Q4 2024 EHang Holdings Ltd Earnings Call
Speaker Change: Good day, ladies and gentlemen. Thank you for standing by and welcome to the Ehang 4th quarter and fiscal year of 2024 Earnings Conference School.
Speaker Change: Please note that the management prepared remarks and the subsequent Q&A session will primarily be conducted in Chinese and the corresponding simultaneous or consecutive interpretation can be accessed on the English line.
Speaker Change: As a reminder, all translations are for convenient purpose only. In case of any discrepancy, the management statement in the original language will prevail.
Speaker Change: Till listen to the original remarks by management, please join the Chinese line.
Speaker Change: Additionally, both the Chinese and English lines are open for questions, and today's call is being recorded.
Speaker Change: Now I will turn the call over to Anne Ji, Ehang Senior Director of Investor Relations. Ms. Anne, please proceed.
Speaker Change: Hello everyone. Thank you all for joining us on today's conference call to discuss the company's financial results for the fourth quarter and fiscal year of 2024.
Speaker Change: The earnings release is available on the company's IR website Please note the conference call is being recorded and the audio replay will be posted on the company's IR website
Speaker Change: On the call today, we have Mr. Huang Zhuhu, our founder, chairman, and chief executive officer Mr. Zhao Wang, chief operating officer, and Mr. Konoyang, chief financial officer
Speaker Change: Before we continue, please note that today's discussion will contain forward-looking statement made pursuant to the safe harbor provisions of the U.S. Private Security Litigation Reform Act of 1995.
Speaker Change: The company does not assume any application to update any forward-looking statements except as required under applicable law.
Speaker Change: Also, please note that all members presented are in R&B and are for the first quarter of 2024 unless they did otherwise.
Speaker Change: With that, let me now turn it over to our CEO , Mr Huazhi Hu. Please go ahead, Mr Hu.
Speaker Change: Hello everyone, and thank you for joining our early school. Q4 and Fuiyue 2024 marked another record-breaking period for Ehang, we continue to grow significantly beating our guidance and setting new record-high quarterly and annual deliveries and revenues.
Speaker Change: In Q4, we deliver 78 units of EH216 Series product, generating revenues of 164 mlnRMB, representing an increase of 239.1% year-over-year.
Speaker Change: For the few years, we delivered 216 units, with a total revenue reaching 456 million RMB, marking a 288.5% year-over-year increase.
Speaker Change: More importantly, 2024 was a breakthrough year as we achieved a positive and adjusted net income and positive operating cash flow for the first year.
A significant milestone in the Han Stack of Law and Journey [inaudible]
Speaker Change: With this, Yihon also became the first Yvido company in the global urban air mobility industry to achieve non-GAAP profitability for their solidifying our leadership.
Speaker Change: At China's 2025 two sessions, the Low Outitude Economy to Accenture Stage, a strategic emerging industry, and a key driver of new quality productivity.
Speaker Change: For the second consecutive year, it was included in the Government Work Report, which explicitly calls for large-scale demonstration projects to advance new technologies, new products, and new applications to promote the sector's safe and healthy development.
Speaker Change: Additionally, Chen's NDRC, National Development and Reform Commission, established a dedicated low-outitude economy development department in December 2024.
Speaker Change: Meanwhile, the local governments in over 50 cities across China have introduced their localized development plans for the sector. These government initiatives further highlight China's long-term national strategy and strong commitment to developing the low-outitude economy.
Speaker Change: If 2024 was the year of planning for low-outitude development, 2025 will be the year of ins implementation.
Speaker Change: Since pertaining the three airworthiness certificates, we have been accelerating the commercial deliveries in operational deployment of the EH216S.
Speaker Change: Our customers have already established over 20 in-zero operational demonstration sites, and e-ports across 16 cities in China, including Hubei, Guangzhou, Shanjian, Changhai, Wuxi, Taiyuan, and Wunzhou.
Speaker Change: This year, our top priorities to launch operational demonstration project in key cities to enable the public to experience the evito flights first-hand. To this end, we have been actively driving the operator certification process for a pilot
Speaker Change: Currently the Civil Aviation Administration of China has completed document and announcement inspections for the first two applicants accepted.
Speaker Change: They are Ehang General Aviation, our wholly owned subsidiary, subsidizing in UAM operation services and Huai Aviation, our joint venture in Huff-A. Both are now awaiting the final approval. We look forward to the early issues of the two operators, Certificate.
Speaker Change: Marking the beginning of the commercial EVO operation era. Looking ahead, we expect more operators to apply for the operator's certificates, paving the way for broader commercial flight service of the EH216S in the future.
Speaker Change: 2025 marks the pivotal year for AI technology innovation in China globally. This year's government work report reaffirms the nation's commitment to the AI-plus initiative, emphasizing the acceleration of AI applications across various industries including the low-outitude economy.
Speaker Change: As a pioneer in Pilellis, Yvido technology, Iehon continues deepening our AI-plus strategy. Leveraging our core technologies, including 50 redundancy, autonomous flight and fleet management, along with intelligence system platform, we are integrating AI across the Ho, Yvido life cycle to drive intelligent upgrades and innovative practices in commercial operations.
This includes further optimizing our—
Speaker Change: Key technologies and capabilities such as intelligent flight control algorithms, Autonomic detection, flight road planning, command and control, human machine interaction, nervous simulation and the UAV cloud system.
Speaker Change: Beyond announcing our aircraft, AI is set to expedite to the construction and enhancement of the digital infrastructure for air mobility. Ehang will collaborate with the multiple Chinese universities, colleges and relevant government departments and the commercial conglomerates to advance the integration and innovative integration of digital technologies, such as 5G, 6G, satellite communication, sensor, technologies, and high precision navigation with the low altitude aviation industry.
