Q2 2024 NaaS Technology Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the NASS second quarter and first half 2024 earnings conference call.
Operator: to the Naas second quarter and first half 2024 earnings conference call. At this time, all participants are in listen-only mode. I must advise you that this conference is being recorded. I would now like to turn the conference over to your first speaker today, Mr. John Wang, the Company's Investor Relations Director. Thank you, and please go ahead.
John Wang: Thank you, Operator, and hello, everyone. Welcome to NAAS's second quarter and first half 2024 earnings conference. The company's results were issued earlier today and are posted online. Joining me on the call today are Ms. Kathy Wang Yang, our Chief Executive Officer, and Mr. Alex Wu, our President and Chief Financial Officer. For today's agenda, Ms. Wang will provide an overview of our recent performance and highlights, while Mr. Wu will discuss our operating results and go through our financial highlights.
Speaker Change: The company's results were issued earlier today and are posted online joining me on the call today are Ms. Kathy Wong Zhang our Chief Executive Officer, and Mr. Alex <unk>, our president and Chief Financial Officer.
Speaker Change: For today's agenda, Ms. Wang will provide an overview of our recent performance and highlights.
Speaker Change: Mr Ward well, the Scott discuss our operating results and go through our financial highlights.
John Wang: Before we continue, I refer you to our safe harbor statement in the earnings press release, which applies to this call as we will make forward-looking statements. Also, please note that this call includes discussions of certain non-IFRS financial measures; please refer to our earnings release, which contains a reconciliation of non-IFRS measures to the most comparable IFRS measures. Finally, please note that, unless otherwise stated, all figures mentioned during this conference call are in RMB. I will now turn the call over to our CEO, Ms. Kathy Wang Yang. Kathy, please go ahead.
Speaker Change: Before we continue I refer you to our Safe Harbor statement in the earnings press release, which applies to this call as we will make forward looking statements.
Speaker Change: Please note that this call.
Speaker Change: Include discussions of certain non I F. R. S financial measures. Please refer to our earnings release, which contains a reconciliation of non I F. R. S measures to the most comparable I F. R. S measures.
Speaker Change: Finally, please note that unless.
Otherwise stated all figures mentioned during this conference call are in RMB.
Wang Yang: Hello, everyone. I'm Wang Yang, the CEO of Naas. Today, I'm very honored to share with you the highlights and strategic progress of the first half of the second quarter of 2024 and the first half of the second quarter of 2024. In the previous sessions, I spoke in English. However, some investors said that they didn't care about the lives of investors when I spoke in English.
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Wang Yang: So today, I will speak in Chinese and report to you in English about the progress of energy-saving electricity. Hello, everyone. I'm Naas CEO Kaixin Wang. It's my pleasure to share Naas' highlights and strategic progress for the second quarter and the first half of 2024. In June 2024, Energy Electricity achieved the first-ever profit-sharing transition in the three-month operating plan since history. The goal of Energy Electricity is also to achieve continuous profit in the third and fourth quarters of this year.
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Wang Yang: In the past six months, Energy Electricity has insisted on focusing on the main business, whether it is manpower cost or operation cost, and the core competitiveness of the business is gradually emerging. At the same time, by optimizing manpower and improving management efficiency, it has optimized the reporting of profits and expanded the continuous profit growth path. We are pleased to announce that, for the month of June 2024, we will achieve our first positive non-effort non-profit.
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Wang Yang: Our goal is to carry profitability into the third and fourth quarters of 2024. In the past six months, we have concentrated on strengthening our core business and reducing costs, significantly enhancing our competitive edge. Moreover, through strategic staff optimization and improvement in management efficiency, we have refined our financial performance, setting the stage for ongoing prosperous growth.
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Wang Yang: In the past period of time, the energy industry has been focusing on the energy supply for autonomous driving and continues to expand ecological cooperation with the vehicle industry. I believe you have seen a lot of news about autonomous driving recently. We are focused on specialized autonomous charging solutions for driverless vehicle scenarios and consistently expanding our ecosystem with automotive manufacturer partners. China has reached the point of autonomous driving explosion; the future will be an era of automatic energy supply. Nenglian was founded in 2016.
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Wang Yang: As early as 2017, Nenglian proposed to provide a one-stop energy supply solution for self-driving public transportation. In 2019, Nenglian, our energy service, launched the first car network company. Nenglian Electricity, through wide cooperation with the car industry, recently announced a strategic partnership with the car robot company Jiyue. In history, Nenglian Electricity has worked closely with Jilin Motor, Hyundai, KIA, Wengie, Changcheng, Guangqi Energy, Shenzhen Blue Car, etc. China stands on the brink of a revolution in autonomous driving, which will lead to an era of autonomous charging solutions.
