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.

Thank you, Yan. And hello, everyone. Please note that our press release contains all the figures and comparisons you need. And we have also Excel format figures for our IR website for your easy reference. As I review our financial results, I'm referring to the first quarter figures, unless I say otherwise. And all monetary figures are in RMB, if not certified. During the first quarter, our company achieved a total sales volume of 94,000 units. Of this figure, 81,000 units were sold in the Chinese market, while the remaining 13,000 units were sold overseas. And the sales performance in China was mainly driven by the premium Niyun series and mid-end Gova series, which accounted for a significant percentage of the sales volume. Those two series represented 94% for the total sales volume for the quarter, which is a notable increase compared to the 70% shares in the same period of last year. In terms of the overseas sales, we continue to experience stable year-over-year growth in micro-mobility sales. Total revenue for the first quarter amounted to $417 million, reflecting a 28% decrease compared to the same period of last year. Schooler sales contributed $358 million to the total revenues. Analyzing the schooler revenue by rating, we observed the revenue from the Chinese market amounted to $305 million, representing a 33% increase. This decline was primarily driven by the decrease in sales volume of the entry-level series discussed earlier. However, with the change in product mix, particularly with the introduction of the high ASP SQI model, our China scooter market had an increase in ASP from RMB 3072 to RMB 37403. marking a 22% year-over-year growth and maintaining a stable level quarter-over-quarter. The overseas scooter revenue, including e-motorcycles, e-mopeds, kick scooters, and e-bikes amounted to $53 million compared to $66 million in the same period of last year. This decline was primarily due to the lower sales volume of e-mopeds and e-motorcycles. However, there was a significant growth in micro-mobility revenue, which witnessed a remarkable yearly year increase of nearly 90%. In particular, kick-scooter revenue surged by 62%. It is worth noting that the kick-scooter ASP also experienced a significant rise of 46%, apart from the consistent increase in the sales volume. And these impressive results were largely driven by the high-end KQi3 series, which accounted for two-thirds of the total kick scooter sales. Due to the higher proportion of kick scooters' revenue, which has an ASP around one-fourth to one-third of the in-motorcycle and in-motor pack, the blended ASP for overseas scooters decreased by 8% to 4138. And the revenue from accessories, spare parts, and services amounted to $59 million, marking a 13% increase compared to the fourth quarter of last year. And this growth can be primarily attributed to the expanding popularity of our NIU application service subscription. And the fourth quarter growth margin increased by 2.6% year-over-year, reaching a 21.7% And this improvement was driven by various factors, including 0.9 PPP increase in kick scooter gross margin, 0.8 PPP improvement in product mix and price increase in domestic market, and 0.9 PPP boost from the non-scooter sales with a higher gross margin. Our fourth quarter OPEX amounted to 157 million, representing a 10.3% increase. compared to the same period of last year. Among the total expenses, selling and marketing expenses reached $72 million, slightly rising by $2 million year-over-year, primarily due to the increase in depreciation and optimization expenses. Research and development expenses amounted reflecting a reduction of $7 million as we have successfully lowered the cost and improved efficiency in this area. G&A expenses were $50 million, $19 million higher, and we have made a provision for credit loss for $21 million. However, if we exclude this provision, G&A expenses decreased by 6% compared to the previous year. With the expansion of our overseas business, the scale of account receivables, which served as the basis for calculating the bad debt provision, had also grown accordingly, and we have observed the European consumer sentiment remains cautious, leading our distributors to request extended payment terms due to the weak retail sales. Despite increasing credit loss provisions for overdue payments in a prudent manner, We maintain an optimistic outlook on receivable collections in the future, as our partners are in sound financial conditions and have continued making payments during this period. The OPEC debt percentage of revenue increased primarily due to the lower revenue base. In the first quarter, our net loss was $16 million, with a net margin of negative 14.5% under the gas measurement. compared to the net loss of $29 million with the net margin of negative 5.1% at the same period of last year. And turning to our balance sheet and cash flow, we ended the quarter with $860 million in cash, restricted cash, term deposits, and short-term investments. Our operating cash flow amounted to $66 million, primarily driven by a seasonal settlement of $95 million. in payment to the upstream suppliers. However, we successfully decreased our operating cash outflow by $101 million compared to the first quarter of the previous year, thanks to the negotiated improvements in credit terms with our suppliers. Our capex for the first quarter amounted to $16 million, reflecting a decrease of $44 million compared to the same period of last year. And this reduction can be attributed primarily to the decrease in the opening of new stores in China. Since the second half of last year, our channel strategy in the Chinese market has shifted from the rapid store expansion to things for sales performance improvement. And now let's turn to the guidance. As we enter the peak season and launch our new products, We are aiming to get back to the growth track and expect the second quarter revenue to be in the range of RMB $828 million to $952 million, representing a year-over-year flat to 15% increase. And please be aware that this outlook is based on the information available for the date and reflects the company's current and preliminary expectations. which were subject to change due to the uncertainties relating to various factors. And with that, let's now open the call for any questions that you may have for us. Operator, please go ahead.

