Niu Technologies

Good day, ladies and gentlemen. Thank you for standing by. Welcome to New Technologies' fourth quarter 2023 earnings conference call. At this time, all participants are in listen-only mode. Later, we'll 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'll turn the call over to Ms. Crystal Lee, Investor Relations Manager of New Technologies. Ms. Li, 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 has been posted on our investor relations website. This call is being webcast from our company's IR site as well. and the replays 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 Security Litigation 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 the company's public feelings with the Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements, except as required by law. Our earnings press release and this call included discussion of certain non-GAAP financial measures. The press release contained 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 CEO Yan.

Thanks, Crystal, and hello, everyone. In the fourth quarter of 2023, our total sales volume was 137,000 units. Maintaining the same level one year ago with slight year-over-year drop of 0.6%. Specifically, sales volume in the China market dropped by 6.4% to 110,000 units, while sales in the overseas market had a significant increase of 33% to 27,000 units. Total revenue in Q4 was RMB 478.7 million, a decrease of 21%. Those results wrapped up the financial year of 2023. In 2023, the total sales volume was 710,900 units. Total revenue for the entire year was RMB 2.7 billion. Now, the year of 2023 presented significant challenges for new operations. The lingering effect of lithium battery price hike in 2022 continued to impact our sales in the first half of 2023. While the price of lithium battery returned to the normal levels in the second half of the year, Our business faced additional setbacks due to consumption upgrades or downgrades in the top tier cities in China. This trend, characterized by cautious spending behaviors among the premium market customers, resulted in a slowdown in sales. In the international electric two-wheeler market, we encountered challenges both externally and internally. The decline of electric moped market in the key European countries, such as Germany and the Netherlands, coupled with temporary operation disruptions due to issues faced by our distribution partners in Europe, further hindered our growth in 2023. Despite the high winds, our 2023 presented itself a year with opportunities to reflect and refocus our strategy. In the China market, our product strategy remains focused on the premium market segment, enhancing our product line by growing our classic series and also by successfully introduce a more sporty style Falcon series. One notable product released in 2023 is the MQL, the legacy return product updates our iconic M series with significant design performance improvements. In just seven months of launch, the MQL sales volume in 2023 represents 16% of China's total sales. The F-Vulcan series is also another popular series that we introduced in 2023 that quickly became a well-known style besides the classic Halo Lite series with the recent launch F400T, F200, F100 products. The new F series together represents nearly 35% of total China sales. So our dedication to craft a premium product is complemented by our unwavering commitment to build a premium brand. Throughout 2023, we remain deeply engaged in branding and marketing activities, leveraging various user events and cross-brand collaboration to strengthen our presence in China market. We actively participated in exhibitions and roadshows, collaborating with leading lifestyle brands such as the North Face Mountain Festival, SneakerCon, G-Fusion Game Fest, and the Designer Toy Expo. These events provided us with valuable opportunities to showcase our products and elevate our brand presence. Simultaneously, we maintained a robust online presence through a strategic communication and a marketing campaign, predominantly on short video platforms like Xiaohongshu and Douyin. Collaborating with over 600 KOLs and KOCs, our content generated over 250 million views, further solidifying our brand's digital footprint. Furthermore, 2023 saw us embark on an impactful cross-brand collaboration, such as our partnership with globally recognized IP Kumamon, resulting in the launch of new Cross Kumamon G100 scooters. Additionally, in Q4 2023, we established a significant official partnership with JD Gaming, a leading esports team in China and a finalist in the League of Legends World 2023. Moving forward, we'll continue to leverage our strategic collaboration and high-profile events to amplify our brand visibility and reinforce our position in the market. Now turning into the overseas market. In 2023, we encounter a mix of challenges and opportunities. Our electric two-wheeler sales experienced a significant decline of 70%. primarily contribute to the operation disruption faced by one of our key distributors. However, our micro mobility segment saw a modest increase of half a percent