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Wang Yang: Since as early as 2017, we have been exploring one-stop energy solutions for autonomous road transport to keep pace with this market change. We have proactively led the groundwork with extensive collaborations with leading automotive brands. Beyond our recent strategic partnership with Jiyuan, we have also focused on alliances with major automotive industry players, including Geely, Hyundai, Zeke, Ayrton, Great Wall Motors, GAC Energy, and Deep Blue Automotive.
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Wang Yang: The wide cooperation with the car industry has provided energy-saving electricity with deep technical accumulation and more diverse business opportunities. The vision of energy-saving electricity is to improve the efficiency of transportation energy. These extensive strategic collaborations provide us with a solid foundation of technological expertise and diverse monetization opportunities.
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Wang Yang: They help us gradually realize our vision of enhancing the energy efficiency of transportation. As mentioned earlier, the vision of Energy Electricity is to improve the efficiency of transportation energy circulation. In fact, it is not just Energy Electricity. The vision of Energy Electricity's parent company, Energy Control Group, is also to improve the efficiency of transportation energy circulation.
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Wang Yang: Energy Control Group, which is the parent company of Energy Electricity, has also achieved a total profit. In the past eight years, Energy Control Group has accumulated 400 million registered owners and 100 million refueled owners. Now, the number of registered owners of refueling and charging stations is about 70%. In the future, 400 million refueled owners will be transformed into charging owners. Energy wants to continue to provide the industry with an integrated energy supply network to form an energy ecosystem.
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Wang Yang: Now the annual order for energy is about 500 million units. We hope to provide a war-like energy supply for the owner of this 500 million-unit order. Now I will turn the call over to Alex, our President and CFO, for a closer look at our operating and financial performance. Thank you.
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Now I will turn the call over to Alex our President and CFO for a closer look at our operating financial performance friendship.
Alex Wu: Thank you, Cathy. Hello, everyone, and thank you for joining us today. I'm excited to discuss the substantial progress we made this quarter. Let's look at the business updates first. We have been aggressively developing AI and related digital technologies to better embrace the unmanned driving and autonomous charging solutions trends. Our enhanced deep learning, V2X, and 3D vision technologies are set to drive revolutionary changes in our approach to vehicle charging in driverless scenarios.
Alex: Thank you Kathy Hello, everyone and thank you for joining us today I'm excited to discuss the substantial progress we made this quarter.
Speaker Change: Let's look at the business updates first.
Speaker Change: We have been aggressively developing AI and related digital technologies to better embrace the unmanned driving and autonomous charging solution trends all of that has to deep learning V to X and three D. Vision technologies are set to drive revolutionary changes in our approach to.
Speaker Change: Vehicle charging in driverless scenarios.
Alex Wu: With that being said, in the second quarter, we made significant strides in the smart charging area, ensuring that Naas leads in the commercial adoption of this cutting-edge technology. For instance, since its initial launch last year, we've upgraded our autonomous charging robots with sophisticated pathfinding, vehicle control, and obstacle avoidance features. These robots can now manage complex charging operations with little to no human intervention, ensuring a safe and more streamlined charging experience
Speaker Change: That being said in the second quarter, we made.
Speaker Change: Strides in the smart charging area, ensuring that nice leads in the commercial adoption of these cutting edge technologies.
Speaker Change: For instance, since initial launch last year with upgraded our autonomous charging robot with sophisticated path finding vehicle control and obstacle avoidance features.
Speaker Change: These robots can manage complex charging operations with little to no human intervention.
Speaker Change: Ensuring a safe and more streamlined charging experience.
Alex Wu: Furthermore, building on our expertise in AI and digital analytics, the NAS Energy Fintech or NAF platform is now driving the transformation of the charging station construction sector towards a smarter billion-dollar market. Our next system uses advanced AI algorithms for comprehensive intelligence in serving charge point operators or CPOs throughout the lifecycle of charging stations. In the early stages, particularly in charging station site selection, NAF helps calculate potential investment returns by analyzing critical regional traffic flow and charging demand data.
Speaker Change: There's a mall doing all expertise in AI and digital analytics.
Speaker Change: <unk> energy theme tacked on NAV platform is now driving the transformation of the charging station construction sector towards a small to get into other market.
Speaker Change: Our next system uses advanced AI algorithm for comprehensive intelligence in serving charge point operators all C. P o's throughout the lifecycle of charging stations.
Speaker Change: In the early stages, particularly in charging station site selection.
<unk> helps calculate potential investment returns by analyzing critical region, though traffic flow and charging demand data.