Thank you. As a reminder, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again.

Please stand by while we compile the Q&A queue. We'll now go ahead with our first question.

Our first question comes from the line of Yating Chen from CICC. Please go ahead. Your line is open.

Hello.

My first question is the number of our channels has decreased in COVID-1. and how should we understand this trend and how should we look forward in the whole year about the number of our channels?

So let me address this question. So I think basically you look at the channel has decreased by about, I think roughly about 150 or 160 stores in Q1. I think this is actually reflected to the status in 2022, because towards the end of 2021, we actually had about 1,600 stores in 2021, and many of the stores actually target to lower tier cities where the entry level priced product are being sold. In reality, I think in 2022, with the lithium battery price went up significantly, you can see our entry level product percentage actually dropped significantly from, you know, representing used to be 38% of the sales volume dropped to almost a single digit percent volume. So that's where, you know, in some of the cities or some of the places where those stores have become unsustainable. So we actually took an active approach and then, you know, sort of optimized the stores. I think that's what happened. Now going forward, I think typically in Q2 and Q3 is the peak seasons. We don't expect we will actually increase the number of stores. I think, you know, looking at this year, I think we'll go back to on sort of a sales store expansions trend, probably Q4 this year, when it's actually coming to a low season sales.

Okay, thank you very much. And my second question is about, as we all know, maybe the two-wheeler industry is witnessing the price war in

so how do you view the price war and uh will us join the price war um so yes i so i think you know this year we do do observe there's a price war with the you know big players uh competing um and basically competing in the in the low end um basically in the low end market basically below the In reality, basically below the 3,000, below the 2,500 RMB sectors. I think the reality is we don't actually have the product in that range, in that price range. So I think we're less affected by the price war. So I think our focus is still sort of at a either what I call the mid-end market and the premium market. But mid-end market, basically, product price above 3,500 RMB to 5,000 RMB, and the premium market are the product price above 5,000 RMB. I think in those price ranges, I think they're, in reality, they're less pressed for, involved.

Okay. Okay. Thank you very much.

Thank you.

We'll now move on to our next question.

Our next question comes from the line of Jing Chan from CICC. Please go ahead. Your line is open. Okay.

First of all, the first problem is that we see that our income guidance for the second quarter is very positive, and we can achieve a positive growth. At the same time, in May, we also released a few new products. I want to know about the current market feedback of these new products, and how we can look forward to the recovery of the domestic electric two-wheeled vehicle sales in the second and third quarter. So this is my first question. Seeing that our income guidance, revenue guidance in the second quarter was very positive. We achieved young year positive growth. And at the same time in May, we also released several new products. So what is the feedback from our dealers and the market after the product listing, and how do we expect the domestic sales volume recovery in the second quarter and third quarter? In addition, will other new products to be launched in the second half of this year, and what are their main market segment targets?