Speaker Change: Together, we aim to build a smart, low-outitude ecosystem, interconnecting air traffic infrastructure, flight corridors, communication and navigation systems, airspace management and operational services.
Speaker Change: This will establish a secure, efficient and intelligent digital foundation to support commercial operations for e-hone and our customers.
Speaker Change: On the product front, we continue to advance our multi-roader Yvido series through strategic collaboration with the leading upstream companies, including Inx, Greater Bay Technology, and M-Power.
Speaker Change: Together, we are developing customized the next generation high-energy solid-state leads in batteries, fast charging batteries, and electric motors. We have achieved a great progress in simple design prototyping and testing. We conducted the industry's first EVO test of light powered by solid steel leads in batteries, delivering an impressive endurance of over
Speaker Change: 48 minutes. We are thrilled about this major technological breakthrough that it reinforces our confidence in next phase overall performance enhancements.
Speaker Change: For our upgraded lift and cruise model VT-35, its prototype is in its final assembly and testing.
Speaker Change: We plan to complete the full functionality test to fly as soon as possible and initiate the errorworthness certification process. It will be unveiled soon. For the flying car that targets the mass consumer market, we formed a cross industry strategic partnership with the China Automobile.
Speaker Change: to actively design and discuss new product solutions to explore innovative approaches to future personal transportation.
Speaker Change: Over the past decade, Ehang has pioneered numerous industry first, and we firmly believe the next ten years will witness the rise of the low-altitude economy, disruptive development of AI technologies, and transformative development in unmanned aviation. As the saying goes, a journey of 1,000 miles begins with the first step. As Ehang enters its next decade in 2025, we remain steadfast in our commitment to advancing technological innovation, industry standards, operational demonstration, and ecosystem development [inaudible]
Speaker Change: Ila Lisee Viros. We aim to lead the transformation of urban air mobility while promoting the safe, healthy, and sustainable development of the industry. Next, I'll turn the call over to our COO, Mr. Wang. Thank you.
Yu Chen, Huazhi Hu, Anne Ji, Cindy Huang, Wang Zhao
Speaker Change: Hello everyone, this is Wang Zhao. We closed 2024 with record-hide deliveries and revenues exceeding our performance guidance.
Speaker Change: This success is driven by Scrum Market Demand and growing customer orders. In particular, our EH216 as Autonomous Messenger, Yvido, has received a 30-unit order from Shandong Province, a 30-unit order from Georgian Province, along with an initial 5-unit order and an addictive order from another 45-units from Sun River. With the result of 78 units delivered in Q4 and 164-million in revenue.
Speaker Change: The total annual deliveries reached 216 units, with the total revenues of 456 million RMB.
Speaker Change: To meet the continuously growing order demands, we are focusing on enhancing production efficiency, scaling production capability, and planning.
Speaker Change: capacity expansion. Guided by our Manufacture to Order principle, we're establishing our regional and networked production base layout in South China, East China, and North China.
Speaker Change: In South China, our Phase 1 Info Production Base currently has an annual capacity of 300 units. This year, we plan to expand Phase 2 with 24,000 square meters of new production lines while upgrading automation and efficiency. By 2025, Yu Chen's Info Production Base is splacted to reach double size and a total
Speaker Change: A Thousand Unit. It also produced a large number of aviation materials and components for our customers.
Speaker Change: In East China, with the Hufe as our regional headquarters, we are further deepening strategic cooperation with the Hufe government.
Speaker Change: Partnering with the Advanced New Energy Vehicle Manufactured JAC Group and Hefei Guoshin Holdings to build an advanced, generalized, and automated Ividol manufacturing base.
Speaker Change: Additionally, we are collaborating with the Weihai High Tech Zone in Juno Province to establish a pilotless, palace-centered, evital R&D and manufacturing base there, creating an all-round collaboration system integrated production sales and operations.
Speaker Change: In North China, we have entered a partnership with the Beijing Function District Government to establish a national headquarters for low-outitude emergency rescue equipment.
They had quarters of features at 7,000 to 2,000 sq.m.
Speaker Change: Factory, a training center of over 100,000 square meters, and a training exercise space of hundreds of acres. Leveraging e-hounds current fly to platform and autonomous flying technologies, we plan to vigorously develop R&D production and operations in the fire emergency rescue sector, providing support for the life safety with autonomous flying vehicles.
Speaker Change: We are deeply in line with Ehang's development strategy. We fully endorse this principle. Safety is the top priority of the sector. From the evido design to the flight and operational system, Ehang has implemented comprehensive safeguards for commercial operations.
Speaker Change: <unk> sales customer service personnel training aviation materials sales maintenance and repair and software system to lending past design route planning and integrated operational services. We are building a full cycle value chain income passing hardware services and operations to provide customers with one stop solutions looking at.
Speaker Change: Our revenue streams will become more diversified this year Ihan remains committed to the safety first principle, while focusing on low altitude of tourism as the key entry points and urban air mobility as large scale goal to expand our au am operation on that work and pioneer cities to demonstrate the low altitude.
Speaker Change: And then systematically scaling operations from point to point connections to a fully integrated network. For example, our second are you a M hub at logon parking Hefei, the veto operations center at our long haul airport in Shanghai's issue, a riverside and the first automated Verde port and the U S.
Speaker Change: M Center in La who shouldn't Jim.
Speaker Change: These flagship projects serve as typical models over the next three years, we will work with partners such as China Construction group trying to communications construction company and other infrastructure construction of units local governments and major commercial partners to jointly develop more than 100 urban air mobility terminals at a more than a hung.
