Q2 2025 Niu Technologies Earnings Call

Speaker #2: Good day, ladies and gentlemen. Thank you for standing by and welcome to the NIU Technologies second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode.

Speaker #2: Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time.

Speaker #2: Now, I will turn the call over to Ms. Kristal Li, Investor Relations Manager of NIU Technologies. Ms. Li, please go ahead.

Speaker #3: Thank you, operator. Hello, everyone. Welcome to today's conference call to discuss NIU Technologies' results for the second quarter 2025. The earnings press release, corporate presentation, and financial spreadsheets have been posted on our Investor Relations website.

Speaker #3: This call is being live-cast from companies' IR sites as well, and a replay of the call will be available soon. Please note, today's discussion will contain forward-looking statements made under the Safe Harbor provision of the U.S. Private Securities Litigation Reform Act of 1995.

Speaker #3: Forward-looking statements involve risks and uncertainties, assumptions, and other factors. The companies' actual results may be materially different from those expressed today. Further information regarding the risk factors is included in the companies' public filings with the Securities and Exchange Commission.

Speaker #3: The company does not assume any obligation to update any forward-looking statements except as required by law. Our earnings press release and this call include a discussion of certain non-GAAP financial measures.

Speaker #3: The press release contained a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results. On the call with me today are our CEO, Dr. Yan Li, and CFO, Ms. Fion Zhou.

Speaker #3: Now, let me turn the call over to CEO Yan Li.

Speaker #4: Thank you, Kristal. Hello, everyone. Thank you for joining us today. The second quarter of 2025 marks another strong performance for us, building on the solid momentum from Q1.

Speaker #4: This quarter, our total sales volume reached 350,000 units, representing a 37% year-over-year increase. In the China market, the sales volume surged by 54% to 380,000 units, continuing the growth trend in Q1.

Speaker #4: The overseas market recorded 31,000 units and a 35% year-over-year decline, mainly due to the impact of US tariffs coupled with intensifying competition in the European market for micro-mobility segments.

Speaker #4: While in the overseas market, our electric two-wheelers continued to grow 4x. However, we have seen positive signs regarding the structural improvements in our overseas operations, which I will elaborate on in subsequent sections.

Speaker #4: Our revenue and gross margin also demonstrated a strong improvement this quarter, with revenue reaching RMB 1.26 billion, a year-over-year growth of 34%. The gross margin is still at 20.1%, up 3.1% year-over-year and 2.8% quarter-over-quarter compared to Q1.

Speaker #4: As previously mentioned, this positive outcome is primarily driven by the product portfolio optimization and the cost reduction achieved through product platformization of our product in the components.

Speaker #4: We also achieved a net profit of RMB 5.9 billion, where we are still navigating the challenges on the profitability front. Our disciplined execution and focused strategy continue to position us well for both revenue and profit growth.

Speaker #4: The performance of this quarter reaffirmed our growth strategy, from product development and technology innovation to expanded sales channels and brand management. Our teams have delivered strong results across all those fronts.

Speaker #4: I will now provide more details, starting with our progress in the China market. In the China market, Q2 sales, as I mentioned, reached about 380,000 units, representing a 54% year-over-year growth.

Speaker #4: Although this volume growth rate is 12% lower compared with the Q1 results of a year-over-year growth rate of 66%, the actual revenue growth from scooters year-over-year for China is 45%, 6% higher than the Q1 results.

Speaker #4: As mentioned in the last call, we observed the ASB decline in Q1 as we introduced two entry-level models of MT and MMT in the market, which were responsible for the ASB drop and partially responsible for the high volume growth in Q1.

Speaker #4: In Q2, as we continue to optimize our product portfolio, the ASB increased by 11% compared with Q1, and the Q2 ASB is back close to the 2024 annual level.

Speaker #4: Now, in 2024, our development effort in product was centered around the electric bicycle product withdrawal of NXT, NT, MT, and has driven strong growth since then.

Speaker #4: In the first half of this year, we really focused on electric motorcycle product development to strengthen our position in the sector. As we mentioned in the previous quarter, we launched the NX Pro electric motorcycle, priced at R&B $9,999, positioned as a speed champion among the sub-$10,000 R&B electric motorcycles.

Speaker #4: In Q2, in May, we expanded our high-end electric motorcycle lineup by introducing three core models: NXL, NL, and FX Pro, covering a price range from RMB 4,000 to over RMB 10,000.

