Q1 2025 EHang Holdings Ltd Earnings Call
Operator: Good day. Hello everyone, thank you all for joining us on today's conference call to discuss the company's financial results for the first quarter of 2025. The earnings release is available on the company's IR website. Please note a conference call is being recorded, and the audio replay will be posted on the company's IR website.
Good day.
Hello, everyone and thank you all for joining us on today's conference call to discuss the company's financial results for the first quarter of 2020 five.
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.
Operator: On the call today, we have Mr. Huazhi Hu, our Founder, Chairman, and Chief Executive Officer, Mr. Zhao Wang, Chief Operating Officer, and Mr. Connor Yang, Chief Financial Officer. Before we continue, please note that today's discussion will contain forward-looking statements made pursuant to the safe harbor provisions of the U.S. Private Security Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding this and other risks and uncertainties is included in the company's public filings with ICC. The company does not assume any obligation to update any forward-looking statements except as required under applicable law.
Mr. Arndt: On the call today, we have Mr. Arndt, you, who our founder Chairman and Chief Executive Officer.
Speaker Change: Mr Chao, Wang Chief operating Officer, and Mr. Conor Yang Chief Financial Officer.
Speaker Change: Before we continue please note that today's discussion will contain forward looking statements made pursuant to the safe Harbor provisions of the U S. Private Security Litigation Reform Act of 90 95.
Speaker Change: Forward looking statements involve inherent risks and uncertainties as such the company's actual results may be materially different from the expectations expressed today.
Further information regarding this and other risks and uncertainties is included in the company's public filings with SEC.
Speaker Change: The company does not assume any obligation to update any forward looking statements, except as required under applicable law.
Operator: Also, please note that all numbers presented are in RMB and are for the first quarter of 2025, unless stated otherwise.
Speaker Change: Also please note that own members present data are in RMB and all for the first quarter of 2025, and I stated otherwise.
Operator: With that, let me now turn it over to our CEO, Mr. Huazhi Hu. Please go ahead, Mr. Hu.
Hu: With that let me now turn it over to our CEO. Mr. <unk> Hu. Please go ahead Mr. Hu.
Huazhi Hu: Hello everyone, and thank you for joining our earnest conference call today. We started the 2025 with another major regulatory breakthrough. In the end of March, Ehang General Aviation, our wholly owned subsidiary, and Heyi Aviation, an operator of our client in Hefei, were granted the first batch of air operator certificates for human carrying, pilotless aerial vehicles by the Civil Aviation Administration of China. This approval officially takes us from product certification into the era of commercial flight operations. It marks the beginning of a commercial e-veto services in China's low altitude economy, allowing the general public to experience e-veto flights for the first time.
Hu: Hello, everyone and thank you for joining our earnings conference call. Today, We started the 2025 with another major regulatory breakthrough in the end of March He hung general aviation or a wholly owned subsidiary and Hawaii Aviation and operator of our client and he will say were granted the first batch of air operators to the gates.
Hu: For human carry pilotless vehicles by the Civil Aviation administration of China.
Speaker Change: This approval officially takes us from product certification into the Arab commercial flight operations and marks the beginning of our commercial <unk> services in China's slow attitude economy, allowing the general public to experience a veto slides for the first time the issuance of the Oc signifies that E on has achieved food lifestyle.
Huazhi Hu: The issuance of the OECD signifies that Ehang has achieved full lifecycle capabilities of e-veto, from design and R&D to manufacturing, airworthiness, certification, and now operational readiness. This completes a fully integrated commercial loop. At the same time, we are gradually contributing to the development of industry innovation standards in areas like infrastructure, personal training, and operational safety.
Speaker Change: Co capabilities of the veto from design and R&D to manufacturing Air Worthiness certification and now operational readiness. This completes a fully integrated commercial loop at the same time, we are gradually contributing to the development of industry innovation standards in areas like infrastructure personnel training and operational safety.
Huazhi Hu: Step-by-step, we're advancing toward our long-term strategic goal, evolving from manufacture of autonomous aerial vehicle into a comprehensive urban air mobility platform operator, delivering a one-stop solution to our clients that covering aircraft hardware, software, operational services, and standards. The first OC represents the most critical milestone for enabling commercial operations. With this issuance, Ehang has officially entered the commercialization phase, a stage that brings both opportunity and great responsibility. Aviation has always progressed with caution and discipline, and as a pioneer in this emerging field, Ehang remains deeply committed to the principle of safety first. We're taking a deliberate and phased approach.
Speaker Change: Step by step and we're advancing toward our long term strategic goal evolving from manufacturer of autonomous aerial vehicle into a comprehensive urban air mobility platform operator.
Speaker Change: During a one stop solution to our clients that covering aircraft hardware software operational services and standards to systems.
Speaker Change: In the first O C represents the most critical milestone for enabling commercial operations with this issuance that Johan has officially entered the commercialization phase I stage that it brings both opportunity and great responsibility aviation has always progress with caution and discipline.
Speaker Change: And as the pioneer in this emerging field. He hung remains deeply committed to the principle of safety first.
Speaker Change: We're taking a deliberate and phased approach on one hand, we continue to accumulate flight test the data and provide strong support to our operator partners such as safe operation guidance and maintenance on the other hand, we're adopting a phased strategy first isolation and then integration first tourism land transportation.
Huazhi Hu: On one hand, we continue to accumulate flight test data and provide strong support to our operator partners, such as safe operation, guidance, and maintenance. On the other hand, we're adopting a phased strategy, first isolation and then integration, first tourism, then transportation, and first pilot projects, then expansion. We're not rushing to scale or chasing short-term gains. Instead, our early efforts are focused on pilot cities where our clients are to accumulate operational experience and build reputable models to gradually lift OC operational restrictions. For example, we started with clearly defined low-risk scenarios, such as sightseeing flights, before expanding into more complex urban air mobility services like urban air commuting.
Speaker Change: And the first pilot projects, then expansion, we're not rushing to scale or chasing short term gains instead. Our early efforts are focused on pilot cities, where our clients are took accumulate operational experience and be direct local models to gradually lift Oc operational restrictions.
Speaker Change: Example, we started with a clearly defined low risk scenarios, such as sightseeing clients before expanding into more complex urban air mobility services like urban Eric meeting this will pave the way for the gradual realization and scaling of commercial operations for autonomous human carrying aircrafts. We believe this is the right path forward for our cost.
Huazhi Hu: This will pave the way for the gradual realization and scaling of commercial operations for autonomous human-carrying aircraft. We believe this is the right path forward for our customers, for our partners, and for the healthy development of the entire urban air mobility industry.
Speaker Change: For our partners and for the health of development of the entire urban air mobility industry, turning to the product development. Our next generation long range pilotless human carrying your veto. The V. P. 35 has completed the final assembly of its first unit based on the T 30 prototype.
Huazhi Hu: Turning to the product development, our next generation long-range pilotless human-carrying Evito, the VT35, has completed the final assembly of its first unit based on the VT30 prototype. The VT35 features significant upgrades, including the industry's most stable and safe autonomous flight control and propulsion systems. With our proprietary autonomous platform and command and control system technologies, the VT35 delivery disruptive innovations in both the design and reliability. We believe it will become an outstanding model among medium and long range VTOL products. It is now undergoing full-scale flight testing. The CAAC has officially accepted our type certification application for the VT35 and the aircraft is ready being used for airworthiness validation.
Speaker Change: The V. T 35 features significant upgrades, including the industry's most stable and safe autonomous fly control and propulsion systems with our proprietary autonomous platform and in command and control system technologies.
Speaker Change: <unk> hundred 35 deliveries.
Speaker Change: Disruptive innovations in both the design and reliability, we believe it will become an outstanding model them all medium and long range video products is now undergoing foods skilled flight testing D. C. A a C has officially accepted our type certification application for the V. T 35, and the aircraft is rare.
Speaker Change: <unk> been used to for air Worthiness validation testing.
Huazhi Hu: Leveraging our EH216-S certification experience, we expect it helps accelerate the VT35 certification process.
Speaker Change: Leveraging our E. H 216 stash as certification experience, we expect it helps accelerate to D. V. T 35 certification process, we plan to unveil the V. T 35 in the third quarter of this year in the international market. We believe the V. T 35 backed by chance.
Huazhi Hu: We plan to unveil the VT35 in the third quarter of this year. In the international market, we believe the VT35, backed by China's industrial strength and advanced manufacturing, will offer a clear cost-incompetitive advantage over other long-range veto products globally.
Speaker Change: At industrial strength and advanced manufacturing will offer a clear cost and competitive advantage over other long range fetal products globally.
Huazhi Hu: On the innovation front, R&D has always been at the driving force behind Ehang. We currently hold over 700 issued and pending patent assets worldwide. Nearly half of our team is dedicated to R&D, and many of our top engineers and technical leads, like me, come from Tsinghua University. Their strong academic foundation in aerospace, automation, and intelligent manufacturing, along with a nearly 10-year experience at Ehang, have positioned us as a global leader in autonomous flight systems and technologies.
Speaker Change: On the innovation front R&D has always been at the driving force behind <unk>. We currently hold over 700 issued and pending patent assets worldwide nearly half of our team is dedicated to R&D and many of our top engineers and technical leaves like me come from seeing high University, they're strong academic foundation in Aero.
Speaker Change: Space automation and intelligent manufacturing along with the nearly 10 years six years any harm.