Alex Wu: Furthermore, after charging stations start to operate, we are responsible for their online operations as well, leveraging our integrated digitalization expertise. As Cathy mentioned previously, we formed a partnership with a leading new energy company to supply them with a comprehensive slate of charging station services through our next platform. This collaboration not only boosted our revenue from charging power cells but also brought us a share of the related charging transaction. Additionally, it has enhanced Naas brand visibility through our joint site operation.
Speaker Change: Furthermore, after charging stations start to operate we are responsible for their online operations as well leveraging our integrated digitalization expertise.
Speaker Change: As Kathy mentioned previously we formed a partnership with a leading new energy company to supply them with a comprehensive slate of charging station services through our <unk> platform.
Kathy: This collaboration not only boosted our revenue from charging pouch cells, but it also brought us a share after the related charging transactions.
Kathy: Additionally, it has unchanged Nash brand visibility through our joint side operations.
Alex Wu: During the second quarter, we successfully launched nearly 50 charges with this partnership and are on track to bring nearly 1,000 additional charges online by the third quarter. Encouraged by this success, we are exploring the replication of this model in other regions, with a similar initiative already underway in Changsha. As we keep advancing our AI and digital analytics capabilities in autonomous charging solutions, our extensive network of automotive manufacturer partners is vital in this program.
Kathy: During the second quarter, we successfully launched nearly 50 charges with this partnership and are on track to bring nearly 1000 additional charges online by the third quarter.
Speaker Change: I'm encouraged by the success, we are exploring the replication of this model your other regions with a similar initiatives already underway and Changsha.
Speaker Change: As we keep advancing our AI and digital analytics capabilities.
Speaker Change: Tell me whats charging solutions and less.
Speaker Change: Our extensive network of automotive manufacturer partners is vital in this progress.
Alex Wu: This ensures our capacity to deliver AI-powered services on a wider scale. For example, we now cover a majority of China's mainstream automotive manufacturers with high-quality AI-powered charging services through the various collaborations Cassie outlined. As of June 30, 2024, we have launched services for 56 top brands supporting 165 new energy vehicle models. We added 66 new models in the second quarter alone, achieving a record high for a single quarter in terms of new model launches.
Speaker Change: This shows our capacity to deliver AI powered services on a wider scale.
Speaker Change: We now cover a majority of China's mainstream automotive manufacturers with high quality.
Kathy: Powered charging services through the various collaborations Kathy outlined.
Kathy: As of June 32020, full we have launched services for 56 top brands supporting 165, New energy vehicle models.
Kathy: We added 66, new models in the second quarter alone.
Kathy: Achieving a record high for a single quarter in terms of new model launches.
Alex Wu: Our extensive and growing network of automotive manufacturing partners continues to reach our ecosystem and broaden our market reach. Now, let's move on to our financials for the second quarter of 2024. We significantly boosted operational and management efficiency this quarter, which substantially improved our financial performance. Notably, our net loss margin reached its lowest historical level this quarter.
Kathy: Our extensive and growing network of automotive manufacturing.
Kathy: This continued to reach all of the ecosystem and broaden our market reach.
Kathy: Now, let's move on to our financials for the second quarter of 2024.
Kathy: We're sitting here can be boosted operational and management efficiency this quarter.
Kathy: Which substantially improved our financial performance.
Kathy: Notably our net loss margin reached its lowest historical levels this quarter.
Alex Wu: We are also excited to announce another milestone. In June 2024, our monthly non-IFRS net profit turned positive for the first time, thanks to our disciplined approach to expanding revenue and reducing costs. I'll walk you through some of the key drivers behind this quarter's success. Our revenue increased by 89% year over year to RMB 91.7 million this quarter, propelled by robust growth across all three of our business segments. Specifically, our core charging services continued to flourish, contributing RMB 44.8 million to this quarter's revenue, up 73% compared to the same period last year.
Kathy: We are also excited to announce another milestone.
Kathy: In June 2024 hour monthly non Ifr S. Net profit turned positive for the first time, thanks to our disciplined approach to expanding revenue and reducing costs.
Kathy: I'll walk you through some of the key drivers behind this quarter's success.
Kathy: Our revenue increased by 89% year over year to RMB 91, 7 million this quarter.
Kathy: Propelled by robust growth across all three of our business segments.
Kathy: Specifically, our Kohl's charge and services continued to flourish.
Kathy: <unk> RMB $44 8 million to this quarter's revenue.
Seven 3% compared to the same period last year.
Alex Wu: This substantial growth not only underscores the resilience and viability of our profitable business model but also highlights our outstanding execution in enhancing our charging service. In addition to strengthening our core business, we made significant strides in diversifying our revenue streams this quarter, thanks to our agile strategy and effective positioning in emerging markets, revenues from energy solutions, and new initiatives, each sold by all by over 100%. Specifically, revenue from energy solutions increased by 105% year over year to RMB 44 million, and revenue from new initiatives increased by 139% year over year to RMB 2.9 million.
