Niu Technologies

Good day and thank you for standing by. Welcome to the New Technologies First Quarter 2023 Earnings Release 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today. Wendy Zhao, IR Manager, please go ahead.

Thank you, operator. Hello, everyone. Welcome to today's conference call to discuss new technologies results for the fourth quarter 2023. The earnings press release, corporate presentation, and financial spreadsheets have been posted on our investor relations website. This call is being webcast from the company's IR website 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 provisions of the U.S. Private Securities Dedication Reform Act of 1995. Forward-looking statements involve risks uncertainties, assumptions, and other factors. The company's actual results may be materially different from those expressed today. Further information regarding the risk factors is included in company's public filings with the Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statement, except as required by law. Our earnings press release and this call include discussions of certain non-GAAP financial measures The press release contains 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. Fiyang Zhou. Now let me turn the call over to Yan.

Thank you, everyone, for joining us on the call today. In Q1 2023, our total sales volume was 94,407 units, representing a year-over-year decrease of 42%. Specifically, sales volume in the China market dropped by 45% year-over-year to 81,518 units, and the sales in the overseas market dropped by 12% to 12,889 units. Total revenue in Q1 was RMB 417 million, a decrease of 25%. Now the decrease in sales volume in the China market is primarily due to two factors. Firstly, the price increase caused by the rise in the lithium battery cost last year. And secondly, the expectation of new product launches in Q2. In response to the lithium battery price hike in 2022, we increased the prices by average 7% across our product in the China market in Q2 2022 to maintain a healthy margin. However, this led to a decrease in sales. The impact of rising prices on the sales volume continues in Q1 2023 this year compared to the pre-price adjustment Q1 2022 on a year-over-year basis. For instance, our entry-level Gola Zero series, which targeted more price-conscious market, experienced the biggest year-over-year drop in sales of nearly 90%. Secondly, the expectation of a new product being launched in Q2 also contributed to the decrease in sales volume in Q1. Our distributors delay orders in anticipation of new product launch events that we host in Q2, where we release mid-end to premium products. Despite the drop in sales volume, the retail sales number remained on par with Q1 2022 last year. Many of our retail partners choose to delay orders from traditional low Q1 to Q2 this year, given the on-time draw of our product in 2023. Now, for the China market, we focused on the premium series and high-quality mid-end series, as the premium high-end flagship products have enabled us to improve our margin and strengthen our brand positioning, where our mid-end products have allowed us to reach a mass market and achieve volume. With this focus in mind, we have developed products that combine design aesthetics and technology-enabled functionalities to bring to the market. In the previous earning call, I introduced the revolutionary high-end straddle-like electric bicycle SQI and the newest addition to the most popular U series, the UQI Plus, which we launched in Q3 2022 last year. Since their launch, both products have received recognition from both industry and our customers. The SQI won the Red Dot Design Awards Best of Best 2023, which is the highest honor that the Red Dot Design Awards can bestow. The SQI have also won the IF Design Awards 2023, making it potentially the third product to win all major awards after legendary U1 at M1. The new UQI Plus have also won the Prestige Red Dollar Design Awards and have been met with immersed popularity in the market. Sales volume for the new UQI Plus accounted for over 50% of total sales of our premium product lines. Those awards and sales performance in pursuit of creating a premium product that resonates with consumers. We also rolled out a B2 product, which is the mid-end range form factor product, which has been very popular since its launch, accounting for nearly 30% of mid-end series sales in the first three quarters since its launch. In Q1 2023, we recently made an upgrade to the popular models, bringing a new look based on the original design and bringing out the old-fashioned style from the minimalist appearance. Now, building on the momentum generated by the product we launched last year, we released four new products in May during the annual Distributor Conference that will be launched into the market Q2 this year. The four products we recently launched are MQIL, the G400 and G400T, and the RQI. I'll share some of the product highlights with you. First, we introduced the MQIL, the next-level flagship product. that inherits the design of our all-time classic M series, but with significant upgrading performance and smart functionalities. The M series is one of our two products that won all seven major international design awards in the mobility industry. The MQL is the first major model we released, hoping to bring back the classic M series in the last few years. Retaining the classic style, the new MQL features significant improvements in the light design range, charging features, new smart control, riding economics, and additional personalization features. The MQL is equipped with new energy 9.0 battery, delivering an impressive 170 kilometer max range, and it can charge 100 kilometer drive range in just over two hours. In addition, the new MQL bike is equipped with the new smart 5.0 with 20 smart features to make this scooter an industry-leading smart vehicle. Those include the new smart dashboard with navigation display, incoming call notice, the new smart lighting system with automatic turning lights, the OK Go control system that's fully integrated with the Apple ecosystem, allowing users to control the scooter with just your Apple Watch or Siri. Targeting the premium electric scooter users, the MQL is priced from RMB $4,999 to RMB $8,299. We have received more than 15,000 orders from our dealers within the first week of its launch. Now for the mid-end product lines, we announced the G400 and G400T. We took an innovative approach to use the same platform to build two vehicles. The G400 is the light motorcycle, and G400T is the electric bicycle. Both vehicles are built with the same modern design and chassis platform, combining design aesthetics and practical functionalities, like large storage space. Both of them are equipped with a full set of new smart system features. The G400 and G400T are set to launch in early June. We have also recently announced the market launch of our first quad electric motorcycle, R2i. The R2i has a top speed of 100 kilometers per hour and a drive range of 119 kilometers. Equipped with an 18 kilowatt motor, the R2i can accelerate to 