Niu Technologies

Good day, ladies and gentlemen. Thank you for standing by and welcome to the new Technologies second quarter 2020 earnings conference call. At this time, all participants are in listen-only mode. 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. Now, I will turn the call over to Mr. Jason Yang, Investor Relations Manager of NEO Technologies. Mr. Yang, please go ahead.

Thank you, Operator. Hello, everyone. Welcome to today's conference call to discuss NEO Technologies results for the second quarter 2020. The earnings, price relief, corporate presentation, and financial spreadsheets have been posted on NEO's investor relations website. This call is being webcast. from the company's IR website, and a replay of the call will be available soon. Please note today's discussion will contain forelooking statements made under the safe harbor provisions of the United Private Securities Mitigation Reform Act of 1995. Forelooking statements involve risks, uncertainties, assumptions, and other factors. The company actual results may be materially different from those expressed today. Further information regarding the risk factors is included in the company's public filings with the Securities and Exchange Commission. The company does not assume any obligation to update an forelooking statement, except as required by law. Our earnings price release on this call includes discussions of certain non-GAAP financial measures. The price release contains a definition of non-GAAP financial measures and the reconciliation of GAAP to non-GAAP financial results. On the call with me today are our CEO Dr. Yan Li and CFO Mr. Hardy Zhang. Now let me turn the call over to Yan.