Speaker #4: All those models are equipped with advanced intelligent features aligning with our new performance and safety standards, such as a full-color TFT display with screen mirror navigation, the OK Go technology, boosting a top speed between 55 to 80 kilometers per hour, undergoing a comprehensive upgrade in handling and performance, and delivering a premium intelligent experience.

Speaker #4: Those models account for 12% of our total sales volume in Q2. Now, building on that momentum, we introduced the NX in July, an entry-level smart e-motorcycle priced at R&B 3,599.

Speaker #4: To 4,499. The NX is built for young urban riders, featuring a compact, nimble body, a 100-kilometer extended range, and intelligent features such as the dual-way throttle and downhill assist.

Speaker #4: Those functionalities typically reserved for premium models are now accessible in the sub-R&B $4,000 e-motorcycle segment, giving NX a strong potential to capture this rapid market share.

Speaker #4: Now, with those add-ons, we have a complete lineup of motorcycle products in the N series, ranging from $3,599 entry-level products to a sub-$10,000 high-speed motorcycle product.

Speaker #4: We also launched, with the launch of FX Pro, a good lineup of F-series products with MotoCom in the second half of this year.

Speaker #4: The current electric motorcycle sales only represent less than 20% of our total volume, with much more growth potential. Now, talking about the new national standard for the electric bicycle product, which will take effect on September 1st, this new regulation will have a set of new requirements for the electric bicycle product, such as a percentage of plastic being used, the total weight, and the form factors.

Speaker #4: We are developing new product lines and modifying the existing product lines to comply with the new requirements. Those products that fit with the new requirements will be rolled out in September and Q4 this year.

Speaker #4: The new requirements require the manufacturer to stop shipping all standard products by August 31st; however, it allows distributors and retailers to continue to sell all standard products until November 30th.

Speaker #4: Hence, with the prepared new products, as well as the extra buffer time for the retailer to sell the all-standard products, we expect a rather smooth transition from all-standard to the new standard in Q4.

Speaker #4: Now, we continue to invest in technology innovation, mainly focusing on smart technology and powertrain systems. On the smart technology side, we continue to focus on the seamless driving experience, smart controlling assistance, and AI smart ecosystem features.

Speaker #4: As safety continues to be an important topic for two-wheel mobility, in Q1, we primarily focused on enhancing driving safety, gradually rolling out features such as the driver dynamic safety warning system, directly in collaboration with Škoda Maps. Additionally, more products are standardized to meet our new safety standards, equipped with screen mirror navigations, millimeter wave radar, and dual-channel ABS.

Speaker #4: With the industry-first introduction of dual-channel ABS adoption in electric bicycles in 2024 on our NXT model in Q2 last year, after one year of continuous development integration, we have incorporated dual-channel ABS in many of our electric bicycle models. As of now, about one-third of electric bicycle models sold are equipped with ABS, covering the range from entry-level to mid- and high-end electric bicycle series.

Speaker #4: Now, in Q2, we focused our shift to the implementation of AI smart control assistance, with the launch of features such as the dual-way throttle and downhill assist.

Speaker #4: Leveraging the sensors and gyroscope installed across the scooter, we monitor its real-time status, such as the low-speed driving mode, as well as the steering direction and angle data.

Speaker #4: With our proprietary algorithms, we use this data to develop smart control systems that provide driver assistance functionalities such as assisted pushing, reverse backing, and parking functions.

Speaker #4: Making the consumer's control experience more effortless and convenient. In the powertrain system, we continue to collaborate with industry-leading battery suppliers to really develop a forward-looking R&D initiative and technology adaptations of new battery technologies.

Speaker #4: Those innovations will be released in subsequent quarters. In Q2, our branded strategy is centered around aligning the product launch with high-impact marketing milestone events to demonstrate our technology innovations.

Speaker #4: We showcase our technology prowess on the tracks. On May 23rd, we had professional research set a China record lap time of 2 minutes and 58 seconds with our NX model on the Shanghai F1 circuit.

Speaker #4: In the product launch dynamics, our May 13th all-star e-motorcycle launch event with NXL, NL, and FX debut emerged as a sales sensation, taking an R&B 100 million GMV within just five hours and moving over 10,000 units across all online platforms.

