Niu Technologies

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the New Technologies first quarter 2024 earnings conference call. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Now I will turn the call over to Ms. Crystal Li, 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 resolved for the first quarter of 2024. 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 site 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 US Private Security Litigation Reform Act of 1995. Forward-looking statements involve risks, uncertainties, assumptions, and other factors. The company's actual results will be materially different from those expressed today. Further information regarding the risk factors is included in company's public feelings with the Security and Exchange Commission. The company does not assume any obligation to update any forward-looking statement, except as required by law. Our earnest press release and this call included discussion 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. Tian Zhou. Now let me turn the call over to CEO Yan.

Thank you, Crystal. And hello, everyone. Thank you for joining us today. In the first quarter of 2024, our total sales volume was 129,000 units, reflecting a year-over-year increase of 37%. Notably, our sales volume in the China market saw an uplift of 31% to 110,000 units, while our overseas market experienced a fast growth of 48% to 19,000 units. Total revenue of Q1 was RMB 504.7 million. marking a 21% year-over-year increase. Q1 2024 was a pivotal quarter to realign our long-term growth trajectory. In the China market, we continue to refine our product strategy, concentrating on the premium segments. We bolstered our competitive product portfolio by enhancing our classic series and broaden its appeal to encompass a more diverse range of vertical user groups. A key highlight of this quarter was a successful long-shot NXT model. The NXT series, characterized by its innovative design and advanced technology, was met with substantial market approval. It contributes 25% of our total sales revenue in China market this quarter, underscoring the efficacy of a strategic focus. Encouraged by the success, we're committed to persisting with this approach and excited about several upcoming product launches scheduled for Q2. The overseas market has met our expectation for regaining growth. In the micro mobility sector, we have focused on expanding our sales channels to establish a strong foundation for product-driven growth for the rest of the year. We have increased our retail presence by partnering with leading retailers such as Best Buy and Media Mart, thereby expanding our physical footprint over 1,200 locations worldwide. For our overseas e-moped and e-motorcycles, we have concentrated on exploring direct sales business models in key markets in Europe and the United States. We believe those strategic efforts are setting the stage for substantial growth in the coming quarters. Now let's take a closer look at the China market We have laid out our product development, conducted marketing activities, and expanded sales channels in Q1, all in alignment with our core strategy for this year. Our goal is to build an urban mobility brand focused on the premium market segment with diversified user needs. At our product launch event in February, we debuted the NX series. This series continues to design our first legendary scooter, the N1, but elevates with the futuristic elements like magnetic transparent panels, aerodynamic lines, and an enhanced version of signature halo light. The NXT, the most premium scooter in this lineup, boasts the most advanced technology to date. The market received the NXT series exceptionally well, marking our initial venture into targeting young demographics with scooter products. To further expand our product lineup targeting the Gen Z demographics, we have introduced the Nplay and the UMAX into the market. The Nplay was officially launched in March at a starting price of RMB $4,399, quickly becoming a competitive product among the young university students. Building on the momentum from NXT and Nplay, we are launching another product, the UMAX, completing our offering for the young consumers. The UMAX is specifically designed for young riders in Tier 1 to Tier 3 cities, attuned to lifestyle trends. It features a large form factor that enhance both visual appeals and the rider comforts, ideally for dynamic urban environment. Performance-wise, the UMAX offers a maximum range of 160 kilometers on a single charge and includes the boost drive mode for rapid acceleration. For safety and enjoyable rides, we incorporate a TCS ensuring a secure and adaptive experience across various urban terrains. Now with the newest addition, our full range of products targeting the trendy young riders is now ready for the upcoming peak quarters. Another target group who aim to expand with our unique position products is the female electric scooter riders. Earlier this year, we released our first female-focused scooter, the upgraded U1E. The U1E features a new color scheme, ergonomic improvement in handles and seat positions, easy-to-use smart functionalities, and the option to include a baby seat among its accessories. Launched at the beginning of March, just in time for the International Women's Day campaign, this model accounted for 12% of total sales volume for the entire quarter, despite being on the market for only one month. Riding on the momentum for the U1E, we are continuing expanding our female focused scooters. The latest addition to our classic M series product line is the MS scooter, tailored to meet the unique needs of female consumers in the premium market segments. The MS scooter showcases the classic and minimalist aesthetics with color schemes in beige white and mint green, creating an elegant and clean style that distinguishes itself from other