Niu Technologies

day ladies and gentlemen thank you for standing by and welcome to the new technologies third quarter 2025 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 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 third quarter of 2025. 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 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 cover provision 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 may be materially different from those expressed today. Further information regarding the risk factors is included in company's public feelings with the Securities and Exchange Commission. The company does not assume any obligation and 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. Fiyang Zhou. Now let me turn the call over to CEO Yan.

Thank you, Crystal. Hello, everyone. Thank you for joining us today. In Q3, we delivered solid and sustained progress across all key strategic priorities, supported by discipline and execution in product innovation, channel expansion, and brand elevation. Our results reflect the continual growth of our core China business and early signs of transition in our overseas operations, laying a strong foundation for the next phase of growth. For the third quarter of 2025, the total sales volume reached 465,000 units, representing a strong 49.1% year-over-year increase. This growth was driven primarily by exceptional performance in China, where sales rose to 451,000 units, up 74% year-over-year, supported by our strength in the product portfolio and effective channel expansion. Overseas volume reached 14,000 units declining year-over-year, mainly due to weakness in the micro-mobility sector. Our total revenue grows 65% year-over-year to RMB 1.69 billion, accompanied by a gross margin expansion to a 21.8%, up 8.0 percentage points from the prior year, or 1.7 percentage points sequentially. This improvement was driven by a favorable shift in the China product mix, with increased contribution from higher value models. Notably, sales of models priced above RMB 8,000 accounted for over 10% of time sales. Net profit for the quarter was RMB 81.69 million, extending the profitability momentum established in Q2. This improvement reflects scale efficiencies from higher volume and our continued focus on operation excellence. Those results underscore our ability to execute with discipline and resilience amid evolving market dynamics. We remain confident in our long-term strategy and the progress achieved this quarter provides a strong foundation for sustainable growth. China remains our primary focus growth engine in Q3, with unit sales rising 74% year-over-year to 451,000 units. A key driver was the channel inventory buildup ahead of the implementation of the new national standard for electric bicycles, which provided a substantial short-term boost. This performance was also supported by successful product launches, strong brand-driven demands, and steady channel expansion. The momentum built through 2024 and into 2025 reflect our refined strategy, enhanced competitiveness, and growing consumer preference for new. In Q3, the China electric bicycle market entered a critical transition phase under the new national standard. While production of non-compliant models ceased after August 31st, retail sales of existing inventories are permitted until November 30th, 2025. This prompted distributors and retailers to build inventories in July and August, effectively pulling forward demand from October and November and create a temporary sales boost in Q3. Now, to prepare for this regulatory shift, we emphasize on three actions. Upgrading the existing high-end electric bicycle models to capture short-term demand, rolling out the new electric motorcycles unaffected by this regulation to target lower-tier cities, and redesigning and re-tuning our entire electric bicycle lineup to fully comply with the new standards for the role of Q4 2025 and Q1 2026. First, to capture its premium electric bicycle demand search under the new old standard, we launched the upgraded flagship models, the NXT Altra 2025 and the FXT Altra 2025 version, each priced at RMB 11,999. The NXT Altra 2025 introduced 10 major upgrades with 77% of core components redesigned to elevate the benchmark standards across 50 power intelligences. The FX-T Ultra 2025 featured a futuristic performance-driven design on the same technology platform as the MX-T Ultra, equipped with an automotive-graded millimeter-weight radar and dual-channel AVS, setting a new safety benchmark for the segment. Together, those Ultra models contribute 8% on total Q3 sales, effectively serving high-end demand during this regulatory transition. Electric motorcycles are more prevalent in the lower-tier cities, tier 3 and below, due to more relaxed regulations. This segment has historically been underserved in our portfolio in the China footprint, making it a key growth priority for us. As highlighted in the previous earnings call, expanding presence in lower-tier cities is a core strategy reflected in our store expansion and strengthening product line. In Q2, we completed a full N-series motorcycle portfolio covering mainstream price points from entry-level NS at 3,000 RMB