Speaker #4: This momentum continued into the 6/18 shopping campaign, where we surpassed our previous record with R&B $1.06 billion GMV, a 128% year-over-year surge. Fueled by a massive live streaming session, the campaign generated about 1.56 billion impressions, further solidifying our premium brand positioning in 37 key urban markets.

Speaker #4: And on July 17th, we saw another successful launch with our NXT Ultra and FXT Ultra models, drawing about 49 million views and 3.6 million live stream viewers.

Speaker #4: Within five hours, those models achieved a staggering 20,000 units sold and R&B $220 million in GMV, securing top rankings across all major e-commerce platforms.

Speaker #4: To celebrate our remarkable 10th anniversary, we also sponsored a Play Festival on June 1st with 30,000 participants, among which many are new users. The total views of such an event reached 220 million.

Speaker #4: Now, in terms of content and placement, our Q2 media campaign cast a wide yet targeted net, spanning 41 cities and including over 500,000 outdoor placements across six major urban areas.

Speaker #4: Online, we engaged on platforms like Douyin, Weibo, Xiaohongshu, and Bilibili, partnering with over 10,000 creators across 12 verticals and generating $4 billion in exposures.

Speaker #4: By the quarter end, the total campaign spreadsheet exceeded $4.5 billion, underscoring the effectiveness of our integrated brand approach. Now, speaking of channel expansion, we have continued our pre-strategy with a strong focus on penetrating the previously underrepresented market in China.

Speaker #4: We're strategically expanding our retail footprint to ensure that our products reach a broader consumer base. In Q2, we expanded our retail footprint by a net of 185 new stores, with significant focus on tier three and tier four cities, which account for 50% of net additions.

Speaker #4: Year to date, we have a net ad total of 569 stores. This strategic expansion not only refines our distribution network but also lays a solid foundation for the upcoming product launch in the second half of the year.

Speaker #4: Now, with those efforts, in the first half, the percentage of sales from tier three plus cities grew by 4 percentage points in terms of contributions, demonstrating our successful effort in penetrating the lower-tier cities.

Speaker #4: Additionally, our online presence has been significantly strengthened, with sales performance improving across multiple online channels. We currently manage 11 official branded accounts, 48 localized accounts, and close to 800 store accounts. These multi-tier strategies have hosted about 20,000 live broadcasts, generating around 620 million views—an 8X increase compared with last year.

Speaker #4: This robust news online visibility and customer interactions contributed about 250,000 units in sales, representing 77% of our total sales volume. Now, turning to our overseas business, we recorded a total sales volume of 30,000 units in Q1 and 31,000 units in Q2, representing a 35% year-over-year decline.

Speaker #4: However, the scooter revenue declined by only 20% as the electric two-wheeler product started to contribute more to the sales, with a higher ASP. The sales in micro-mobility declined by 41% due to the impact, as mentioned, of traffic tariff-driven adjustments in the US market and the pressure from intensive price competition in the key European market.

Speaker #4: Now, let's first talk about electric moped segments. Our strategic transition to a direct distribution model in key markets began to yield tangible results.

Speaker #4: In Q2, we delivered over 3,200 electric two-wheeler units in overseas markets, marking a more than 4X increase compared to the same period last year.

Speaker #4: And close to 45% of those sales are engineered from our direct distribution channels, marking a significant shift from last year and confirming the growth traction of our direct sales approach.

Speaker #4: Our core market, including Germany and Italy, has now secured a top position in market share. This is a direct outcome of the robust and efficient direct distribution system we have built in the past years.

Speaker #4: Our retail network for the direct distributed regions has also expanded. In Q2, we increased the number of direct distributed stores from 181 to 244, adding 63 locations.

Speaker #4: This figure is three times the number of stores we had during the same period last year and aligns closely with our target of building a 250-store network.

Speaker #4: In the micro-mobility segment, we experienced a decline of 41% year-over-year. However, we observed a 50% increase quarter-over-quarter. The year-over-year downturn is primarily attributed to challenging market conditions in Europe and the United States, while we see an emerging bright spot in the Asian market.

Speaker #4: Our U.S. sales declined by 17% in Q2, particularly due to a strategic channel management in the market trend shift. In Q2, the retail and sell-through prices were not adjusted to reflect the recent tariff changes.

Speaker #4: To avoid channel staffing, we proactively reduced the selling volume. Notably, the activation number, basically the sell number to the consumer, still grew by 10% year-over-year, indicating healthy end-user demand.

