EHang Holdings Limited

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the IHANG fourth quarter and fiscal year of 2025 earnings conference call. Please note that the management's prepared remarks and the subsequent Q&A session will primarily be conducted in Chinese, and the corresponding simultaneous or consecutive interpretation can be accessed on the English line. As a reminder, all translations are for convenient purposes only. In case of any discrepancy, the management's statements in the original language will prevail. To listen to the original remarks by the management, please join the Chinese line. Additionally, both the Chinese and English lines are open for questions. And today's call is being recorded. Now I'll turn the call over to Lee E. Hang, Senior Director of Investor Relations. Ms. Ann, please proceed.

Hello, everyone. Thank you all for joining us on today's conference call to discuss the company's financial results for the fourth quarter and the fiscal year of 2025. 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. On the call today, we have Mr. Huai-Zhi Hu, our founder, chairman, and chief executive officer. Mr. Shuai Feng, chief technology 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 these and other risks and uncertainties is included in the company's public filings with SEC. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Also, please note that all numbers presented are in RMB and are for the fourth quarter and the fiscal year of 2025, unless stated otherwise. With that, let me now turn the call over to our CEO, Mr. Hua Zhihu. Please go ahead, Mr. Hu. Hello, everyone, and thank you for joining our call today. 2025 was a pivotal year for Ehan as we strengthened our business foundation and made a meaningful progress toward commercialization. In Q4, we delivered a strong set of results. Quarterly eVito sales volume reached 100 units for the first time. Revenues grew significantly both year over year and sequentially. And we achieved our first ever quarterly GAAP profitability. For the full year, we delivered 221 units of Vito aircraft, setting a new record and successfully meeting our annual revenues guidance. We also achieved a non-gap profitability for the second consecutive year. These results reflect years of sustained investment and disciplined execution across product innovation, regulatory certification, industrial ecosystem development, and market expansion, laying a solid foundation for our commercialization progress in 2026. I am pleased to announce that the commercial operation of our flagship product, the EH216S, is entering the final countdown. Following comprehensive preparation across our commercial operation system, we're about to officially open our commercial flight services to the public. After nearly a year of internal trial operations, we have established standardized procedures across the entire operational chain, from route planning and fleet management to boarding services. At the same time, we have optimized our maintenance systems and safety assurance mechanisms while actively supporting the Cebu Aviation Administration of China in advancing the training and certification program for our ground operating crew. Our two OC-certified operators, Ehon General Aviation and Hui Aviation, both plan to begin offering ticketed EH216S flight services to the public this month at their operational sites in Ehon Future City, our new headquarters in Guangzhou and Luogang Park in Hefei. This launch is expected to mark the world's first commercial service of pilotless human-carrying veto aircraft. It also represents the completion of EHA's full lifecycle ecosystem from technology development and airworthiness certification to manufacturing and commercial operations. Going forward, we are evolving from being an aircraft manufacturer into a comprehensive provider of integrated advanced air mobility solutions. 2026 marks the first year of China's 15th five-year plan period. As the national strategic emerging pillar industry, the low-altitude economy is embracing unprecedented strategic development opportunities. Supported policy direction is now shifting from encouraging exploration to systematic advancement. With the continued progress in aerospace management reform, airworthiness certification frameworks, and infrastructure development, Together, these initiatives are creating a favorable policy environment for industry development. With that in mind, Ehan's core strategies for this year are to move forward with its plan execution, strengthening our foundation while steadily advancing commercialization, operational ecosystem development, and global expansion. First, it has been nearly a year since Ehan obtained OC for EH216S. Over the past year, we have been working intensively to expand our customer and partner base. At the same time, we built the operational systems required to support commercial flights. This year, our top priority is to launch routine and skilled commercial operations of human-carrying vehicle aircraft to the public, delivering reliable flight services and continuously improving the flight experience. Our