above and NL at 4,000 RMB and NXL at 6,000 RMB to the performance-oriented NX just under RMB 10,000. Starting Q3, we extended the strategy to the F-series, broadened the price band, and enhanced the performance-to-value offerings. Now, despite Q3 being a channel stocking period focused on electric bicycles, our intensive motorcycle portfolio supported a healthy 14% revenue contribution from motorcycle sales. We expect this year to increase in the coming quarters. A key milestone in Q3 was the successful launch of FX Windstorm version on September 28th. Known for its sharp, distinctive styling that resonates strongly with frenzy riders, the FX windstorm reinforced F-series positioning as a performance powerhouse. Priced at RMB $4,799, it targets RMB 4,000 segments at its highest first high-speed motorcycle for the young riders. Equipped with a 3,000-watt motor, reinforced frame, and a full-size TFT display, and four piston disc brakes, it delivered performance comparable to a model priced at about RMB $10,000, including 80-kilometer power top speed and a 0-50-kilometer power in 4.7 seconds. The FX windstorm was an instant success, with 14,000 units sold in the first five hours, and the January RMB 68 million in GMV, and ranked number one on Douyin, Tmall, 3D.com, and Kuaishou in GMV and popularity. This success validates our strategic expansion into the electric motorcycles and creates strong momentum for upcoming launches, such as FS, targeting the entry-level users. Alongside the high-end electric bicycle motorcycles, we dedicated significant R&D resources to the new standard compliant electric bicycles. The updated regulations require substantial redesign from the limit usage of plastics to form factors. We now plan a full rollout of compliant products beginning in late November and extending through Q1 2026. The portfolio will include the renewed and new series offerings and also introduce new series designed to reach a broader consumer segment, including products optimized for female riders. Beyond the new product development, we continue to invest in core technologies, including the smart riding system, power to innovation, and R&D platformization to enhance efficiency and capabilities. Our smart writing and the AI effort focus on three areas, expanding the foundational safety technologies, such as the ABS and millimeter wave radar, developing assisted writing features for premium models, such as the two-way throttle and downhill assist, and building intelligent ecosystem to broader third-party integrations. Through partnership with Apple and OPPO and with other industry leaders, we expand the cross-device connectivity, including off-bike, safety alert, and Apple Wallet key access, enhancing overall user experience. In the powertrain system, we advanced several next-generation initiatives through a deeper model control R&D and the close collaboration with our battery partners. Our efforts focused on two key objectives, delivering a higher peak current output for stronger acceleration and a fine-tuned overall system efficiency to extend the reward riding range under the diverse conditions. The NXT and NXT Ultra and FX Spring Storm are the strong examples of this R&D achievement. The enhanced powertrain architecture enables 0 to 25 kilometers per hour acceleration in just 1.92 seconds, setting a new benchmark for urban performance. For the FX windstorm, the upgraded 3-kilowatt high-efficiency motor and optimized controller deliver a top speed of 80 kilometers per hour while maintaining stable power delivery, improve thermal performance, and consistent power output even during the extended high-speed riding. Those events will not only elevate riding performance, but also form a foundation for the new generation of a new powertrain platform that will scale across future product lines. Lastly, our product-based R&D strategy continues to deliver a meaningful operational benefit. In Q3, it accelerated product iteration, strengthened manufacturing consistency, and increased the economy of scale. The improvement supported a smooth delivery of 450,000 units, surpassing our previous peak by roughly about 20%, while enhancing margins through shared components and modular design cross-partnerships. Now, in Q3, we continued elevating the new brand and the deepening engagement with our core audiences, particularly improving consumers and Gen Z riders. Our approach integrated lifestyle campaign, adding product launches, and target digital engagement to strengthen brand equity and drive conversion. We activated a series of use-focused Lifestyle campaigns, the Summer Ride and Splash campaign embedded new into the outdoor leisure scenes, such as lake diving and quick hiking across major cities, generated 130 million impressions across online and offline channels. Following the FX Windstorm launch, we hosted large-scale test ride events in Chengdu and Chongqing, engaged riders in real mountain environments. This created authentic word of mouth within the key user segment to provide valuable feedback. Our launch event continues to highlight new technology leadership. The June 17 Duke Ultra flagship launch generated about 20,000 units sold in five hours, with