So Jun, I guess it's okay, I'll respond in English for the general audience. I think one, with the new product, with the four new products, I think the ML is already out. The G400, G400T, we haven't really announced the price or accepted taking orders yet. But with our first product, the MQL, we actually got a huge response from the dealers, from the consumers, and from the market, and even from the social media. So I think that's a... Even the first week, within the first week or so, I think some of the dealers are committing almost more than 15,000 units. And so we're actually in a rush. I think the issue, looking at it in a month basis, is probably somewhere around 30,000 to 40,000 units ordered. But the issue we have right now is actually need to run public production. I think that was a good response from the market. I think the reason it has a good response from the market is because it comes from a legendary product. It's the M series, our orange M series, announced in 2016. Basically, it was the all-time awards winner product. We actually have people sort of yelling out saying they want to have something product that looks like M. upgrade, but actually adapt, also compatible with the new China New Standard. I think that's what that is. Now, with going forward to Q2 and Q3, I think we have two or three products in the pipeline. So basically, we're looking at this year, we'll probably have product coming out in May, June, July, and August, and potentially September. So I think that's the layout. We have quite a few new products. Most of those products are going to focus on one, the premium end, and the second, the mid-end, with potentially one sort of entry-level upgrades. I think we're very optimistic. We're very confident with the new product offerings. I think this actually reflects how we forecast our Q2 earnings. Having said that, I think with the respondent market itself, we do take a more cautious view. I think in terms of overall market sizing, we take a cautious view in terms of the market does observe some sort of, at least in some of the provinces, we observe like a market slowdown because the product replacement happened last year. And the second, I think some of the previous question mentioned with the price war, we do see it's happening at low end, but we don't know whether actually we extend to the mid-end prices So this is something we take cautious view. On the positive note, there is a trend where we do see the lithium carbonate pricing came down quite a bit from the peak of last year, which means there will be a downward pressure on the lithium battery prices, which means that with the lithium battery prices coming down, The percentage of lithium scooters as the overall percentage of electric scooters sold in China, that percentage will start to come back up, and that's where our target market mainly. So I think that will actually help us a little bit, basically on the Q2 and Q3, especially Q3.

Thank you, thank you, Mr. Yin.

And my second question is about the overseas expansion and progress of skateboarding. In the first quarter, the sales of skateboarding is not too high. If we look at it from our side, I don't know what the market demand of skateboarding overseas is like. In addition, how much do the market and entrepreneurs accept our products and new products? So my second question is about how is the offline distribution network expansion of our Kik scooter? And the sales volume of Kik scooter in the first quarter is not very high. So from our perspective, what is the overall market demand of KickSchoolers in the overseas market. In addition, what is the acceptance of our products and also new products by the market and dealers? What is our annual sales targets and how to look forward to the quarterly performance in the future?

So I think one, with the KickSchoolers, as made today, we have been to 400-plus offline channels in the United States. I think those are mainly the Best Buy, Best Buy mainly, and also Walmart. And then we are also in about 400-plus channels in the, I think, in Europe, which is a typical sort of the Mediamar, ECI, those ones. I think the, so in terms of offline channel expansion, I think that's completed. The, now with the Q1 this year, I think the issue with the Q1 has also been a, traditionally has been a low quarter in terms of kick schooler sales. So I think that's why you don't see the Q1 year-on-year increase significantly. Second, it's a, the also, because I think what happened is I think one minor detail I didn't mention on the call is with the typically with our you know with the moped I think what happens when the moped distributor order it takes a month a month and a half to ship the moped to the you know to Europe that's where you know you ship in Q1 you start to see the sales in Q2 With kick scooters, a lot of actually our current business model is actually we have kick scooter inventories in Europe. So low season is actually low season. You don't see this sort of like a three-month lag. I think that's what happened where Q1 is low season, so they decide not to order too much. They just match whatever sales out. And I think we expect Q2 and Q3 really start to pick up. I think throughout the whole year we expect this business to grow about 2 to 3x. Whether we land at 3x or whether we land at 2x, I think it really depends on how we perform in Q2 and Q3, and also depends on how I think the oil market responded. I think historically in the past the oil market has been saying the market has been growing at a double digit. But this year, I think we'll also take a cautious view. But regardless, I think from our point of view, even when we do about 3x, that's only a 300,000 unit sales, compared to overall markets, about 4 million units. So we're still a very, very small player. Even when we do about 300,000 sales out of that 4 million units, you're talking about really just 7% of market share. to a very small market player there, which means actually we do have a tremendous growth potential.

Okay. Thank you very much for your detailed answers. And this is all my questions. Thank you.

Thank you.

Thank you. We'll now move on to our next question. Our next question comes from the line of Scarlett G from Credit Suisse. Please go ahead. Your line is open.

