Niu Technologies

Good day, ladies and gentlemen. Thank you for standing by and welcome to the NEHOR Technologies First Quarter 2025 Earnings Conference Call. At this time, all participants are in a 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 Lee, Investor Relations Manager of Nehorn Technologies. Ms. Lee, please go ahead.

Thank you, Operator. Hello, everyone. Welcome to today's conference call to discuss new technologies resolved for the first quarter of 2025. The earnings press release, corporate presentation, and financial spreadsheet have been posted on our Investor Relations website. This call is being webcapped from our company's IR set 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 Education Reform Act of 1995. Forward-looking statements invoke risks uncertainties, assumptions, and other factors. The company's actual result may be materially different from those expressed today. Further information regarding the risk factors is included in the company's public rulings with the Security 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 a discussion of certain non-GAAP financial measures. The press release contains 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, Mi-Psiang Zhou. Now, let me turn the call over to CEO Yan.

Thank you, Crystal. Hello, everyone. Thank you for joining us today. In the first quarter of 2025, will achieve a total sales volume of 203,000 units, marking a significant 57.4% year-on-year growth. Behind its strong performance was a 66% year-on-year increase in the sales volume in the China market and a 6.4% year-on-year growth in the overseas market. Total revenue for the first quarter reached to RMB 682 million, reflecting a 35% increase compared with the same period last year. The gross margin rebounded to 17.3%, with 4.9% year-over-year increase, primarily driven by the pump cost reduction, product platformization, component standardization, and procurement cost improvement. The performance in Q1 2025 has set a tone for the rest of the year, underlying our drive for high volume and revenue growth, as well as the profitability improvement. Taking a closer look at our performance in China, Sales volume reached to 183,000 units in this quarter. Our focused product portfolio strategy emphasized on technology innovation and expanding sales channels, as well as targeting marketing strategy for the key drivers to the strong domestic performance. In Q1 2025, we maintain our focus in our key product strategy of N, M, and U and F series. We enhanced our existing products through upgrading and refining our product portfolio, which led to an optimized product mix and offered our customers an even more enjoyable riding experience. Additionally, we stepped up our motorcycle offerings and introduced models like NX, NL, and FX. The expansion diversified our electric motorcycle range and helped to broaden our sales channel. First, we successfully launched a comprehensive range of electric motorcycles, including the MX, ML, and FX series, spanning price range from RMB 4,000 plus to over RMB 10,000. Each model features significant enhancement in functionality and smart technologies, aligning with our new performance and safety standard. Those additions have significantly expanded our electric motorcycle portfolio, offering consumers more diverse options while reinforcing our position as a premium brand in the electric two-wheeler sector. To delve into the details of each product, on March 21st, we first launched the NX Pro motorcycle, priced at RMB 9,999, positioning it as the speed champion among the sub-10,000 RMB electric motorcycles. It's equipped with 72V, 42Ah high-energy DTM battery, offering a range of over 90km on one charge. Powered by a motor with a peak power of 6kW under Boost mode, it hits the top speed of 80km per hour and accelerates from 0 to 50 in just 5.4 seconds. The 8Ah Intelligent Fast Charging System allows for full charge in only 5 hours. The NX Pro received around 2,000 pre-orders and set a sales record on a platform like Douyin, JD.com, and Tmall on its launch day. This model has established itself as a pioneer in the high-end two-wheel motorcycle market, reinforced news reputation for high performance, and attracting a younger demographic that values speed and innovation. It significantly boosts our presence in the premium electric motorcycle segment. We also launched our entry-level NL, the Smart Electric Motorcycles. Key upgrades include an enlarged footboard, extended seats, and expanded storage compartment. It comes equipped with advanced intelligent features such as full-color display, TFT display with a screen measuring navigation, as well as OK Go and Go ZZ technologies. Powered by a 2,000-watt peak power motor, the NL reaches a top speed of 35 kilometers per hour and includes a TCS as the standard features. Priced at RMB 4,799, the NL offers a compelling combination of performance, market technology, and affordability. We also expand our S series with the FX Pro, FX Sports, and FX CD, completing the S series product lineup on the motorcycle side. With their aggressive design, those models now come with enhanced features, such as full-color TFT display, expanded battery compartments, offering options of 72-volt 42mAh lithium batteries or 72-volt 35mAh lead-acid batteries. Those models deliver a 45% increase in the top speed and a 72% boost in the peak input power. The S series also features dual-channel ABS and a magic wheel, which significantly enhance playability and ease of operation, establishing F-Series as a performance powerhouse. We launched F-Series on May 13th across platforms such as Tmall, JD, and DOE, and this series is set to start in Q2. Now, besides the electric motorcycles, we have also integrated those technologies into our electric bicycle lineup, elevating the categories with innovation technologies We start with the popular signature electric bicycle models such as NXT, NLT, MT, and MMT. Those approach bring a premium electric motorcycle experience to the electric bicycle categories. The NXT launch on March 21st stands out as the first left-axis electric bicycle equipped with dual-channel ABS, a 12-inch full-disc motor, and a standard boost launch mode. The NXT seamlessly incorporates top-tier electric motorcycle features. Those investments have made a highly favored choice among the consumers, setting a new benchmark in the electric bicycle market. Now, we also unveiled two new models under the M series targeting the female users, the MT and MMT. The MT stands out for its