Niu Technologies (NASDAQ:NIU) Q3 2023 Earnings Call Transcript

The launch of KQi Air marks our consistent effort in product innovation and we have more kick-scooter product in our pipeline for next quarter to further complete our product offerings. Meanwhile, we’re also leveraging the traction that we gathered from our kick-scooter product to expand our sales network coverage. Currently, we have our new products sold in over 1,500 offline stores in the United States and Europe in major retailers like Best Buy and MediaMarkt. Together with the product portfolio enhancement, the sales network expansion has laid a solid foundation for ramping up sales in the next few months throughout the holiday seasons. Now, as we look forward, we [maintain] (ph) cautious outlook for Q4 this year as some of the operational adjustments in both the China and also the oversea electric moped market will take time to be fully implemented to drive the midterm growth.

We’re nonetheless confident to regain growth in 2024 after a temporary adjustment period this year. In the China market, the fourth quarter traditionally experience a low market demand. We’re using this time to continue to enhance our product portfolio and build momentum for store expansions. In terms of product portfolio, the Falcon series is a testimony of a successful product for full expansion. We’re also focused on expanding our retail store this quarter. With those, we believe we’re well positioned to get back on the high-growth track in 2024. Now, for the international electric two-wheeler market, the addition of new products off-road and also the motorcycle product and also the swapping solutions well position us for growth in the key European, United States and the South East Asia market next year.

We’re also actively implementing the operational adjustments for better delivery of those products to our key markets through the key channels. But we expect those adjustments will take time and hence we [maintain] (ph) cautious outlook for the Q4 2023. Last but not least, for our international micro-mobility market, we’re pleased to report a sustained and robust growth trajectory. This growth is fueled by two key pillars: the completion of our product portfolio, and expansion of our sales network. Our product lineup has not only boosted sales volume but also significantly elevated the presence of new brands within this market segment. The recent addition of the KQi Air represents just one of the many exciting products yet to come. The expanding product portfolio has driven the development of our sales channels with remarkable growth observed in our expanded retail networks.

We’re confident in our ability for sustaining high growth in Q4 and beyond. Now, I will turn the call over to our CFO Fion.

Fion Zhou: 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 excel format figures to our IR website for your easy reference. As I review our financial results, I’m referring the third quarter figures, unless I say otherwise, and all monetary figures are in RMB, if not specified. As Yan just mentioned, during the third quarter, we sold a total of 266,000 units and 230,000 were sold in China while the rest was sold overseas. And the total revenue for the third quarter amounted to RMB927 million, a decrease of RMB226 million compared to the same period of last year. And China market revenue was RMB785 million, accounting for 85% of the total revenue.

Of this, the China scooter revenues were RMB711 million, a year-over-year decrease of 17%. And this decrease was mainly due to the lower sales volume of our premium series and partially offset by the higher sales volume and revenue from our mass premium series. And the China scooter ASP was RMB3,085, a year-over-year decrease of 5.5%. And this decline in ASP was mainly due to the product mix change, which I just mentioned. And the overseas market revenue were RMB142 million, accounted for 15% of the total revenue. And the overseas scooter revenue, including the e-motorcycles, mopeds, kick-scooters, and e-bikes, amounted to RMB122 million compared to RMB195 million in the same period of last year. And this decrease was mainly due to the decline in the sales of e-motorcycle and mopeds.

The micro-mobility revenue were around RMB109 million, up 20% quarter-over-quarter. And the overseas scooter ASP increased from RMB3,386 to RMB3,430 year-over-year, and mainly due to our premium model [K3 Max] (ph) sales volume increase from [3,200] (ph) units to [7,100] (ph) units year-over-year. And the revenue from accessories, spare parts, and services amounted to RMB94 million, a 5% decrease compared to the same period of last year. And this decline was mainly driven by the lower sales of battery packs overseas, as we mentioned in the previous quarters. And the gross margin decreased by 0.7 ppt year-over-year to 21.4%. And of this, 0.6 ppt of this decline was driven by the lower sales volume from the overseas e-motorcycle and e-mopeds, and the remaining 0.1 ppt due to the change to the product mix domestically.