speaker Change #255: And the better.
Speaker Change #255: The market changes and challenges.
Speaker Change #255: With the pound rates will be provide will provide us with a more resources to invest in expansion in the sales team and the commercial operations R&D and production capacity.
Zhao Wang: Currently, we have around 380 employees, which is not a very big increase from last year, but with the new fund raise, we will speed up our team expansion to support our business. The gross rate of the operating expenses will definitely be below our top-line gross rate.
Speaker Change #255: Currently we have around 380 employees, which is not too much.
Speaker Change #255: Increased format last year.
Speaker Change #255: With our new found ways, we will speed up our team expansion to support our business.
Speaker Change #255: But the growth rate of the operating expenses.
Speaker Change #255: Definitely below our topline growth rate.
Zhao Wang: Thank you, Mr. Wang.
Speaker Change #256: Thank you Mr Monaco.
Zhao Wang: DH-216-S is the first product that we have tested on the market. At this stage, business operations will focus on it. At the same time, we will continue to develop new products and technologies to better respond to the diversification of the different scenarios of air traffic in global cities and maintain Ehang's leadership. VT30 is a product we are currently developing. It has a variety of functions such as unmanned driving, electric driving, composite, and long life.
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Speaker Change #257: I don't know guys. So initial Zen from washer hunks of dealer channel.
Speaker Change #257: San Diego <unk> you John.
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Speaker Change #259: Chomsky hopped on board.
Zhao Wang: With the successful test flight experience of EH216-S, the relevant R&D and test flight application preparation work of VT30 is proceeding steadily. In April, we held the first overseas exhibition of VT30 in 2009. We will keep you updated in the future.
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Zhao Wang: For your second question, the Ehang 216S is our first product to receive Airworthiness Certification, and commercial operations will be carried out focusing on the Ehang 216S at this stage. Meanwhile, to better address the diverse needs of urban air transportation scenarios globally and maintain our leading position, we will continue to develop new products and technologies. The VT-30 is a product that we are currently developing with features including airman piloting, electric propulsion, lift and cruise type, and long endurance.
Second question.
Speaker Change #261: In 2016 at least our first product to receive <unk> certification.
Speaker Change #261: Certification and the commercial operations will be carried out focusing on de <unk> at this stage.
Speaker Change #261: Meanwhile to better address the diverse needs of urban air transportation scenarios globally.
And our leading position.
Speaker Change #261: You'll continue to see lab developed new products and technologies.
Speaker Change #261: It really is a product that we are constantly developing risk.
Speaker Change #261: Featured seeing pruning and then piloting electric propulsion leap and the crude tank and alone endurance.
Zhao Wang: Following the successful airworthiness experience of the EHANG-216S, the relevant research and development of the VT-30 and the preparations for airworthiness applications are progressing steadily. We conducted the first overseas showcase of the VT-30 in the UAE in April, and we will announce more programs in due course. Thank you.
Anne Ji: Thank you. This will conclude the Q&A due to the time limit. And I would now like to turn the call back to Ms. Anne for closing remarks.
Speaker Change #261: Following the successful air Worthiness experience update in 2016 at the relevant research and development.
Speaker Change #261: The medium duty and the preparations for Edwards NASA applications are progressing steadily.
Speaker Change #262: We conducted the first overseas showcased at the BD <unk> <unk>.
Speaker Change #262: In April and we will announce more progress.
Speaker Change #262: In two parts.
Speaker Change #263: Thank you.
Speaker Change #263: Okay.
Speaker Change #264: Thank you this will conclude the Q&A.
Speaker Change #264: Session due to the time limits.
Speaker Change #265: And I would now like to turn the call back to Ms. Ann for closing remarks.
Anne Ji: Thank you, operator, and thank you all for participating in today's call. If you have any further questions, please contact our R team by email or attend our following investor events through the calendar information provided on our R website. We appreciate your interest and look forward to our next earnings call. Thank you.
Anne Ji: Thank you operator, and thank you all for participating on today's call. If you have any further questions. Please contact our axles E mail or stating our following investor event.
Anne Ji: The candidate information provided on our IR website. We appreciate your interest and look forward to our next earnings call. Thank you.
Operator: Thank you all again. This concludes the call. You may now disconnect.
Anne Ji: Thank you all again this concludes the call you may now disconnect.
Anne Ji: Okay.
Anne Ji: [music].
Okay.
Anne Ji: Yes.
Anne Ji: Yes.
Anne Ji: [music].