Speaker Change: <unk> positioned us as a global leader in autonomous flight systems and technologies in February this year, the aerospace and intelligent manufacturing Committee of the Chino Alumni Association was officially launched at <unk> headquarters in Guangzhou, We're honored to serve as the chair member and myself as the chairman.
Huazhi Hu: In February this year, the Aerospace and Intelligent Manufacturing Committee of the Tsinghua Alumni Association was officially launched at Ehang's headquarters in Guangzhou. We are honored to serve as the chair member and myself as the chairman. Through this committee, we aim to build an innovative ecosystem for the low-altitude economy in the Greater Bay Area, combining Ehang's leadership in autonomous aviation with Tsinghua University's deep strengths in research and talents. Our shared goal is to drive continuous R&D and achieve breakthroughs in next-generation pilotless aerial vehicle technology.
Speaker Change: Through this committee, we aimed debuted in innovative ecosystem for the low altitude economy in the greater Bay area, combining ehealth leadership in <unk> aviation with the Qinghai University steep strengths is in research and talent. Our shared goal is to drive continuous R&D and achieve breakthroughs in next generation Pollalis a wheel.
Speaker Change: Vehicle technologies in March we also signed an Mou with the University of sterile GOSE in Spain, and Guangzhou University to establish a joined the latitude of flight safety lab when their support we are deepening our cooperation with the European Union Aviation Safety agency and advancing join in R&D and <unk>.
Huazhi Hu: In March, we also signed an MOU with the University of Zaragoza in Spain and Guangzhou University to establish a joint low-altitude flight safety lab. With their support, we are deepening our cooperation with the European Union Aviation Safety Agency and advancing joint R&D and talent development in Europe.
Speaker Change: <unk> development in Europe, with continuous innovation and differentiated a core competitiveness, we will remain a global leader in the pilotless, you Vito industry and continue to shape the future of urban air mobility without I'll hand, it over to our Chief operating officer, Mr. Wong to walk through our operational highlight thank you.
Huazhi Hu: With continuous innovation and differentiated core competitiveness, we will remain a global leader in the pilotless EV industry and continue to shape the future of urban air mobility.
Operator: With that, I'll hand it over to our Chief Operating Officer, Mr. Wang, to walk through our operational highlights. Thank you.
Zhao Wang: Thank you, Mr. Hu.
Mr. Wong: Thank you Mr. Hu in the first quarter, we delivered 11 units of our E. H 216, as and generated revenues of 26 point of 1 million RMB. The low delivery volume was primarily due to three factors first the seasonal slowdown the winter months and the Chinese new year holiday typically make Q1.
Zhao Wang: In the first quarter, we delivered 11 units of our EH216S and generated revenues of 26.1 million RMB. The low delivery volume was primarily due to three factors. First, seasonal slowdown. The winter months and the Chinese New Year holiday typically make Q1 an off-season for product deliveries. Second, after the holiday, many clients, especially those involving government procurement, require time for their internal budgeting and approval process. Third, as the issuance of an O.C. was approaching, some customers chose to place their orders after the O.C. was granted, meaning those orders were not reflected in Q1 returns.
Speaker Change: On an off season for product deliveries second after the holiday many clients, especially those involving government procurement required time for their internal budgeting and approval process third as the issuance of an Oc was approaching some customers who chose to place their orders. After the Oc was granted meaning those orders were not refer.
Mr. Wong: In Q1 results and at the same time in Q1 2025, we kicked off the expansion and upgrade of our Haynesville production base to signs of our main factory has now doubled and once fully operational it will support an annual production capacity of up to us.
Zhao Wang: At the same time, in Q1 2025, we kicked off the expansion and upgrade of our Yunfu production base. The size of our main factory has now doubled, and once fully operational, it will support an annual production capacity of up to 1,000 units. In parallel, we're also building additional assembly facilities in Hefei, Anhui Province, and Weihai, Shandong Province. These multiple sites will ensure we have ample production capacity to fulfill orders in the future, while also providing supply of spare parts and consumables for the aircraft in operation.
Mr. Wong: Housing units in parallel we're also getting additional assembly facilities in Hefei, Anhui Province, and Weihai, Shandong Province. These multiple science will ensure we have ample production capacity to fulfill orders in the future. While also providing supply of spare parts and consumables for the aircraft in operations on March.
Zhao Wang: On March 28th, two operators of the EH216S and relevant services were officially granted their OCs. This marks a significant milestone for both Ehang and the industry, as it formally allows autonomous human-carrying aircraft to begin commercial operations in China. It also demonstrates strong recognition and validation of our EH216S for both the CAAC and the market. With the commercial operations now underway, we expect the flight activities to ramp up significantly since the second quarter. The decline in Q1 performance was only temporary. Underlying demand remains robust with procurement and deliveries were simply deferred to later quarters. We're pleased to see that following the issuance of the OECD's consumer inquiries and order volumes have picked up significantly.
Mr. Wong: 28th two operators of the H 216, as and relevant services were officially granted they're always sees this marks a significant milestone for both <unk> and the industry as it formally allows autonomous human caring aircraft to begin commercial operations in China. It also demonstrates.
Mr. Wong: Strong recognition and a validation of our E. H 216 as from both the C. A C in the market with the commercial operations now underway, we expect to flight activities to ramp up significantly since the second quarter. The declining Q1 performance was only temporary.
Mr. Wong: Underlying demand remains robust with procurement and deliveries were simply deferred to later quarters. We're pleased to see that following the issuance of the ocs consumer inquiries and order volumes have picked up significantly we could expect a strong rebound in the second quarter several major order towards disgusting Q1.
Zhao Wang: We could expect a strong rebound in the second quarter. Several major orders were discussed in Q1 with customers from provinces such as Jilin, Jiangxi, Guizhou, Hainan, Anhui and Guangdong in China are now moving forward and will begin to convert into delivery starting in the second quarter in phase two.
Mr. Wong: One with the customers from provinces, such as the Gillian Chung sheet, Guizhou, Hainan underway and Guangdong in China are now moving forward and it will begin to convert into delivery starting in the second quarter in face to batches on the operations side. Following D. C. A S east principle of safety first E on and our operator part.
Zhao Wang: On the operations side, following the CAAC's principle of safety first, Ehang and our operator partners are implementing enhanced standards to ensure safe and compliant flight operations. The two certified operators, Heyi Aviation and Ehang General Aviation, are taking a phased three-step rollout, starting with load-only trial operations, followed by human-carrying trial operations, and automatically transitioning into routine human-carrying commercial services. This approach ensures a safe, stable, and seamless progression toward full-scale commercial operations. Currently, both operators have entered the human-carrying trial phase at designated e-vehicle cities in Guangzhou's Suigang Pier and Hefei's Luogang Park. These flights are being offered initially to internal staff and a selected group of invited passengers via ticketing platforms. Once sufficient experience and safety data have been accumulated, the operators will begin offering flight tickets sales to the public.
Mr. Wong: <unk> are implementing in Hong standards to ensure a safe and compliant a flight operations. The two certified operators E. F E elation and E. On General Aviation are taken a phased three step rural lapped starting with load only trial operations, followed by human carrying trial operations and ultimately transitioning into root.
Mr. Wong: In human carrying commercial services. This approach ensures that saves us stable and seamless progression toward food scale commercial operations. Currently both operators have entered a human carrying a trial phase as designated Evandro cities in our Guangjo's sake on pier and her face logon.
Mr. Wong: Mark These flights are being offered initially to internal staff and a selected group and they invited passengers five ticketing platforms. Once it's sufficient experience and 60 data had been accumulated the operators, who will begin offering flight tickets sales to the public at the same time, we're actively laying.
Zhao Wang: At the same time, we're actively laying groundwork for scaled commercial operations by enhancing our customer service infrastructure. This includes providing standardized and scalable flight route planning, modular and customized vertiport designs, and a systematic training program for operational and maintenance personnel. These efforts are aimed at helping more customers prepare for their OC applications. In Q1, we supported a customer in Shanghai in establishing an evito operation center at Longhua Airport on the Xuhui Riverside and successfully completed the first EH216S flight in the city. This also marked the start of routine sightseeing flights along the Huangpu River in Shanghai.
Mr. Wong: Round work for scaled commercial operations by enhancing our customer service infrastructure.
Mr. Wong: This includes providing standardized and scalable flight route planning module and customized version 14 port designs and the systematic training program for operational and maintenance personnel. These efforts are aimed at helping more customers prepare for their Oc.
Mr. Wong: Applications in Q1, we supported our customer in Shanghai in establishing and a veto operations center at Longhorn Airport on the shoe Horn River site and successfully completed the first E. H 216 as flat in the city. There's also mark to the startup routines Nicene flights.
Mr. Wong: On the <unk> River in Shanghai in one chunk, Zhejiang province, the world's largest the U E M Center for a veto, especially in sales and operations, whereas established Meanwhile, in Shenzhen slow who district, our client has launched a U a M demonstration and experience center. This facility features the worlds.
Zhao Wang: In Wencheng, Zhejiang Province, the world's largest UAM Center for Evito Expression Sales and Operations was established. Meanwhile, in Shenzhen's Lohu District, our client has launched a UAM Demonstration and Experience Center. This facility features the world's first fully-automated, multi-level smart evito vertiports, setting a new benchmark for urban low-altitude infrastructure.
Mr. Wong: First a fully autonomous <unk> multi level smart a veto vote supports setting a new benchmark for urban low altitude infrastructure. Additionally, in collaboration with the China Communications information and Technology group, we are building a multi level urban transportation hub in Malnati's Xinjiang.