scooters in the market. This scooter is also engineered specifically to cater to the distinct needs and preferences of female riders, such as the traction control system to ensure a smooth riding experience, a dual tube frame system for enhanced stability, and bolts from the rear disc brakes offering an advanced level of safety. We also expect to introduce another product specifically tailored for female users in the coming days, the O-Series. The O-Series combines an aesthetic design and unique ergonomics to address the special needs of female scooter riders. We plan to release the O-Series on July 1st through a live stream with top influencers, and I look forward to sharing more details after the launch. Now, with the introduction of MS and O-Series, we will soon complete our product line targeting the premium female user segment of the market. As I mentioned in my previous earning call, Building our product portfolio to target various premium segments is a core component of our business strategy this year. I'm pleased to share that we have already received some initial positive feedback with this strategy in place. Now, with our product strategy in focus, we have been actively engaging in continuous marketing and branding campaigns to reinforce our brand identity. Recently, we rolled out a dynamic marketing campaign and broadcast a mix of videos across iconic landmarks in six major cities, significantly enhanced our brand's high-end positioning and robust capabilities. The campaign prominently featured NXT, our cutting-edge flagship product, establishing it as an ideal vehicle for stylish urban commuters. The NXT is designed to resonate with the new generations of trendsetters. The video showcasing key urban centers like Beijing, Shanghai, and Guangzhou has captured the public's attention, a mass of total of nearly 200 million views. Our branding effort also centered around the newly introduced product lines targeting specific user demographics. At the beginning of the year, we announced our collaboration with JD Gaming, a top performing esports team. As their official electric vehicle partner, we collaborate, ranges from brand activities to product launch. aiming to make a significant impact on the Generation Z demographic, which align with our product focus. To further bring up our product presence among the young users, we have an initiative to collaborate with top gaming peripherals brand Razer. Last year, we released the co-branded new Cross Razer SQI Limited Edition, and this year we're taking the partnership one step forward to collaborate as Razer's brand ambassador In May, you join Razor to host gaming events in various universities by presenting a Razor-new co-branded scooter. So far, the event has covered numerous universities with 2,000 event attendees. In addition, during the period, we have generated widespread content on social media for more than 2 million views. We plan to carry out a series of student events throughout 2024 with 100 plus universities to host the event. Now to engage the female demographic effectively, we have launched a series of online campaigns specifically tailored to introduce scooter design for female users. In Q1, with our upgraded U1E scooter through a live stream campaign led by a prominent influencer, gathered a significant traction that positioned us as the top brand in the mobility category during the campaign period. Now, throughout the launch of this flagship product, we continued our online campaign effort. We collaborated with over 70 KOLs in the industry and created approximately 200 pieces of high-quality content, which generated 80 million views across various platforms. Now, let me turn into the overseas market. This quarter, we have witnessed a year-over-year growth of 48%, driven by the micro-mobility sector, with year-over-year growth of 63%. The growth in the micro-mobility sector is a combined result of product offering expansions and the sales channel lineup. On the product portfolio front, with the introduction of the KQi Air, a full carbon fiber lightweight performance kick scooter in last year's September, we now have a comprehensive product lineup. To further complete our product offerings in Q1, we launched the KQi 300 series, which is the enhanced upgrade of the popular KQi 3 series, designed for all urban terrain use. The series featured a dual-tube hydraulic suspension for better handling on uneven surfaces, promising up to 60 kilometer range per charge. Starting at $699, the KQi 300 series was met with great popularity upon its pre-order period. The KQi 300 will be officially made available in Q2 this year, and we believe it will lift the sales volume in the coming months. Now with our comprehensive product lineup, we've made significant progress in entering retail channels since the second half of last year, laying out a solid foundation for the growth. In the United States market, while well positioned in 800 plus specified stores, and are advancing our effort to enter additional retailers like Lowe's, Home Depot, Walmart, Target, and Costco. In Europe, our product is played in over 400 MediaMarkt stores in Germany, over 100 Boulangerie stores in France, and over 100 Media Mart and Core English stores in Spain. We are working closely with our retail partners on marketing campaigns to boost sales, which proved effective during the first quarter. During a pilot promotion with our German retailers, we witnessed a year-over-year growth of over 300% in scooter activation numbers in Germany. To further expand our retail partnership, we are actively moving forward with new retail dealers such as Decathlon in France, Media World in Italy, and others. Through our retail network expansion effort, we aim to double our retail footprint, selling micromobility products by end of 2024. Now, the electric two-wheeler sector in Q1 is marked by a significant transition