ultra-compact design, vibrant color options, and user-friendly features like Gopi Go systems, making it especially suitable for female users seeking convenience and style. The MMT, a smaller model, embraced the iconic M-Series design with fresh, colorful aesthetics and a comfortable riding experience tailored to a diverse preference of Gen Z female users. As a product line targeting those demographics, the M-Series accounted for an impressive 32% sales in Q1, reinforcing its appeal and market success. Now in Q1, our search Strategical emphasis on standardizing those key product platforms has shown a sign of progress. They enhance our R&D process and also reduce our bump cost, contributing a significant improvement of our gross margin in the China market. The positive impact is evident in Q1 2025. Besides the product, we also roll out a series of features and smart technologies, such as a full-function 5-inch TFT display, the Magic Wheel, all those focusing on stimulus driving experience, AI smart control assistance, and AI smart ecosystem features. Also, in terms of driving safety, we have partnered with Galdo Maps to develop an industry-pioneered data-driven dynamic safety warning system. The system's forcibly advanced functionalities include one-spot warning, a rear vehicle approach warning, and AI piloted traffic light navigation. This has already been implemented in our new NX-NXT models, with a more advanced feature to be released in Q2 and Q3 this year. We're aiming at a significantly enhanced writing safety and uplifting overall writing experience for our customers. Now, in the last quarter, we also continued to enhance our brand influence of our products among the target consumer groups, especially the premium consumers and Gen Z writers. On March 21st, the launch of our NX Pro was marked by a strategic partnership with the renowned Game for Peace. This collaboration introduced a new cup-raising tournament within the game, which quickly topped the trending list on platforms like Weibo, Douyin, and Xiaohongshu. The advertising campaign spent over 115,000 placements across 16 major cities, targeting prominent landmarks. key business districts and subway systems, and offices and elevators, garnering over 2.4 billion views. Also on May 13th, we debuted our electric motorcycle matrix product, targeting the premium users and Gen Z users, with the NX and also the FF series. The launch became a milestone in 2025, with stocking sales of over RMB 100 million sales in just the first five hours and the volume of Lastly, in terms of channel expansion, we continue our previous strategy, which focused on penetrating the previous underrepresented market in China, strategically expanding our retail footprint to ensure our product reaching a broader consumer base. We have expanded our retail footprint by opening about 384 new stores in Q1. with significant focus on Tier 3 and Tier 4 cities, accounting for 50% of the new opening stores. This strategic expansion refined our distribution network and also paved the way for upcoming launch of electric motorcycle products in Q2. Additionally, our online presence has been strengthened with sales improvement across multiple online channels, such as our official brand accounts, the regional localized accounts, 400-plus store accounts. This multi-tier strategy has hosted about 10,000 live broadcasts, generating 430 million views, marking a 6x increase compared with Q1 2024 last year. This has significantly boosted our online visibility and customer interactions, contributing about 100,000 units of sales, representing 60% of our total sales volume. Now let me turn you to the overseas market. In the overseas market in Q1 2025, the sales volume reached 20,000 units. Within the overseas market, we focused on the electric two-wheeler market, which is electric mopeds and electric motorcycles. The electric two-wheeler market achieved an over 3x increase due to the readiness we put in place on the direct distribution operation in key countries such as Germany, Italy, and France. And those direct operations contributed more than 50% sales in Q1. Now with the logistics financing CRM system, also the on-the-ground team, we have really built the operation in those key countries and accelerated internet network expansions. By end of Q1 2025, the number of dealers in those direct distributed regions have increased from 120 to 180 dealers. with projection to reach about 250 dealers by mid-2025, exceeding our initial forecast. We have also introduced a full line of electric two-wheeler products, mainly from 50cc equivalent L1E models to 125cc equivalent L3E models, as well as the off-road motorcycles. Those products price between €2,000 to €4,600 catering to a diverse consumer needs. Now the first batch of new product was shipped in Q1 2025 and now it's being stocked in local warehouse ready for the peak season sales in Q2. Now with those full line-up of electric tooler products, specifically electric motorcycles, multi-type operator motorcycles, and also the direct distribution operation in place, We anticipate exponential sales growth targeting the 3 to 5x increase in 2025, with Q1 as the early indicator of such growth. Now, the fast growth in the electric two-wheeler sectors with the direct distribution region sales anticipate accounting for 60% to 80% sales will contribute significantly to our profitability turnaround in the international market. Now for the micromobility market for the international market, such as the kick scooters and also the e-bikes, Q1 2025 is the underperforming quarter with nearly flat volume growth and delayed profitability turnaround due to the tariff situation in the US and also the inventory clear out in Europe. In Europe, our Q1 sales focus on sales out of outdated inventories, hence have impact of gross margin and profitability. Those other inventory impacts will continue partially into Q2, but we expect to minimize those by the second half of this year. Now, in the U.S., due to the uncertainties around the tariff situation, we deliberately hold back the sales of existing inventories in the U.S. market in Q1 for more clarity. We have implemented price increases in online channels in Q1 and negotiated with offline channels for price increases to be effected in late Q2 and early Q3. Now, for the supplies to the US market, our manufacturing in Southeast Asia have already dispatched our first deliveries in late Q1 2025, taking advantage of the 10% tariff window. The ship product has not been reflected in the sales yet.