50 kilometers per hour within just 2.9 seconds. The R2i also includes many smart features. The RFS QI is priced at RMB 32,980 and went online through a live streaming on May 20. The product is perfectly suitable for motorcyclists who plan to switch from petrol to electric for the fast acceleration experience with the pursuit of environmental friendliness in mind. Now, we are confident that with this premium product we have introduced, the market will not only increase sales, but also enhance our brand image and strengthen our leadership Our focus on developing premium products is complementing with our effort to build premium brands through user-engaged activities and marketing campaigns. The new Innovative Ambassador program, where a selected core user, Sanqiao, is serving as a culture ambassador for new brands launched in 2022, has become a core part of our user-centered event planning strategy. Since its launch in Q3 last year, we have planned and hosted over 80 events in 30 cities in China. Now, along with the product launch, we have organized a series of marketing and branding campaigns through our online social media, KOL collaborations, offline product launch events, and PR. For online marketing, we invited over 150 KOLs and KOC content creators with a large fan base to generate content showing cases of our new product. And we expect those content to gain over 150 million views throughout the launch event. For the offline event, we are planning to host four official events and utilize our innovative ambassador network to support another 15 events, bringing new scooters to the market. We believe that with those marketing content, an offline event will gain significant media exposure for the new products, further strengthening our brand image as an innovative leader in urban mobility scenarios. Now turning into the overseas market, we have experienced a year-over-year decrease of 12% in sales in Q1 2023. The electric moped category saw a significant 70% decrease, while the micro-mobility category enjoyed a moderate 16% increase in sales. The price adjustment made in Q2 2022 in response to the increase in the lithium battery price continued to have an impact on the electric moped sales when compared year-over-year. The international distribution partner has also been waiting for a planned performance upgrade for our high-end performance 125cc bikes in Q2. Now, for the European market, we're rolling out the improved 125cc product in Q2 2023 to gain growth. In the Southeast Asian market, we're also developing battery swapping-enabled solutions with electric multi-swappable batteries and battery charging cabinets. This solution will be suitable for battery swapping operators to sell the moped chassis, but also charging the batteries on a rental basis, lowering the upfront purchasing cost of electric moped in the region. We expect to roll out those solutions in second half 2023. Together with those solutions, we're also actively expanding stores and developing partnerships with local operators and enhancing factory assembly capacity in Southeast Asia. Despite being in the low season, our micro mobility category still experienced a moderate of 16% year-to-year growth in sales in Q1 2023. We have already established a solid foundation with our product portfolio, sales channel development, and marketing and branding activities. With this foundation, we expect a micro mobility category to continue to drive high quality growth in the coming quarters. In Q1 2023, we launched the KQi1 Pro as an addition to our KickSchooler product offerings. The KQi1 Pro features a patented folding mechanism added to the original KQi1 Sports Kick Scooter. With the newly added KQi1 Pro, we have completed the product offering that covers a wide range of products from high-end $900 price range to the entry-level $300 price range. The established Kick Scooter product mix has generated high volume growth since its launch. Beyond the growth in sales, our KickScooter product has received prestigious awards such as the IF Design Awards and New York Product Design Awards. Our KQi2 and KQiU Plus won the IF Design Awards 2023, and the KQi3 Pro was selected as the gold winner of 2023 of New York Product Design Awards as the only product in the vehicle technology category. Additionally, NIO was awarded the Writer's Choice Award 2023 With the market presence we have built throughout the micromobility products, one of our current focuses is on the sales channel expansion on the targeting market. As of May 2023, new products are available in approximately 500 retail stores in the US and over 400 in Europe throughout retail partners such as Best Buy and Media Mart. This sales network has laid a solid foundation for ramping up our product sales in the upcoming quarters. In addition to the sales channel expansions, we continue to collaborate with the influencers on product marketing campaigns to further establish our presence in the market. We have worked with over 300 influencers across various platforms to showcase our kick scooters and the moped. And their content gathered more than 40 million views. Only to their broad reach and wide acceptance, our product have also been featured and placed in multiple TV shows and movies. We are pleasantly surprised to see our product Street 2 and TV shows that Drew Barrymore showed on The Price is Right. In conclusion, regarding to the overseas market, we anticipate a sustainable growth driven by our strategy to diversify our product offering beyond the electric two-wheelers and expand it into geographic regions beyond our primary European market. Despite a temporary low orders due to seasonality, we see growth potential stemming from our diversification strategy based on product offerings and increasing brand recognition. Now, looking forward, we target to regain growth throughout 2023 in both China and international markets. Gradually recovering from the negative impact of price increase and delayed product launch in 2022, we have put a focused strategy in place for product development, brand marketing, and sales channel expansion. In the China market, our strategic product positioning have generated growth opportunities for us in 2023 by focusing on the premium and also the mass premium segment. By combining the high-end, high-quality product with user-centered activities and marketing campaigns, we aim to maintain our brand leadership in the premium urban mobility sector. With new product rollout and brand activities in place, we expect to see a strong rebound from last year starting in Q2 2023. For the overseas market, we anticipate returning to a fast-growing path through a product and geographic expansion. In the electric two-wheeler sector, with the product ready for release in our respective markets, we believe we will see a sales ramp-up in the near quarter. As for the micro-mobility sector, with the comprehensive product offerings, extensive sales channel coverage, and the growing brand awareness, we expect this sector to experience a faster growth in both sales volume and margin performance. Now I'll turn the call to our CFO, Yan.