Kathy: This substantial growth not only underscores the resilience and viability of our profitable business model, but also highlights our outstanding execution.
Kathy: Painting, our charging services.
Kathy: In addition to strengthening our core business, we made significant strides in diversifying our revenue streams in this quarter, thanks to our agile our strategy and the effective positioning in emerging markets.
Kathy: Revenues from energy solutions, and new initiatives, each sold by <unk> by over 100%.
Kathy: That's typically revenue from energy solutions increased by 105% year over year to RMB $44 million.
Kathy: And revenue from new initiatives increased by 139% year over year to RMB, two 9 million.
Alex Wu: Alongside our impressive revenue growth, our gross profit grew 59% year over year to RMB 30.5 million in the second quarter of 2024. This growth was primarily fueled by the robust performance of our high-margin charging service. Notably, the gross margin for our charging services reached its highest level over the past four quarters, highlighting the significant economics of scale we are realizing as our business continues to expand. Furthermore, we drove improvements in our operational performance this quarter, leveraging our expanding market presence and enhanced network capability. The proportion of orders with positive NTR surged to 70% in the second quarter of 2024. Cost structure optimizations and operational efficiency are a critical part of our strategy to sustainably expand our business scale.
Kathy: Alongside our impressive revenue growth our gross profit grew 59% year over year to RMB $30 5 million in the second quarter of 2024.
Kathy: This growth was primarily fueled by the robust performance of our high margin charging services.
Kathy: Notably the gross margin for our charging services reached its highest level over the past four quarters, highlighting the significant economics of scale. We are realizing at all business continues to expand.
Kathy: Furthermore, we drove improvement in our operational performance this quarter.
Kathy: Leveraging our expanding market presence in a haste network's capabilities.
Kathy: The propulsion of orders was positive NCR surged to 70% in the second quarter of 2024.
Kathy: Cost structure optimization and operational efficiency.
Kathy: A critical part of our strategy to sustainably expand our business scale.
Alex Wu: In the second quarter of 2024, we reduced our operating expenses to record lows relative to our revenue, strengthening our financial foundation as we continue to grow. In summary, this quarter's performance stands as a testament to the effectiveness of our long-term development strategy and our excellent operational and financial management. The substantial reduction in our net loss margins and the non-IFRS net profit in June are clear indicators of our ability to not only enhance profitability but also sustainably manage our growth. As we move forward, we will remain dedicated to financial discipline, innovation, and progress to deliver enduring value to all our stakeholders.
Kathy: In the second quarter of 2024, we reduced our operating expenses to record lows relative to our revenue strengthening our financial foundation as we continue to grow.
Kathy: In summary, this quarter's performance stands as a testament to the effectiveness of our long term development strategy and our excellent operational and financial management.
The substantial reduction in our net loss margins and the non fastener prostate in June are clear indicators of our ability to not only profitability, but also sustainably manage our growth.
Kathy: As we move forward, we will remain dedicated to financial discipline innovation and progress too.
Kathy: To deliver enduring value to all our stakeholders.
Alex Wu: Thank you for your continued trust and support. This concludes our prepared remarks for today. Operator, we are now ready to take questions. Thank you. We will now begin the question and answer session.
Kathy: Thank you for your continued trust and support.
Speaker Change: This concludes our prepared remarks for today.
Speaker Change: We are now ready to take questions. Thank you.
Operator: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Ting Song with Goldman Sachs. Please go ahead.
Ting Song: Hi, thank you for taking my question. So today I have two.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question you May press Star then one on your telephone keypad.
Speaker Change: If you are using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: To withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Speaker Change: The first question comes from Ching song with Goldman Sachs. Please go ahead.
unknown: The first question is, how are you able to meaningfully elevate your margin level and how do you expect a quarterly net profit breakeven going forward? And my second question is, as Naas continues to enjoy fast revenue growth and scale up, can you share more color on your revenue drivers in the next two years? Thank you.
Ching song: Hi, Thank you for taking my question so.
Ching song: Cute.
Speaker Change: Uh huh.
Emily: Equally Emily your margin level, and how do you expect a quarterly eating out call. It breakeven going ahead.
Speaker Change: And my second question is Nos continues to enjoy the fast growth and scale up can you share more color on our revenue.
Revenue our revenue drivers.
Speaker Change: Yes. Thank you.
Speaker Change: Yeah.
Alex Wu: Thank you, Amber. To your first question regarding the margin improvement, we reached a milestone of single month non-RFRS net profit breakeven in June and a positive operational cash flow in the second quarter of 2024. We have made a lot of efforts to optimize our business operations in order to achieve this milestone. Our revenue is one of the major contributors to our net profit margin improvement in the second quarter of 2024. With the fast penetration of EVs in China, we have enjoyed an increase of both EV drivers and EV charge point operators on our platform.