Speaker Change: The low altitude of cultural tourism terminals in national five a level cynics areas across China, we aim to beauty city level low altitude economy flight service system, and a carryout integrated business Corporation that it combines culture and tourism transportation emergency.
Speaker Change: Boss and logistics in 2025 based on Ehealth Carton to mature fund platform announced autonomous flying technologies, we will not only vigorously developed passenger business, but also develop non passenger business. The fire emergency rescue sector has already been established in the capital Beijing. Besides <unk>.
Speaker Change: Added to developing low energy loan endurance logistics, you a V product, which will greatly promote the development of low cost high efficiency <unk>.
Speaker Change: Wheel logistics transportation, we aim to realize applications in intra provincial interprovincial and cross border logistics scenarios. Currently we have started exploration and lay out in Beijing, Guangdong Gong XI and heighten overseas, we are expanding our presence in Asia, Europe and south.
Speaker Change: <unk> to continuously and event our market development fly scenarios and regulatory approvals in Q4 of last year. We conducted three consecutive days of E. H 216, as passenger carrying flights in central Bangkok, Thailand and plan to launch commercial trial operations this year within the sandbox.
Speaker Change: Areas designated by the Thai Civil Aviation Authority in Japan, We completed a new forest city fly toward expanding our Florida footprint across 16 cities and showcasing multiple use cases, including aerial sightseeing Inter island transportation, a real logistics and emergency services.
Speaker Change: In February this year E. H 216, as completed of Europe's first autonomous you Vito flied in an urban environment in Benin dorm, Spain, setting a precedent for future urban air mobility deployment in Europe. Most recently, we conducted our first flight in Mexico further expanding our global footprint.
Speaker Change: And to the 19th countries today to our accumulative flight recorder has surpassed the 64000 flights as we move into 2025, we will continue to execute our global market strategy of deepening domestic business, while expanding globally. We will remain focus on both sales and operations further diversifying our revenue streams.
Speaker Change: Mr. China's trillion level low attitude economy, and a blue ocean market, along with the great potentials for AOS IC across nearly 15000 class a and above tourist attractions and nearly 700 cities for urban Air mobility, we remain optimistic about the strong demand for our elite.
Speaker Change: Product and operational services confident in our long term growth prospects. We expect total revenue for 2025 to reach 900 milling RMB, representing an approximately 97% of increase year over year now I'll turn the call over to our CFO Connor for the financial performance. Thank you.
Connor Yang: Hello, everyone. This is Conor before I go into details. Please note that all numbers presented are in RMB unless otherwise stated detailed analysis or are contained in our earnings press release, which is available on our IR site I will now highlight some of the key points here I am pleased to rip.
Connor Yang: For that we closed 2024 on a strong note surpassing expectations for both Q4 and the full year and Q4, we achieved record revenues of 164.3 million, representing an impressive 190% year over year growth for 'twenty 'twenty four our total revenues reached an all time.
Connor Yang: High of $456 2 million up a substantial 289% year over year. This outstanding performance was primarily driven by strong E. Vito market demand, along with our well coordinated and impactful strategic initiatives in key areas, including OCC.
Connor Yang: The case, Jim production scaling and commercial readiness on deliveries, we set a new quarterly record with 78 units off the E. H 216 as delivered in Q4, marking a 239% year over year increase and a 24% sequential growth for 2020.
Connor Yang: For total the deliveries of the H 216 series reached 216 units up 310% from 52 units in 'twenty two 'twenty three our gross margin for Q4 was 60.7% slightly down from 64, 7% in.
Connor Yang: The same period of 2023 and on par with Q3.
Connor Yang: Full year 2020 for the annual gross margin was 61, 4% a slight decrease from 64 point of 1% in 2023.
Connor Yang: Decreases in gross margin was primarily due to changes in our revenue mix and higher unit costs for the H 216 S. Despite these modest declines our gross margin remained high at 60% highlighting our competitive edge and pricing power in the Vito sector.
Connor Yang: Turning to the operating expenses in Q4, adjusted operating expenses, which is defined as operating expenses, excluding share based compensation were $78 2 million up 22% year over year from $64 2 million, but down 10% from Q3.
Connor Yang: Hi.
Connor Yang: The sequential decline reflects cost control and efficiency optimization, while the year over year increase was mainly due to the expansion of sales channels higher employee compensation and investments in new a veto mottos. In addition, we continue to actively investing in the development and iteration of new in vivo models.
Connor Yang: And technologies since we obtained in the three airworthiness certificate for 'twenty 'twenty four adjusted operating expenses were 290.1 million up 28, 2% from $226 3 million in 2023 strong.
Connor Yang: Topline growth and cost efficiency contributed to a solid improvement in non-GAAP profitability. Adjusted operating income for Q4 was 27.9 million a significant improvement from the adjusted operating loss of $24 9 million in Q4, Tony during the three and <unk>.
Connor Yang: <unk>, 208.2% from Q3 in Q4, we realized the third consecutive quarter of adjusted net income for 36.4 million a sharp improvement from the adjusted net loss of 22 point of $1 million in Q4, 2023 and up 100.
Connor Yang: Drilling 32, 3% from Q3 for 'twenty 'twenty four we achieved our first ever annual adjusted net income of.
Connor Yang: 43 point of $1 million, a significant improvement from the adjusted net loss of 139 million in 2023 marking our entry into a new phase of sustainable and accelerating profitability alongside a strong revenue growth and improving profitability. We also maintain a solid liquid.
Connor Yang: Entity position I live at the end of Q4, our total cash and cash equivalents restricted short term deposits and short term investments was 1.155 billion. There is a strong cash balance provides us with strategic flexibility to support our growth initiatives invest in innovation.
Connor Yang: <unk> and enhance marketing competitiveness, notably we recorded our fifth consecutive quarter of positive operating cash flow in the first ever annual positive operating cash flow.