Zhao Wang: Additionally, in collaboration with the China Communications Information and Technology Group, we are building a multi-level urban transportation hub in Nalati, Xinjiang. These are examples of how the low-altitude economy will diversify its operational models and shape a more vibrant, future-oriented way of life.
Mr. Wong: These are examples of how the low altitude a time, they will diversifies operational models and shape and more vibrant future oriented way of lifestyle on the industrial collaboration front in February we entered into a strategic partnership with J C Motors and caution holdings.
Zhao Wang: On the industrial collaboration front, in February, we entered into a strategic partnership with JAC Motors and Guoxian Holdings to jointly develop a next-generation evito manufacturing base in Hefei. More recently, we expanded our partnership with CCIT to include CCCC-FHDI Engineering Company, forming a trilateral collaboration on three key areas. First, we're focusing on delivering specialized low-attitude tourism routes, smart inner-city transportation corridors, and emergency response networks. This includes creating unique transport systems such as themed low-altitude tourism experiences and aerial canal logistics pathways. Second, we are jointly building a multi-dimensional infrastructure network covering airspace management, flight route planning, and deployment of digital base stations.
Mr. Wong: To jointly develop a next generation is Vito manufacturing base in Hefei more recently, we expanded our partnership with the C. C. I T to include C. C. C. C Dash S. H D I engineering company, forming a trilateral collaboration on three key areas first we're focusing on.
Mr. Wong: Delivering specialized low attitude of tourism routes smart inner city transportation corridor and emergency response networks. This includes creating unique transport system, such as themed low attitude tourism experiences and a O L Canal logistics pathways second we are jointly beating a mold.
Mr. Wong: Tying to National infrastructure network harboring Aerospace management flight route planning and deployment of digital base stations third we're jointly expanding into international markets across Southeast Asia Africa, and South Asia to develop integrated land air and water transportation solutions. Our goal is to build a glue.
Zhao Wang: Third, we're jointly expanding into international markets across Southeast Asia, Africa, and South Asia to develop integrated land, air, and water transportation solutions. Our goal is to build a globally connected low-altitude economy ecosystem, promote the adoption of Chinese standards worldwide, and bring safe, intelligent air mobility to more regions across the world. At the same time, we're establishing low-altitude aircraft testing sites across multiple regions to evaluate performance under extreme conditions such as high altitude, high temperature, high salinity, low temperature, and severe weather. continuous testing and refinement will help enhance the resilience and safety of our aircraft.
Mr. Wong: Billy connected low attitude economy ecosystem promote the adoption of Chinese standards worldwide and bring safe intelligent air mobility to more regions across the world at the same time, we're establishing a low attitude aircraft testing sites across multiple regions to evaluate performance under extreme conditions.
Mr. Wong: Such as high altitude high temperature high salinity low temperature and the severe weather conditions continuous testing and refinement and will help enhance the resilience and safety for our aircraft and Guangzhou, we are working closely with the governmental authorities and construction partners to transform the arris.
Zhao Wang: In Guangzhou, we are working closely with the government authorities and construction partners to transform the area surrounding our new headquarters into an aerospace industry hub, promoting industrial clustering, accelerating the deployment of standardized infrastructure, and promoting the growth of low altitude economy. Currently, the construction is already underway.
Mr. Wong: <unk>, our new headquarters into an aerospace industry hub promoting industrial clustering accelerating the deployment of a standardized infrastructure and promoting the growth of low attitude economy. Currently the construction is already underway and.
Zhao Wang: In addition, we're also actively expanding our businesses into other applications, such as logistics and emergency rescue. Our logistics autonomous aerial vehicle have already completed multi round trip flights between Guangzhou and Zhuhai, covering distances of up to 200 kilometers. With the upcoming launch of our VT35 series, we expect it to further enhance our long range, high efficiency logistics capabilities.
Mr. Wong: In addition, we're also actively expanding our businesses into other applications, such as logistics and emergency rescue or logistics autonomous aerial vehicle have already completed multi round trip flights between Guangzhou into high covering distances of up to 200 kilometers.
Mr. Wong: With the upcoming launch of our V. T 35 serious we expected to further enhance our long range high efficiency logistics capabilities emergency rescue is another major focus area for the growing use of Uavs offers new solutions for high rise firefighting forest fire fighting search and rescue and Medica.
Zhao Wang: Emergency rescue is another major focus. The growing use of UAVs offers new solutions for high-rise firefighting, forest firefighting, search and rescue, and medical transportation. Ehang has developed new generation of specialized UAVs tailored for these uses. These aircraft have already been used in multiple emergency drills and have drawn strong interest from China's Ministry of Emergency Management and National Firefighting Authorities. These products have already received initial purchase interest. As these products near finalization, we expect them to begin generating sales later this year and contributing to our revenues.
Mr. Wong: Transport.
Speaker Change: E. Haun has developed a new generation of specialized of Uavs tailored for these use cases. These aircraft have already been used multiple emergency drills and have drawn trone interest from China's Ministry of emergency management and National fire fighting authorities. These products have already.
Speaker Change: Eddie received initial purchase interest as these products near Finalization, we expected them to begin generating sales later this year and contributing to our revenues. This year. In addition to advancing low attitude of products Ihan is exploring our collaborations with regenerate aviation sector. We've launched a pilot of initial.
Zhao Wang: In addition to advancing low-altitude products, Ehang is exploring our collaborations with the general aviation sector. We've launched pilot initiatives through different approaches for integrated trial operations of low-altitude aircraft in general aviation airports in Guangxi, Hezhou, Beijing, Pinggu, and Fangshan, Hainan, Wanning. We're also planning additional projects in Nianhui, Hefei, Guangdong, Guangzhou, and Hainan, Linggao. Now, as our operations in airports and the network expands in the future, we expect to unlock greater deployment potential for our full range of aircraft. As China's low-attitude economy continues to gain momentum, Ehang, as a recognized industry leader, is attracting increasing interest from cities and enterprises nationwide.
Speaker Change: Lives through different approaches for integrated trial operations, low attitude and crafting general aviation airports Hain Wuxi, Hangzhou, Beijing, Pingo and function Hainan widening. We're also planning additional projects in non Huawei, Hefei, Guangzhou, Guangzhou, and Hainan Lane Gal as our <unk>.
Speaker Change: Operations in airports and the network expands in the future, we expect to unlock greater deployment of potential for our full range of aircraft as China's low attitude economy continues to gain momentum ihan as a recognized industry leader is attracting increasing interest from cities and enterprise.
Speaker Change: This is nationwide our products operational philosophy, and unwavering commitment to safety are gaining broader recognition and acceptance across the market in the first quarter. Ihan was featured in over 19000 domestic media reports, including coverage from the CCTV Spring Festival.
Zhao Wang: Our products, operational philosophy, and unwavering commitment to safety are gaining broader recognition and acceptance across the market. In the first quarter, Ehang was featured in over 19,000 domestic media reports, including coverage from the CCTV Spring Festival Gala, national television networks, newspapers, and major online platforms, reaching an estimated 80 billion views. Internationally, we were mentioned in more than 3,600 times across media outlets in the UK, France, Spain, the US, Japan, and other countries, generating a global reach of over 1.69 billion views. Ehang's products have been featured at a wide range of low-altitude economy exhibitions and forums, both in China and internationally.
Speaker Change: Carla National.
Speaker Change: Television networks newspapers, and a major online platforms, reaching an estimated 80 billion views internationally will remain shut in more than.
Speaker Change: 3600 times across media outlets in the U K, France, Spain, the U S, Japan and other countries generating a global reach of over one point to 69 billion views Ehealth products have been featured at a wide range of furlough attitude economy expirations and forums, both in China and internationally.
Zhao Wang: Our brand has earned strong recognition at home and abroad. Internationally, our global flight footprint continues to expand in the first quarter. Our EH216s successfully completed demo flights in Benidorm, Spain and in Mexico. In Thailand, our local partners have started working with the National Air Traffic Control Authority to conduct preliminary route and flight assessments in Phuket.
Speaker Change: Our brand has earned strong recreation at home and abroad internationally Arrow Global flight footprint continues extend in the first quarter R. E. H one six as successfully completed the demo flights in Fannie dorm, Spain and in Mexico in Thailand are local.
Speaker Change: Owners have started working with the national Air traffic and full authority to conduct preliminary route inside assessments in Phuket and operational team is already in place aiming to launch commercial trial flights within Thailand's designated regulatory sandbox in the near future looking ahead.
Zhao Wang: An operational team is already in place, aiming to launch commercial trial flights within Thailand's designated regulatory sandbox in the near future.
Zhao Wang: Looking ahead to the rest of 2025, we will continue advancing both operations and product sales with a clear focus on building diversified revenue streams. We are confident in our growth momentum over the next few quarters and remain fully committed to achieving our full-year revenue target of $900 million.
Speaker Change: To the rest of 2025, we will continue advancing both operations and product sales with a clear focus on building diversifying our revenue streams. We are confident in our growth momentum over the next few quarters and remain fully committed to achieving our full year revenue target of 900 million RMB now al.
Connor Yang: Now I'll turn it over to our CFO, Connor, to walk us through the financial results. Hello everyone, this is Connor. Before I go into the details, please know that all numbers presented are in RMB, unless otherwise stated.
