Niu Technologies

Good day ladies and gentlemen. Thank you for standing by and welcome to the New Technologies first quarter 2026 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, and hello, everyone. Welcome to today's conference call to discuss new technologies results for the first quarter of 2026. The earnings press release, corporate presentation, and financial spreadsheets have been posted on our Investor Relations website. This call is being webcast from companies on our 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 U.S. Private Security Litigation Reform Act of 1995. Forward-looking statement involves 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 rulings 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 in this call included discussion of certain non-GAAP financial measures. The press release contained the 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. Dian Zhou. Now, let me turn the call over to CEO Yan.

Thank you, Crystal. Hello, everyone. Thank you for joining our first quarter 2026 results call. The first quarter of 2026 was a period of high-quality execution and strategic resilience within a complex regulatory environment. The total sales volume reached 261,000 units, representing a robust 28.7% year-over-year increase. Revenue for the quarter reached RMB 909.52 million, up 33.4% year-over-year. In China, the sales volume increased 35.3%. to nearly 248,000 units. This growth was powered by a major structural breakthrough in our electric motorcycle segment, which successfully offset a temporary contraction in the electric bicycle market as the new national standard took full effect. Overseas, the sales of 13,686 units reflected a 32.4 percent decline. This remains a planned result of our ongoing channel structure optimization and discipline inventory management. We're staying completely focused on our core objective, prioritizing healthy retail sales group and the long-term profitability over a short-term shipping volume. Now, let me walk through our China and overseas operations in more detail. In China, our first quarter sales volume reached 247 1,938 units, a 35.4% increase year-over-year. While this growth is robust, internal data reveals a significant positive structural evolution of our brand. To end this quarter, we must look at a divergence between two product categories. First, in the electric motorcycle category, the segment surged by a stagnant 3x year-over-year increase, including our momentum that begins in Q4 last year with our Windstorm product line. We further accelerate our growth in the electric motorcycle market, expanding our footprint directly into Tier 2 and Tier 3 cities. This is no longer just a temporary trend. It's a definitive market breakthrough, proving New's ability to rapidly scale and capture the meaningful volume in the segment. In the electric bicycle segment, the sales have softened. This was fully anticipated as the market remained a transitional winning period as the new standard rolled out last December. We're managing this fear deliberately by moving on our new product lines in a phased approach, ensuring we're perfectly positioned to capture the high-quality volume as consumer demand returns. Now, this shift has fundamentally redefined our geographic footprint as well. Historically, NIO has been perceived as a Tier 1 CD brand, with the market representing 60% of sales. In Q1, we saw the Tier 1 and new Tier 1 CD softened. where the Tier 2 and Tier 3 cities grow at a faster pace fueled by the rapid adoption of electric motorcycles. This represents a massive strategic milestone, improves news brand equity, successful skilling beyond the urban elites, and penetrating the broader mass premium China market. Now, this shift has set a powerful foundation for 2026. By breaking through the lower-tier motorcycle market, we'll have added a new growth engine When the electric motorcycle market inevitably recovers, our total growth will rebound with double the force. To ensure we're the first to capture that recovery, we made deliberate strategic decisions to front-load our investment in branding, R&D, and the new product launch in Q1. Now, in branding and marketing, recognizing 2026 is a pivotal year for our brand's revolution, we made a proactive decision to front-load our marketing investment in this quarter. We chose to capture the consumer mindshare ahead of the curve by building a massive brand awareness in Q1. We have ensured that the new national standard of transition stabilizes news while positioned to capture its unmet demand. In Q1, we executed three major saturation initiatives. First, our new global ambassador strategy. In late January, we officially announced Wu Lei and Song Yiqi as new global brand ambassadors, the first strategy of this kind in our industry. bullish image as a high-performance outdoor enthusiast resonates with our corporate users, while so many significantly extend our reach among Gen Z and female audiences. This campaign was activated across 40-plus cities and 80-plus global landmarks, generating an unprecedented 3.4 billion impressions. Second, our Spring Festival Saturation Campaign, we capitalized on the highest frequency travel period in China, a large-scale offline campaign across 37 cities, 42 transportation hubs, and nearly 3,000 cinemas. This generated over 400 million impressions, firmly embedded in the message, premium smart equals new, in the mind of travelers. Third, the 2026 Technology Launch Event. On March 17th, we unveiled our next-generation AI mobility strategy, This event was not just a product review, but also repositioning you as a technology leader in the AI era. With over 130 media outlets and 460 million impressions, we had redefined what smart retailers can be. Now, those intensive branding activities led to a 4x plus year-over-year increase in the marketing expense for Q1. So this was the one-time front-loading of our revenue budget. Historically, the first quarter has seen a lower marketing spend due to a seasonal retail trend. However, we choose to strategically shift our marketing weight in Q1 this year to ignite the brand momentum for the entire fiscal year. Now, as we move into Q2 and beyond, you will see that our marketing-to-revenue ratio normalized. We have already established deep brand equity as far to drive our 2026 close target. Now we're transitioned directly from this investment phase to execution and harvest phase. Now in terms of R&D technology, the technology and continuous innovation remain core to Nu's long-term strategy as they are fundamental to our ability to compete far beyond simple pricing and basic hardware specifications. Our primary technology focus this year is to bring the power of AI to the electric two-wheeler industry, zeroing in on three major development errors. The AI Operating System, Intelligent Chassis System, and Intelligent Writing Technology. First on the news, AIOS. Launched at March 17th events, the new AIOS is our cornerstone to redefining the next era of