Connor Yang: Mounting to approximately 160 million in 'twenty 'twenty, four demonstrating our ability to generate sustainable cash flow while scaling operations.
Connor Yang: Can I have 220 25, we are in the final stretch of obtaining operator certificate, we believe that the achievement of this key milestone on our own with our active progress in E. Vito commercialization readiness operational deployment production scale up technology innovation and global market expansion will further solidify our industry leadership.
Connor Yang: I have a strong foundation for accelerated growth and drive us into a new growth cycle based on our current progress and market demand and we're expecting a total revenue in 2025 of approximately 900 million RMB, representing a year over year increase of 97%. Thank you.
Connor Yang: Thank you now let's open the call for questions.
Connor Yang: If you wish to ask a question. Please press star one on your telephone and wait for your name to be announced.
Connor Yang: If you wish to cancel your request please press star two.
Connor Yang: If you're on a speakerphone please pick up the handset to ask your question.
Teng song: Your first question comes from Teng song from Goldman Sachs. Please go ahead.
Teng song: Okay cool.
Speaker Change: Oh, Oh, Oh I'm sure go ahead.
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Teng song: Hi, Chip insight this is ernie.
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Teng song: So the only Oh I don't know if you can go that way.
Teng song: So.
Speaker Change: Thank you for taking my question I just have a question, which is recorded on the production capacity I know, we are expanding our production capacity for that.
Teng song: To.
Teng song: So wondering what kind of added production capacity, we are looking at for the I'll say.
Teng song: <unk> facility by the end of 2025 and 26 and also if you are talking about a total production capacity of 5000 units. So how much are you know more.
Teng song: Volume how much volume always scheme, so how much will be to utilize additional rate I'll be looking at to between 2025 and 26. Thank you.
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Speaker Change: As a young man.
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Speaker Change: So why won't that is on the way.
Speaker Change: Okay.
Speaker Change: I'll I'll take this question.
Speaker Change: In phase two for the capacity expansion. This will complete this year, reaching a total annual capacity of 1000 units and the your interim phase one phase two production lines will have specialized okay says they will be focusing on.
Speaker Change: Aviation materials flash component manufacturing and aircraft Assembly, respectively. So Additionally, with our.
Speaker Change: Joint venture with.
Speaker Change: Empower we are also upgrading the production lines, improving the automation and efficiency in manufacturing and supply chain management with regard to Hefei, we plan to establish a G JV with.
Speaker Change: Jay AC Motors in Hefei, Washington Holdings to build a modern low attitude aircrafts manufacturing facility and according to the planning.
Speaker Change: Off the government of the local local local.
Speaker Change: <unk>.
Speaker Change: Expansion construction work is expected to be completed in one and half in two years.
Speaker Change: So by a woman so nowhere hi, Pedro.
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Speaker Change: Things you can do better.
Speaker Change: Will you talk with them.
Speaker Change: Yeah.
Speaker Change: Oxygen since you'll have rebounded.
Speaker Change: Yeah.
Speaker Change: And Additionally, we also have plans for production in Weihai, Robbins and functional district of Beijing.
Speaker Change: Previously mentioned and our expansion for the capacity follows manufacturing to order a principle. So we will adopt a medic oh I see.
Speaker Change: Strategy across different parts of China, and South East and North China and.
Speaker Change: They will have specialized management for different product lines, including passenger transport logistics and emergency response and firefighting. Thank you.
Speaker Change: Yeah.
Cindy Wang: Thank you. Your next question comes from said Cindy Wang from Morgan Stanley. Please go ahead.
Speaker Change: And I said this all of the key languages.
Speaker Change: Okay, and then see the long term he understood you there yet.
Speaker Change: Thank you Lindsey silencing Glenn anytime you can think that what shape the oce this agenda.
Speaker Change: Yep Okay.
Speaker Change: Nah P&L when tissue balancing quality penetration, that's only that is being hosted in gaucher Centennial gap in right now so I just figured I heard the whole thing once you have hard tissue such as just sort of taking a nimble. If he comes out what I think are key to the opec's done Capex Betsy just yet.
Thank you for taking my question first congratulations on the strong Q4 result could management provide additional color on the timeline for our I see absolutely k-shell what are some of them can be a milestone. So we are expecting.
Speaker Change: With regard to the application and my second question is that Oh, when are we going to achieve for a GAAP profitability with our collaboration initiatives and also the construction of many of the infrastructure at them already.
Speaker Change: Can you please offer a.
Speaker Change: Ballpark capex and old patch for the coming quarters of this year.
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Speaker Change: Since you don't sell any of our union.
Speaker Change: Yeah, Let me take your first question, we are glad to announce that we have.
Speaker Change: So D C. AAC has completed the acceptance and onsite inspection of NIS two AC apps again, that's for our <unk> Oh subsidiary company and we are now just waiting for so we have pretty much completed all the required to work and.
Speaker Change: Waiting for the final regulatory approval. So we also expect in D. C. You will be rewarded if you watch that as soon as possible, but so the inspection and everything I mentioned itself is already a milestone and the lease will provide.
Speaker Change: Provided the basis for us to roll into a commercial operation as soon as possible.
Speaker Change: Yeah.
Well Michelle.
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Jon Wheeler: Hi, Jon Wheeler, Yes, sorry, Hello, guys magic drunk goodwill industrial REIT that owns it.
Jon Wheeler: But doing what they're saying, Oh, I'm sure you're waiting and doing well.
Jon Wheeler: Well you correctly.
Jon Wheeler: Uh huh.
Speaker Change: I want to emphasize that these will be the first unmanned you'd need to always see issued under the new interim regulations for the U a V flight management. So the certification process itself is establishing and also refining.