Hi. Thank you, management, for the introduction, and congrats on winning great orders for the new launched products. So I have two questions. The first question is, could you share the order flow of other product models? And my other question is, would you keep your full year 2023 target in both the sales volume and the sales revenue? Because if I add up the first quarter revenue and the guided second quarter revenue, it totally accounted for around 30% of the whole year revenue target. Any actions you would like to take to

um realize the targets or would you like to change thank you yeah so i think just uh first respond to the quick address on the revenue percentage question um i think this this year we're looking at it's actually a uh you you will look at this year sort of a rebounding case where um the you know the q1 compared with last year Q1 with a drop because it was the last year Q1 with a pre-price increase. That was an unfair comparison. We expect to really have Q2 start to get back to the gross momentum and with Q3 and Q4 looking for a quite significant growth over the last year. Issue being that, also, I think this is also related to how our new product going out. With the first new product going out in May, which means, or in mid-May, which means actually only able to impact about half of the Q2. Where Q3 and Q4, you're going to see sort of a full impact of the new product coming out. So I think that's on the China side. Similar thing in the international side as well, where I think really, as I mentioned earlier, the Q1 with the kick schooler, it's a low season. So it's unfair. It's the year-over-year growth. It's only like, what, 16% less. Where really, the whole year you look at a 2x or 3x growth, which means that the growth in Q2 and Q3, Q4 will be more significantly than the first quarter. I think that's where you would see a typical range. And I think it's a combination of rebounding from a downward momentum last year and also a product roll-off schedule. That's where we expect to see a faster growth in the second half this year versus the first half.

Okay, thank you very much. My other question is that, can you share the order flows in hand for the other product models? And for the new product, new launched products, when will you start to deliver?

I think, you know, currently, I think what we see is actually about roughly about 50% orders from actually the newly launched models and, you know, 50% from the existing models. I think that's what we see in May. So we don't have it for looking in June because there are two new products coming out, the G400, G400T coming out in early June and how that reflected the orders.

Okay, got you. Thank you very much.

Thank you. Once again, as a reminder to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. There are no further questions at this time, so I'll hand the call back to CEO Dr. Yan Li for closing remarks.

Thank you, operator, and thank you all for participating on today's call and for your support.

We appreciate your interest and look forward to reporting to you again next quarter on our progress. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by. Thank you. Thank you. you Bye. Thank you. Thank you. Thank you. 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 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 27.5% year-over-year. 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 focus 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% on total sales of our premium product lines. 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 MQL, the G400 and G400T, and the RQI. I'll share some of the product highlights with you. First, we introduced the MQL, the next-level flagship product. that incurs 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 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 is 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 the 18 kilowatt motor, the R2i can accelerate to 50 kilometers per hour within just 2.9 seconds. The R2i also includes many of the smart features. The RS-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 a premium brand through user-engaged activities and marketing campaigns. The new Innovative Ambassador program, where selected core users and KOLs serving as a culture ambassador for new brands launch 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-over-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 featured 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 kick scooter product 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 as the Best Scooter Company by the Micro Mobility Awards. With the market presence we have built throughout the micro mobility 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 moped. And their content gathered more than 40 million views. Only to their broad reach and wide acceptance, our products have also been featured and placed in multiple TV shows and movies. We are pleasantly surprised to see our product appears in movies like Murder Mystery 2 and TV shows like Drew Barrymore Show and 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 market. 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 has 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.

