Niu Technologies

Good day, ladies and gentlemen. Thank you for standing by. Welcome to New Technologies' second quarter 2024 earnings conference call. At this time, all participants are in this anonymous 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. Lee, please go ahead.

Thank you, operator. Hello, everyone. Welcome to today's conference call to discuss new technologies resolved for the second 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 our company's IR site as well, and the 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 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 companies' public fillings 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 included discussion of certain non-GAAP financial measures. The press release contained a definition of non-GAAP financial measures and the reconciliation of GAAP to non-GAAP financial results. On the call with me today are our CEO, Dr. Yan Li, and CFO, Ms. Fionn Jo. Now, let me turn the call over to CEO Yan.

Thank you, Crystal, and hello, everyone. Thank you for joining us today. The second quarter of 2024 continued the growth trend from Q1 with a total sales volume of 256,000 units, reflecting a year-over-year increase of 21%. The China market saw a 16% year-over-year increase to 207,000 units While the overseas market experienced a significant year-over-year growth of 45% to 48,600 units, total revenue reached RMB 940.5 million, marking a 13.5 year-over-year increase. This performance underscores the effectiveness of a strategic focus on expanding product, sales channel, and the market coverage. We have made substantial progress in both China and overseas market reflected in the improved performance and increased recognition from our partners. In China, we focused on enhancing our product portfolio with new offerings around the core series. The new product introduced received positive feedback from users. In Q1, we launched product strategy to focus on target groups and Q2 expanded our product offerings to further meet the diversified needs from the core groups. In the overseas market, we have significantly expanded our sales network for micro-mobility products by partnering with the key retail channels. This expansion has greatly increased our market presence, expected to further drive long-term growth. In the electric two-wheeler segment, we are optimizing our business operations to focus on key markets. We have completed the initial phase of building a foundation of direct sales in key markets in Europe and the United States for our key products. Although the strategy to invest more heavily in local operations takes time to implement in the beginning, we're confident that a direct-to-market approach allows us to adapt more to the local market, thus can bring substantial growth in the long term. Now let me delve into the China market. Our growth is driven by a strategic focus on product portfolio expansion, sales channel growth, and same-store sales improvement. This year, we emphasized on product development on targeting both the high-end premium segment to reinforce our brand premium image, and specific consumer segments like Gen Z and female users. We initiated efforts to expand sales channels by increasing the number of stores, increasing under-penetrated CDs. Additionally, we strengthened our omnichannel approach, integrating online and offline strategies to boost same-store sales. In Q1, we introduced the NXT, or Most Premium Electric Bicycle, priced at RMB $12,899. It quickly became the leading product in segments, equipped with advanced features like full-function ABS, CCS, blind spot detection, a car-grade dash 4, and a millimeter wave radar. Riding on this success, we launched the N-PLAY electric motorcycle and the UMAX electric bicycle designed to appear to the young Gen Z riders. The N-PLAY inherited the classic N design and the UMAX offered a larger form factor, inherited the classic U series design. Additionally, we focused on female demographic by launching the upgrade at U1 in March, coincided with the International Women's Day, combining the classic design with user-friendly and safety-focused features. Those new products are well-received, collectively accounting for more than 50% of all units sold in Q2, underscoring our strict focus on targeting product development. In Q2, we continued the product development strategy to roll out our key premium products and expand the product portfolio for Gen Z and female users. We prepared the launch of NX, our most premium electric motorcycles, which was recently released in the market in July. The NX offers a customizable smart tire pressure monitoring system, high-quality disc brakes, and adjustable suspension for smooth ride. Equipped with the most up-to-date new smart functionality, the NX is priced from RMB $6,500 to $20,900. We believe the product will not only contribute to the sales volume, but also reinforce NX's leading position in the premium electric scooter market. To continue to explore products targeting the Gen Z user group, we recently launched the NTPlayer electric bicycle that inherited the classic design of the N-Series, and it combined the advanced motorcycle-grade hydrolyzed electric bike. Equipped with top features such as keyless ignition, TCS traction control, cruise control at the push of 50 during the ride, The NT is priced competitively at RMB 4,499. For the female consumer segment in May, we released the O Series to complete our product offerings covering the premium female sector. The O Series is designed for young female riders with focused on comfort and looks. It emphasizes easy long distance riding safety, simple operations, and design excellence. Key design features include comfortable seating, ergonomic handles, stable riding triangle in addition to the new smart features to ensure a delightful and comfortable riding experience for urban commuters. The old series was launched in the market on June 1st through our live stream. So our product rollout strategy positions the new portfolio with premium products while also focusing on diversified offering for unique user needs. Each product maintains a consistent design element and new signature halo light to help strengthen our brand recognition in the market. Now for our marketing campaigns this year, we have strategically focused on penetrating target user groups with our new product launches. Statistically, we have integrated marketing efforts aimed at the Gen Z and female demographics. To engage the Gen Z group, we expanded our partnership with JD Gaming, a popular online gaming team in China, through co-branded product launches, live stream sessions, and the gaming competition sponsorship. Additionally, we collaborated with Razer, including launching a new X-Razer XQI Limited Edition and