Now, we are carefully watching the tariff situation.

However, with the negotiated price increases and the inventories prior to the tariff hike, We expect to regain profitability for the second half in 2025 for the US micro mobility market. Now, overall, we remain optimistic about the China market in Q2 2025, building on strong foundation in product channel development and also the brand momentum. This has already produced the positive initial results in Q1. On the product side, we'll continue to focus on our product portfolio around our core N, M, U, and F series. The launch of a newly upgraded Inland F series in Q2 is expected to elevate our brand attractiveness and recognition within the high premium consumers and the Gen Z customers. Simultaneously, the launch of a motorcycle product has diversified our product portfolio, offering consumers a wide array of options. Also, we have moved up the launch of a new product in Q2 to May 13th, right before the China top sales season of June 18th to take advantage of this. Now we'll continue to expand our sales channels, expecting to add in another 300 to 400 stores in Q2. The channel expansion will drive sales growth, but also shows the sign of channel momentum turn around this year. Now lastly, we'll continue to improve our gross margin as the results ratio will be a product platform evaluation in Q1. And finally, we have worked diligently to modify our current product lineups to create a new design style to cope with the new electric bicycle standard in China to be in place in September. We'll have a solid product line-up in development ready to be in the market by then. Now, looking at the international market, with the trend we observed in Q1 and early Q2, we anticipate a steady growth in the overseas market and turnaround profit loss this year. In the electric cooler market, With a complete product portfolio and established direct distribution operations, we anticipate a hyper-growth in both revenue and profit contribution. The sales growth we saw in Q1 is a testament to this foundation we have built. In the following quarters, our focus will be on expanding the direct distribution operations as it yields a higher contribution margin. For the micro-mobility market, even with the turmoil on the tariffs, we have started to observe a turnaround sign from the profitability perspective. With the clearing out of the out-of-state inventory in Europe, as also the clarity with the US tariff situation, we expect to rebound with the moderate growth and a significant improvement in the profitability. Now I'll turn over to our CFO, Fian Zhou, to talk about the financials.