Thanks Jason and thanks everyone for joining us on the call today. We have observed a recovery in the China market in Q2, while in the overseas market our sales performance was still affected by COVID-19. Now on performance in Q2, our total sales volume reached $160 units, an increase of 61% year-over-year. The sales volume in the China market reached $255 units, an increase of 81% year-over-year, while the international market reached $5,000 units decreased by 62% due to the impact of COVID-19. Despite the decline in sales in the overseas market in Q2, we remain very, very positive about our performance in the second half as the market gradually recovers from the COVID-19 outbreak. Now in Q2, we continue to build our leadership in urban mobility via new product rollout, branding and marketing activities, and the retail expansions. So first of all, Q2 has been a very busy quarter for us in launching new products. As I mentioned in the previous earning call, we launched our MQi2 on May 7, our flagship electric bicycle product for the China market in 2020, as the upgrade of our 2016 Signature M1 model, with up-to-date technology and compliance with China's new regulations. The product launch was held on Zhibo or online live streaming sales at Taobao platform, and achieved a huge success with 3 million plus views and likes. Since then, M2 has been a key selling product in our electric bicycle category, representing 50.5% of our sales in Q2 and is positioned as our high-end electric bicycle product. We also introduced the MQIS or MS model on July 16th. MS is slightly smaller compared with M2, but also inherited the family design style of M series using the same technology platform as in M2. We also apply our innovation in lightweight materials in MS, reducing the weight of MS chassis, which allowed us to expand the battery capacity to 48 volt 26 amp hours while still complying with the new regulation. Now with this new battery capacity the MS has a longer drive range up to 100 km and leads the drive range for the entire electric bicycle industry. Also the compact form factor of MS is also very friendly for people with old heights. MS comes with four models with pricing ranging from $3899 to $5599 RMB. representing an entry-level product for the M series, while M2 is with a price range from $4599 to $6199. Now, besides expanding our M series with two new models, M2 and MS, we also expanded our Gowa series with three new models, G0, G2, and upgraded G3. G-Zero is an electric bicycle designed as an entry-level product of the Golba series targeting the mid-end market with two drive range options at 40 and 60 kilometers priced at $2299 and $2799 RMB G-Zero inherits the design style of the Golba series but is more compact and more practical with built-in back seats and add-on baby seats GZERO was launched as a JD June 18th campaign with a pre-sale warm-up and online live stream event. During the live stream event, we received close to 4 million views and 2 million likes on JD platform. And the entire product launch campaign generated a total sales volume of close to 17,000 units, demonstrating our capability to penetrate the mid and electric bicycle market. We also launched G2 and Upgrade G3 and the Gowa series on June 12 and July 18 respectively. G2 is an electric bicycle product larger than G0 with two drive range options at 60 and 80 kilometers priced at $3599 and $3999 RMB. Now G3 is an upgraded electric motorcycle product from our last year's G3 announcement, targeting cities with no restrictions on motorcycles. It's bigger in size and with faster speeds up to 60 km per hour. It is equipped with three battery options and with price range from $4299 to $6499 RMB. Now with G0, G1, G2, and G3, our Goa series achieved full spectrum coverage from entry-level electric bicycle to electric motorcycle with price range from 2299 RMB to 6499 RMB, meeting a wide range of consumers' demand. The entire Goa series will help us to expand our market range to lower tier cities. Besides new products, we continue to enhance our brand awareness via user activity-based viral marketing and targeted marketing. On user activity-based marketing, we had two very interesting events in Q2. First, a new fan from Shanghai spent 261 days riding along the entire border of China with total distance of 30,000 kilometers. on our original N scooter. During his trip, the fan goes through the snow mountains, goes across the Gobi Desert, and challenges the extreme cold temperature of minus 41 degrees Celsius in northeast China. So this story was published on Weibo and Douyin, and then was picked up by all major medias across China. It has achieved 35 million views on social media and 10-plus key media coverage with hundreds of article mentions. Now second, to celebrate a new fifth anniversary, a new fan from Beijing actually sent a new miniature model up to 20,000 meters above the sea level in Inner Mongolia with a hot air balloon and made a vlog capturing the entire event. The VLOG has also achieved 41 million views and received 9 million likes on Douyin. Both of those activities demonstrate a strong loyalty of our users to our brand and helped us to further build our brand awareness and brand reputation across a mass consumer base. Third, to promote safe riding, we also launched a no helmet, no riding campaign together with traffic administrative departments across 10 provinces and cities with Weibo articles and Douyin and Kuaishou videos. This campaign generated 24 million views across those platforms. Now with those efforts, we continue to build out our own site on short video platforms like Douyin and Kuaishou, with Douyin quarterly views increased to 47 million in Q2. a 23% growth over Q1 and quite short 4.5 million views in Q2 versus only 190,000 in Q1. Now internationally, despite the impact of COVID-19 virus, we continue to add key opinion leaders to the new crew team of creators. One worth to mention is the Spanish key opinion leader post on YouTube and his post achieved 1.7 million views, making new a hot topic in Spain. And to further enhance the user experience and engage our new users, we launched a new social feature on our app called My Writing Journey, allowing users to quickly create long format pictures with the writing geopath to be easily shared in WeChat and within the app. More than 15,000 journeys have been created and published in our new app community. We will continue to add more functions to our app as a mean to increase user engagement and build brand loyalty. Lastly, a very popular hip-hop live competition show called Three Dance of China was launched on July 18 on Youku. It was expected to be one of the hottest shows for the summer in China. We will have two feature advertising in the semifinal and the final during the show as well as an offline advertising campaign in September when the show is at its final stage. We estimate an overall exposure over 200 million online and 400 million views offline. Not only this will provide a brand awareness exposure, it will also help us to further enhance our brand image as a trending brand leading the urban lifestyle. Supported by the new products that enhance customer engagement and brand awareness, we continue to expand our footprint through store expansion and new market entries. In China, Niu added 61 stores to 1,084 stores in Q2, which effectively accelerated store opening pace in Q3 as the COVID-19 situation recovered in China. For the international market, we have increased our market coverage to 45 countries with three more ads in South America, mainly the Dominican Republic, Peru, and Brazil. We added additional 48 flagship and premium stores with total counts reaching 91 flagship and premium stores versus 43 in Q1, despite the COVID-19 situation. Now I will turn to the call over to Harding to discuss our financial results. Harding.