goal is to transform scenes in science fiction into everyday reality for people. This is the milestone many people have been waiting for, and so have we. But aviation has always been an industry that moves forward with patience and responsibility, especially when safety and human lives are involved. Second, we'll continue advancing our global expansion strategy, taking the Thailand AAM Cinebox initiative as an example. We're steadily moving toward commercial flight operations and established benchmark projects. I'm also pleased to share good news that Ehan is suspected to obtain the first commercial operation license four pilotless passenger EVTO aircraft from the Civil Aviation Authority of Thailand, paving the way for regular urban air mobility services in the country. Third, we'll accelerate the commercialization readiness of the VT-35. In 2026, our focus will be on advancing its time certification and conducting extensive flight tests in more diverse and complex environments to fully validate its passenger flight capabilities. At the same time, we'll continue improving the performance of the EH216 series and expanding the deployment of non-passenger products and applications, including firefighting and logistics, further broadening our market reach. Fourth, we'll further strengthen our AI. end-to-end industrial chain integration capabilities. By coordinating our R&D manufacturing supply chain and quality management systems, we aim to improve operational efficiency across the entire value chain, reinforce our long-term competitive advantages, and contribute to the establishment of industry standards. EHON remains committed to the principles of safety-first, innovation-driven growth and collaborative development. We will continue advancing our technology and product innovation, expanding multi-scenario commercial operations and establishing AAM operational models in more regions around the world. At the same time, we're building a comprehensive business model combining technology R&D, intelligent manufacturing, commercial operation services, infrastructure collaboration, and industry education integration. We believe the low altitude economy industry will evolve from demonstration programs to scaled commercial operations and then to public accessible services. It will become a vital engine for activating three-dimensional aerospace resources and cultivating new forms of consumption, truly transforming the industry of values into economic and social benefits. At this important starting point of a pivotal year, our newly appointed Chief Technology Officer Feng Chui is also joining today's earnings calls. Under my leadership, he will oversee our technology R&D, supply chain management, manufacturing, and quality system development, driving a more integrated end-to-end management approach from technology innovation to product delivery. By strengthening coordination and integration across the entire industry chain, we believe our innovation capability, product competitiveness, and overall execution will continue to improve. With that, I would like to hand the call over to Feng Shui. Thank you. Thank you, Mr. Hu. Hello, everyone. I'm Feng Shui, CTO of Yihan. It is a great honor to join today's earnings call for the first time. I am pleased to share our progress in four key areas during the fourth quarter, R&D, production and manufacturing, quality management, and supply chain assurance, which we refer to as the RPQS Center. We'll also briefly outline our priorities for 2026. The RPQS Center is the core engine of our technology and industrial execution. We focus on technology innovation as the foundation, production capacity as the driver, quality control as the bottom line, and supply chain as the cornerstone. Together, these capabilities support the development, commercialization, and scale delivery of our products. Let me walk through the key highlights in each area. Starting with R&D, the fourth quarter of 2025 marked major breakthroughs across our core products. Our flagship passenger-carrying aircraft, VT35, completed multiple critical tests, including multi-copter protective transition flights and lock-to-prop fixed-wing flights. The aircraft also successfully completed its first public demonstration flight in Hefei after its grand debut in October. During the quarter, we held the first type certification team meeting with the CAAC. marking a key step forward in the airworthiness certification progress. We are currently conducting flight envelope testing and aim to obtain the type certification in China within the next two years. For the non-passenger business, we are also developing and deploying product and system lines under multiple application scenarios. Our new GE 4.0 formation drones set a Guinness World Record with 22,580 units flying simultaneously at the China Spring Festival Gala. significantly enhancing our brand of visibility and generating strong demand for both drone product and performance services. In the firefighting aircraft program, we are upgrading the current models while advancing the next generation R&D to support emergency response scenarios. For