Amber: Thank you Amber.
Speaker Change: To your first question regarding the the margin improvement.
Speaker Change: We reached a milestone of single moms not wildfires net profit breakeven in June.
Speaker Change: And a positive operational cash flow in the second quarter 2024.
Speaker Change: We have made a lot of effort to optimize our business operations in order to achieve this milestone.
Speaker Change: Our revenue is one of the major contributor to our net profit margin improvement in the second quarter of 2024.
Speaker Change: What is it a fast EV penetration in China, we have enjoyed the increase Oh I suppose you'd be drivers in the EV charge point operators on our platform.
Alex Wu: Our second quarter 2024 revenue maintained its growth momentum and increased 89% year-over-year with both business lines growing at a healthy rate. If you look at the gross profit, as we adopt a platform business model, the profit margin improved as we scaled up. The gross profit margin in the second quarter of 2024 increased eight percentage points quarter over quarter to 33 percent, while the absolute amount of gross profit increased 59 percent to RMB 30.5 million in the second quarter.
Speaker Change: Our second quarter 2017 for revenue maintained its growth momentum and increased 89% year over year.
Speaker Change: With both business lines growing at a healthy rate.
Speaker Change: Okay.
Speaker Change: If you look at the gross profit as we adopt a platform business model the profit margin improved as we scale up.
Speaker Change: The gross profit margin in the second quarter of 2024 increased eight percentage point quarter over quarter to 33%, while the absolute amount of gross profit increased 59% to RMB 30.5 million in second quarter.
Alex Wu: The major contributor is our charging service business, while our energy solution business has a relatively stable gross profit margin. As we grow in size, we believe we still have upside to our gross profit margin through its improvement. If you look at the expenses, we have made significant progress as well. Our total non-IFRS operating expense as a percentage of revenue decreased to 90%, which is the first time it is below 100% since we got listed.
Speaker Change: The major contributor is our charging service business, while our energy solutions business has a relatively stable gross profit margin.
Speaker Change: It's really growing size, we believe we'll still have outside of our gross profit margin our unions improvement.
Speaker Change: If you look at the expense we have made.
Speaker Change: And progress as well our total long ifr as operating expense.
Speaker Change: As a percentage of revenue decreased to 90%, which is the first time. It is below 100% as soon as we get lift we got listed it.
Alex Wu: It is not only due to the operating leverage that we receive from our revenue scale-up, but it's also due to our heightened expense control. Especially, we cut our sales and marketing expense by more than half year over year while maintaining our revenue growth at a very fast pace. The improvement of our financial numbers, I think is largely the result of our optimized operations, to give you some evidence from the operations level.
Speaker Change: It is not only due to our operating leverage that we received from our revenue scale off.
Speaker Change: But it's also to our tightened expense control.
Speaker Change: Especially we touch all the sales and marketing expense by more than half the year over year, while maintaining our revenue grows at a very fast pace.
Speaker Change: The improvement of our financial numbers I think he is a largely as a result of our optimized operations.
Alex Wu: Our profitable order is now 70% of our total number of orders; in comparison, for second quarter 2023, that same percentage is only 41%. Our growth take rate, or GTR, has also reached an all-time high level due to the increased acquisition of so-called long-tail CPOs, and our net take rate has been maintained at a very healthy level throughout second quarter 2024. We're also seeing an increasing number of drivers subscribe to our VIP services and an increasing number of OEMs work with us.
Speaker Change: To give you some some evidence from the operation level, our profitable order is now 70% of our total number of orders.
Speaker Change: Comparison for our second quarter 2023.
Speaker Change: That same percentage is only 41%.
Speaker Change: Our gross take rate until the GTR has also reached all time high level due to the increased acquisition of so called long tail Cte OS.
Speaker Change: And our net take rate has been maintained at a very healthy level throughout second quarter 2024.
Speaker Change: We are also seeing an increasing number of drivers to subscribe our VIP services and increase the number of Oems to work with us.
Alex Wu: So to answer your first question in terms of margin, after we allocate our resources and energy in the right direction, we have been seeing very positive indicators in the past quarter from financial metrics and from business performance. This is certainly a very encouraging milestone for us, and we will continue to work on our business operation and on efficiency. So to your second question regarding growth, which is another very good question, let's look at the numbers first.
Speaker Change: So to answer your first question in terms of margin.
Speaker Change: Sure.
Speaker Change: After we allocate our resources and energy in the right direction, we have been seeing very positive indicators are in the in the past quarter from financial metrics and from a business performance. This is certainly very encouraging milestone for us and we will continue to work on our business operation and on efficiency.