year-on-year. Despite the decline in the electric two-wheeler sector, we have initiated efforts to make operational adjustments to improve our performance since the second half of 2023. We continue to introduce new products in 2023 in the electric two-wheeler market. In the fourth quarter, we introduced the RQi, a high-performance urban quad electric motorcycle, to the European market. Its cutting-edge design, swift acceleration, and integrated smart features such as keyless lock and lock, GPS navigation, and OTA updates have been met with enthusiasm from the market. Alongside the RQi, we launched the XQi electric dirt bike. available in two variants, the XQI3 Street for urban riders and XQI3 Wild for off-road adventurers. The XQI quickly garnered acclaim, winning the 2023 Gold Winner of the New York Product Design Awards. Furthermore, 2023 marked the official launch of a new battery swapping solution compatible with our newly introduced F600E moped. This initiative aims to collaborate with partners across Southeast Asia, South America, and Europe to revolutionize the way riders engage with our product by offering quick, efficient battery swaps, thereby opening doors in the markets that we have previously yet to penetrate. We officially kick off the solution in Q4 2023 and expect to have battery swapping cabinets available by working closely with three to five operational partners by the end of the year 2024. In the micro mobility sector, we deliver sales volume slightly higher than the previous year with the increase of half percent. However, the total activation number in 2023 grew by 2x compared to 2022. In product strategy, we focused on rounding our product portfolio to cater a broader spectrum needs. We launched our premium KQi Air and KQi AirX models, constructed predominantly from lightweight carbon fiber for incredible low weight of under 12 kilograms. satisfies our range in micro-mobility categories. With the KQi-Air series, we now brought a comprehensive line-up that spans from high-end innovative design scooters in US$1,000 plus range to a high-performance scooter in the $800 to $900 range to accessible entry-level options in the $300 to $400 bracket. This diverse range lays a strong foundation for anticipated sales growth in 2024. The expanded sales channel of our micro mobility product also played a bigger role in the growth. In 2023, we transitioned from focusing on online sales throughout Amazon and Shopify to a combination of online and offline sales by working with official retail partners like Best Buy, Media Mart, Boulangerie, and more. Through those retail partners, we were able to place our products in more than 1,000 physical locations in the United States and Europe. Our active participation in global expos and roadshows, including the AIM Expo in Las Vegas, IFA in Berlin, and ECMA in Milan, and the Electric Expo in various countries, have significantly elevated news spread visibility. Moreover, our inclusion in popular media, such as the appearance in the movie Murder Mystery 2 and TV shows like Drew Barrymore Show and The Price is Right has pleasantly surpassed our expectations, further enhancing our brand's presence on the global stage. Now, as we move into 2024, our optimism for growth is brought by strategy adjustment laid out in 2023 across our operations. In China, our commitment remains strong towards the premium market segment, focusing on premium product development, targeting very specific consumer segments, channel expansion into Tier 2 and Tier 3 cities, and same-store sales growth via online and offline traffic optimization. In terms of product, back in 2022, we introduced our new classic UQi Plus model, an upgraded U series featuring improved light design, smart control, enhanced radar ergonomics. This model quickly captures market attention and contributes to near 14% of total sales in 2022. Similarly, the MQiL introduced in Q2 2023 as the enhancement of old-time popular M series presented itself as a classic return with a performance improvement. The MQL contributed to 16% of total 2023 China sales. Both models served a clear testimonial to the consumer's preference for a classic design combined with upgrade technology, both in powertrain and smart functionalities. Those design styles are deeply ingrained in the minds of Chinese consumers as premium high quality. The successful launch of the UQI-Plus in the U-Series and MQIL in the M-Series set a foundation for our new product. Now on February 29, 2024, we debuted our newly designed NX-Series, continuing the design style of our first legendary product, the N1, which laid the foundation for our company back in 2015. The N1 was our first electric moped in China and has sold over half a million units since its launch. It has not only become the legendary design for new, but also a classic example of a premium high-quality smart electric scooter in China. However, since 2019 with the introduction of new regulations on China electric bicycles, the N1 no longer met the updated standard and has to be sold as a motorcycle, leading to a decline in