Speaker #4: We also observed that customer preferences in the U.S. are trending towards low- to mid-priced scooters, leading to a decline in sales of our premium scooter models.

Speaker #4: To address this, we have provided our entry-level K90 model, which is scheduled to be launched in Q4. Now, the European market faces a significant headwind due to intensified price competition across key markets.

Speaker #4: Including Germany, France, Italy, and Spain, this aggressive pricing environment pressures our sales performance in the region, contributing to a substantial overall segment decline. In contrast to the Europe and the United States markets, the Asian market delivered healthy growth, with a 21% year-over-year increase.

Speaker #4: This positive performance reflects a strong market demand and the effective execution of our original strategy. On the retail coverage side, our channel expansion has reached maturity with over 2,100 retail locations now carrying new mobility products globally.

Speaker #4: A key highlight in Q2 is our participation in the Best Buy Achiever event in the U.S., where we connected with top-performing sales associates, conducted 68 test rides, and explored new service partnerships such as the in-store repair solutions with Best Buy Squad.

Speaker #4: Those interactions paved the way for a deeper retail integration and long-term growth in the United States market. Now, looking ahead, we remain optimistic about the performance both of China and the overseas market in the second half of the year.

Speaker #4: In China, we believe Q3 will benefit from both seasonal trends, strong product momentum, and a potential temporary demand surge due to the new regulations.

Speaker #4: The launch of the highly competitive NX electric motorcycle and the upgraded smart electric bicycle product in Q2 has positioned us effectively to meet the evolving consumer preferences.

Speaker #4: Our channel expansion efforts throughout 2024 and the first half of 2025 are the second driver of sales growth, as we target to add about 1,000-plus stores for the entire 2025.

Speaker #4: We have net added about 589 stores in the first half, with MotoCom in Q3 and Q4. Furthermore, the upcoming implementation of new national regulation for electric bicycles indicates that manufacturers cannot manufacture all standard bicycles after August 31st, and retailers cannot sell all standard bicycles after November 30th.

Speaker #4: This will, in turn, drive distributors to build up inventories in Q3 and also drive a bid-demand surge in Q4, as consumers won't be able to buy the all-standard product.

Speaker #4: After November 30th, our effort in product portfolio optimization and platformization has also demonstrated positive results in gross margin improvement and ASP improvement.

Speaker #4: Looking forward, we are confident that we can maintain a healthy gross margin and stable ASP throughout the second half of the year. Now, looking ahead for the overseas market, we are on a path towards recovery and profitability.

Speaker #4: The significant growth in the electric two-wheeler and electric motorcycle and moped sales, along with the strong performance of our direct distribution regions this year, validate both the market competitiveness of our products and the retail capability of our channels.

Speaker #4: Our direct distributed electric moped business has demonstrated a distinct local advantage. By adhering to the strategy of continuing to expand stores in these directed distributed regions, we expect to continue the growth trend as we observed in Q2.

Speaker #4: In the micro-mobility segment, we're closing the gap between the losses and break-even. In the US market, as tariffs are finalized clear, for the Southeast Asia and the China, we continue to negotiate a price increase for existing products with retailers, and the rollout of a low-cost version for better to a ter addressed market.

Speaker #4: This will help the U.S. market to turn profitable. In the European market, we're planning to recover from the decline in the half, and the focus is on profitability in the selected market.

Speaker #4: Now, with that, let me turn the call to Fion.

Speaker #3: Hi, everyone. Please note that our press release contains all the figures and comparisons you need, and we have also uploaded an Excel file for my figures to our IR website where you see ENCE.

Speaker #3: As I review our financial results, I'm referring to the second quarter figures unless I say otherwise. All monetary figures are in R&B, if not specified.

Speaker #3: At the end, as mentioned, our total sales volume for the second quarter was 350,000 units, up 37% compared to the same period last year.

Speaker #3: 359,000 units were sold in China, while the remaining 31,000 units were sold overseas. Nearly 50% of our sales volume in China came from our top three models this quarter.

Speaker #3: The total revenue for the second quarter amounted to $1.26 billion, an increase of $335 million, or nearly 34%, compared to the same period last year.

Speaker #3: China revenue was $1.15 billion, accounting for 91% of total revenue. Of this, the scooter revenues were $1.6 billion, a year-over-year increase of 45%. This increase was mainly due to the rise in sales volumes.