Speaker Change: Can be a standards. So it is a significant responsibility, but well set.
Speaker Change: Crucial precedence or safe all commercial operation of E. H 216, S and all unmanned passenger carrying air craft in China.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: All right, what's the kind of well definitely not.
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Speaker Change: Oh, just the non-GAAP.
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Speaker Change: Okay.
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Speaker Change: This is kind of I'll take your second question.
Speaker Change: As we have mentioned that we have achieved non-GAAP profitability in 2024.
Speaker Change: And when your question of how and when are we going to achieve a full a full.
Speaker Change: Full year of GAAP profitability. So according to our plan and also our estimated revenue growth of 97% of which is 900 million revenue in 2025, and we expected to achieve.
Speaker Change: Profitability Fortunately in the second half of 2024, however for full year GAAP profitability, but it will be sometime in 2026.
Speaker Change: Cindy and Julian.
Speaker Change: She is truly just a capex why you decided it wasn't maintenance or Youll see I don't think that I agree with homes.
Speaker Change: Thank you.
Speaker Change: Well, it's equal weight.
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Speaker Change: She was on who that is.
Speaker Change: Yeah, Julian the role one.
Speaker Change: So it's a capex sound.
Hello, Jim.
Speaker Change: Yeah.
Speaker Change: So with regard to cod.
Speaker Change: Next our full year Capex guidance for 2025 will be 14 billion U S dollars and the Capex will be used in scaling up our production capacity and getting through phase two way high.
Speaker Change: But he as well as our planned production site and function district of Beijing, and we will also use some day.
Speaker Change: Money for July loved thing Mark.
Speaker Change: Does.
Speaker Change: That will be used in emergency response and the logistics.
Speaker Change: Plus there's going to be investment in construction of our new headquarters in Beijing.
Speaker Change: Joe.
Speaker Change: Yeah.
Speaker Change: Uh huh.
Speaker Change: I think up Opex, I think that sends out Oh in Jordan.
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Speaker Change: Okay.
Speaker Change: Yep.
Speaker Change: And we expect to be old parts to grow at 40% a year over year in 2025.
Speaker Change: Yes.
Speaker Change: Appreciate it.
Speaker Change: Thank you.
Thank you. Your next question comes from way Shen from UBS. Please go ahead.
Speaker Change: Good work by his hand wash Oh, well, it's all around when he goes to the sound was mostly Gamal Linda at Chartwell, Yeah. All once you she's always Oh and young we'll see.
Speaker Change: Why.
Speaker Change: Two questions are good evening management two questions. One is on the gross margin outlook and the other one is financing plans in 2025.
Speaker Change: Yeah.
Speaker Change: What's the kind of leader Margarita.
Speaker Change: Momentum Nobel <unk> patterns and dealership.
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Speaker Change: Why does it of course.
Speaker Change: Marty the way he also bound to they want to ensure we bought that in late June.
Speaker Change: So.
Speaker Change: How much I'm looking to Bob because you also it sounds yeah sorry.
Speaker Change: Mobile data.
No.
Speaker Change: Sure.
Speaker Change: Our targeted gross margin is around 60% give or take so to achieve that we are going to adopt a two initiatives for one we're going to invest more athletes rollout of more product lines to make our product offering more diverse.
Speaker Change: With the diversification that's going to help drive up the gross margin and then the second initiative, we are planning to.
Speaker Change: Well I have just mentioned that that'll be helpful.
Speaker Change: The gross margin how about what we're planning to do distribution model, which kind of.
Speaker Change: Microphone five some of the gross margin a little bit about give or take where Amy 60% gross margin.
Speaker Change: Goes to that because I've always said to you Bob Cuneo women and things of that nature, you don't see that challenging email Oh well. This is Jim Julien told what I see is I mean, not that you know.
Speaker Change: Let me add some color.
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Speaker Change: Hopefully that just.
Speaker Change: Yes.
Speaker Change: So last year, we reversed.
Speaker Change: Nearly 100 million U S dollars.
Speaker Change: And also are occurring to cash.
Speaker Change: Reserves exceeded one 1 billion RMB and as Ive mentioned that our cash positive cash flow is around 160 million for 2024.
Speaker Change: So as you can see that our business is so we have.
Speaker Change: Business sustaining can.
Speaker Change: Cause the ability and healthy development, so with regard to this year with accelerated market and business expansion seeking additional financing to strengthen our capital position well. This will support new video technology and product development market expansion, New headquarters construction production facility development.
Speaker Change: And team growth, so ensuring sufficient funding for our next growth phase.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Thank you. Your next question comes from Laura Lee from Deutsche Bank. Please go ahead.
Speaker Change: Hey, thank.
Thank you for taking my question and congrats on a strong year. My first question is about the air taxi parts. So we noticed there are inquiries you know announcements you a M. Either your theater experience center development of digital infrastructures. So.
Speaker Change: So just wondering is there any rough time line for the air taxi operation and any notable milestones in between.
Speaker Change: Hello, guys like why do you think you've been going to the Chilean generally.
Speaker Change: What do you think you're going to you're going to withdraw the at home and that's usually read golf. She may have dialed going towards why you a M someone that Sheila and thoughtful well dwarfs, your Guangzhou Tianjin machine or their share of closet with half I just wasn't sure does not wash out things out what we're going through the tango two trial.
Speaker Change: The doctor that she can get G coming out of the Leach on Dania, Russia.
Speaker Change: With one draw it up with article Lindsay.
Speaker Change: Well known food footage comes into your hometown to utilize Cmos to send them.
Speaker Change: <unk>.
Speaker Change: That's a Hong Kong shipper on jump on that yes, sure you believable Darwin.