Thank you, Yan. And hello, everyone. Please note that our press release contains all the figures and comparisons you need, and we have also uploaded the Excel format figures to 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 non-GIF, not specified. As Yan just mentioned, our total sales volume for the first quarter was 203,000 units, up 57% compared to the same period of last year. 183,000 units were sold in China, while the remaining 20,000 were sold overseas. The total revenue for the first quarter amounted to $682 million, an increase of $177 million, or 35% compared to the same period of last year. The China revenues were $608 million, accounting for 89% of the total revenues. Of this, the scooter revenue was $546 million, a yearly increase of 39%. This increase was mainly due to the increase in sales volume and partially offset by a decrease in revenue per e-scooters. China Scooters ASP was fell to nearly RMB 3,000. This decline in ASP was primarily attributed to a shift in product mix. The notable increase in sales volume of high-end lead-acid models, as mentioned in the previous quarters last year, has led to a more concentrated retail price range from $3,000 to $7,000. And the overseas revenue was $74 million, representing 11% of the total revenue. The scooter revenues, including electric motorcycles, mopeds, kick scooters, and e-bikes amounted to $60 million, up from $49 million in the same period of last year. And this growth was driven by stronger international demand for electric motorcycles and mopeds, which amount to higher retail price, and the premium pricing of these products also contributed to a year-over-year increase in the overseas scooter ASP, rising from RMB 2,577 to RMB 2,962. And the revenue from accessory spare parts and services amounted to $76 million, a 20% increase compared to the same period of last year due to the increase in the spare parts sales in both China and overseas markets. The gross profit for the first quarter exceeded $118 million, marking a significant improvement compared to $96 million during the same period of last year. And the gross margin was 17.3%, 1.6 PPT lower than the same period of last year, but 4.9 PPT higher than the previous quarters. The domestic market gross margin improved due to the successful cost reduction initiatives, which increased the overall GM by 1.2 PPT. However, the overseas kick schoolers' margins dragged down the total gross margin by 2.8 ppt, primarily due to the three factors, the impact of 25% of the U.S. tariffs implemented last June, elevated freight costs, and aged inventory write downs. The operating expenses for the first quarter were $165 million. remaining flat compared to the same period of last year. However, the OPEX ratio declined significantly from 32.7% to 24.2%. Salient marketing expenses rose by $9 million year-over-year to $150 million, driven by a higher staff cost, advertising and promotional activities, and rental expenses. Salient marketing expenses accounted for 16.8% of revenue, down from 20.9% in the first quarter of 2024. R&D expenses increased by $1 million year-over-year to $30 million, primarily due to the higher staff costs and share-based compensation. The R&D expenses as percentage of revenue is 4.4%, compared to 5.7% in the first quarter of 2024. G&A expenses decreased by 10 million year-over-year to 21 million, largely attributed to the foreign currency exchange gains. And G&A expenses as percentage of revenue was 3%, a notable reduction from 6.1% compared to last quarter in 2024. In the first quarter, we had a net loss of RMB 39 million with a net loss margin of 5.7% under the GAAP accounting, compared a net loss of 55 million with a net loss margin of 10.9% for the same period last year. The adjusted net loss was RMB 31 million with an adjusted net loss margin of 4.6%. And turning to our balance sheet and cash flow, we ended the quarter with our mean $963 million versus $1.1 billion last year in cash, restricted cash, term deposits, and short-term investments. And our operating cash outflow amounted to $154 million. The old capex for the first quarter amounted to 24 million, reflecting an increase of 3 million compared to the same period of last year, and this can be attributed primarily to an increase in the opening of new stores in China. Now let's turn to guidance. We expected the second quarter revenue to be in the range of RMB 1.3 billion to 1.4 billion. an increase of 40% to 50% year-over-year. Please be aware that this outlook is based on information available as of the date and reflects the company's current and preliminary expectation, which is subject to change due to the uncertainties relating to various factors. And with that, we'll now open the call for any questions you may have for us. Operator, please go ahead.