logistics, we are accelerating the development and first flight of the VT series lift and cruise cargo aircraft, developing laundry endurance aerial logistic applications. At the same time, our proprietary command and control system continues to evolve. As a city-level digital infrastructure platform for a low-attitude economy, it's now being trial operations in Hefei and Guangzhou, providing solid tech support for future scaled commercial operations and air traffic management. On manufacturing, we continue to expand our production capability and enhance the smart manufacturing capabilities during the fourth quarter. The Phase 2 expansion of our Yunfu production facility was successfully completed, bringing our total planned annual capacity to 1,000 units of the B2 aircraft and components. The automated production lines have entered a trial product stage, and our smart manufacturing systems will further improve production efficiency and supply chain management. Meanwhile, additional facilities in Hefei, Weihai, and Beijing are progressing as planned. Our nationwide manufacturing footprint is steadily taking shape. We follow a manufacturing-to-order approach, ensuring stable production planning while preparing large-scale deliveries in the future. On quality control, we maintain strict end-to-end quality control across the entire product lifecycle. Throughout 2025, our quality management system delivers strong performance, With steady improvements across all key indicators, the post-certification airworthiness review for RPC achieved as a third zero-defect pass, and the EN9100 audit continues to pass. On supply chain, during the fourth quarter, we further expanded our supplier network and strengthened our supply chain resilience. Our core supplier system remained stable, with a 100% on-time delivery rate for key components, fully supporting our production and deliveries. Going forward, we will continue our strategy of maintaining strong partnerships while introducing additional high-quality suppliers. This approach will strengthen our stable and scalable supply chain, providing support for future capacity expansion and new model development. The low-altitude economy represents a new frontier for technological and digital innovation. Strong R&D and smart manufacturing capabilities are the foundation of our long-term competitiveness. As CTO, I'll continue leading the RPQS team to drive technology innovation, advanced product development and certification, expanded manufacturing capacity, and smart production capabilities, maintain strict quality standards, and strengthen supply chain resilience. Our goal is to efficiently translate technological innovation into real commercial deployment and provide solid technical and industrial support for the company's long-term growth. With that, I would like to turn the call over to our COO, Mr. Wang Jiao, for our sales and operations update in more detail. Thank you. Thank you, Mr. Hu and Mr. Feng. In 2025, we advanced our business across three key priorities, safety operations and commercialization. For the full year, we generated 509 million RMB in revenues and delivered 221 units of the Vito aircraft, including 215 units of EH216 series and 6 units of VT35 series. Our Q4 performance reached a new high. We delivered 95 units of EH216 series and 5 units of VT35 series, generating 240 million RMB in revenues. In China, we continue to deepen our presence in key cities and beautiful flagship partnerships. In Hefei, our collaboration with the local government expanded from a single product to a full product portfolio. The corporation now covers multiple applications, including the EH216 series human carrying and firefighting versions, the VP35, and the DD4.0 formation drone. We also continue to strengthen our partnership with Anshun in Guizhou Province and Guizhou Tourism Group. In Q4, 30 units of EH216S were delivered to the local market, bringing total deliveries to 50 units to this customer, supporting the development of local low-altitude economy applications. Building operational capability has been a major strategic focus throughout the year. After Ehan General Aviation and Hawaii Aviation obtained their operator certificates in March 2025, we began to conduct extensive internal testing and operational optimization across the entire service process, from ticket booking and on-site verification to boarding and flight operations to ensure a seamless user experience. In the same time, we have established a comprehensive set of standard operating procedures covering battery charging, maintenance, and fault troubleshooting to ensure the continued airworthiness and operational stability of the fleet. Based on the safety and operational experience we have accumulated, we plan to officially launch commercial operations with the EH216S in this month. IHON General Aviation and Hawaii Aviation will begin selling flight tickets to the public, offering EH216S, pilotless aerial flight-seeing flights in our headquarters in Guangzhou and Luogang Park in Hefei. The public will be able to book flights through the YonTrip and the Heyevi Aviation