Speaker Change: Turn it over to our CFO Conor to walk us through the financial results. Thank you.
Speaker Change: Hello, everyone. This is Connor before I go into the details. Please note that all numbers presented are in RMB unless otherwise stated a detailed analysis is available in our earnings press release on the IR site total revenues were 26.
Connor Yang: A detailed analysis is available in our earnings press release on the IRC. Total revenues were 26.1 million RMB in Q1 2025, a decrease compared with the Q1 last year and Q4 2024. This change is primarily driven by a decreased sales volume of EH216 series products. As our COO mentioned earlier, although there was a short-term decline in performance in the first quarter, this doesn't affect the company's long-term growth trend. In fact, we have observed a significant improvement and growth in potential orders and deliveries in Q2, which keeps us confident in the company's future performance. Gross profit was 16.3 million RMB in Q1 and gross margin improved to 62.4% compared with 61.9% in the same period of 2024 and 60.7% in Q4 2024.
Speaker Change: Point 1 million RMB in Q1, 'twenty 'twenty five a decrease compared with the Q1 last year and Q4 'twenty 'twenty. Four this change is primarily driven by decreased sales volume of E. H, one six serious product as our CLO mentioned earlier, although there was a short term decline in performance in the fourth.
Speaker Change: Quarter. This doesn't effect of the company's long term growth trend and in fact, we have observed a significant improvement in growth and potential orders and deliveries in Q2, which keeps us confident in the company's future performance gross profit was $16 3 million RMB in Q1 and gross margin improved.
Speaker Change: To 262, 4% compared with 61.9% in the same period of 'twenty 'twenty, four and 60.7% in Q4 'twenty 'twenty four the increasing gross profit was mainly benefited from the higher average selling price of E. H 216 series Prada.
Connor Yang: The increase in gross profit was mainly benefited from the higher average selling price of EH216 series product indicating that our products have strong market competitiveness and pricing power.
Speaker Change: Indicating that our products have strong marketing competitiveness and pricing power turning to expenses total operating expenses in Q1 were hundred and 10 million RMB a quarter on quarter decrease of 31, 6%, mainly due to a significant reduction in employee.
Connor Yang: Turning to expenses, total operating expenses in Q1 were 110 million RMB. A quarter-on-quarter decrease of 31.6%, mainly due to a significant reduction in employee compensation and share-based compensation expenses. Adjusted operating expenses, which exclude share-based compensation expenses, were 63.6 million RMB in Q1, up 16.8% a year over a year and down 19.3% from the previous quarter. The year-on-year growth is due to the company's continuous expansion of key positions and recruitment of talents to support sustained business growth, leading to an increase in overall employee compensation expenses. Meanwhile, we continue to invest in R&D to maintain our technological leadership.
Speaker Change: E compensation and share based compensation expenses, adjusted operating expenses, which exclude share based compensation expenses were.
Speaker Change: 63.6 million RMB in Q1 up 16.8% a year over year and down 19, 3% from the previous quarter. The year on year growth is due to the company's continuous expansion of key positions and the recruitment of talent to support sustained business growth leading.
Speaker Change: Two an increase in overall employee compensation expenses. Meanwhile, we continue to invest in R&D to maintain our technological leadership the quarter on quarter decrease reflects our achievements in cost control and efficiency optimization.
Connor Yang: The quarter-on-quarter decrease reflects our achievements in cost control and efficiency optimization. Adjusted net loss was 31.1 million RMB in Q1, primarily driven by a decline in deliveries in the quarter. While this represents a decline compared with an adjusted net income of 36.4 million RMB in the last quarter, we believe the impact is only temporary. As deliveries recover and continue to grow in the coming quarters, we expect financial performance to gradually improve accordingly. The company still has sufficient capital reserves.
Speaker Change: Adjusted net loss was 31.1 million RMB in Q1, primarily driven by a decline in deliveries in the quarter. While this represents declined compared with an adjusted net income of 36.4 million RMB in last quarter. We believe the impact is only temporary.
Speaker Change: As it delivers recover and continued to grow in the coming quarters, we expect our financial performance to gradually improve accordingly, the company still has sufficient capital reserves as of March 31, 'twenty twenty-five cash restricted deposits and short term investments totaled one point 11 billion.
Connor Yang: As of March 31, 2025, cash, restricted deposits, and short-term investments totaled 1.11 billion RMB, giving us solid flexibility to support upcoming R&D investment, production scale-up, and commercial With the achievement of the important OEC milestone in Q1 and the eVITO commercial operations to be gradually launched going forward, we're confident in our business growth throughout the year. As such, we're maintaining our annual revenue guidance of 900 million RMB for the full year 2025. We believe that the market increasingly recognizes Ehang's commercialization capabilities and the low-altitude economy industry continues to gain momentum. We're able to continuously create value for our shareholders over the long term.
Speaker Change: M B, giving us solid flexibility to support our upcoming R&D investment and production scale up and commercial deployments.
Speaker Change: With the achievement of the important Oc milestone in Q1, and the veto commercial operations to be gradually launch to going forward, we're confident in our business growth throughout the year as such we're maintaining our annual revenue guidance of 900 million RMB for the full year 2025, we believe that.
Speaker Change: At the market increasingly recognized enhance commercialization capabilities and the low altitude economy industry continues to gain momentum we are able to continuously create value for our shareholders over the long term.
Connor Yang: Thank you. year revenue guidance of a 900 million RMB unchanged.
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Speaker Change: Full year revenue guidance of 900 million RMB unchanged.
Operator: I was wondering could you please give us an outlook on which in which quarter we could probably see a significant growth in both the sales and as well as the deliveries. So just to give us an outlook on that. So that's the first question.
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Speaker Change: So just to give us an outlook on that so that's the first question.
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Zhao Wang: Hello everyone, I am Wang Zhao. I will answer the first question. The decline of the performance in the first quarter is mainly due to political factors, but also due to seasonal factors, such as winter and Chinese Spring Festival holidays.
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Zhao Wang: 年初一般易记录通常是产品交货的淡季 二十春节后进入新财年 客户制定年度预算需要时间 也接受不到 The internal flow cycle is relatively long. Thirdly, with the advancement of OCH, some customers' purchase orders were placed after OCH, so they did not experience the sales performance of the first quarter. 当我们获得AZ之后, When we get AZ, Q1 performance declined due to several factors. First, seasonal impacts from winter and Chinese New Year holidays, which typically create slow delivery periods in the first quarter. Second, as we enter the new physical year, customers require time to finalize their annual budgets, especially for government procurement, which involves longer approval cycles. Third, anticipating OC certification, some customers delayed their orders until after certification was granted, which pushed these sales beyond Q1.
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Speaker Change: Q1 performance declined due to several factors first the seasonal impacts from winter and Chinese new year holidays, which typically create slow deliberative areas in the first quarter second as we enter the new fiscal year customers will require time to finalize their annual budgets, especially for.
Speaker Change: Our government achievement, which involves longer approval cycles third anticipating Oc certification some customers delay their orders and two after stipulation was granted which pushed it leaves the cells beyond Q1.
Zhao Wang: Now that we have obtained the OTC, we can see that the 2nd quarter turnover and sales situation have improved. In the 1st quarter, customers from Jilin, Jiangxi, Guizhou, Hainan, Anhui, Guangdong, etc. will also start to split up from the 2nd quarter and sign contracts and transfer. We maintain a revenue of RMB90 million a year. However, after obtaining OC certification, our internal data shows improvements in both Q2 delivery volumes and sales. Large orders from customers in Jilin, Jiangxi, Guizhou, Hainan, Anhui, and Guangdong that were negotiated in Q1 will begin converting into contracts and deliveries in batches starting from Q2.
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Speaker Change: However, after obtaining <unk> certification, our internal data shows improvements in both Q2 delivery volumes and sells large orders from customers, saying Gee Lane junkie Guizhou by not on play and Guangzhou that were negotiated in Q1.
Speaker Change: Well begin converting into contracts and deliveries in batches starting from Q2. Therefore, we maintain our full year revenue guidance of 900 million RMB unchanged. Thank you.
Zhao Wang: Therefore, we maintain our full-year revenue guidance of 900 million RMB unchanged.
Speaker Change: Yeah.
Operator: Thank you for your answer, Mr. Guan. My second question is, first of all, congratulations.
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Operator: We can see that there are already two operators, including your company, have obtained the operating license. I would also like to know how long does it take to obtain the operating license on average? In addition to the two we mentioned in the announcement, will there be other Ehang 216 operators who can also obtain the relevant license this year? And will you further promote our overall shipment to the national operating scale?
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Operator: I would also like to ask Mr. Guan. Thank you. And thank you for your answer and a follow-up question. I've noticed that in the reporting period, two EH216S operators, including one of your wholly-owned subsidy, have obtained the EROC from the CAC, enabling commercial operations. I was wondering, on average, how long will it take for EH216 owners to get the certificate? And how many more operators may get the approval of commercial operations this year? Hopefully, that will translate into more deliveries and scaled operation fleet in the second half of the year. So that's my second question.
Speaker Change: And thank you for.
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Speaker Change: <unk> E <unk> as operators and quoting one of yours holding subsidy on subsidy, having obtained the air Oc from D. C AAC.
Speaker Change: Enabling commercial operations I was wondering on average how long will it take for a D. H 216 owners to get their certificate.
Speaker Change: The certificate and how many more operators may get the approval of commercial operations. This year, hopefully that will translate into more deliveries and scaled operation fleet in the second half of the year. So that's my second question. Thank you.