Thank you, Yan. And hello, everyone. Please note that our press release contains all the figures and comparisons you need. And we have also Excel format figures for our IR website for your easy reference. As I review our financial results, I'm referring to the first quarter figures, unless I say otherwise. And all monetary figures are in RMB, if not certified. During the first quarter, our company achieved a total sales volume of 94,000 units. Of this figure, 81,000 units were sold in the Chinese market, while the remaining 13,000 units were sold overseas. And the sales performance in China was mainly driven by the premium Niyun series and mid-end Gova series, which accounted for a significant percentage of the sales volume. Those two series represented 94% for the total sales volume for the quarter, which is a notable increase compared to the 70% shares in the same period of last year. In terms of the overseas sales, we continue to experience stable year-over-year growth in micromobility sales. Total revenue for the first quarter amounted to $417 million, reflecting a 28% decrease compared to the same period of last year. Schooler sales contributed $358 million to the total revenues. Analyzing the schooler revenue by rating, we observed the revenue from the Chinese market amounted to $305 million, representing a 33% decrease. This decline was primarily driven by the decrease in sales volume of an entry-level series as discussed earlier. However, with the change in product mix, particularly with the introduction of the high ASP SQI model, our China scooter market had an increase in ASP from RMB 3072 to RMB 37403. marking a 22% year-over-year growth and maintaining a stable level quarter-over-quarter. The overseas scooter revenue, including e-motorcycles, e-mopeds, kick scooters, and e-bikes amounted to $53 million compared to $66 million in the same period of last year. This decline was primarily due to the lower sales volume of e-mopeds and e-motorcycles. However, there was a significant growth in micro-mobility revenue, which witnessed a remarkable year-over-year increase of nearly 90%. In particular, kick scooter revenue surged by 62%. It is worth noting that the kick scooter ASP also experienced a significant rise of 46%, apart from the consistent increase in the sales volume. And these impressive results were largely driven by the high-end KQi3 series, which accounted for two-thirds of the total kick scooter sales. Due to the higher proportion of kick scooters' revenue, which has an ASP around one-fourth to one-third of the in-motorcycle and in-motor pack, the blended ASP for overseas scooters decreased by 8% to 4138. And the revenue from accessories, spare parts, and services amounted to $59 million, marking a 13% increase compared to the fourth quarter of last year. And this growth can be primarily attributed to the expanding popularity of our NIU application service subscription. And the fourth quarter growth margin increased by 2.6% year-over-year, reaching a 21.7% And this improvement was driven by various factors, including 0.9 PPP increase in kick scooter gross margin, 0.8 PPP improvement in product mix and price increase in domestic market, and 0.9 PPP boost from the non-scooter sales with a higher gross margin. Our fourth quarter OPEX amounted to $157 million, representing a 10.3% increase. compared to the same period of last year. Among the total expenses, selling and marketing expenses reached $72 million, slightly rising by $2 million year-over-year, primarily due to the increase in depreciation and optimization expenses. Research and development expenses amounted reflecting a reduction of $7 million as we have successfully lowered the cost and improved efficiency in this area. G&A expenses were $50 million, $19 million higher, and we have made a provision for credit loss for $21 million. However, if we exclude this provision, G&A expenses decreased by 6% compared to the previous year. With the expansion of our overseas business, the scale of account receivables, which served as the basis for calculating the bad debt provision, had also grown accordingly, and we have observed the European consumer sentiment remains cautious, leading our distributors to request extended payment terms due to the weak retail sales. Despite increasing credit loss provisions for overdue payments in a prudent manner, We maintain an optimistic outlook on receivable collections in the future, as our partners are in sound financial positions and have continued making payments during this period. The OPEC says percentage of revenue increased primarily due to the lower revenue base. In the first quarter, our net loss was $16 million, with the net margin of negative 14.5% under the gas measurement. compared to the net loss of $29 million with the net margin of negative 5.1% at the same period of last year. And turning to our balance sheet and cash flow, we ended the quarter with $860 million in cash, restricted cash, term deposits, and short-term investments. Our operating cash flow amounted to $66 million, primarily driven by a seasonal settlement of $95 million. in payment to the upstream suppliers. However, we successfully decreased our operating cash outflow by $101 million compared to the first quarter of the previous year, thanks to the negotiated improvements in credit terms with our suppliers. Our capex for the first quarter amounted to $16 million, reflecting a decrease of $44 million compared to the same period of last year. And this reduction can be attributed primarily to the decrease in the opening of new stores in China. Since the second half of last year, our channel strategy in the Chinese market has shifted from the rapid store expansion to things for sales performance improvement. And now, let's turn to the guidance. As we enter the peak season and launch our new products, we are aiming to get back to the growth track and expected the second quarter revenue to be in the range of RMB $828 million to $952 million, representing a year-over-year flat to 15% increase. And please be aware that this outlook is based on the information available for the date and reflects the company's current and preliminary expectations, which were subject to change due to the uncertainties relating to various factors. And with that, let's now open the call for any questions that you may have for us. Operator, please go ahead.

Thank you. As a reminder, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again.

Please stand by while we compile the Q&A queue. We'll now go ahead with our first question.

Our first question comes from the line of Yating Chen from CICC. Please go ahead. Your line is open.

Hello.

My first question is the number of our channels has decreased in COVID-1. and how should we understand this trend and how should we look forward in the whole year about the number of our channels?

So let me address this question.