Mini programs with an early bird discount price of 299 RMB per person. This will be the world's first ticketed commercial service for pilotless human-carrying Vito in the urban air mobility industry. transforming the low-altitude economy from a concept into a reality that is accessible to the general public. Over the past year, we have carefully refined every aspect of the operation. Our approach has always been safety-first, experience-focused, and sustainability-driven. Delivering a high-quality flight experience for our passengers in the initial phase is crucial to building public trust and supporting long-term market adoption. Looking ahead, we will leverage the experience from our OC certification and operations, to develop a comprehensive operational solution covering vertiport planning, route state line, ground crew team training, and operational system setup. We plan to replicate this model across more locations in China and overseas to support our customers and partners in launching commercial operations. It is worth noting that we are building a core mode for our operational capabilities, a professional talent system. We're actively working with the CAAC on the trial project for the administration of licenses for the ground operating crew of large civil unmanned aerial vehicles. We have completed multiple rounds of validation and refinement of training courses. Recently, the CAAC has expanded the number of special approval license to ground operating crew for us, providing additional talent support for our upcoming commercial operations. Beyond meeting immediate operational needs, This initiative is helping establish a long-term industry talent training system. Together with RegoLitter, we are converting our frontline operational experience into standardized training procedures. This helps establish professional stances for a new generation of aviation talents and strengthens the safety foundation of the industry. Over time, this training framework will enable us to support partners and export our operational capabilities as commercial operation expands. On the international front, the Thailand AAM sandbox program remains our key focus. Since its launch in October last year, we have completed a series of verification flights and ongoing trial operations. We are now working closely with the Civil Aviation Authority of Thailand to obtain the first commercial operation license under the sandbox initiative. If approved, this could become the first overseas commercial operation of a pilotless human-carrying vehicle. The initial center box areas are planned near the Impact Challenger International Convention Center in Bangkok, which will also host the ICAO Second Advanced Air Mobility Symposium, or AAM, 2026. The CAAT and our local partners have set a clear goal of operating up to 100 Avito aircraft across 20 center box areas by the end of 2026. Our plan is to establish Calend as a model for overseas operations and gradually replicated this model in Southeast Asia and other Belt Road markets. Overall, in 2025, we maintain a disciplined approach to growth, focusing on strengthening our product manufacturing and operational systems under a strict framework of safety and regulatory compliance. We believe that building these foundational capabilities is essential to support sustainable growth and scalable international expansion in the years ahead. At the same time, the low-altitude economy industry is entering an important policy window. China's 15 five-year plan has elevated the low-altitude economy to a level of strategic emerging pillar industry. This signals a transition from early demonstration programs to a new phase of national-level industry development. The low-altitude economy has also been formally incorporated to the newly amended Civil Aviation Law of China, which took effect in 2026. Looking ahead to 2026, we believe the company is entering a new stage of development. Over the past several years, we have been systematically building the key capabilities required for the urban air mobility industry, including aircraft R&D, airworthiness certification, smart manufacturing, and commercial operation readiness. As these financial capabilities continue to mature and integrate, we see three important shifts in our business model. First, our revenue streams will gradually become more diversified. Applications beyond passenger transportation, including logistics, area fire fighting solutions, and command and control systems are progressing steadily and could become additional growth drivers as the market evolves. Second, We are evolving from an aircraft provider to a one-stop, low-altitude operation solution provider, leveraging the operational experience of VHON General Aviation and HIA Aviation, along with our standardized operating systems. We will offer integrated solutions to customers. These include aircraft deliveries, vertical construction, route planning team, build-up and training, and operational guidance. Third, We're establishing a clear pathway for overseas expansion that combines regulatory center box programs, partnerships with the local operators, and