Operator: Thank you.
Zhao Wang: I'm Wang Zhao. I'll answer the second question. Ehang Holdings and Hefei Hei are the first companies in China to obtain a driver's license to operate unmanned aeronautical aircraft. The issuance of the license also means that the rules and standards related to the application of the license must be followed.
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Zhao Wang: So this experience will help face OVERDRIVE 目前呢,今年我们很多客户的运营公司都已经在申报 This is Wang Jiao. I'll also take your second question. Ehang General Aviation and Hefei Heyi are the first two operators nationwide to receive operating certificates for the unmanned civilian aircraft. The OCE issuance actually clarifies the regulatory standard and framework, which should reduce application timeline for future operators. At the moment, many of our customers operating companies are currently in the application process.
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Speaker Change: General Aviation and Hefei, Hawaii are the first.
Speaker Change: Two operators nationwide to receive operating certificate for the.
Speaker Change: The unmanned civilian aircraft the oce issue and so actually clarify the regulatory standard and framework, which is sugar reduced application time, what timeline for future operators.
Speaker Change: The moment many of our customers operating companies are currently in the application process.
Speaker Change: Thank you.
Operator: Your next question comes from Loa Li with Deutsche Bank. Hey, thank you for taking my question, and congrats on the OC award.
Laura Lee: Your next question comes from Laura Lee with Deutsche Bank.
Laura Lee: Hi, Thank you for taking my question and congrats on the O C Award. So my question is about the competition. So we have seen some of your peers start showing orders recently most of them all with different designs like T O to O tired or whatnot.
Operator: So my question is about the competition. So we have seen some of your peers start to win orders recently. Most of them are with different designs, like Tilt-a-Rotor or like Lex and Cruz. But some of those have applied for TC like one or two years ago ahead of our VT35. So and they might be granted maybe next year or so.
Laura Lee: Like that cruise, but some of those have applied for T. C. Like one to three years ago ahead of our V. P 35, so and they might be granted maybe next year or so so how should we be how stay like compared to take going forward, especially beyond the current market called her design.
Operator: So how should Ehang stay like competitive going forward, especially beyond our current like multi-copter design?
Operator: Thank you, Guanli Chen, for accepting my question, and congratulations to your company for obtaining the immunity certificate. My question is about competition. We have noticed that some of your recent peers have also started to win some orders. I noticed that some of your peers have adopted different design solutions. Some of them have adopted the design of a centrifuge or a composite. However, I estimate that these designs may also obtain a corresponding license next year. Given this, how does Ehang maintain its competitiveness in the future, especially in the field of centrifuge design, where there are more and more candidates?
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Operator: How do you guarantee our competitiveness?
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Zhao Wang: I'm Wang Zhao. I'm here to answer this question.
Lindsay: So under one umbrella and Lindsay.
Zhao Wang: The air traffic in the city and the air traffic in the city are two different scenarios.
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Zhao Wang: The demand of the predecessors is the high-definition deployment of the combat air-to-air missile and the practical and economic stability of the air-to-air missile. and Changxuhang. These two companies do not have direct competition. Their real competitors are the traditional mainstream indoor and city transportation vehicles, such as cars and high-speed trains. Compared to most other EV products, our EH21-S is designed to be versatile. The whole aircraft has only 6m x 6m of combat space, which is even smaller and lighter. The requirements for the aircraft carrier and the combat area are relatively low, which makes it more convenient for large-scale operations in the air-to-air scenic area and the city.
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Zhao Wang: The precision choice of 10-millimetre-large expedition and the caption of the airplane is very difficult and costs a lot of time to customize multiple large airflares inside the city.
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Zhao Wang: Urban air mobility and intercity air transport serve different markets with very distinctive requirements. Urban operations need small footprints, high-density networks, quick turnarounds, and cost efficiency, while inter-city requires long range. These markets aren't directly competitive with each other. The real competition comes from traditional ground transportation. say, cars, urban travel, and high speed for intercity. Compared to other eVTOL designs, our EH216S multi-copter configuration has a compact 6m x 6m footprint, making it lightweight with minimal infrastructure requirements for take-off and landing. This enables larger-scale deployment in tourist areas and urban environments.
Speaker Change: Urban Air mobility, and intra city air transport serve different markets with very distinctive requirements.
Speaker Change: Urban operations need small.
Speaker Change: High density networks quick turnarounds and cost efficiency.
Speaker Change: While interest city requires long range. These markets are directly competitive with each other the rail competition comes from traditional ground transportation.
Speaker Change: Cars urban travel and high speed for intercity routes.
Speaker Change: Compared to other in vitro designed our E H 216.
Speaker Change: Small tie copter configuration.
Speaker Change: Contact six meter times, six meter footprint, making it lightweight with minimal infrastructure requirements or takeoff and landing sites.
Speaker Change: This enables larger scale deployment in tourist areas and urban environments, and contrast aircraft with 10 plus meter weighing Spanish like tilt rotors.
Zhao Wang: In contrast, aircraft with 10-plus-meter wing spans like tilt rotors and lift-and-cruise models would require expensive, large-scale airport infrastructure, which makes it impractical for dense urban deployment. Secondly, our operating economy is also better, EH216-S's domestic price is only 2.39 million RMB, which is more than 10 million RMB higher than the price of a large-scale aircraft on the same-degree flight. and we follow the technology of unmanned driving. In actual operation, we have also greatly reduced the cost of training and employment of pilots. And with the accumulation of operational data and experimental data, we will continue to carry out continuous flight work to further reduce the operating cost of the aircraft.
Speaker Change: And lift in Crows model winter require expensive large scale airport infrastructure.
Speaker Change: Which makes it impractical for dense urban deployment.
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Zhao Wang: This can also further enhance our operational competitiveness. Our economics are also superior. The EH216S sells for only 2.39 million RMB domestically. which is significantly below our competitor's large aircraft priced above 10 million RMB. Our autonomous flight approach eliminates pilot training and employment costs. As we gather and accumulate more operational data, our continued airworthiness programs enable significant cost reduction. strengthening our competitive position.
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Speaker Change: Our economists are also superior.
Speaker Change: The H 216, as self or only two point 90 up 39 million RMB domestically.
Speaker Change: Which is significantly below our competitors large aircraft priced above 10 million RMB or autonomous flight approach eliminates pilot training and employment costs.
Speaker Change: As we gather and accumulate more operational data.
Speaker Change: Continued air worthiness programs enable significant cost reduction.
Speaker Change: Strengthening our competitive position.
Zhao Wang: We will make full use of our own development advantages and continue to upgrade the technology and product line. On the one hand, in the upgrade of EH216S, we are working on a more efficient battery solution as well as a solution for fast charging batteries and solid-state batteries. On the other hand, in the development of long-life products, our VT35 has entered the process of T-series audit.
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Zhao Wang: In the future, when it enters the market, it will have a better price and market competitiveness Thank you.
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Zhao Wang: Last but not least, we are leveraging our first-mover advantage through continuous technology and product development. For EH216S upgrades, we are developing more efficient motors, fast-charging batteries, and solid-state battery solutions. For long-range products, our VT35 is progressing through PC certification.
Speaker Change: It was the last fund all lease we're leveraging our first mover advantage through continuous technology and product development for H 216, as upgrades, we are developing more efficient motors fast charging batteries.
Speaker Change: Solid state battery solutions for long range products are a V. T 35 is progressing through P. C certification.
Zhao Wang: When it is launched, it will offer superior pricing and competitiveness compared to other long-range Evita products. Okay, thank you for the color. That's very helpful.
Speaker Change: When it is launched at all after a superior pricing and competitiveness compared it to other long range you'd beta products. Thank you.
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Speaker Change: Okay, so you're going to use going forward.
Operator: 感谢管理层的回复 Thank you for your response. 谢谢 Thank you.
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Speaker Change: Yeah.
Operator: Your next question comes from Shen Wei with UBS.
Speaker Change: Your next question comes from Sean Lee with UBS.
Speaker Change: Okay.
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Operator: 各位领导好,我想再问一下就是关于二季度的订单, 刚刚就是领导也说了二季度订单会有一个很明显的改善, 那我想问一下像上半年如果放在一起看, 我们是不是能够实现一个快速的增长, 这是第一个问题, 然后也还有一个第二个问题是想问一下就是, 公司过去一般都会说一下这个订单的后备订单那个指引, 所以想问一下比如说到五月份五月底现在的这个后备订单的一个情况怎么样, 最后也想问一下就是因为我们看到合肥其实这个基础设施已经差不多好了, 那我们现在还在等待什么才能开始正式的一个运营, 谢谢。 Thank you, management, for taking my question. Got three questions. First one is on your delivery. When are we expecting to see sales growth? Are we able to achieve growth in the first half of the year?
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Speaker Change: Thank you management for taking my question I've got three questions first one is on your delivery when are we expecting to see sales growth are we able to achieve growth in the first half of the year.
Operator: Second question is with regard to the order guidance. Can you please share some color on the order guidance as of May? And last question is on when are we able to see the operator commence commercial operation? Because infrastructure-wise, it's almost ready. So these are the three questions.
Speaker Change: Second question is with regard to the order guidance Ken.
Speaker Change: Can you please share some color on the order guidance.
Speaker Change: May and last question is on when are we able to see the.
Speaker Change: Operator commenced commercial operation because infrastructure wise, it's almost ready. So these are the three questions.