So I think basically you look at the channel has decreased by about, I think roughly about 150 or 160 stores in Q1. I think this is actually reflected to the status in 2022, because towards the end of 2021, we actually had about 1,600 stores in 2021, and many of the stores actually target to lower tier cities where the entry level priced product are being sold. In reality, I think in 2022, with the lithium battery price went up significantly, you can see our entry level product percentage actually dropped significantly from, you know, representing used to be 38% of the sales volume dropped to almost a single digit percent volume. So that's where, you know, in some of the cities or some of the places where those stores have become unsustainable. So we actually took an active approach and then, you know, sort of optimized the stores. I think that's what happened. Now, going forward, I think typically in Q2 and Q3 is the peak seasons. We don't expect we will actually increase the number of stores. I think, you know, looking at this year, I think we'll go back to on sort of a sales store expansions trend, probably Q4 this year, when it's actually coming to a low season sales.

Okay, thank you very much. And my second question is about, as we all know, maybe the two-wheeler industry is witnessing the price war. So how do you view the price war? And will us join the price war?

So yes.

So I think this year, we do observe there's a price war with the biggest players competing and basically competing in the low end market. Basically, in reality, basically below the 3,000, below the 2,500 RMB sectors. I think the reality is we don't actually have the product in that range, in that price range. So I think we're less affected by the price war. So I think our focus is still sort of at what I call the mid-end market and the premium market. product price above 3,500 RMB to 5,000 RMB, and the premium market are the product price above 5,000 RMB. I think in those price ranges, I think they're, in reality, they're less price for involved.

Okay, okay. Thank you very much.

Thank you.

We'll now move on to our next question. Our next question comes from the line of Jing Chan from CICC.

Please go ahead. Your line is open.

Okay. So this is my first question. Seeing that our income guidance Revenue guidance in the second quarter was very positive. We achieved young year positive growth. And at the same time in May, we also released several new products. So what is the feedback from our dealers and the market after the product listing? And how do we expect the domestic sales volume recovery in the second quarter and third quarter? In addition, we have other new products to be launched in the second half of this year. and what are their main market segment targets?

So Jun, I guess it's okay, I'll respond in English for the general audiences. I think one, with the new product, with the four new products, I think the ML is already out. The G400, G400T, we haven't really announced the price or taking orders yet. But with our first product, the MQL, we actually got a huge response from the dealers, from the consumers, and from the market, and even from the social media. So I think that even the first week, within the first week or so, I think some of the dealers are committing almost more than 15,000 units. And so we're actually in a rush of I think the issue looking at it in a month basis is probably somewhere around $30,000 to $40,000 units ordered. The issue we have right now is actually need to run public production. It's a good response from the market. I think the reason it has a good response from the market because You know, it's come from a legendary product. It's the M series, our orange M series, announced in 2016. Basically, it was the all-time awards winner product. So, you know, we actually have people, you know, sort of yelling out saying they want to have something product that look like M, the upgraded M, but actually adapt, also compatible with the new China new standard. I think that's what that is. Now, with going forward to Q2 and Q3, I think we have two or three products in the pipeline. So basically, we're looking at this year, we'll probably have product coming out in May, June, July, and August, and potentially September. So I think that's the layout. We have quite a few new products. Most of those products are going to focus on one, the premium end, and the second, the mid-end, with potentially one sort of the entry-level upgrades. I think we're very optimistic. We're very confident with the new product offerings. I think this actually reflects how we forecast our Q2 earnings. Having said that, I think with the respondent market itself, we do take a more cautious view. One is I think in terms of overall market sizing, we take a cautious view in terms of the market does observe some sort of... At least in some of the provinces, we observe a market slowdown because they the product replacement happened last year. And the second, I think some of the previous question mentioned with the price war, we do see it's happened at low end, but we don't know whether actually we extend to the mid-end prices. So this is something we take cautious view. On the positive note, there is a trend where we do see the lithium carbonate pricing came down quite a bit from the peak of last year, which means there will be a downward pressure on the lithium battery prices, which means that with the lithium battery prices coming down, the percentage of lithium scooters as the overall percentage of electric scooters sold in China, that percentage will start to come back up, and that's where our target market mainly So I think that will actually help us a little bit, basically on the Q2 and Q3, especially Q3.

Thank you, thank you, Mr. Yin.

