Lotus Technology Inc.

Good day and thank you for standing by. Welcome to the Lotus Technology first half 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised, today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Ms. Michelle Ma, Head of Investor Relations. Please go ahead.

Thank you, operator, and welcome to Lotus Tech's first half of 2026 earning call. My name is Michelle Ma, the Head of Investor Relations here at Lotus. With me today are the CEO, Mr. Qingfeng Feng, and the CFO, Dr. Daxue Wang. Our conference call materials were issued today and available on our Investor Relations website. We are also broadcasting the call via webcast. Before we continue, please be reminded that today's discussion will contain forward-looking statements. First went to the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual future results may be materially different from the views expressed today. For the information regarding represented certainties is included in the notice text relevant following with the U.S. Securities and Exchange Commission. The company undertakes no obligation to update any forward-looking statements except as required under applicable laws. Please also note that our earnings press release and this conference call will include disclosure of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. You can find a reconsolidation of these figures in the press release available on our investor relations website at ir.group-lotus.com. With that, I'm delighted to turn the call over to our CFO, Dr. Wang Li.

Thank you, Michelle. Good morning, good day and good evening. distinguished shareholders, analysts, and media friends. Thank you for joining our first half of 2036 learnings release. Again, this is Daxue Wang, the Chief Financial Officer of Lotus. I'm excited to brief you the audited financial results of the company. In the first half of 2036, the company delivered 3,904 units, representing like a 39% year-over-year increase of performing the reference traditional premium and luxury segments. This solid delivery performance reflects the company's growing market presence and competitiveness, producing in the high-end automated sectors Strong delivery growth directly drove revenues up 23% year-over-year to $268 million for the first half of 2036, with strong momentum in the China market Average selling price dropped slightly by 3% year-over-year, attributable to an increased sales peak of the lower-priced Electro-X. Gross profit rose 47% year-over-year to $26 million, while gross margin expanded 1.6% to 10%. This improvement was supported by a favorable product mix following the successful launch of Electro-X. are the first-ever PHEV in its 78-year history, marking the early validation of our multipower train strategy. To maintain our disciplined cost management trajectory, the operating loss narrowed 63% year-over-year to $97 million in the first half of 2026. This improvement stems from rigorous financial management, better operating leverage and a one-off license fee refund linked to the product pipeline adjustments. Excluding these one-off items, the operating loss narrowed 26% year-over-year to 195 million US dollars, demonstrated the company's ongoing focus on driving operational efficiency and upholding the strict financial discipline. And in May 2026, we unveiled our Focus 2030 strategy, which Ms. Feng will address in his remarks. This improved financial outcomes so as tangible proof of our progress against core pillars of Focus 2030, namely our multi-power train strategy and commitment to financial discipline, which are translating into measurable operational and financial advancement. In the first half of 2026, Lifestyle vehicles deliveries made up 77% of companies' total vehicle deliveries for the period, driven largely by the successful market introduction of the Electro-X in China. China market deliveries grew 60% year over year, keeping China as the company's largest market and accounting for 58% of total deliveries during the period. Deliveries outside China rose 17.4% year over year, including 45% growth across the Americas and 164% growth in ROW. European delivers 570% year-over-year amid intensifying competition in the luxury BEV segment. In Europe, we will continue to refine inventory management, enhance product value, and enforce pricing discipline to protect residual values and rebuild momentum. Electronics opened for stores for orders across mainland Europe on June 3rd, with customer deliveries commencing in the fourth quarter. UK launches will follow in mid-2027. We expect this new model to fuel delivery growth over the upcoming quarters. China market deliveries expansion outpaced overall growth across China's premium passenger vehicle segment. This result underscores the strong inherent of the Lotus full product portfolio even made mounting competition across the border for the auto industry. Now let's move to the half year financials. Overall, our first half 2026 financial performance improved meaningfully versus the prior year period. I've already covered deliveries, revenues, and gross margin. I will not repeat them here. In line with revenue, cost of revenues for first half of 2076 stood at $242 million of 21% year-over-year As a result, gross profit reached $26 million, a 47% year-over-year increase Operating expenses during the period came in at $127.5 million, a 46% year-over-year, primarily comprising the following and the expense stood at negative 2 million US dollars in the first half due to the aforementioned one-off items. Steeping out of this specific special one-time adjustment, and the expenses totaled 96 million dollars, a modest 4% year-over-year interest versus 92 million in the first half of 2075, driven by technology investment for the Electro-X. Selling and marketing expenses increased to $83 million of 5% year-over-year The uplift reflects higher sales commissions tied to driving vehicle volumes alongside marketing activities for the Electro-X launch in China and the pre-launch campaigns in overseas markets General administrative expenses decreased to 46 million U.S. dollars, down 27% year-over-year, as we tightly control travel, agency, and other costs, and optimize our organizational structures. With the above, even excluding one of the effects, the operating expense-to-revenue ratio improved from 107% in first half 2027 to 84% in first half 2026. reinforcing our priority to lift operational efficiency and maintain strict cost controls. Accordingly, operating loss and net loss for the first half of 2026 narrowed 63% and 52% respectively. Our non-GAAP adjusted basis, adjusted EBITDA loss for the first half of the year narrowed 57% to $104 million, compared with the $240 million 40 million US dollars loss in the same period last year. Beyond high demand metrics, I would like to emphasize that we have delivered a sustained operating expense reduction through the value driven initiatives. This reflects our continued focus on cost optimization and operational efficiency. And looking ahead, We aim to advance towards profitability and create long-term shareholder value by maximizing product positioning, expanding margins via optimized product mix, and executing rigorous cost reduction actions. With that, I'll hand over to Miss Feng. Thank you very much.