Connor Yang: Hello, I'm Conor. I'd like to answer the question about the order. As we mentioned before, the current decline in the first quarter is a short-term impact. In the second quarter, we also observed a lot of customers and the increase in the number of orders. So we are very confident that the second quarter can maintain a very strong growth in the second quarter. At present, the annual value of 9 billion yuan is still unchanged. As mentioned earlier, many of these orders are currently being processed by large companies. Once we have confirmed that the order has been signed, we will, as usual, start to close the circle.
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Connor Yang: Thank you. This is Connor.
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Connor Yang: I'll take your question on new order guidance. As I've explained, Q1, the sales was impacted, however, due to the seasonal factors as well as the OC certification progress. However, we believe it is temporary and we have already seen our orders and the number of clients have picked up in Q2, which the sales is quite strong.
Speaker Change: New order guidance.
Speaker Change: As I have explained she wants the salads and was impacted however, due to the seasonal factors as well as the Oxy certification progress. However, we believe it is temporary and we have already seen our orders and that the number of decline.
Speaker Change: Has picked up in Q2, which.
Speaker Change: So this is quite strong and therefore, we maintain our full year revenue guidance of 900 million RMB unchanged.
Connor Yang: Therefore, we maintain our full-year revenue guidance of 900 million RMB unchanged. Additionally, many large orders are progressing at the same time. So as we near or finalize those contracts with our clients, we will disclose them as we previously did. So that's on your first question, on your new order guidance.
Speaker Change: Additionally, many large orders are progressing at the same time. So as we are near all finalized those contracts with our clients and we will disclose them as we previously Duke So that's on your first question on your new order guidance.
Speaker Change: Okay.
Zhao Wang: I'm Wang Zhuo, I'm here to answer questions about the operation of Hefei After the acquisition of O valley, the business operation of O valley has started Under the premise of ensuring the safety of the operation, we adopt a sustainable and open approach. In the first phase, we will open up to customers by inviting them to our store. At the moment, customers can make a reservation through our shopping platform.
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Zhao Wang: And the second one is open to public voting. Thank you.
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Zhao Wang: So, this is Wang Zhao. I'll take your second question. So, actually, the operator in Hefei has already started the operation. However, we're taking a phased approach. At the first approach, currently for phase one, it's only limited to internal employees and invited passengers. And employees can already book flight experiences through our ticketing platform. And in phase two, we will open ticket sales to the general public. This is it.
Speaker Change: No.
Speaker Change: This is Joe I'll take your second question, so actually the operator in Hefei has already started.
Speaker Change: Operation. However, we're taking a phased approach that the first approach currently face one it's only limited to internal employees and invited our passengers and employees kind of an already booked flight experiences through our ticketing platform and in phase two we will open.
Speaker Change: Ticket sales to the general public.
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Operator: Your next question comes from Wade Wu with Jeffreys. Thank you for watching. You guys are wonderful. I'm a short presser.
Speaker Change: Your next question comes from Wildblue with Jefferies.
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Operator: Hello, can you hear me? Yes, I can hear you.
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Operator: Hello everyone, I'm Jingying. I have three questions. The first question is, I would like to ask, what is the schedule of the fee plan for Guangzhou and Hefei? The fee plan is for the public.
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Operator: The second question is, I would like to know the status of the OECD application I remember that the company told me that there are about five companies that are expected to get the OECD this year. Is this number updated?
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Operator: This is the first question, thank you. Sorry, I was on mute.
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Operator: A couple of questions. First one is on the timeline for inaugural flight ceremonies. When are we expecting the formal commercial operation to be Guangzhou and Hefei?
Speaker Change: Questions first one is on the timeline for an all girl.
Speaker Change: Ceremonies when are we expecting the formal commercial operation at should be Guangzhou.
Operator: My second question is on the end customers who's applying OC. Rumor says that around five operators is going to obtain OC certificates by the end of the year. Are there any updates on that?
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Speaker Change: He says that around five operators is going to obtain a C.
Speaker Change: So it's case by the end of the year are there any updates on that.
Zhao Wang: I'm Wang Zhao, and I'm going to answer these two questions.
Speaker Change: So Andre went up without Hudson on Wednesday.
Zhao Wang: First, Guangzhou Hefei has obtained the OCA, and is currently in the early stage of adaptation work. Safety is the number one priority for the sustainable development of the low-income economy. It can be said that without security, there is no development in the industry.
Speaker Change: Guangdong.
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Zhao Wang: As previously stated, we will adopt a segmented operating model. At present, these two operators are operating in Iveto, located at Suigang Pier in Guangzhou and Hefei Luoguan Park. They have already entered the stage of on-demand test operation.
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Zhao Wang: First of all, we will invite our internal employees and external fixed-line customers through the purchase platform. After gaining enough safety operation experience, the operator will directly open the ticket to the outside world. It can be said that the operation has already started, and there is no need to hold the bidding ceremony.
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Zhao Wang: I'll take your questions. Guangzhou and Hefei operators are conducting trial operations following the OC certification.
Speaker Change: This is how long ago I'll take your questions.
Speaker Change: Guangzhou and say all traders are conducting trial operations following the O C certification.
Zhao Wang: But what I want to say is that safety remains paramount for a sustainable, low-altitude economy development. Like I said earlier, we're implementing our phased operational approach. Both operators at Guangzhou Suigang Terminal and Hefei Luogang Park have entered manned trial operations, initially serving internal employees and invited passengers through our booking platform. Once we accumulate sufficient operational experience, operators will open public sales.
Speaker Change: But I wanted to say is that safety remains paramount for a sustainable low altitude economy decline development.
Speaker Change: Like I said earlier, we're implementing are faced operational approach both operators at the Guangzhou.
Speaker Change: So you got a terminal and Ofa Logon Park have entered manned trial operations initially serving internal employees and invited passengers through our platform. Once we accumulate situational operational experience operator, So we'll open public sales.
Zhao Wang: since operations are already underway, so inaugural ceremony is on.
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Zhao Wang: 关于其他客户的OC进展,我们所有具备一定飞行器体量的客户都在积极筹备运营合格证的提报。举例来说,文诚客户在我们的指导下建立了一个专业团队,那运营合格证的相关证件已经提报,并由华东局设立。 And with regard to the progress on OC applications from other clients, our customers with substantial fleets are right now actively preparing OC applications. For instance, our Wencheng customer has assembled a professional team with our guidance and submitted to their application, which the East China Regional Administration has accepted for review.
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Speaker Change: And with regard to the progress on IC applications from others, our clients our customers went to substantial with substantial fleets are why now actively preparing our UC applications for instance, R. One chunk customer has assembled a professional team with.
Speaker Change: Our guidance and submit it to their application, which the east China Regional administration has accepted for review.
Operator: Thank you.
Speaker Change: Yeah.
Speaker Change: Yeah.
Operator: Your next question comes from Fiona Liang with Bank of America. Good evening, leaders. I have two questions to ask you. The first is about the order and delivery issues we just mentioned. You just said that the order situation in the second quarter has improved a lot compared to the first quarter.
Speaker Change: Your next question comes from Dr. <unk> Yang with Bank of America.
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Operator: In terms of our production cycle and delivery, do we see a sharp increase in revenue or delivery in the second half of the year?
Speaker Change: So what's your cell phone down below eco LPG that show in Shanghai, Guangdong Dongguan comes from Suntrust Robinson.
Speaker Change: Yes.
Connor Yang: The second question is about the interest rate. We can see that the interest rate has improved a lot compared to the first quarter. In the financial report, it is also said that it is due to an increase in our price. Can you tell us more about this increase in interest rate?
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Operator: Hello! Hi, can I ask a question, please? Thank you.
Neal: Hey, Neal.
Speaker Change: Hi, I'm looking on next question. Please thank you.
Operator: Your next question comes from Yiming Wang with China Renaissance. Hello, Manager Chen. Thank you for accepting my question. I'd like to follow up on the question about commercialization. I'd like to ask if the company has estimated the flow rate of a single day's operation, including the income generated, after the operators started to collect votes from the public. Thank you. Thank you for taking my question.
Speaker Change: Your next question comes from Jim I'm, Wang with China Renaissance.
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Speaker Change: Thank you everybody. Thanks for taking my question.
Operator: With the current commercialization progress and the operational status after receiving the OECD, I was wondering whether the company has conducted any preliminary assessment or survey. What is the daily revenue and also the passenger flow slash traffic is like? and how much revenue does that translate into on a daily basis.
Speaker Change: With the current set of commercialization progress.
Speaker Change: And the operational status after receiving the oce I was wondering whether this.
Speaker Change: The company has conducted any preliminary assessment.
Speaker Change: Our survey what is the daily revenue and also the passenger flow.
Speaker Change: Traffic is like and.
Speaker Change: And how much revenue does that trend translating to on a daily basis.
Speaker Change: Okay.
Zhao Wang: I'm Wang Zhao, I'm here to answer this question. On the one hand, two companies with operating licenses have already started to test operations. First, maintain a certain daily flight schedule, and remember the operating experience and data. At the same time, internalize our reservation and purchase system. On the other hand, in the future, long-term flight will be very important. With the adoption of the OC certificate, in the second quarter, our number of operations will be greatly increased. This increase may be hundreds or even thousands of times per month. With the long-term operation of other customers and the adoption of the OC certificate, and even the approval of the certificate, the number of operations nationwide will be greatly increased in the second half of this year and the end of this year.