Speaker Change: And so I'm just.
Speaker Change: Okay.
Speaker Change: Gogo deals you can see those on page <unk>.
Speaker Change: Well the answer is some switches without full launch will go for it.
Speaker Change: Commensurate with this other towns you well do you allow you mean.
Speaker Change: So she comes in.
Speaker Change: Right.
This was the did you empower comes in.
Speaker Change: Who knows.
Speaker Change: Sure.
When they go to you go through Parliament did.
Speaker Change: Although these timber notes I'm sure will I send you the hardest social works on simply more patients.
Speaker Change: Yeah.
Shannon: Well, Shannon well I'm, assuming that you're talking about your plans. So today I'm sure I'm sure I'm going Jonathan.
Shannon: Oh sure. So a highest is in the audience.
Shannon: And so for me as it will help with you.
Jonathan: Oh, Hello, how are you doing Jonathan Yeah Cathedral.
Jonathan: Yes, just that way our Techs addition goes yeah, well on the on body.
Thank you.
Joe: Joe I will take this question.
Speaker Change: Wow Air Taxi services remain our long term vision and mission.
Speaker Change: Asian prioritize safety above all repairing carefully step by step progress. So over the next couple of years. So we will first establish operations and domestic tourism areas to accumulate enough data before we venture into air textured surfaces.
Speaker Change: And also air taxi.
Speaker Change: Limitation depends on ground infrastructure, particularly for T points, and many low altitude digital infrastructures, including communication navigation Surveil lens air traffic management.
Speaker Change: Right now.
Speaker Change: Cities across China.
Speaker Change: The board clear and specific plans and timelines for the infrastructure construction.
Speaker Change: And with many lending hires 2030 ports and routes over the next three years.
Speaker Change: As an industry pioneer E. On is actively contributing to policy development infrastructure planning Oh partnerships with the C C C and C. It yes.
Speaker Change: Yes, the CEC and many local governments are actually helping to build the ecosystem and framework for air taxi operations.
Speaker Change: Thank you. Your next question comes from Rob Young Zhou from Citi. Please go ahead.
Speaker Change: Okay.
Speaker Change: You got any sense of the churn that you don't know who you guys see it.
Speaker Change: But.
Speaker Change: Yeah. You go ahead, you should buy your local items.
Speaker Change: Oh of course is that right.
Speaker Change: Goodbye.
Speaker Change: Yeah in terms of their team.
Speaker Change: Yeah.
Speaker Change: Yes.
One huge we'll make sure they're grandfathered.
Speaker Change: Yeah.
Anthony: Anthony that's a little bit to go out and place.
Anthony: Well I wouldn't say so.
Anthony: So with that woman.
Anthony: That's just how they sell.
Anthony: Hi.
Anthony: So I always listen back to what I talked about it again.
Anthony: So the goal that you always see that beyond that you wanted to.
Anthony: Yes.
Anthony: Yeah.
Speaker Change: Thank you for the presentation and thank you for taking my question my questions Al.
Speaker Change: On your overseas markets. The first one is the progress of our Oh C. A certification.
Speaker Change: As well as the.
Speaker Change: Orders.
Speaker Change: Kind of situation are we at right now and my second question is on our plans on diversifying our revenue streams.
Speaker Change: So with that I mean, particularly what kind of rather than new Oh boy or mix are we looking at outside of.
Speaker Change: Manufacturing of these Oh flying vehicles, so any guidance or plan on that.
Speaker Change: Hello, I want to elaborate.
Speaker Change: So why the Xinjiang <unk>.
Speaker Change: I suppose you, though Eli.
Yeah, Hi walks you buy a more secured the lunch.
Speaker Change: Sure.
You don't do it as soon as I can put on about Brazil.
Speaker Change: [noise] senior women's Oh.
Speaker Change: Well I mean.
Speaker Change: Hi, Michael.
Speaker Change: And then Joe.
Speaker Change: Well, it's only the official yeah sure Egypt Dogwood Meehans you the shale.
Speaker Change: Well months or it wouldn't Josh sorry.
Hard home user that sushi two go audacious competency there Linda.
Speaker Change: Let me finish.
Speaker Change: On the <unk>.
Speaker Change: Sure John well nobody's onto your thought each social table, we're in touch with you.
Speaker Change: So he sees in the hub, which is why they didn't.
Speaker Change: Did you have a sensor.
Speaker Change: Since you're the silver cross transfer your thought around that.
Speaker Change: Egypt.
Speaker Change: Well I'll take.
Speaker Change: The question since Q4, we have completed our flight demonstrations and Japan, Thailand, Spain, Mexico, and many others.
Speaker Change: Expanding our flight footprint to 19 countries last year, we delivered orders to oversee its markets that include UAE, Japan dominate.
Speaker Change: As pioneers in pilotless passenger carrying aircraft, we are actively engaging with civil aviation authorities worldwide.
Speaker Change: Local flight demonstrations and discussions to promote the airworthiness certification for this new aircraft.
Speaker Change: The C AAC.
Speaker Change: It's very supportive of our efforts in applying for international certification.
Speaker Change: And we are working together to promote in the certification of unmanned passenger carrying aircraft overseas. We are actively exploring some innovative.
Speaker Change: Oh pilot first approaches to expedite the international operations of our new Ddos. Thank you.
Speaker Change: Do you want Houston shortly.
Speaker Change: Yeah European Sugar, Here's hoping June 30th.
Speaker Change: Well many of them were built in the pudding.
Speaker Change: <unk> got strong well known they are co who goes yeah.
Speaker Change: Oh <unk>.
George: George Utah.
Speaker Change: Well of course, somebody social iacocca and young patient hung price.
George: Sure.
George: Ron just.