Speaker #3: China's scooter average selling price (ASP) was R&B 3,316, down 5% year-over-year, but up 11% quarter-over-quarter. This decline was primarily attributed to a shift in product mix.

Speaker #3: In last year's Q2, large-scale scooters like NXT and Play dominated our best sellers, with an average retail price exceeding R&B 5,000. In this year's Q2, however, the MP models, which are more compact than the scooters, emerged as the top seller, capturing over one-fifth of the total sales units at a retail price range of R&B 3,700 to 4,600.

Speaker #3: And overseas revenue was $110 million, representing 9% of total revenues. The scooter revenue, including electronic motorcycles and mopeds, kick scooters, and e-bikes, amounted to $103 million.

Speaker #3: Down from 130 million in the same period of last year. This decline was driven by the decrease in sales volume and ASP of kick scooters.

Speaker #3: While overseas scooter ASP increased, the 23% year-over-year to R&B 3,280, driven by the increased propulsion of electric motorcycles in the total sales volume.

Speaker #3: Revenue from accessories, spare parts, and services amounted to $96 million, a 15% increase compared to the same period last year, due to the increase in spare parts sales in the China market.

Speaker #3: The gross margin exceeded $252 million, marking a significant improvement compared to $160 million during the same period last year, and $118 million last quarter.

Speaker #3: The gross margin was 20.1%, 3.1 percentage points higher than the same period of last year and 2.8 percentage points higher than the previous quarter. Domestic market gross margin improved due to the successful cost reduction initiatives, contributing to a 5.1 percentage points increase in overall gross margin.

Speaker #3: However, the overseas margins reduced the overall gross margin by 2 percentage points, primarily due to three factors: a change in kick scooters product mix, the impact of U.S. tariffs, and aged inventory write-downs.

Speaker #3: The operating expenses for the second quarter were $265 million, an increase of 38% compared to the same period last year. The OPEX ratio rose slightly to 21.1%, up from 20.4% year-over-year, but decreased from 24.2% last quarter and 22.8% for the whole year 2024.

Speaker #3: Selling and marketing expenses rose by $82 million year-over-year to $202 million, primarily driven by higher spending on online shopping festivals and marketing events in China.

Speaker #3: Selling and marketing expenses representing 16.1% of revenue, compared to 12.8% in the same period of last year, but down from 16.8% last quarter. R&D expenses increased by 11 million year-over-year to 44 million, primarily due to a higher staff cost and share-based compensation, as well as higher design and testing expenses.

Speaker #3: R&D expenses represented 3.5% of revenue, compared to 3.4% in the same period of last year, but down from 4.4% last quarter. G&A expenses decreased by $20 million year-over-year to $19 million.

Speaker #3: Largely attributed to foreign currency exchange gains, G&A expenses represented 1.5% of revenue, a notable reduction from 4.2% in the same period of last year and 3% from the previous quarter.

Speaker #3: Net income was R&B 5.9 million, with a net income margin of 0.5% under GAAP accounting. This compares to a net loss of R&B 25 million for the same period last year. The non-GAAP net income was R&B 13.7 million, with a non-GAAP net margin of 1.1%.

Speaker #3: And turning to our balance sheet and cash flow, we ended the quarter with RMB 1.4 billion, versus RMB 1.1 billion last year, in cash, restricted cash, term deposits, and short-term investments.

Speaker #3: Our operating cash inflow amounted to $5.19 million. CapEx amounted to $32 million, reflecting an increase of $12 million compared to the same period last year. This can be attributed primarily to an increase in the opening of new stores and modules cost in China.

Speaker #3: And now, let's turn to guidance. We expect third quarter revenue to be in the range of $1.4 billion to $1.6 billion, an increase of 40% to 60% year-over-year.

Speaker #3: Please be aware that this outlook is based on the information available as of the date and reflects the company's current and preliminary expectations, which are subject to change due to uncertainties reflecting various factors.

Speaker #3: And with that, we're now opening the call for any questions that you may have for us. Operator, please go ahead.

Speaker #2: Thank you. We will now begin the question-and-answer session. To ask a question now, please press star 11 on your telephone and wait for your name to be announced.

Speaker #2: To withdraw your question, please press *11 again. Please stand by while we compile the Q&A roster. Once again, that's *11 for questions.

Speaker #2: We will now take our first question from the line of Yating Chen from CICC. Please ask your question, Yating.