intelligent writing. As the industry's first mass-produced AI dashboard system, it represents a technological milestone integrating AI-enabled voice assistant with high-performance automotive-grade operating systems. The second is the intelligent chassis platform also introduced our next generation intelligent chassis platform. This platform is engineered to integrate advanced safety and performance system, including ABS, TCS, continuous damping control, battery management system, and lighting system into a single unified vehicle level architecture. Based on this platform, we aim to introduce several industry first features for mass produced two wheelers. such as adaptive driving beam AI headlights and adaptive CBC suspension. And lastly, through a strategic partnership with the leading automotive-grade technology companies, we're bringing advanced rider-assisted functionality to the two-wheeler segments. This includes integrating cutting-edge hardware like advanced visual recognition systems and high-performance processing chips. Now, supported directly by those core technologies, we launched the industry-first AI-enabled electric bicycles, the NXT2 Ultra, as our flagship model. Now, talking about our product matrix, our product strategy in Q1 was clear. It's driving an aggressive growth in the electric motorcycle segment while building a dominant portfolio for the electric bicycle recovery. Now, first, to lead the electric bicycle transition, We launched the MX-T2 series priced from RMB $5299 to RMB $12,999. The flagship MX-T2 Ultra is the industry's first AI-powered e-bicycle, featuring our AIOS, dual-channel ABS, and millimeter wave radar. This isn't just a bike. It's a statement that news owns the high-end market. Second, we expand our total addressable market with the Y-Series. We officially entered the female mobility segment with the Y-Series, endorsed by our ambassador, Sun Yuqi, at a competitive RMB 3,000 to 4,000 price point. And third, the NX Marathon, our new volume engine. To capitalize our 3X growth in the electric motorcycle market, we launched the NX Marathon at a RMB 6,499. This model targets long-range family commuters offers a 146 kilometer drive range of flagship features such as magic wheel at a mainstream price point on the market expense was was immediate within just five hours to launch the next marathon generate over rmb 91 million in sales ranking the number one cross major e-commerce platform those performance proves our hero product strategy is working Now, in Q1, we continue to strengthen both the offline retail sales and online ecosystem operations. In terms of online channels, it delivered another standout quarter. The online sales increased by 53%, accounting for approximately 46% of domestic retail sales, demonstrating a continuous strength of our online to offline operation model. Also, on Doin, we conducted more than 32,000 live streams, generating over 270 million impressions. We also continue to expand on quash on May 1, further broaden our digital retail coverage. Now turning to our international operations, we're navigating a deliberate structural transition to prioritize the healthy fundamentals. Our high margin electric motorcycle business remain a key strategic priority and is showing a strong momentum, shipment reach more than 2,000 units and 29% year-over-year increase. Our European dealer now expanded from 307 to 360 active locations this quarter. Now, in the micro mobility segment, international sales was down 37% year-over-year. First, this is regarding the channel distribution structuring. During the first quarter, we complete a major structural shift to a linear distribution model in our key market like Germany and US. This critical action allows us to significantly minimize the ongoing China operation expenses. Consequently, Q1 served as a transition phase where the major retail partners, such as Best Buy in the United States and the Media Mart in Germany, focused primarily on sell-out of their existing retail inventories. The fresh stock-up period under the new distribution model is only in the beginning now in Q2. Second, reflecting our current inventory positions, we're holding an elevated volume of micro-mobility inventories in Europe and the United States, stemming from lower-than-anticipated sales in 2025. Our primary mandate for the remainder of 2026 is clear, is to accelerate unit sales volume and aggressively reduce the inventory back to a lean and healthy baseline. To execute this inventory clearance swiftly and to protect against long-term operation drag, we're implementing targeted price promotions throughout the rest of the year, especially on older model products. So those efforts will depress our micromobility contribution margins throughout the year. While this discounting strategy presents a short-term headwind to our profitability matrix, it is necessary to bring our global micromobility operation back to a clean, optimized and highly stable foundation for the course of 2026. Now, looking ahead, we'll continue executing our strategy with a focus on sustainable and quality-driven growth. In China, we expect the electric bicycle market will recover gradually throughout Q2. We're taking a cautious view to leave this market where executing a phase-out rollout of our full compound product mix, anchored by the NXT2 and the Y series, Those position us with a comprehensive and premium line-up ahead of a critical June ended Q3 selling season. Meanwhile, our electric motorcycle category will continue to be our primary growth engine. We have additional models targeting female riders and technology enthusiasts planned for Q2 and the second half of the year. And the upcoming 6-18 shopping festival will be the first major retail test of those expanded portfolios. Now, overseas, our direct-to-retail strategy in electric motorcycles is gaining speed. We expect our dealer count to surpass 400 locations by the year end, supporting both volume growth and improved profitability. In the micro-mobility, as I detailed moments ago, our absolute operation priority for the remainder of 2026 is to aggressive inventory normalization and maximizing retail sell-through. We expect our linear operating channel transition to finalize throughout the first half of this year with our broadened promotional clearance and inventory normalization largely concluded by the second half of 2026. So in summary, we have used the first quarter to do the heavy lifting required for a transformative year. By front-loading our marketing, investing deeply in our AI technology roadmap, and diversifying our product portfolio, and clean up our global channels, we have moved beyond the transition phase. We believe those strategic actions have laid a solid foundation to drive sustainable and high-quality growth in Q2 and will serve as a catalyst to accelerate our growth in the latter half of the year. We're confident in our path and focused on execution. Now I'll turn over to our CFO, Fiyang Zhou, to talk about the financials.