George: Central Cart you Oh wait.
Right.
George: With all the talk little more Shire, Ian Johan where you couldn't bullion silver.
George: Sure.
George: While my senior year, where is that I need to find out.
George: Obama.
George: So far in July.
George: Florida power <unk> light system.
George: Sure.
George: On your second question Diversifies, our revenue streams <unk> maintains a dual strategy.
George: Operations and sales so we position ourselves beyond just being an easy to manufacture.
George: Build a complete.
George: Lifecycle value system for our customers featuring hardware service and operations.
George: This includes product sales and customer service personnel training.
George: The Asian materials maintenance software systems, and route planning and operations.
George: As the veto commercial operation scalar Hong will develop a more diversified revenues streams and additionally, I want to tell you that beyond the passenger transportation.
George: We are intensifying our efforts on logistics and firefighting business this year to broaden our revenue sources. Thank you.
Gaming Lung: Thank you. Your next question comes from gaming lung from China Renaissance. Please go ahead.
Gaming Lung: Oh Gosh I had one of its unusual that you would.
Speaker Change: Oh wait on <unk> zones, and Georgetown, which Oh God Cushing from Tien Tsin Huang.
Speaker Change: I'll go on to shield jumped quite a whistle unless answered one cycle itself, although education and digital door to door.
Speaker Change: <unk> well Joseph Uncle, Joanna triples will show you suitable sometimes that's just.
Speaker Change: Thank you for taking my question I've got two questions. One is on the update on new orders and the second question is on the collaboration with the J H C production base, so what kind of ROI, we shall Welch AAC any unplait in basin, JV and what kind of.
Speaker Change: Profit split and also cost.
Speaker Change: Uh huh.
Speaker Change: A split we are looking at between the between you two thank you.
Speaker Change: Yeah.
Speaker Change: The England he says.
Speaker Change: One is you mentioned to open her lung some.
Speaker Change: Which ill woman Guy so that you don't invite in travel retail.
Speaker Change: Those that are not quoting that youll sugar cocoa Sudhakar would also use system didn't go usage Aberdeen.
Speaker Change: Well, you'll G E. R. One eight you showed that the audience either homegrown.
Yeah, Hi audience, she buys what's I'm sure the cooling judgment.
Speaker Change: You bet.
Speaker Change: With us on the issues so about one.
Speaker Change: Yeah.
Speaker Change: Our domestic demand is very strong with a current intention of water, it's exceeding a thousand units plus many more orders are under negotiation. Just so you know that we have dozens of clients who place order of dozens of units at each time and Additionally, you should know that China.
Speaker Change: Nearly 16000, great eight and a ball tourism attractions for aerial sightseeing and there are nearly.
Speaker Change: 700 cities that offer Oh planning air mobility services. So we remain optimistic about the strong demand for our products and operational services. Thank you.
Speaker Change: Yeah.
Speaker Change: Yuzu, when he jumped by the who as well I'm not so sure well John what's your sort of hogwash as I hope issues don't just as happened either.
Speaker Change: Either.
Speaker Change: Well, Michael I'll jump Archie so, let's say it wasn't cool Oh, sorry, Tony because of flu.
Speaker Change: Andy you've made whole DOCSIS LGD Zohar.
Speaker Change: How much is really not a trend on shortages out at you.
Speaker Change: Congress will meet.
Speaker Change: Well, yeah, one isn't yet.
Speaker Change: The woman the Osha cause I, you guys wouldn't use us in Boston.
Speaker Change: Boston.
Speaker Change: Yeah.
Speaker Change: Is this a cyclical downturn.
Speaker Change: Entrepreneurs are probably shrunk all that goes with it.
Speaker Change: So that's the answer.
Speaker Change: How's that.
Speaker Change: Is that true.
Speaker Change: And with regards to your second question.
Speaker Change: JV partnership with a J a C is actually carried out under the support with the support of the Hefei municipal government.
Speaker Change: And we are building a JV with J, a C and I'll take question Holdings Corporation too.
Speaker Change: Illegal production base, so J a C has accumulated.
Speaker Change: Expertise in manufacturing and supply chain management in automobile sector, whereas for US we are leading in.
Speaker Change: The.
Speaker Change: Development production and Oh C.
Speaker Change: In illegal sector. So this cooperation that will bring the best of us and leverage both parties' respective advantages.
Speaker Change: And with regard to the specific details on these JV.
Speaker Change: Under discussion.
Speaker Change: I'm, sorry, I couldn't disclose more at the moment. Thank you.
Speaker Change: Yeah.
Speaker Change: Thank you. Your next question comes from Ya Qin from Guangzhou Securities. Please go ahead.
Speaker Change: How about that.
Speaker Change: Sure.
Speaker Change: No fish uncle.
Speaker Change: Hum.
Speaker Change:
Speaker Change: They don't bother to call you wish you could help on that.
Speaker Change: Oh, well I didn't know what does she like Colombia.
Speaker Change: What are you finding the ones who sell gold outside Shanghai.
Speaker Change: Just real quick can you take out some of that at all.
Speaker Change: If you do the pocket in that kind of why do you say Oh, yes, I'll say one thing.
Speaker Change: Oh shale your question Jonathan.
Speaker Change: Hum.
Speaker Change: That one we're not you know nature that something Omega Tricia.
Speaker Change: Yeah.
Speaker Change: First of all thank you for taking my question and congratulate on the breakthroughs in the strong results achieved in 2024.
Got a question on the financials, but I would like to double check with the management. So in Q4, we have seen that management and R&D related expenses Roche can make quarter over quarter in Q4, So how do you how does management.
Speaker Change: And do you know.
Speaker Change: Trends for these expenses for 2025.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Fair enough, Okay, I'm going to assume as we've said that you were down to three.