Speaker Change: So to your second question regarding gross which is another very good question.
Alex Wu: In general, our revenue in the second quarter of 2024 maintained strong growth momentum, and we're seeing 89% year-over-year revenue growth. If we look at different segments, both major segments of our revenue enjoyed very healthy growth. Our charging services are seeing a 73% increase year over year due to our increasing coverage on both the supply side and the demand side of the charging network. We have processed 50 million transactions in the past quarter, and 70% of those transactions are profitable.
Speaker Change: Let's look at the numbers first right in general all revenues in second quarter of 2020 full maintained a strong growth momentum and we've seen a 18, 9% year over year revenue growth.
Speaker Change: If we look at different segments, both major segments of our revenue enjoyed a very how's. It goes are charging services are seeing a 73% increase year over year due to all including coverage on both the supply side and demand side of the charging that.
Speaker Change: The work.
Speaker Change: We have processed 50 million transactions in the past quarter and 70% of those transactions are profitable.
Alex Wu: On the energy solution business, as we keep improving our AI capabilities in site selection, EPC, and state operations, we gain more trust from the CPUs that we work with, where we can constantly get more projects and hardware orders from them, which results in a 105% growth year-over-year on energy solutions. I would like to emphasize the role of AI capabilities in driving our business growth. As we build AI models from millions of transactions that we process, we're able to empower our charge point operator partners to enjoy a better operational outcome.
Speaker Change: On the energy solution business as we keep improving our AI capabilities in site selection U P C and state operations, we gained more trust from the CPO. So we work with where we can constantly getting more projects and how do they all those from them which results.
Speaker Change: A 105% growth year over year on energy solutions.
Speaker Change: I would like to emphasize the go off AI capabilities in driving our business growth as.
Speaker Change: As we build AI models from millions of transactions that we perhaps are processed we're able to empower our charge of point operator partners to enjoy better operational outcomes.
Alex Wu: For example, we are able to recommend potential locations with better business opportunities to the operator for their deployment of new charging stations. With that capability, the CPUs will choose us as the one-stop solution provider, and we can potentially monetize our AI capabilities through hardware sales and software subscription fees. For example, we are collaborating with one of the largest CPOs in central China, and we'll help them deploy 1000 charges in the third quarter.
Speaker Change: For example, we are able to recommend potential locations with better business opportunities to the operator for <unk>.
Speaker Change: So they had to play a deployment for charging stations.
Speaker Change: Was that capability, the cpo's will choose us as the one stop solution provider and we can potentially monetize our AI capabilities through hardware sales and software subscription.
Speaker Change: Subscription fees.
Speaker Change: For example, we are collaborating with one of the largest C. P O in central China, and we'll help them deploy 1000 in charges.
Speaker Change: In the third quarter.
Alex Wu: To sum up, with the fast penetration of EVs in China, we're enjoying the fast growth of EV charging demand. Meanwhile, we are maintaining our leadership in the market with our AI capability. We have started to monetize those AI capabilities, and we'll continue to explore more business opportunities as we grow. Thank you. The next question comes from James Zou with UBS; please go ahead.
Speaker Change: To sum up with the fast penetration of E beam, China, we're enjoying the fast growth of EV charging demand.
Speaker Change: Meanwhile, we are maintaining our leadership in the market with our AI capabilities. We have started to monetize those AI capabilities and we'll continue to explore more business opportunities as we grow.
Speaker Change: Thank you.
Operator: The next question comes from James Zhou with UBS. Please go ahead.
James <unk>: The next question comes from James <unk> with UBS. Please go ahead.
James <unk>: Oh, Thanks for taking the question I have one question.
James <unk>: We wish you the improving financial numbers can you share with us more details on the operating metrics such as the gross take rate then agree. Thanks.
James Zhou: Great, thanks. Thanks, James, for the question. The main reason that we are able to achieve margin improvement and non-alpha net profit breakeven in June was because of our continuous efforts in enhancing operating metrics. So if you look at GTR, for example, our GTR has reached an all-time high. The reasons are twofold.
Speaker Change: Great. Thanks, Thanks, James for the question are the main reasons that we were able to achieve margin improvement and non <unk> net profit breakeven in June or was it because of our continuous effort.
Speaker Change: <unk> operating metrics ultimate business.
Speaker Change: So you can look at G. T. Our for example, our GTR has reached all time high.
Alex Wu: First, our algorithm continued to bring traffic to our CPUs on the platform, which helped CPUs enjoy a better operational outcome and, therefore, allowed us to get a better commission rate. And number two, we see more long-tail CPOs joining our platform, where we were able to have a better bargaining power. So that's for GTR.