Speaker #5: Hi. This is Yating from CICC. Congratulations for your outstanding performance. And I have one question. I'd like to know the reasons of I'd like to know that what are the reasons for the increase of unit price and the gross profit margin, in second quarter.

Speaker #5: And what's our outlook, for the unit price and gross profit margin in the third quarter?

Speaker #3: Okay. This is, Fion. I'll take this question. Regarding to the, overall blended ASP, the ASP, improvement, quarter-over-quarter, it's mainly due to the, product mix improvement, especially in China, scooters.

Speaker #3: last quarter, our ASP, is around 3,000 R&B in the domestic market. just because we launched the two smaller or more compact scooters, MP and MMT, which the, retail price range is through R&B 3,500 to, 4,000 and 800.

Speaker #3: So, this will drag down the ASP last quarter. And this quarter, since, you ow, we launched the, the, upgraded version of the NXT 2025 version, the, NLT and also the N Play which, all the large-scale scooters and the upgraded version from our best sellers.

Speaker #3: And the retail price exceeding, R&B 5,000, so, the blended product mix in China market, rose up, by those best sellers. And additionally, in the overseas market, this quarter, our e-motorcycles sales volume increased more than 3,000 units.

Speaker #3: And our motorcycle ASP was around 15,000 R&B, which includes the FOB models and also the DDP models. And this, this will improve the overseas blended ASP as well.

Speaker #3: As to the gross margin, actually, you know, both on the cost reduction side and also our ASP improvement brought up the overall China market gross margin.

Speaker #3: Actually, in this quarter, our domestic gross margin, with the scooters and also the non-scooters altogether, the, the gross margin in the in the domestic markets is more than is more than 20.1%.

Speaker #3: Overall. So this is a a very, optimistic and a very good, figure for the past six quarters. And this also, you ow, improves give us a a better gross margin for the overall gross margin for the total gross margin for our business this quarter.

Speaker #3: Hope this will answer your question.

Speaker #2: Thank you. and, I have another question. I'd like know about I'd like to know that, how how do you predict sales volume next year for the domestic electric two-wheeled vehicles?

Speaker #2: Some investors are worried about that.

Speaker #4: So it's the end. So let me address this question. I think I think currently, we're still it's still really early to, predict the sales for for next year, I mean, I think it's one thing we're looking at is actually with this, new, as I mentioned, there's new regulation that's going to be effective, with with with two dates, right?

Speaker #4: One date is actually September 1st. That's for the manufacturers. One day is December 1st. That's for the, retailers. So if you look at the entire market, you ow, there there are speculations that, maybe some of the demand from next year will shift to this year.

Speaker #4: because the, you know, because the regulatory changes. but we're we're still being, very cautious at at this point to, to, you ow, to, to actually to observe the market.

Speaker #4: in terms new, I think, you know, what we are doing right is actually, we're paring we have a a multiple line of products that they're they're new series that that will comply with the standard.

Speaker #4: And also, we're modifying our existing series to comply with the new standard. At the same time, we continue to increase the number of retail stores.

Speaker #4: and those two actions will help us to really to drive the growth for next year. regardless of the market changes.

Speaker #2: Thank you. That's all my questions. Thank you. Our next question comes from the line of Kai Kang from Citics. Please ask your question, Kai.

Speaker #6: Hi. Thank you for this opportunity. This is Kai Kang from Citics. And congratulations for this strong performance in the second quarter. And I also have two questions.

Speaker #6: And the first question is about the overseas market. so we know that in the last two years, we were under a high pressure in overseas market, our performance was under pressure.

Speaker #6: So do we think we are working our way out of the woods or going out of the bottom and climbing up again? This is due to our new driver on e-scooters and also our new direct selling channel in the overseas market.

Speaker #6: So can we expect, maybe a better, brighter future, since the second half and into the next year in the overseas market? Thanks.

Speaker #4: Right. so, Kai, to address your question, I ink, you know, the short answer is yes. I, we really we spent the last two years, because I, I the the overseas market for electric two-wheelers, the moped, Europe is actually one of our largest markets.

Speaker #4: And, we really spent the last two years building up the direct distributed models. it's very complex. it requires setting up our own operations from, from logistics to dealer financing.

Speaker #4: So we really spent the two years to building out that. And then, really, it really started to turn around, basically, second quarter this year.

Speaker #4: we look at the our market share. Based on the registered vehicles, because many of mopeds, you sell in Germany, Italy, it requires registration. We look at our market share in registered vehicles.