And my second question is about the overseas expansion and progress of the off-road vehicles. In the first quarter, the sales of off-road vehicles were not too high. So my second question is about how is the offline distribution network expansion of our kick scooter. And the sales volume of kick scooter in the first quarter is not very high. So from our perspective, what is the overall market demand of kick scooters in the overseas market? In addition, what is the acceptance of our products and also new products by the market and dealers? What is our annual sales targets and how to

Look forward to the quarterly performance in the future So I think one with the kick schoolers that you know as may today we have we were being to 400 plus offline channels United States, I think those are mainly the best by best but mainly and also Walmart and then we are also in about 400 plus channels in the I think in Europe, which is a typical sort of the medium R, ECI, those ones. So in terms of offline channel expansion, I think that's completed. Now with the Q1 this year, I think the issue with the Q1 has also been traditionally has been a low quarter in terms of peak school sales. So I think that's why you do see the Q1 year-on-year increase significantly. Second, also because I think what happened is I think one minor detail I didn't mention on the call is typically with the MOPAT, I think what happens when the MOPAT distributor order, it takes a month a month and a half to ship the multi to Europe. That's where you're shipping Q1, you start to see the sales in Q2. With the kick scooters, a lot of actually our current business model is actually we have kick scooter inventories in Europe. So low season is actually low season. You don't see this sort of like a three month lag. I think that's what happened where Q1 is low season, so they decide not to order too much. They just match whatever sales out. And I think we expect the Q2 and Q3 really start to pick up. I think throughout the whole year, we expect this business to grow about 2 to 3x. Whether we land it at 3x or whether we land it at 2x, I think it really depends on how we perform in Q2 and Q3. And also depends on how I think the overall market responded. I think historically, in the past, the overall market has been saying the market has been growing at a double digit. But this year, I think we also take a cautious view. But regardless, I think from our point of view, even we do about 3x, that's only a 300,000 unit sales, compared to overall markets, about 4 million units. So we're still a very, very small you know, small player. Even when we do about 300,000 sales out of that four million units you were talking about, it really is just 7% of market share. It's still a very small market, you know, player there. So which means actually, you know, we do have a tremendous growth potential.

Okay. Thank you. Thank you very much for your detailed answers. And this is all my questions. Thank you.

Thank you.

Thank you. We'll now move on to our next question. Our next question comes from the line of Scarlett G. from Credit Suisse. Please go ahead. Your line is open.

Hi. Thank you, management, for the introduction and congrats on winning great orders for the new launched products. So I have two questions. The first question is, could you share the order flow of other product models? And my other question is, would you keep your full year 2023 target in both the sales volume and the sales revenue? Because if I add up the first quarter revenue and the guided second quarter revenue, It totally accounted for around 30% of the whole year revenue target. Any actions you would like to take to realize the target or would you like to change? Thank you.

So I think just first respond to the quick address on the revenue percentage question. I think this year we're looking at, it's actually a, you look at this year sort of a rebounding case where the Q1 this year compared with last year Q1 was a drop because it was the last year Q1 was a pre-price increase. So that was an unfair comparison where we expect to really have Q2 start to get back to the growth momentum and with Q3 and Q4 looking for a quite significant growth over the last year. Issue being that also, I think this is also related to how our new product going out. With the first new product going out in May, which means, or in mid-May, which means actually able to impact about half of the Q2, where Q3 and Q4, you're going to see sort of a full impact of the new product coming out. So I think that's on the China side. A similar thing sort of in the international side as well, where I think really, as I mentioned earlier, the Q1 with the kick schooler is the low season. So it's unfair, it's a, you know, the year-on-year growth is only like, what, 16% less, where really, you know, the whole year you look at a 2x or 3x growth, which means that the growth in Q2 and Q3, Q4 will be more significantly than the first quarter. I think that's where you start, you will see this typical range. And I think it's a combination of rebounding from a, a downward momentum last year and also a product low off schedule. That's where we expect to see a faster growth in the second half this year versus the first half.

Okay, thank you very much. My other question is that can you share the order flows in hand for the other product models? For the new product new lunch the products when will you start to deliver?

But I think you know currently I think what we see is actually about roughly about 50% orders from actually the The newly launched models and you know 50% from the existing models. I Think that's what we see in May so we don't have a for looking in June because there are two new products coming out, the G400, G400T coming out in early June and how that reflected the orders.

Okay, got you. Thank you very much.

Thank you. Once again, as a reminder to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. There are no further questions at this time, so I'll hand the call back to CEO Dr. Yan Li for closing remarks.

All right. Thank you, operator, and thank you all for participating on today's call and for your support.

We appreciate your interest and look forward to reporting to you again next quarter on our progress. Thank you.

This concludes today's conference call. Thank you for participating.