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Zhao Wang: Wang Jie, I'll take your question. The two certified operators have begun trial operations, maintaining regular daily flights to accumulate operational experience and data while testing our booking platform. And as more customers obtain OC in a second, starting from Q2, we are going to see a larger fleet and more operators will trial operations. We expect the number of trial operations to grow to even 1,000 flights. And we are expecting that number to grow even further as more customers obtain their OCs. into the rest of the year. Thank you.
Andre: Hello, Andre I'll take your question. The two certified all creators have began trial operations maintaining regular daily flights to accumulate operational experience and data while testing our booking platform and as are we.
Speaker Change: Sure.
Speaker Change: Customers obtain oh see in a second starting from Q2.
Speaker Change: Going to see a larger fleet and more operators won't began trial operations are we expected to be <unk> trial operations to grow to even thousands.
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Speaker Change: And though we are expecting that number to grow even further.
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Speaker Change: And to the rest of the year.
Speaker Change: Thank you.
Operator: Your next question comes from Ron Yangzhu with SciTech. Hello everyone, I have two questions. One is about our products, and the other is about our market expansion. The first question is about the non-profit products we mentioned earlier. What is the market price of them? This is my first question.
Speaker Change: Your next question comes from Ron Young Soo with Psi tax.
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Operator: The second question is about our overseas market expansion. What is the current market price in India? Is it convenient for me to make a disclosure?
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Operator: Thank you. Thank you, management, for taking my question.
Speaker Change: That was it.
Speaker Change: Yeah.
Speaker Change: Thank you management for taking my question two questions. One is on the list and trade product whats the progress just like all the products are working that specification second question is on the overseas market expansion, what's the progress with like is it okay for the management share some color on that.
Operator: I've got two questions. One is on the Lyft and Cruise product. What's the progress is like on the product airworthiness certification?
Zhao Wang: Second question is on the overseas market expansion. What's the progress is like? Is it OK for the management to share some color on that?
Speaker Change: Yeah.
Zhao Wang: I'm Wang Zhao, I'm going to answer these two questions. The first question is, what kind of product is it? At present, the VT35 has completed the assembly of the test aircraft.
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Zhao Wang: Based on the first generation VT30, we have upgraded the components of the product, such as the flight control system and the power system, to achieve a more perfect design and more reliable flight, and to reduce the volume. We will officially launch Ehang VT357 in the third quarter of this year.
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Zhao Wang: The third phase I has officially started. The VW 353 model is on the formal batch. Based on the success of Ehang's 216 test flight experience, we expect that WT35's test flight process will be expanded.
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Zhao Wang: This is Wang Zhou, VT35 assembly is complete. Building on the VT-30, we have upgraded key components, including configuration, flight control, and propulsion systems. achieving far superior design, more reliable flight performance, and reduced size. We will officially launch the Ehang VT35 series in Q3 this year. As for VT35, it is currently undergoing comprehensive flight testing.
Joe: This is Joe.
Speaker Change: V T 35 Assembly is complete.
Speaker Change: Building on the <unk> 30, we have upgraded key components, including configuration.
Speaker Change: Flight control.
Speaker Change: And propulsion systems.
Speaker Change: Sheathing.
Speaker Change: Far superior design more reliable flight performance and reduced sites, we will officially launch.
Speaker Change: On Beachy 35 series in Q3 this year.
Speaker Change: As for V. T 35, it is currently undergoing comprehensive.
Speaker Change: Flight testing.
Zhao Wang: And CAAC, China Aviation Administration of China, has formally accepted our type certificate application. Based on our successful EH216A certification experience, we expect an accelerated VT35 certification progress.
Speaker Change: And C AAC, China aviation at a maturation of China has formally accepted our type certificate application.
Speaker Change: Built on our successful E H two wide fixed adds certification experience we expect.
Speaker Change: Excellent rate V T 35 certification progress.
Zhao Wang: Secondly, about the overseas market, in the first quarter of this year, EH216S successfully completed flight delays and tests in Benidorm, Spain, and Mexico. Ehang Holdings has been deployed to 20 countries around the world.
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Zhao Wang: This year, we plan to launch a commercial operation in Thailand. Our partners in Thailand have already started cooperation with Thai airline companies. In Phuket, we will conduct a preliminary inspection of airlines and operating locations. The operating team has been established.
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Zhao Wang: We strive to launch operations in the Sahara wetland area of Thailand as soon as possible.
Zhao Wang: Thank you. With regard to your question on international market expansion progress, actually in Q1, we have conducted successful demos in Benidorm, Spain, and Mexico. Ehang has now operated in 20 countries globally.
Speaker Change: Yes.
Speaker Change: With regard to your question on international market expansion progress actually in Q1, we have.
Speaker Change: Conducted successful flight demos, and adding dorm, Spain and Mexico.
Speaker Change: Young has now upgraded in 20 countries globally.
Zhao Wang: With our progress in Southeast Asia, we plan to launch commercial operations in Thailand first. Our partner in Thailand is collaborating with National Air Traffic Company on route and site surveys in Phuket. The operational team is established and we are working to begin operations in Thailand's sandbox pilot zone.
Speaker Change: With our progress in South East Asia, We plan to launch commercial operations in pilot first our partner in Thailand.
Speaker Change: Collaborating with the National Air traffic company on route and site share base in Phuket.
Speaker Change: Operational team is established and we are working to begin operations in Thailand and sandbox pilot.
Speaker Change: Okay.
Speaker Change: Yeah.
Operator: Thank you. Your next question is Luciana Lang with Bank of America. Hello, can you hear me? Yes. Hello, leaders. I have two questions to ask you. First, I'd like to ask about the order and payment of the second quarter. As you mentioned, the order of the second quarter increased rapidly. According to our production pace, from the point of view of payment, is it true that our income or payment has improved a lot since the second half of the year? My second question is about the interest rate of the first quarter. As mentioned in the financial report, the increase in the interest rate of the first quarter is related to the increase in the average price.
Speaker Change: Thanks.
Speaker Change: Your next question is the piano Wang with Bank of America.
Speaker Change: Yeah.
Speaker Change: Late 19th AMA.
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Connor Yang: Could you please explain to us the distribution of products in the first quarter and the composition of our income? Thank you, management, for taking my question. You briefly talked about the... you're expecting a significant growth in sales in Q2, as well as the deliveries in Q2. So the way I understand it, as you deliver more, as you ship more to clients, which will translate into revenues, so I assume there's going to be significant revenue increase in the second half of the year. So is that so? And my second question is on the gross profit margin.
Speaker Change: Yeah.
Speaker Change: Thank you management for taking my question you briefly talked about you talked about to be.
Speaker Change: You're expecting a significant growth in sales in Q2 as well as the deliveries in Q2, so the way I understand it as you deliver more.
Speaker Change: As you ship more to clients, which will translate into revenues.
Speaker Change: So I assume there is going to be significant revenue increase in the second half of the year. So is that so and my second question is on the gross profit margin.
Connor Yang: The Q1 gross margin improvement was partly due to the ASP gains. So can management share the reasons or give us a breakdown on the delivery volumes by the models shipped? Thank you. This is Connor.
Speaker Change: The Q1 gross margin improvement was partly due to the ASB games. So can management share the reasons or give us a breakdown on the delivery volumes by the mottos of shipped thank you.
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Speaker Change: This is Carter I'll take your first question.
Connor Yang: I'll take your first question. You're absolutely right. Q2 is showing very strong sales growth, and we're expecting very strong year-over-year growth. And as we negotiate and engage more clients, and according to their actual needs, you know, we can tell that in the second half of the year, we're going to expect much stronger year-over-year revenue growth. Yes, the second question is related to the毛绿绿 flower. In the past two or three quarters, there were a lot of big orders, so there were some discounts in terms of price. In the first quarter of this year, our supply was mainly EH216-S, with 11 orders from some customers.
Speaker Change: You are absolutely right.
Speaker Change: Q2 is showing a very strong sales growth and we're expecting very strong year over year growth.
Speaker Change: And as we negotiate and engage more clients and according to their actual needs. What we can tell that in the second half of the year, we're going to expect much stronger year over year revenue growth.
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Connor Yang: So our price is based on the retail price, which is 2.39 million RMB per unit, without any discount. So the SP, which is the military price, is higher, which also leads to higher毛绿绿. In addition, in terms of the cost of purchasing, the current quantity has increased a lot compared to the first quarter of last year, so the cost of purchasing a lot of materials has also decreased. So in terms of these two factors, our毛绿绿 has improved. And on your second question, for the past two to three quarters, since there were a lot of large orders, which we have, which we give discounts to, however, in Q1, we delivered 11 H216s and these are retail customers.
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Speaker Change: And on your second question for the past two to three quarters. Since there were a lot of large orders, which we have which.
Speaker Change: Which we give.
Speaker Change: Discounts to however in Q1, we delivered 11 E H 216 <unk>.
Speaker Change: And these are retail customers. So we're selling them at two point 39 million RMB per unit without any discount pushing up the average selling price. Additionally, since we are having a bigger.
Connor Yang: So, we're selling them at 2.39 million RMB per unit without any discount, pushing up the average selling price. Additionally, since we are having a bigger volume of procurement, so that brings the total boom down on a year-over-year basis in Q1. So, these two factors contributed to the improved growth profit margin in Q1. Thank you. Your next question comes from Yu Shen with Guangfeng Securities. Can you hear me? Hello, can you hear me? Yes, I can. Thank you very much, leaders of Yi Hang Zhi Neng. I am Chen Yu, an education analyst at Guanghua Securities. Some of the questions I would like to ask, as mentioned by the previous analysts, are to confirm the details of two aspects.