Especially I P O.
Speaker Change: That's been a great time.
Speaker Change: So here it goes beyond solar flares up between us.
So you will.
Speaker Change: The year on year, that's you said.
Speaker Change: When I sold you Man Oh man I tell what's your that you saw you haven't Bobby always also appealed continue so she is not cheap.
Speaker Change: Money.
Speaker Change: Thank God and things I think that between US and these are you in theory woman sold that.
Speaker Change: Cynthia.
Jimmy: Thank you Jimmy and shell, so cheap Andrew George Schiele of Congress.
Speaker Change: Well, we achieved emptied out thank you.
Jimmy: And Peel apart only sends out you got that.
Jimmy: Yeah.
Scott: Hi, This is Scott I'll jump from question one quick comment.
Jimmy: Yeah.
Jimmy: Hmm.
You know that the companies are still expanding.
Jimmy: And that's why we are seeing substantial revenue and deliberate growth over the past year. We're also expanding our teams are leading to increased expenses. However, <unk> expenses as a percentage of revenue has decreased.
Jimmy: Decreased significantly and looking into this year, we expect it to sales and R&D expenses to grow definitely for sure with moderate growth in management expenses. So as revenue grows.
Jimmy: Well outpaced expense growth, we expect the ratio of SG&A to revenue to continue declining as you know that we are projecting a 97% of quota.
Jimmy: Whereas our operational growth related costs will grow at 40% year over year. Thank you.
Jimmy: Yeah.
Jimmy: Okay.
Speaker Change: Thank you. Your next question comes from Ling Li from <unk> Securities. Please go ahead.
Speaker Change: Hum.
Speaker Change: Yeah go ahead.
Speaker Change: Yeah.
Speaker Change: Got it.
Speaker Change: Thanks.
Speaker Change: Is that where would you say that the.
Speaker Change: Yeah no. Thank.
Speaker Change: So just to clarify.
Speaker Change: Is that the foundations to holiday would take them so how about San Juan.
Speaker Change: Right.
Speaker Change: Sure Brian Thompson attention. Thank you Michelle.
Speaker Change: Attending the same thinking.
Speaker Change: Thank you.
Speaker Change: Michelle go chips with acquisition.
Speaker Change: I don't know.
Speaker Change: Thank you two questions. One is on the EHR one thinks battery so what's the progress on the X generation lithium batteries and what are the expected upright timeline the anticipated flight endurance improvements how are that looking second question is on the product back up in between.
Speaker Change: 35, or what's the update on that what are we planning to something can be yet.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: People are going to ensure off without a hitch and Dan to do most of them are a little down.
Speaker Change: Yeah.
Speaker Change: So two questions.
Speaker Change: Oh, well, that's your onesie and are comfortable with.
Speaker Change: Neil Young kids, when I've been with <unk> for sure.
Speaker Change: Although the sada efficiency the tuned Amsterdam.
Speaker Change: Oh gosh.
Speaker Change: Women Sunday it holds the Syngenta shrunk.
Speaker Change: Drunk on pick up.
Speaker Change: Uh huh.
Speaker Change: So since you don't have too much impact.
Speaker Change: Sure.
Speaker Change: I know <unk> I'm glad that issue is as you know them don't issue Youll Hydro goes on the sumo <unk> syndrome, now my junk food and indeed, a chance again once you're down.
Speaker Change: Yes, yes.
Speaker Change: With regard to battery right now were pursuing two directions for the battery management first on the fast charging batteries of fast charging we are partnering with greener based technology and are currently testing samples.
Speaker Change: That could significantly reduce the charging time, so thats for one and secondly on the solid state batteries, our strategic investment in inks energy is progressing well, we are having very excellent cooperation and R&D breakthroughs. So we have doubled the H 216, a flattish.
Speaker Change: And it will continue fine tuning the performance and conducting more scenario validation. So we're aiming for mass production.
The installation by the end of this year. Thank you.
Speaker Change: Yeah.
Speaker Change: Yeah, I was actually a one honeywell visions to.
Speaker Change: So I don't know if the agency media zone without <unk>.
Speaker Change: <unk> sure well, then Jim Hoffmann, Joe I'm going to Miss you.
Speaker Change: Dan.
Speaker Change: So give me so what's the old joke wage I assume that that element.
Speaker Change: With regard to the long haul model.
Speaker Change: Fine right now the development prototype is currently in its final assembly.
Speaker Change: And can keep on eating stage, we plan to complete the full function flight testing soon.
Speaker Change: The airworthiness certification projects eight will be unveiled and show the public shortly.
Speaker Change: Thank you seeing no more questions in the queue, Let me turn the call back to Ms. Ann for closing remarks.
Speaker Change: Although that schedule showing you got.
Speaker Change: Gotcha.
Speaker Change: Turns out well.
Speaker Change: Well that would be one.
Speaker Change: I am told audience.
Speaker Change: Ah Yes your attendance.
Speaker Change: The one on ones that goes into our California.
Speaker Change: Oh no.
Speaker Change: Yes, John she that wasn't talking attacks and go away from tissue biopsies.
Speaker Change: The downhill Oh gosh, you got other ones will be <unk> that wasn't shyam Sundar, how about you halfway.
Speaker Change: Yeah.
Speaker Change: Thank you operator, and thank you for all for participating on today's call. If you have further questions. Please contact our IR team by email or participate in the following investor events through the culinary information provided on our IR website. We appreciate your interest and look forward to our next earnings call. Thank you.
Speaker Change: Thank you all again this concludes the call you may now disconnect.
Speaker Change: Yes.
Speaker Change: [music].
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Speaker Change: [music].
Speaker Change: Yeah.