participating in a game competition across 50 universities, generating over 50 million views online. Other initiatives, including a sponsored U18 basketball team game and the running university's new KOL Ambassador programs. With the product focused on female user groups, we launched a targeted sales and marketing initiative. For the O-Series launch, We executed a comprehensive campaign on the Xiaohong tool, leveraging KOL content marketing and influencer events. This included widespread exposures, in-depth user experience, and media coverage. Across all platforms, we have our content around the product released this year, gaining 1.1 billion views. With those marketing efforts and new products, we observed a significant increase in interaction across all social media platforms. This quarter, the new brand received a total of 125 million interactions, representing a 22% increase year-over-year. The growth in interactions on social media platforms indicates that both our product and marketing campaigns are gaining significant traction and effectively resonate with our audience. Now, regarding the sales network expansion, we made an effort to enhance our sales networks through both channel expansions and same-store sales improvements. Driven by the new product introductions, we resume the channel expansion this year, opening 400-plus new stores in the first half, resulting in close to 300 store ads, primarily in Tier 3 and Tier 4 CDs. While this growth is modest compared with our total store counts, it signals the start of a renewed momentum in our sales network expansion. We anticipate a continuous positive trend in Q3 and Q4. In addition to new store openings, our key focus this year has been on improving safe store sales through our omni-channel approach, driving online traffic to offline stores. We significantly increased the effort on the traditional e-commerce platform with online orders accounting for 48% of total orders in the first half, versus last year at 26%. In addition to traditional e-commerce platform, we actively expand our online presence on Douyin, Xiaohongshu, and Kuaixiong. Leveraging a strong content from our influencer network, those platforms became the fastest growing channels. For example, Andouyin will ramp up the in-store live stream sessions across 15 major cities, conducting more than 500 sessions and nearly 2,000 hours of streaming this quarter. By end of Q2, over 22,000 orders were placed on Andouyin compared to a double digit from same period last year. Those efforts improved the same store sales close to 7% year-over-year in Q2, laying a strong foundation for future growth. Now let me turn you to the overseas market. This quarter marks the period of growth and strategic execution. In the micro-mobility category, we achieved a 54% year-over-year growth in volume and launched a key strategic partnership to expand our sales network. For electric two-wheeler segment, we focused on building direct sales operations to revive our market presence in key markets. In micromobility, we leverage our established product portfolio to grow market presence by updating our well-received products with new versions and enhanced channel penetrations in key offline channels. In Q2, we introduced the KQi300 series as a significant update to the popular KQi3 series, offering versatile and powerful options for urban commuting. including the KQi 300p and 300x. Both features advance due to hydraulic suspension system for smooth ride or rough surfaces. Both models include a smart connectivity to the new app, enhancing the overall ride experience with customizable settings and safety features. The KQi 300 sold over 10,000 units in the first few months during its launch, and it quickly attracted attention from influencers, media, and industry. In the first half of 2024, we also expand our micro-mobility offline retail channels in key countries in the US, Germany, and Australia, achieving notable growth in the key market. In the US in July, we announced our strategic partnership entering all 800 plus Best Buy stores. This milestone allows us to reach a wide market across the United States. Udallness Momentum is also collaborating with Walmart, Kohl's, Target, and Home Depot to diversify our product offerings across various channels. Similar expansion efforts were carried out in Europe and Australia. In Germany, our products are now over 400 MediaMarkt Satone stores. And with successful pilot programs, Australia saw considerable progress with JB HiFi stores increasing to 230, and hundreds of book guides and Harvard Norman stores are also displaying our products. Now moving forward, our focus for the rest of the year is to leverage our well-rounded product portfolio and establish a sales network to drive growth in both sales volume and profitability. In response to change the import tariffs to the United States, we have an initial effort to relocate part of our manufacturing outside China. Now shifting to the electric two-wheeler segment, the business decreased by 69% year-on-year in first half 2024, driven by both external and internal factors. Externally, key markets in Europe, like Germany, France, and Dutch region saw a significant drop in the total market volume after withdrawal of government subsidies for clean energy product, leading over a 50% decrease in total market size. Internally, we transitioned to a direct sales model in core market. While this shift will drive substantial long-term growth, it requires time to be fully implemented and realized. By Q2, we have added 100 plus dealers on board in those key countries, and those build a good foundation for future growth when the market starts to turn around. Now, looking ahead, we're optimistic about the coming quarters for both China and overseas operations. In China, we'll continue our strategy of optimizing product portfolio with premium products and Gen Z mass premium products to be announced in this market in July and August. including same-source sales with omni-channel approach and building our market effort around the specific consumer segments. Those adjustments have shown very positive results in Q1 and Q2, and we're confident that this will bring faster growth in Q3 and Q4. Overseas markets expect sustained growth in micro-mobility segments supported by the comprehensive product portfolio and solid-channel presence in the key markets like Germany, US, and Australia. We have observed a strong 32% year-to-year growth in the product activation in July, and those growths are sustainable throughout the year. In the electric tool world market, while we're updating our product offerings, our focus remains on expanding the dealer network throughout the rest of the year to regain the dealer network footprint. Now with that, let me turn the call to Fionn.