Prepared remarks
Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Niu Technologies Second Quarter 2025 Earnings Conference Call. 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. Kristal Li, Investor Relations Manager of Niu Technologies. Ms. Li, please go ahead.
Thank you, operator. Hello, everyone. Welcome to today's conference call to discuss Niu Technologies' results for the second quarter 2025. The earnings press release, corporate presentation and financial spreadsheets have been posted on our Investor Relations website. This call is being webcast from the 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 harbor provision of the U.S. Private Securities 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 the company's public filings with the Securities 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 include 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, Ms. Fion Zhou. Now let me turn the call over to CEO, Yan.
Thank you, Kristal. Hello, everyone. Thank you for joining us today. So second quarter of 2025 marked another strong performance for us, building on solid momentum from Q1. So this quarter, our total sales volume reached 350,000 units, representing a 37% year-over-year increase. In the China market, the sales volume surged by 54% to 318,000 units, continuing the growth trend in Q1. The overseas market recorded 31,000 units, a 35% year-over-year decline, mainly due to the impact of the U.S. tariff, coupled with intensifying competition in the European market for the micromobility segments, while in the overseas market, our electric 2-wheelers continue to grow at 4x. However, we have seen positive signs on the structural improvements in our overseas operations, which I will elaborate on in the subsequent sections. Our revenue and gross margin also demonstrated a strong improvement this quarter.
Revenue reached RMB 1.26 billion, a year-over-year growth of 34%, while the gross margin stood at 20.1%, up 3.1% year-over-year or 2.8 percentage points quarter-over-quarter compared to Q1. As previously mentioned, this positive outcome is primarily driven by the product portfolio optimization and cost reduction achieved through platformization of our products and components. We also achieved net profit of RMB 5.9 million. While we are still navigating the challenges on the profitability front, our disciplined execution and focused strategy continue to position us well for both revenue and profit growth. The performance of this quarter reaffirms our growth strategy from product development, technology innovation, expanded sales channels to brand management. Our teams have delivered strong results across all those fronts. I will now provide more details, starting with our progress in the China market.
In China market, Q2 sales reached about 318,000 units, representing 54% year-over-year growth. Although this volume growth rate is 12% lower compared to the Q1 results of year-over-year growth rate of 66%. The actual revenue growth from scooters year-over-year for China is 45%, 6 percentage points higher than the Q1 results. As mentioned in the last call, we observed the ASP decline in Q1 as we introduced 2 entry-level models of MT and MMT in the market responsible for the ASP drop and partially responsible for the high volume growth in Q1. In Q2, as we continue to optimize our product portfolio, the ASP increased by 11% compared with Q1 and the Q2 ASP is back close to the 2024 annual level. Last year, our development effort in product was centered around the electric bicycle product with a lot of NXT, NT, MT which has driven strong growth since then. In the first half of this year, we really focused on electric motorcycle product development to strengthen our position in this sector.
As we mentioned in the previous quarter, we launched NX Pro Electric Motorcycle priced at RMB 9,999, positioned as the speed champion among the sub RMB 10,000 electric motorcycles. In Q2, we may expand our high-end electric motorcycle lineup by introducing 3 core models, NXL, NL and FX Pro covering a price range from RMB 4,000 to over RMB 10,000. All those models are equipped with advanced intelligent features aligning with our new performance and safety standards, such as a full-color TFT display with screen mirror navigation, the OkGo technology, boosting a top speed between 55 to 80 kilometers per hour, undergoing a comprehensive upgrade in handling and performance and delivering a premium intelligent experience. Those models account for 12% of our total sales volume in Q2. Building on that momentum, we introduced NX in July, an entry-level smart e-motorcycle priced between RMB 3,599 to RMB 4,499.
The NX is built for young urban riders, featuring a compact nimble body, 100-kilometer extended range and intelligent features such as a dual-way throttle and downhill assist. Those functionalities typically reserved for premium models are now accessible in the sub RMB 4,000 e-motorcycle segment, giving NX a strong potential to capture this rapid market share. Now with those add-ons, we have a complete lineup of motorcycle models in the N-Series ranging from RMB 3,599 entry-level products to a sub RMB 10,000 high-speed motorcycle product. We also launched, with the launch of FX Pro, we have a good lineup of F-Series products with more to come in the second half of this year. The current electric motorcycle sales represent less than 20% of our total volume with much more growth potential. Talking about the new national standard for the electric bicycle product, which will take effect on September 1.
This new regulation will set a new requirement for electrical bicycle products, such as a percentage of plastic being used, total weight, and form factors. We are developing new product lines and modifying existing product lines to comply with the new requirements. Those products that fit with the new requirements will be rolled out in September and Q4 this year. The new requirement requires the manufacturer to stop shipping old standard products by August 31. However, it allows distributors and retailers to continue to sell old standard products until November 30. Hence, with the prepared new product as well as extra buffer time for the retailer to sell the old standard product, we expect a rather smooth transition from the old standard to the new standard in Q4. We continue to invest in technology innovation, mainly focusing on smart technology and powertrain systems. On the smart technology side, we continue to focus on the seamless driving experience via Smart Control Assistance and AI Smart Ecosystem features.