Speaker Change: The reasons are twofold first our algorithm continued to bring traffic to our C. P. O S. A on the platform, which helps if you're always enjoy better operational outcome and therefore allow us to get a better commission rate.
Speaker Change: And number two you would see more long tail cpo's drilling all platform, where we are we're able to have a better bargaining power.
Alex Wu: For NTR, Net Tech Create, we continue to drive NTR to a higher level, where we are improving our sales and marketing efficiency with our advanced algorithm to acquire and retain users. For example, our net addition of VIP members increased close to 30% quarter over quarter in the second quarter of 2024. As a result, our profitable orders increased to 70% of all orders. So, in conclusion, we will continue to improve our operating metrics through the iterations of our algorithm and AI capability, and we strive to make a more sustainable and profitable business model. Thank you. The next question is from Ethan Chang with Nomura. Please go away.
Speaker Change: That's what the ETR for the NGL in that take rate.
We continue to drive the NTR to higher level, where we are improving our sales and marketing efficiency without advanced algorithm to acquire and retain users.
Speaker Change: For example, our net addition of VIP members increased close to 30% quarter over quarter.
Speaker Change: The second quarter of 2024.
Speaker Change: As a result, our profitable orders increased.
Speaker Change: <unk> to 70% off or number of orders.
Speaker Change: So in conclusion, we continue to improve our operating metrics through the iterations of our algorithms and AI capabilities, and we strive to make them more sustainable and profitable business model.
Speaker Change: Good.
Operator: The next question is from Ethan Chang with Nomura. Please go ahead. Oh, thanks.
Speaker Change: The next question is from Ethan chatting with Nomura. Please go ahead.
Ethan: Oh, that's management's Oh, so listen to me a robo taxi outcome has become very popular in China. So my question is how do you see your position in the new normal striking area. Thank you.
Ethan Zhang: Thanks, Yizhen. That's a very good question. We have been looking at this trend for a while. Robotaxi, and most of the models that we've seen, are actually electric vehicles or EVs. So these vehicles need some sort of charging infrastructure to operate. Given our extensive partnership with OEMs, we have closer access to the smart EV operating system, and we'll put ourselves into a very good position to best utilize that operating system
Speaker Change: Ah. Thanks season, that's that's a very good question, we have been declared this trend for a while.
Speaker Change: Robo taxi as are.
Speaker Change: Most of the models that we've seen they are actually electrical vehicles are evs.
Speaker Change: So these vehicles need to be a need in some sort of charging infrastructure to operate.
Speaker Change: Given our extensive partnership, whereas Oems, where you have closer access to the smart EV operating system, and we would put ourselves into a very good position.
Speaker Change: To best utilize that operating system.
Alex Wu: Particularly, our AI algorithm could potentially help Robotaxi to optimize its charging operation with our larger charging network, and we could help robot taxi owners to find the optimal locations to establish their EV charging infrastructure. More importantly, our autonomous charging robot, which we initially reviewed last year and has been improving under things, has all the core technologies to facilitate the autonomous charging actions, such as deep learning, B2X, 3D vision, and other intelligent technologies.
Speaker Change: Particularly our AI algorithm could potentially help a robo taxi to optimize its charging operation with our larger charging network and we could help robot taxi owners to find the optimal locations to sluggish there you'd be charging infrastructure.
Speaker Change: More importantly, our autonomous charging robot.
Speaker Change: Which we usually are reviewed last year and has been improving and the thing has all of the core technologies to facilitate the autonomous charging actions such as deep learning B two X three D vision and other intelligent technologies.
Alex Wu: When we initially deployed the autonomous charging robots, we always had the robot taxi in mind. We always had autonomous driving in mind. We think in a future where there are no drivers, there wouldn't be any need for human-involved charging, so the charging robot is specifically designed for that purpose. As autonomous driving continues to unfold, we believe we're at the front seat to empower the charging infrastructure and software to adapt to the new era. Thank you. Again, if you have a question, please press star then 1.
Speaker Change: When we initially deployed our autonomous charging robot, we always have the robo taxi in mind, we always had the autonomous driving in mind, we think in the future where there is no drivers there wouldn't be any.
Operator: The next question is from Zoe Feng with Tian Feng Securities. Please go ahead.
Speaker Change: Any need for humans involved charging so they're charging robot is specifically designed for that purpose.
Speaker Change: As the autonomous driving continues to unfold.
Speaker Change: We believe we're at the front seat to empower the charging infrastructure and software to adapt to the new era. Thank you.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Again, if you have a question. Please press Star then one.
Speaker Change: The next question is from Zoe Fang with 10 thing Securities. Please go ahead.
Zoe Fang: Thank you for taking my question.
Zoe Fang: I know that you've been acquiring a lot of could you share more updates on the latest.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Yeah.
Zoe: Thank you Zoe.