systematic deployment of our technology and operational capabilities. Thailand is the first market where this model is taking shape, and we expect it to gradually expand to other regions, including Southeast Asia, Central Asia, and the Middle East as global regulatory framework continue to evolve. Overall, we remain committed to a strategy of safety first and disciplined execution. For 2026, we are targeting 600 million RMB of annual revenues while continuing to scale the business at a more steady pace. As the industry is still in its early stages, we'll continue to work closely with regulators, partners, and local governments to help move the low-attitude economy from demonstration programs to a broader commercial adoption. unlocking the long-term potential of urban air mobility as a new form of transportation. Now, I'll turn it over to our CFO, Connor, to walk us through the financial results. Hello, everyone. 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 price release on the IR site. Now, I'll present some key financial data. In Q4 2025, revenues were 243.8 million RMB up, 48.4% year-over-year, and 163.6% sequentially. The quarterly increase was primarily driven by higher sales volume of our products, including 95 units of EH216 series and 5 units of VT35 delivered this quarter. For the full year, the total EBITDA deliveries reached 221 units, Revenues totaled 509.5 million RMB, representing 11.7% increase year-over-year, surpassing our annual guidance. This growth reflects a sustained market demand for our products, as well as our effective execution and delivery management, customer support, and commercial operation readiness. Gross margin in Q4 was 62.1%, improving from 60.7% in Q4 of 2024 and 68.2%. 8% in Q3 of 2025. For the full year of 2025, gross margin was 62%, improving from 61.4% in 2024. As production scale expanded, overall cost efficiency continued to improve. Overall, the company maintained a gross margin above 60%, reflecting our strong product competitiveness, scaling production capability, and displaying cost management in the eVito sector. Turning to operating expenses, in Q4, adjusted operating expenses defined as operating expenses excluding share-based compensation were 99.3 million RMB, representing a 26% year-over-year increase from 78.8 million RMB in Q4 2024 and an 11.4% increase from 89.1 million RMB in Q3 2025. For 2025, adjusted operating expenses were 348.9 million RMB, representing a 20% increase from 290.1 million in 2024. The increase in operating expenses was primarily driven by the continued R&D innovation, expansion of our product sales, and the company's commercialization efforts. As we scale our business, we have strategically expanded our sales network, strengthened our operations team, and added key R&D talents. While maintaining ongoing investments in the development and iteration of new EVITO models like VT35 and EH216F series and etc., and related technologies to enrich our product pipeline and lay the groundwork for future revenue streams. As the company's revenue continues to grow with operating expenses increasing modestly, operating efficiency has been steadily improving, particularly in the fourth quarter, where overall profitability saw a significant improvement. In the fourth quarter, we achieved our first quarter of cap profitability with net income reaching 10.5 million RMB. Adjusted operating income for the fourth quarter reached 54.3 million RMB, representing a year-over-year increase of 99.5% and a substantial sequential turnaround from a loss. Adjusted net income for the fourth quarter was 71.5 million RMB, up 96.4% year-over-year, also achieving a sequential return to profitability. On a full-year basis, the company recorded its second consecutive year of profitability under non-GAAP measures, with adjusted net income of 29.4 million RMB in 2025. This not only underscores that we have captured the right direction for profitable growth, but also demonstrates our ability to transfer the operating leverage into sustainable financial returns. Looking ahead to 2026, the company will continue to advance the commercial operations and sales of the EH216S, expand its non-passenger business, and further penetration into international markets. Full-year total revenues are expected to reach 600 million RMB, representing a year-over-year increase of approximately 18%. As our manufacturing and operational systems continue to mature, overseas sandbox projects progress, global market expansion accelerates, and ongoing investment in next-generation products, the foundation for our long-term growth continues to solidify. This requires us to strike a balance between strategic execution and financial display in our resource allocations, ensuring that every investment translates into sustainable long-term value. We will remain committed to controlling risks and enhancing efficiency amid our expansion, solidifying the financial foundation for the next phase of high-quality and sustainable growth, and delivering long-term and stable value to our shareholders. Thank you.

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