GMV exceeding RMB 228 million. The FX Windstorm launch delivered 14,000 units sold in five hours at 93% positive ratings, resonantly strong with the Gen Z and delivery riders. Now, with strengths in both offline and online channels, as of Q3, new surplus 4,500 stores nationwide with 238 net new stores added in Q3 and 800 year to date. Nearly half of new stores were in the lower tier cities, supporting deeper market penetration. Our digital ecosystem also scaled rapidly. You now manage nine official flagship accounts, supported by 1,062 dealers operated accounts. In Q3, the network generated 30,000-plus live streams, 69,000 content pieces, and 740 million impressions. The online sales represented close to 70% of our total volume. We also expanded onto a new e-commerce platform. On May 20, we piloted it with 10% stores, generating R&B 40 to 50 million monthly sales, We plan to expand store coverage and more motorcycles next on quite your local services. Over 2,200 stores have joined and FX Windstorm ABS launched rank number two nationally, reinforcing our brand resonance among Gen Z riders in the lower tier market. Now turning to our overseas market, Q3 unfolded as expected transitional quarter as we continue to optimize operation and preparing for our next growth cycle. The overseas sales volume reached 14,000 units with declining micro-mobility offset by encouraging progress in electric motorcycles. Despite Q3 being a seasonal low for European two-wheeler demand, our electric motorcycle sales reached approximately 2,500 units at 160% a year. The self-operated sales accounted for 76% on total. We further accelerate our self-operated dealer network expansion. Dealers in those direct distribution regions grow from 120 at the start of the year to 289 in Q3, exceeding our initial target of 250. This reflects the strong brand recognition, product competitiveness, and the growing retailer confidence in these direct distribution models. With channel foundations now established, we will shift from capability building towards product law and deeper channel market penetration. The product line-up unveiled at ECMA positioned us strongly for multi-year growth. At ECMA, the largest two-wheeler show in Milan, we showcased our international product roadmap, expanding from smart scooters to product electric mobility portfolios. Our lives included a 2026 NQi X-Series with Google Map integration, featuring 125 kilometer per hour NQi 1000 launching Q3 2026, the all-new XQI X-Series for city commuters in the L1e and L3e version for Q3 2026. The expanded XQI series including the 110-kilometer-per-hour XQI 500 Street version for the second half of 2026. And lastly, the COMSTEP-06, a forward-looking 155-kilometer-per-hour platform featuring AI-assisted intelligence, advanced safety, The new NQi500 was awarded Top Award 2025 by German leading motorcycle media outlet 1000PS, a strong validation of our product excellence. Our micro-mobility volume reached to 11,900 units, down 77% year-on-year, reflecting market headwinds in the US, Europe, and Asia. Europe saw an intensified price competition while the U.S. shifted towards a lower price model due to tariff dynamics. In Q3, we intentionally reduced promotion and shipment to avoid overstocking and to protect margin during a period of pricing pressure and supply chain transition. Given the current inventory levels in Europe and the U.S., we expect the structural adjustment to continue for the next couple quarters. In our look ahead, we'll continue executing our strategy of driving fast growth in the China market and scaling our international electric two-wheeler business while strategically adjusting the micro-mobility operation. We expect China to remain our primary growth driver of strong execution across the first three quarters, where we break out product each quarter, demonstrating our capability in product definition, channel activation, and brand influence. However, we... back some uncertainty and softening in Q4 this year due to the timing of the new standard implementation. The retailers have preloaded inventory into Q3, shifting some demands from Q4. And a new standard compliant product will run up from late November through a Q1 2026, shifting part of the Q4 demand into Q1 2026. Combined, those factors will likely result in a relative flat year-over-year volume in Q4. We expect growth to reaccelerate in Q1 2026 as the regulatory transition completed and the market stabilized. The full new standard electric bicycle lineup, along with 300 to 400 new stores additions in Q4, will support a strong momentum into 2026. Now, turning into the overseas market, for electric tool wheelers, we expect strong year-over-year growth in Q4, supported by ongoing expansion of direct-to-service networks. The new product introduced at ECMA will fuel the multi-year growth starting in 2026. In micro mobility, we'll continue prioritizing profitability or skills in Q4, reducing promotions that focus on clearing existing inventories. This will lead a lower Q4 volume. We expect the adjustment to conclude in first half of 2026 with margin return to the normal level second half of 2026.

Now with that, let me turn the call to Fiyang.