sales. Nonetheless, consumers have long been requesting an upgraded N1 that complies with both the regulations for electric bicycles and motorcycles. Now in 2024, we finally debuted the NX series, with the NX representing electric motorcycles and the NXT as the electric bicycle. Both models inherited the design style of the original N1, but refined and upgraded the modern look. The design stands out with a futuristic style incorporating magnetic transparent panels to showcase its front circuitry. The body is designed with sharp yet smooth aerodynamic lines. Additionally, we have upgraded halo light, a signature element shared across our most well-known scooters. In the NF series, the halo light is embedded in the front panel, adding another futuristic touch to the design. The NX and NXT are equipped with our most cutting-edge technology functions to date, making them the smartest electric scooters on the market. For driving safety, they are equipped with the full-function ABS and TCS. Additionally, they feature the BSC, the blind spot detection, and RCW, the rear cross-traffic warning, along with the automobile-grade dash cams in the front and the millimeter wave radar in the back. To further enhance the riding experience, they are outfitted with the interactive PFT display serving as a smart cockpit. This incorporates riding aid features such as keyless start, navigation, remote access, as well as interactive features including lap timing, riding routes, locks, and entertainment systems. Also, to seamlessly integrate with the user's smart device ecosystem, the update also incorporates new smart features like Map for Navigation that are compatible with Apple and the Huawei Harmony system. The integration of mobile features such as voice control, shortcut phone display, and device management, including Apple's Spun My features. Now as one of the highest performance electric motorcycle we ever released, the NX boosted maximum power 20,000 watts with top speed 135 km per hour and accelerates from 0 to 50 km per hour in just 2.45 seconds. The NX-T is available immediately since its launch with pricing from RMB 6,000 to 12,500 while the NX is available in May. The NXT were well received as evidenced by online pre-orders of NXT initially through live streaming of major platforms. With the initial two weeks launch, we secure more than 10,000 units in pre-orders, generating sales revenue exceeding 100 million RMB. This amount is 40% more than compared to our initial crowdfunding campaign for the release of first and one. Those pre-order results positioned us as top seller across all major e-commerce platforms during the period. Now with the successful launch of NX-NXT series targeting the premium motorcycle consumer segments and performance driven electric bicycle segments, we also plan to introduce several products to target diversified user group. For example, our recently upgraded U1 product launched just a few days ago, targeting female users with this new color scheme, ergonomic improvement in handle and seat positions, easy to use smart functionalities, and options to include baby seat and accessories. The key to our product strategy in 2024 is to build our product portfolio targeting the premium consumer segment with diversified needs. Now, supported with those new products, we also plan to restart channel expansion in Q2 2024, building up the channel coverage across Tier 1 to Tier 4 cities. We'll initially focus on the top 45 cities, which represent 80% of our sales. We plan to build sales in the lower tier cities as well. Now, with additional store counts, the key focus for 2024 remains the improvement of same-store sales. leveraging the combination of online and offline traffic. We initiated those efforts in the second half of 2023, conducting over 15,000 live stream sessions on Douyin and Xiaohongshu. We have recorded some successful cases of achieving a GMB of over 100,000 RMB in just one live stream session, indicating a successful online to offline conversion model we plan to further scale up. Starting Q1 2024, we have continued live stream initiatives in 30 key city markets, enabling those stores to sell directly through online live streaming on a daily basis. Additionally, we have planned to launch online sales campaigns and co-create over 10,000 widespread social media content. With those strategies in place, we anticipate improving our same-store sales by 10% to 20% in 2024, driving significant volume growth for the company and enhanced store profitability. Now with our product strategy and retail channel expansion in focus, we aim to further strengthen our brand through marketing and branding campaigns. A recent highlight was our collaborations with JD Gaming Team. Expanding our partnership form last year, we joined forces with JD Gaming Team as their official electric scooter partner. This collaboration extends from social media engagement to product launches and seeks to make a significant impact within the Generation Z demographics. The collaboration with JD Gaming marks the beginning of a serious partnership plan for 2024. We