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Speaker Change: For two minutes, so that brings the total bone down on a year over year basis. In Q1. So these two factors contributed to the improved gross profit margin in Q1.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Your next question comes from MS Shen with Guangzhou Securities.
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Operator: The first one is about our production capacity. What is the progress of production capacity at Yunfu Base and the production line of Hefei Industrial Park? Especially the production line of Hefei Industrial Park, what is the expected expansion capacity and when will it be completed? The second question is, there is still a trend of a decline in the company's QE adjustment. I would like to ask the leaders, is there still a 40% increase in the guidance on QE adjustment? Thank you, management, for taking my question. This is Chen Yu, Trader and Analyst from Guangfang Securities. Actually, my questions are pretty much echoed what other analysts have touched on.
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Speaker Change: Thank you management for taking my question, it's just churning.
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Speaker Change: From a goalpost securities are actually my questions are pretty much echo to what other analysts to have touched on that just wanted to clarify and double check on etsy of details first one is on the base capacity at two going through and also the Hefei Industrial Park can the management give you an update.
Zhao Wang: I just want to clarify and double-check on a few details. First one is on the base capacity at Yunfu and also the Hefei Industrial Park. Can the management give an update on what's the planned production capacity for our Hefei facility, as well as a timeline in terms of its progress? And my second question is on the SG&A expenses. In Q1, it declined on adjusted terms. I was wondering if the management or the company is maintaining the SG&A expense ratio at 40% growth guidance unchanged? Thank you. I am Wang Zhou.
Speaker Change: On what Cindy planned production capacity for our Hefei facility as well as the timeline in terms of its progress and my second question is on the G&A expenses in Q1 I showed you know it declined on a adjusted her term terms.
Speaker Change: Wondering if the management of where the company is.
Speaker Change: Maintaining the SG&A expense ratio at 40% growth guidance unchanged. Thank you.
Speaker Change: What's wrong with that.
Zhao Wang: My first question is about the factory. In the first quarter of this year, we launched the expansion and upgrade of Yunfu Production Base. We increased the area of the main factory to 48,000 square meters. 同时提升了工厂的自动化水平。 The plan is to increase annual output to 1,000 units by the end of this year. In Hefei, we also announced the strategic cooperation between Jianghuai Automobile and Guoxiankong. In Hefei, we established a modern air-conditioning production manufacturing base. According to the Hefei government's plan, it is expected to be completed in one and a half to two years. Before completion, we are building a cross-factory factory.
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Zhao Wang: The basic construction has been completed, and production equipment is being laid. By the way, the construction of factories in Beijing, Shandong and Weihai has also been completed. It is currently under construction. Wang Jiao. In Q1, the launched expansion and upgrade at our Yunfu facility, which has doubled the main factory gross floor area to 48,000 square meters, and with enhanced automation, we plan to increase the total annual production capacity to 1,000 units by the end of the year. And in Hefei, we have also announced a strategic partnership with JAC Motors and Guosheng Holdings to establish a modern, low-altitude aircraft manufacturing base.
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Speaker Change: In Q1.
Speaker Change: The launched expansion and upgrades at our facility.
Speaker Change: Which has doubled.
Speaker Change: Main factory gross floor area to 48000 square meters.
Speaker Change: And with enhanced automation, we plan to increase the total annual production capacity to a thousand units by the end of the year.
Speaker Change: And in Hefei, we have also announced a strategic partnership with J AC Motors that question and how it is to establish a modern.
Speaker Change: Only two aircraft manufacturing base according to the government Clinton.
Zhao Wang: According to the government plan, the completion is expected within one to two years from now. Currently, we are building a makeshift facility with completed infrastructure and ongoing equipment installation. Also, I want to mention that our factory site selection in Beijing and Weihai is complete, with construction now underway.
Speaker Change: Completion is expected within one to two years from now.
Speaker Change: We are building a transitional ore mix shift facility.
Speaker Change: With the completed infrastructure and ongoing equipment installation also I want to mention that.
Speaker Change: Our factory site selection in Beijing in a way high is complete.
Speaker Change: With construction now underway.
Connor Yang: Hello, I'm Conor. I'm here to answer the cost question. Cost and cost control is one of the key tasks of the company this year. Specific results are also reflected in the first quarter report. Before the company's first quarter adjustment, the three-way cost reduction has decreased. Looking forward to the next few quarters, the company will continue to control the three-way cost reduction and the increase in total related costs. This year, with a revenue of RMB900 million, the operating cost will remain around RMB400,000 per share. This is Conor. Cost and expense management is a key focus this year for the company.
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Speaker Change: Cost and expense management is a key focus this year for the company.
Operator: We have already seen the results reflected in Q1 financial results. It shows quarter-over-quarter decrease in the pre-adjusted expenses. We will continue to maintain stringent control on the S&P. SG&A expense growth in the coming quarters. While maintaining our full year revenue guidance of $900 million unchanged, we will keep our 40% operating expense growth guidance for the full year of 2025. Thank you. Our next question comes from Ling Liu with Gaosheng Security. Hello, Mr. Guan. Thank you very much for accepting my question. I'd like to know what you think about the statement made by the WTO at the latest press conference on the principle of first-carry, then-carry, first-isolation, then-integration, then-extension, then-duration, and the scenario of the WTO economic application.
Speaker Change: We have already seen the results reflected in Q1 financial results it shows quarter over quarter decrease in the pre adjusted expenses.
Speaker Change: We will continue.
Speaker Change: Stringent control on the SG&A SG&A expense growth in coming quarters.
Speaker Change: While maintaining our full year revenue guidance up from 900 million unchanged, we will keep our 40% operating expense growth guidance for the full year of 2025. Thank you.
Speaker Change: Our next question comes from <unk> with <unk> Securities.
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Zhao Wang: Can you help us analyze what we think about this statement? Thank you, management, for taking the question. I was wondering how the management and the company perceive the recent narrative or statement from the NDRC, because according to the NDRC recent statement about expanding low-altitude economy applications, it should follow cargo for passengers. isolation before integration, and suburbs before urban areas principle.
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Speaker Change: At the recent.
Speaker Change: Narrative or statement from the DRC.
Speaker Change: Because according to the N DRC recent statement about expanding low altitude economy applications.
Speaker Change: Should follow cargo for passengers.
Speaker Change: Isolation before integration and suburbs before urban areas principal so just wondering what's management's view on that statement.
Zhao Wang: So just wondering what's management's view on that state of Mr. Wang, let me answer this question. Ehang Holdings has maintained the principle of safety first since its establishment. At present, two operating companies that have acquired OC will also adopt a three-step plan, which is to operate from a carrier-type operation to a carrier-type operation, and then to a carrier-type normalization operation, to ensure a safe, stable, smooth transition to a normalized business operation model. At present, these two operators have entered the carrier-type operation stage at the Iveto operation site in Luogang Park, Suigang Pier, Guangzhou and Hefei Luogang.
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Zhao Wang: Ehang has always prioritized safety since its inception. For our two OC-certified operators, they will follow a three-phase approach. Cargo trial operations, passenger trial operations, and then routine passenger operations, ensuring safe, stable transition to commercial operations. Both operators at Guangzhou Suigan Terminal and Hefei Zhugan Park have entered passenger trial operation. Currently, the underground economy industry is developing very fast, and many new companies are emerging. Combined with the path of Ehang, it is very important to ensure the safe operation of the aircraft. The guidance of the Development and Development Commission is to express the safety requirements of the entire industry.
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Speaker Change: Ensuring safe stable transition to commercial operations.
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Zhao Wang: It must be after thorough research and verification that it can enter the development and production of manned aircraft. In this regard, Ehang has undergone 10 years of research and development tests. At the same time, the Development and Development Commission has been paying close attention to Ehang's manned operations. We often communicate through meetings. Thank you. The low-altitude economy is developing rapidly with many new entrants. Well, from Ehang's experience, ensuring aircraft safety is always paramount. So the NDRC's guidance emphasizes industry-wide safety requirements. Thorough research and validation must go ahead before passenger aircraft development and production. In this regard, Ehang has invested over 10 years in this development.
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Zhao Wang: And additionally, the low altitude. Office of the Low Altitude Office of NDRC, as continuously tracks Ehang's passenger operations through regular communication meetings. Thank you.
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Speaker Change: Thank you no more questions in the queue, let me turn back to MS. Wang for closing remarks.
Operator: Seeing no more questions in the queue, let me turn back to Ms. Sam for closing remarks. Thank you to all the hosts and investors for participating in today's meeting. If you have any further questions, please contact our IR team by email. We have also released the information of the subsequent investor meetings on our website. We welcome everyone to communicate with the management team in the following meetings. We also look forward to communicating with you again at the next financial performance conference. Thank you very much. Thank you, operator, and thank you all for participating on today's call.
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Speaker Change: Thank you operator, and thank you all for participating on today's call. If you have further questions. Please contact our IR team by email or participating in the following investor events through the calendar information provided on our IR site. We appreciate your interest and look forward to our <unk>.
Operator: If you have further questions, please contact our IR team by email or participate in the following investor events through the calendar information provided on our IR website. We appreciate your interest and look forward to our next earnings call. Thank you.
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