Speaker Change: E T two with a weird because they improve our partnership with our OEM partners are specifically.
Zoe Feng: Specifically, in Q2, we partnered with Jiyue to embed our platform into EVs and provide charging services to Jiyue drivers to better enhance our capabilities and create a wholesome charging ecosystem. By the end of Q2, we established partnerships with most of the major OEMs and built our services into more than 150 EV models. Our continued collaborations with EDOEMs help us in a number of ways. First, we obviously make revenue from those collaborations and partnerships. Naas can get a one-time system setup revenue and ongoing subscription fees when users charge using our platform within OEM.
Zoe: Specifically with in Q2, we partnered with yeah to embed our platform into a UV and provides charging services to G drivers to better enhance our capabilities.
Zoe: And create a wholesale I'm charging ecosystem.
Zoe: At the end of Q2, we have established a partnership with most of the major Oems and butyl services in more than 150 Remodels.
Zoe: Our continued collaboration with Oh, yes help us in a number of ways.
Zoe: First we obviously make revenue from those collaborations and partnerships NAS can get a one time system set up revenue and ongoing subscription fee when users charge using our platform.
Zoe: Within the OEM.
unknown: And second, and probably more importantly, is that we're creating more brand awareness and technology collaboration through these partnerships, and that, in turn, helps us to acquire new customers and build our technological leadership in the whole ecosystem. Meanwhile, we collaborated with China Automotive Technology and Research Center to release the China Electric Vehicle Charging and Battery Swap Industry Development Report. This collaboration with government-sponsored research institutes and various stakeholders in the charging industry could help us to maintain a leadership role in making technological advancements and setting industry standards.
Zoe: Second and probably more importantly is we're creating more brand awareness and technology collaboration through the partnerships and that in turn help us to acquire new customers and build our technological leadership.
Zoe: In the whole ecosystem.
Zoe: Meanwhile, we collaborated with China automotive technology and research center to release, the China electric vehicle charging and battery swap industry developed.
Zoe: Development report this collaboration with government sponsored research Institute and the various stakeholders in the charges industry could help us to maintain our leadership role he made some technological advancement and setting industry standards.
Unknown Executive: Mover, we are highly engaged in the initiatives from the government to make a carbon neutral society. For example, we partnered with Harbing's first carbon inclusive service platform, which could benefit millions of reviewers. Our target infrastructure, Monter and service platform for Joe Jiang has also recently been deployed, which could help local government and a power grade to better services millions of EV drivers.
unknown: Moreover, we are highly engaged in the government's initiative to make a carbon neutral society. For example, we partnered with Harbin's first carbon inclusive service platform, which could benefit millions of EV drivers. Our charging infrastructure, monitor, and service platform for Zhejiang has also recently been deployed, which could help local governments and power grids to better serve millions of EV drivers. So the conclusion is, in this fast-growing EV charging industry, we want to build a stronger partnership with all stakeholders in the industry and leverage these partnerships to create a better user experience for EV drivers. Thank you.
Zoe: Moreover, we are highly engaged in the use of tools from the government to make a carbon neutral society. For example, we partnered with Harbin first carbon inclusive service platform, which could benefit millions of EV drivers are.
Speaker Change: I'll talk to infrastructure monitor and service Cleveland for Joy. Zhang has also recently been deployed which could help local government and Apollo grade to better services millions also you'd be drivers.
Unknown Executive: So the conclusion is, in this fast growing EV charging industry, we want to build stronger partnership with all stakeholders in the industry and leverage these partnerships to create a better use experience for the new drivers.
So the conclusion is in this fast growing EV charging industry, we want to build stronger partnership with all stakeholders in the industry and to leverage these partnerships to create a better user experience for that you'd be drivers.
Speaker Change: Thank you.
Speaker Change: Yeah.
Unknown Executive: It concludes our question at an answer session.
Speaker Change: This concludes our question and answer session.
Unknown Executive: I would like to turn the conference back over to the company for closing remarks. Thank you once again for joining us today. If you have any further questions, please feel free to contact us.
Operator: This concludes our question and answer session. I would like to turn the conference back over to the company for closing remarks.
I would like to turn the conference back over to the company for closing remarks.
Speaker Change: Yeah.
unknown: Thank you once again for joining us today. If you have any further questions, please feel free to contact us.
Speaker Change: Thank you once again for joining us today, if you have any further questions. Please feel free to contact us.
Unknown Executive: Thank you.
Speaker Change: Yeah.
Unknown Executive: This concludes this conference call. You may disconnect your lines. Thank you.
Operator: This concludes this conference call. You may disconnect your lines. Thank you.
Speaker Change: This concludes this conference call you may disconnect your lines. Thank you.
Speaker Change: Yeah.