intend to continue our co-branding effort with several strong IPs targeting specific user groups and leveraging social media platforms. Now, in the overseas market, our comprehensive product portfolio, which includes the introduction of MGT-100, RQI, and XQI models in the fourth quarter of 2023, strategically bridge the gap between our product offering the high-performance electric motorcycle market demand. The MGT 100 priced at the Euro 5,000 together with NGT provides a comprehensive coverage from 50cc to 125cc electric moped. The RQI targets the electric motorcycle category offering a high-performance quad-motorcycle option with price starting at 8,000 euros. Additionally, the new dirt bike XQI marks our debut product in the off-road motorcycle sector. Priced at €6,000, the XQI model has garnered significant attention. Our active engagement industry events, such as AM Expo in Las Vegas, Moderator in Dortmund, Germany, has further amplified our brand visibility. At those expos, we brought our latest bikes, providing attendees including influential KOCs with the opportunity to test drive and review our product. The positive feedback and heightened interest from the diverse user group received at those events has been instrumental in solidifying our presence in the market. Most importantly, since the latter half of 2023, we have undertaken substantial adjustment in our business operations in the overseas electric two-wheeler sector. In some of our key markets, in addition to the existing distributors, We are established entities and the operation team for direct distribution of some of our products to retailers. We believe this direct distribution model will enable us to invest more in local branding and marketing, establish strong ties with customers, and make us more adaptable to local market changes. With those operation adjustments, they initially delay the revenue recognition until products actually reach to individual retailer dealers. They will help us create a strong foundation in each local market in the long run. With the comprehensive product portfolio and operational adjustment complete in Q1 2024, we are confident in kick-starting the growth beginning in the second quarter of this year. Now, in the overseas micro-mobility sector, we have established a solid foundation for growth in 2024 over the past two years. Although the book sales volume has remained relatively flat compared to 2023 to 2022, The actual seller volume to customers has doubled as suggested by the activation number increase, and the trend continues at a 2x rate. We believe that our effort in product portfolio building and the sales channel establishment has positioned us well for the further growth this year. On the product portfolio front, with the introduction of the KQi Air, a full carbon fiber lightweight high-performance kick scooter in September 2023, we now boost the comprehensive product lineup Additionally, January 2024 marked the launch of KQi 300 series, an enhancement of popular KQi 3 series designed for old-time use. This KQi 300 series features a dual-tube hydraulic suspension for better handling on an even surface, promising up to a 60-kilometer range per charge and starting at $700. We have several other product upgrade plans throughout the year of 2024. Now, with those products lined up, we made significant progress in entering retail channels in the second half of 2023, laying a solid foundation for growth in 2024. In the U.S. market, we are well positioned in over 800 Best Buy stores and advanced in our efforts entering retailers such as Walmart, Target, and Costco. In Europe, our products are displayed in over 400 Media Mart stores in Germany, over 200 Blanchet stores in France, and we are making progress in placing them nearly 100 core English stores in Spain. Additionally, we are moving forward with new retail partnership with Media World in Italy and retailers in Australia and others. By the end of 2024, we plan to double the number of point of sales of micro mobility products by expanding the retail sales network. So heading into 2024, we're optimistic about regaining growth. In the China market, the excitement surrounding our latest product release has been palpable. Leveraging the momentum gained from the newly released product, we have also a rollout schedule prepared for all the other products throughout the year, as well as the channel expansions. In the overseas motorcycle market, with the ready-to-shift product and the operational adjustment already in place in Q1, we're confident in the growth of 2024. However, those operational adjustments may temporarily result in declining sales in Q1, as the sales are actually booked differently due to the model change. For the micro mobility segment, we anticipate fast growth in Q1 as well as throughout the entire year, given that we have laid out a product portfolio and established both online and offline channels at the beginning of this year. Now, with those factors considered, we anticipate the sales volume in 2024 reaching 1 to 1.2 million units. Now I'll turn to Fiyang to discuss.