in both our product portfolio and operating models across core business markets in the US and Europe. Last quarter, we introduced the MGT-100, RT1, and XQI models, all of which has garnered considerable attention and strategically filled the gap in the market, offering a comprehensive coverage from 50cc to 125cc electric two-wheelers. The XQI recently received the prestige Red Dot Award in April this year, joining a few other new legendary products that have received this honor. Although this product encountered temporary logistics delays, we anticipate they will be fully distributed in the targeted market by second quarter 2024, aligning perfectly with the peak sales season. And during this quarter, we have made a significant adjustment to our business operations in overseas. In several key markets alongside our existing distributors, we're establishing local entities and operation teams to manage the direct distribution to dealers. We believe those direct distribution to dealer model allow us to invest more heavily in local branding and marketing effort, establish a strong customer relationship, and increase our adaptability to local market fluctuations. While those operation changes require time to fully implement and direct to dealer model has extended the sales and revenue recognition period, we're confident this strategy not only deepen our roots in those local market, but also drive substantial long-term growth. Aligned with our updated product offerings and expansion of sales network, our branding effort in Q1 has been actively pursued internationally. We focused on both enhancing our with our sales network, including the distributors and dealers, by sharing our plan for the upcoming quarters. To build and fortify our brand presence, in Q1, we actively participated in major industry events, such as NIM Expo in Las Vegas, Motor Raiders in Dortmund, Germany, and the Salon du Tour in Lyon, France. Those events significantly amplified our brand visibility. Furthermore, we hosted a series of new Connect events aiming at local media, distributors, and retailers to showcase and introduce our 2024 product lineup. In Q1, we successfully carried out those events in France and Italy, bringing together over 50 partners to provide commercial and technical information on our new products and test drive our new products. Notably, the local media partners, including Clean Right and Moore, have published very positive reviews of our product. We plan to continue the new Connect series throughout the year in various locations, demonstrating our commitment to build a long-term relationship with our partners in the core regions. Now, as we conclude in Q1, we anticipate a continued growth in Q2. For China market, the growth is driven primarily by introduction of new product and channel improvements. We have already witnessed the great popularity of NX series launching Q1, while waiting time to finish release of premium product line MS and O series in the coming weeks. Furthermore, our comprehensive approach to expand channel through both the physical stores and online platforms It ensures that we broaden our market footprint while meeting the diverse needs of our customer base. We actively expand our sales channels to improve offline coverage in O-tier cities to support our products. And with additional new stores, the key focus for 2024 remains the improvement of same-store sales by leveraging a combination of online to offline traffic. In Q1, we conducted over 6,000 live stream sessions on platforms such as Douyin, Tmall, JD.com, and Xiaohongshu. Notably, the newly entered Douyin live stream platform has positioned us as top three brands in this category, indicating a successful online to offline conversion model that we plan to scale up further. In Q2, we have a series of product launch event planned to utilize the online live stream sales network, which will be our channel focus for the coming quarters. As we enter the peak sales season with campaigns such as 618 Online Shopping Festival, we aim to drive further same-store growth. With the product portfolio enhancement sales expansion, we believe we are well-positioned in China market for the rest of the year. However, we also observe a macro sluggish market trend in Q2, and we remain cautious about potential growth in our China market in Q2. For the overseas market, we maintain a positive outlook. In the micro-mobility segment, we anticipate 2x growth throughout the year, supported by our comprehensive product portfolio and established sales network. The introduction of KQI 300 series promise to lift sales volume in the coming months. Our significant progress in entering regular channels has laid out a solid foundation for growth in 2024. We're advancing our effort in entering additional retailers in this key market. Now, in the overseas motorcycle market, with adjustment in product offerings, operation strategy, we're confident to regain growth by Q2. The recent introduction of this new product gathered a considerable attention that strategically filled the market gaps. We anticipate the distribution of the new product in the target market by Q2, aligned with the peak sales season. Additionally, the establishment of a local entity's operation team to manage direct-to-dealer distribution will allow us to invest more heavily in local branding and marketing efforts. We're now working with over 100 dealers in our direct sales network, and we plan to continue to grow those numbers throughout the year. So in summary, our strategic focus on product innovation, targeted market campaign, and robust channel expansion, both domestically and internationally, position us well for the continued growth. We're confident in our ability to improve sales and achieve our business objective in the upcoming quarters. Now I will turn over the call to our CFO, Fian Zhou, to talk about financials.