Thank you, Yan. Hello, everyone. Please note that our press release contains all the figures and comparisons you need, and we have also uploaded Excel format figures to our IR website for your easy reference. As I review our financial results, I'm referring to the third quarter figures, unless they are otherwise. And all mandatory figures are in RMB if not specified. As Yan just mentioned, our total sales volume for the third quarter was 466,000 units, up 49% compared to the same period of last year. Among this, 451,000 units sold in China and remaining 14,000 units overseas. Nearly 50% of our sales volume in China came from our top three models this quarter, and the number of franchise stores in China was 4,542 at the end of this quarter. Total revenue for the third quarter amounted to $1.69 billion, an increase of $670 million, or 65% compared to the same period of last year. And the result came in slightly ahead of our guidance, primarily due to the robust sales volume growth in China during the peak season in third quarter. China revenues were $1.62 billion, increased 84% year-over-year, and accounting for 95% of total revenues. Of this, the scooter revenue was $1.48 billion, and this growth was primarily driven by a 74% increase in sales volume, and coupled with a higher ASP. China's scooter ASP was RMB 3,283, representing a nearly 7% year-over-year growth and remaining largely stable compared to the previous quarter. And this growth was primarily driven by a favorable shift in our product mix. In Q3, our top-setter MT with a retail price range from RMB 3,699 to 4,599 continued to perform well. In the meantime, complemented by a strong contribution from the new products like the NLT and NSP range from RMB 3,899 to 6,299. Collectively, these three top sellers accounted for nearly 50% of our total sales volume this quarter. Overseas revenue was 77 million, representing 5% of total revenue. Scooter revenues, including electric motorcycles and mopeds, kick scooters, and e-bikes amounted to $67 million, down from $130 million in the same period of last year. And this decline was driven by a decrease in sales volume and ASP of kick scooters. Overseas scooter ASP increased 90% year-over-year and 41% quarter-over-quarter to RMB 4,648, and driven by a greater proportion of revenue coming from the higher-priced electronic motorcycles and mopeds. Revenue from accessories, spare parts, and services were 145 million, representing 8.6% of total revenue and a 51% increase compared to the same period of last year due to the increase in spare parts sales in China. Gross margin this quarter, gross profit this quarter exceeded 370 million, marking a significant improvement compared to 142 million during the same period of last year and 252 million last quarter. The gross margin was 21.8%, 8 ppt higher than the same period of last year, and 1.7 ppt higher than the previous quarter, marking our best quarterly gross margin performance this year. And this improvement was driven by the ongoing cost reduction initiative and the economy of scales from higher sales volume in China market. Operating expenses for the third quarter or 297 million, increased 48% compared to the same period of last year, and OPEX ratio down to 17.5% dropped from 19.6% in the same period of last year and 21.1% in the previous quarter. Selling and marketing expenses rose by 87 million year-over-year to 215 million primarily driven by higher spending on marketing and online promotion campaigns in China. Selling and marketing expenses representing 12.7% of revenue compared to 12.5% in the same period of last year and down from 16.1% last quarter. R&D expenses increased by 13 million year-over-year to 43 million primarily due to the higher staff costs and share risk compensation. R&D expenses representing 2.6% of revenue compared to 3% in the same period of last year and down from 3.5% last quarter. G&A expenses decreased by $4 million year-over-year to $39 million, mainly due to the improved cash collection from account receivables. in the reversal of better provision, and G&A expenses representing 2.3% of revenue down significantly from 4.2% in the same period of last year, well up from 1.5% last quarter, as the company benefited largely from foreign currency exchange gains in the previous quarter. The net income was 82 million with a net margin of 4.8% on the GAAP accounting compared to a net loss of 41 million for the same period of last year and net income of 5.9 million for last quarter. The non-GAAP net income was 88 million. And turning to our balance sheet and cash flow, We ended the quarter with RMB $1.8 billion versus $1.1 billion last year end in cash, restricted cash, term deposits, and short-term investments. And our operating cash inflow amounted to $433 million. The capex amounted to $73 million, reflecting an increase of $32 million compared to the same period of last year. And this can be attributed primarily to an increase in the opening of new stores and modules closed in China. And now let's turn to guidance. We expected the fourth quarter revenue to be in the range of RMB 737 million to 901 million, representing a year-over-year change of minus 10 to plus 10%. And please be aware that this outlook is based on the information available as of the date and reflects the company's current and preliminary expectation, which is subject to change due to uncertainties relating to various factors. And with that, we'll now open the call for any questions that you may have for us. Operator, please go ahead.

Thank you. 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. Once again, you will need to press star 1 and 1 on your telephone to register a question and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Thank you. Seeing no more questions in the queue, let me turn the call back to Mr. Lee 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.