Thank you. If you wish to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. We will take our first question. And the first question comes from the line of Kyle Wu from Citi Research. Please go ahead. Your line is open.

Thank you, operator. Hi, this is Kyle from Citi. Thanks for taking my questions. I have two questions. First is about the sales volume guidance. At the year beginning, we guide 2025 full-year sales volume to be 30% to 50% year-on-year growth. Do we still maintain this volume guidance? Second is about the margin. What's our margin outlook for the upcoming quarters of this year? And also, do we still expect second quarter to see net profit turn around? Thank you.

Let me address the first one.

In terms of guidance for the annual volume we haven't reached, we have not changed the guidance. I think we're on the path.

Okay, for the gross margin annually, actually last year our overall gross margin was only 15.2% overall. And for sure this year the annual gross margin will be recovered from 15%. And for the second quarter this year, we still expected that we will get the profit from the net margin. So the NP is the positive expectation for us.

Okay, thank you.

Thank you. Once again, if you wish to ask a question, please press star 1, 1 on your telephone. We will take our next question. And the next question comes from Yatin Chen from CICC. Please go ahead. Your line is open.

Hello. I have one question. I have seen that the average selling price decreased quarter-over-quarter in Q1, but the gross profit margin improved significantly quarter-over-quarter. So I'd like to know what is the main reason. And what is the outlook for average selling price in subsequent quarters? This is my question. Thank you.

Okay. I'll take this question. Actually, in this quarter, the ESP, especially the China ESP, dropped due to we launched new models. Starting from last year, the launch date of our new models, especially the flagship models, varies each year. For instance, the retail price of MP2025 models, this is this quarter's best-seller. The price range from nearly RMB 4,000 to 5,000. Whereas last year, we launched the NXT in last Q1. This is our last year's top seller, and the price between RMB 6,000 to around 12,000. So the launching date of our new models actually varies our ASP each quarter, but this ASP will smooth if we're looking forward to the following quarters, especially the annual ASP. as we just explained to the market that the ESP will remain almost the same compared to last year, or change a little bit within the single digital change. For the second quarter after this year, actually we expected the ESP, especially in the domestic market, will recover. compared to the Q1 this year, but we will concentrate it. Actually, the model's retail price was concentrated in the range from R&D 3,000 to 7,000, so the ASP will rebound from this quarter's 3,000 RMB to around 3,000 to 3,500 ASP in the domestic market. So this is our expectation in the quarter two's ASP. And as to the gross margin recovered, as I just explained, that this quarter's gross margin recovered especially from our domestic schoolers cost reduction. Since last Q4, we see a dramatic growth margin drop down due to our land assets, motorcycles and mopeds in the domestic market contributed more than 40% of our sales volume. which are 3-5% gross margin lower than the same year in the recent Mayan one and we began to change the smart function platform and also the R&D platform and also the cost reduction from the raw material. And this quarter we saw the benefit from the cost reduction in the domestic market. And in Q2, we think the gross margin will remain at this level but will change you know, a little bit, you know, due to the product mixed in the domestic market. But we're not go back to, you know, lower than 15% as last year showing the figures. This is the gross market and the ASP for this year's explanation.