Speaker #4: We're actually ranked number one in market share in Germany and Italy at this point, with a much faster growing rate than our competitors in those markets.

Speaker #4: So we actually expect to continue the growth trend, basically, in the electric two-wheeler market overseas, you know, to hopefully get back to the peak level, which will be in 2020 or 2021.

Speaker #6: Thanks. I have another question about the dealer network in China. We know that in the last year, the dealer network was a strong driver of our performance in the domestic Chinese E2W market, that revenue.

Speaker #6: So, do we think we will keep opening more new stores at the very first base? And like this year, in the next year, that means maybe next year, our dealer network stores number in China will reach about maybe 6,000 or 7,000, maybe at some speed like that.

Speaker #4: So, I think right now we're at 4,300, right? And we're expecting to, because this year, our total target was to open about 1,000 stores or so.

Speaker #4: We have net ads. So we have net ads added about 569 stores. So we're looking another about 400 stores to be net added in Q3 and Q4.

Speaker #4: So, let's say we achieve that target; that will get us to the number of about 4,700 stores. I think if you look at our competitors in this market, you know, and with the same price range, I think at least the ceiling for us will be somewhere around 8,000 to 9,000 stores.

Speaker #4: And we still have a long way to go. So if you look at basically for the next three years, we should be looking at continuing to expand our stores.

Speaker #4: At the same time, as we're opening stores, our per-store sales haven't really dropped; in fact, the per-store sales have actually slightly increased, I think it's more around like 7 to 8 percent per-store sales.

Speaker #4: so, you ow, so with that, basically, that demonstrates that, you know, by opening the stores, we didn't dilute the sales per-stores and the that actually shows a sort of a trend for healthy growth or healthy channel expansion.

Speaker #6: Very clear. Thanks a lot. Thanks.

Speaker #2: Thank you. As a reminder, to ask a question, please press *11 on your telephone keypad. We will now take our next question from the line of Michael Siemens from Global View.

Speaker #2: Please go ahead, Michael.

Speaker #7: Oh, thanks. Thank you. Yeah, this is Michael speaking here. Congratulations, Dr. Li. Congratulations on China—this is a very good result for Q2. I just noticed you've been posting some good volume sales growth and volume growth in the number of scooters for the last few quarters.

Speaker #7: But revenue growth always falls behind that. This last quarter, it seems to be catching up a bit. Ms. Chen, the comments you've just been making sound as though in this next quarter, where you're predicting 40% to 60% revenue sales growth, do you think this will be the first quarter where that's going to be actually ahead of the volume in scooters?

Speaker #4: So Michael, sorry. I didn't fully get the estion. So the question based on the volume growth will be similar in line with the revenue growth for Q3?

Speaker #7: Well, yeah. I am, so far, for a little while now, you've been achieving revenue growth that's been behind the volume growth in scooters.

Speaker #7: But from what you're saying on this call, it sounds as though in your guidance of revenue growth of 40% to 60%, that actually this could be ahead of scooter growth, volume scooter growth in this quarter.

Speaker #7: Is my assumption correct?

Speaker #4: I think it would be so let me actually go back to my data here. If Fion has the data in front of her, you ow she could be better at answering the question.

Speaker #4: My sense is actually will be very similar because if you look at our Q basically, if you look at our Q3, the if I remember correctly, our ASP for China market for Q3 2024 is around actually 3,000 R&B.

Speaker #4: It's actually significantly lower than Q2 2024. Compared with our Q2 2025, which is around 3,300 R&B, Q3 typically tends to be a low quarter for ASP.

Speaker #4: Because it's actually a top sell season for China, so a lot of the low-end scooters even for us are you know will represent a higher percentage.

Speaker #4: So we're still you know halfway through Q actually not halfway, about 48 in Q3. So we're actually don't have the full picture on what our ASP is.

Speaker #4: Currently, we roughly estimate that the ASP volume growth will be very similar in line.

Speaker #7: Okay. Thank you. That's helpful.

Speaker #2: All right. Thank you. As a reminder to ask a question, please press star 11 on your telephone keypad. I'm seeing no more questions in the queue.

Speaker #2: Let me turn the call back to Mr. Li for closing remarks.

Speaker #4: Right. Thank you, operator. And thank you all for participating in today's call and for your support. We appreciate your interest and look forward to reporting to you again next quarter on our progress.

Speaker #4: Thank ou.