Thank you, Yan. 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 the first quarter figures unless I say otherwise. And all mandatory figures are in RMB if not specified. As Yen just mentioned, our total sales volume for the first quarter was 262,000 units, up 29% compared to the same period of last year. 248,000 units were sold in China, while the remaining 14,000 units sold overseas. Over 60% of our sales volume in China came from the top three best-sellers. The total revenue for the first quarter amounted to $910 million, an increase of $228 million, or 33% compared to the same period of last year. China revenue were $854 million, accounting for 94% of the total revenue. Of this, the scooter revenue was $774 million, a year-over-year increase of 42%. And this growth was primarily driven by a sales volume and an improvement in the revenue per e-scooters. China scooter ESP were RMB 3,120, up nearly 5% year-over-year. While the overseas revenue was $56 million, representing a 6% of the total revenue, the scooter revenue, including electronic motorcycles, mopeds, kick scooters, and e-bikes, amounted to $51 million, down from $60 million in the same period of last year. And this decline was driven by the lower sales volume and reduced the revenue for kick scooters, partially offset by a higher revenue per electronic motorcycle and mopeds, which command higher retail prices. The sales volume in the international market shifted in favor of the electronic motorcycle and moped category. The premium pricing of this product further contributed to a year-over-year increase in the ASP of overseas scooters, which rose from RMB 2,962 to RMB 3,716. The revenue from accessories, spare parts, and services was $85 million, a 13% increase compared to the same period of last year, mainly driven by the higher revenue from new services. And the gross profit for this quarter exceeded $159 million, marking a significant improvement compared to $118 million during the same period of last year. The gross margin was 17.4%, 0.1 PPT higher compared to the same period of last year, and 2.1 PPT higher than the previous quarter. The domestic gross margin improved due to a favorable high margin product mix, which boosted overall gross margin by 2 PPTs. However, these gains were offset by a 1.9 PPT strike from the lower key holders margin. The operating expenses for the first quarter were $264 million, increased $99 million, or 60%, compared to the same period of last year. The OPEX ratio was 29% compared from the 24.2% in the same period of last year, but down from 30 points 5% in the last quarter. Selling and marketing expenses rose by $65 million year over year to $180 million, primarily driven by the intensified marketing initiatives in domestic market during the holiday season, as well as a higher depreciation and amortization expenses and staff cost. Selling and marketing expenses accounted for 19.8% of revenue up from 16.8% in the same period of last year, but down from 21.3% in last quarter. R&D expenses increased by 12 million year over year to 41 million, primarily due to an increase in design and testing cost, as well as the staff cost. The R&D expenses representing 4.5% of revenue compared to 4.4% in the same period of last year. but down from 7.3% in last quarter. GNA expenses increased by 22 million year-over-year to 42 million, largely driven by an increase from foreign currency exchange losses. The GNA expenses constitute 4.7% of revenue, up from 3% in the same period of last year and 1.8% in last quarter. Excluding the impact of foreign currency exchanges, The G&A expenses were $23 million compared to $30 million in the same period of last year. In the first quarter, we had a net loss of $94 million with a net loss margin of 10.3% under GAAP accounting compared to a net loss of $39 million with a net loss margin of 5.7% for the same period of last year. And the non-debt net loss was $88 million with a non-debt net loss margin of 9.7%. Turning to our balance sheet and cash flow, we ended this quarter with RMD $1.4 billion, remained flat compared to the end of last year in cash, restricted cash, term deposits, and short-term investments. Our operating cash inflow amounted to $131 million. CapEx for the first quarter amounted to $70 million, reflecting an increase of $46 million compared to the same period of last year. And this can be primarily attributed to an increase in opening of new stores and module costs in China. And now, let's turn to guidance. We expected the second quarter revenue in the range to be in the range of RMB 1.2 $57 billion to $1.82 billion, an increase of 25% to 45% year over year. 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, let's now open the call for any questions that you may have for us. Operator, please go ahead.

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Seeing no 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.