Thank you very much. That's all my questions.

Thank you. Once again, if you wish to ask a question, please press star 1, 1 on your telephone. We will take our next question. And the question comes from the line of Michael Simmons from Global View SA. Please go ahead. Your line is open.

Thank you. Yes, it's Michael here, Michael Simmons. Hey, Dr. Lee, perhaps I can just ask you a little bit about the balance sheet. I think it's The cash position has kind of come down a little bit. Given what you've just been talking about, it sounds like the second quarter is looking quite good. How do you think the cash position, the net cash position is going to look at the end of the year?

Well, actually, each year, the quarter one, the cash position is the lowest. Since it's the Chinese New Year, we need to clear out all the advance to the suppliers, the accounts payable, and also the notes payable to the bank. So if you're looking back to 2024 and 2023, each year, the first quarter's cash balance is the lowest during the whole year. But at the end of this year, 2025, actually we expected the cash position will grow up starting from quarter two since the peak season, both in the domestic market and the overseas market is coming. And we give a high speed sales volume increase aligned with the revenue increase. And this brought us the operating cash flow inflow starting from quarter two. And we didn't expect a large for the furniture and equipment and also the stores opened. So overall, we think the cash position at the end of this year will be higher than the end of December 31st in 2024.

Great. Thank you.

Thank you. We will take our next question. Your next question comes from the line of Ziyan Wanyan from Southfield Capital. Please go ahead. Your line is open.

Okay. This is Daniel from CIFI Capital, and I have only one question regarding overseas business. As we know that wide scooter revenue has been negatively impacted by tariffs. Electric motorcycle sales have shown growth. How should we interpret the growth rate target for overseas operations under these circumstances? Thank you.

I think for the overseas growth rate, we remain to be, we haven't really changed through our forecast for this year. I think even at the last quarter, when we talked about the last year results and getting the forecast of this year, we know that our electric tool or the electric motorcycle market, the growth rate will be quite high because they start with actually, you know, last year we only did about 3,000 plus units of electric motorcycles. And then during our peak time, we actually did it close to way above 20,000 units. So starting from 3,000 units last year, we look at really a hyper growth this year, looking at somewhere at least 5x to 6x growth on the electric motorcycle side. On the Q1, quarter one, we already see a 3x growth there. On the micro mobility, basically the kick scooters, the US tariff really started to impact us last year when our tariff actually increased to 25% on May 30, post May 31st last year. So that already has an impact on our So we actually start to relocating the manufacturing base from China to Southeast Asia to try to cope with that 25% tariff, where back then in Southeast Asia it was a 0% tariff. So, I mean, this quarter, Q1 this year, you know, we see, you know, basically this tariff Even the Southeast Asia tariff went up to 10%, but the China side actually went up significantly. So we actually consciously made adjustments by holding off the sales for the US market. But if you look at the entire year, I think the demand there with our Southeast Asia manufacturing base in place, also with how we negotiate the price increase with the key US retailers like Best Buy, Walmart, I think we should be able to see that business goes as normal as what we expected at the beginning of the year. But overall, I think with the micromobility, both on the U.S., Europe, I think our key three footprints are U.S. market, well, the entire North American market, basically U.S. and Canada, and also the European market, as well as some of the Australian market, New Zealand market. You know we expect moderate growth. We don't expect that Business grow at 2x or something. We really expect a simple double-digit growth and with the key goal is actually a Turn around the profitability I think if you look at this to international market segment with the electric motorcycle I think it's a hyper growth with the high profitability contribution and And on the kick-scooter micro-mobility market, you really should expect this is a moderate growth, but with the key focus on turning around from a profit loss to a profitability business unit.

Thank you.

There seems to be no further questions. I would like to hand back 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 looking 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.