As safety continues to be an important topic for 2-wheeler mobility, in Q1, we primarily focused on enhancing driving safety, gradually rolling out features such as a driver dynamic safety warning system developed in collaboration with Galileo Maps. Additionally, more products are standardized to meet our new safety standards, equipped with screen mirror navigations, millimeter-wave radar, and dual-channel ABS. We're the industry first to introduce the dual-channel ABS adoption in electric bicycles in 2024 under our NXT model in Q2 last year. After 1 year of continuous development integration, we have incorporated dual-channel ABS in many of our electric bicycle models. As of now, about 1/3 of electric bicycle models sold are equipped with ABS covering old to mid- to high-end electric bicycle series. In Q2, we shifted our focus to the implementation of AI Smart Control Assistance with the launch of features such as the dual-way throttle and downhill assist.
Leveraging the sensors and gyroscope installed across the scooter, we monitor its real-time status such as the low-speed driving mode as well as the steering direction and angle data. With our proprietary algorithms, we use this data to develop a smart control system to provide driver assistant functionalities such as assisted pushing or reverse backing and parking functions, making the consumers' control experience more effortless and convenient. In the powertrain system, we continue to collaborate with industry-leading battery suppliers to develop forward-looking R&D initiatives and technology adaptations on new battery technologies. Those innovations will be released in subsequent quarters. In Q2, our brand strategy is centered around aligning the product launch with high-impact marketing milestones to demonstrate our technology innovation. We showcased our technological prowess on the tracks.
On May 23, we had a professional setting a China record of lap time of 2 minutes 58 seconds with our NX model on the Shanghai F1 Circuit. In the product launch dynamics, on May 13, our O-Star e-motorcycle launching with NXL, NL, and FX emerged as a sales sensation, achieving RMB 100 million GMV within just 5 hours and moving over 10,000 units across all online platforms. This momentum continued into the 618 shopping campaign, where we surpassed our previous record with RMB 1.06 billion in GMV, a 128% year-over-year surge, fueled by a massive live streaming session. The campaign generated about 1.56 billion impressions, further solidifying our premium brand positioning in 37 key urban markets. On July 17, we saw another successful launch with our NXT Ultra and FXT Ultra models, garnering about 49 million views and 3.6 million live streaming viewers. Within 5 hours, those models achieved a staggering 20,000 units sold and RMB 220 million in GMV, securing top rankings across all major e-commerce platforms.
To celebrate our remarkable 10th anniversary, we also sponsored a play festival on June 1 with 30,000 participants, many of whom are NIU users. The total view of such an event reached 220 million. In terms of content placement, our Q2 media campaign capped a wide yet targeted campaign spanning 41 cities and included over 500,000 outdoor placements across 6 major urban areas. Online engagement on platforms like Douyin, Weibo, Xiaohongshu, and Bilibili included partnerships with over 1,000 creators across 12 verticals and generated 4 billion exposures. By the quarter's end, the total campaign expression exceeded 4.5 billion, underscoring the effectiveness of our integrated brand approach. Now, speaking of channel expansion, we have continued our previous strategy with a strong focus on penetrating previously underrepresented markets in China. We're strategically expanding our retail footprint to ensure that our product reaches a broader consumer base.
In Q2, we expanded our retail footprint by a net add of 185 new stores with significant focus on Tier 3 and Tier 4 cities, which accounts for 50% of net adds. Year-to-date, we have a total of net adds totaling 569 stores. This strategic expansion not only refined our distribution network but also laid a solid foundation for the upcoming product launch in the second half of the year. With our efforts in the first half, the percentage of sales from Tier 3 plus cities grew by 4 percentage points in contributions, demonstrating our successful effort in penetrating the lower-tier cities. Additionally, our online presence has been significantly strengthened, with sales performance improving across multiple online channels. We currently manage 11 official branded accounts, 48 localized accounts, and close to 800 store accounts. Our multi-tier strategy has hosted about 20,000 live broadcasts, generating about 620 million views, an 8x increase compared with last year.
This robust online visibility and customer interactions contributed to about 250,000 units in sales, representing 77% of total sales volume. Now turning to our overseas business, we recorded a total sales volume of 31,000 units in Q2, representing a 35% year-over-year decline. However, the scooter revenues declined by only 20% as electric 2-wheeler products started to contribute more to the sales with higher ASP. Sales in the micromobility segment declined by 41% due to the impact, as mentioned, of tariff-driven adjustments in the U.S. market and the pressure from intensive price competition in key European markets. Let's first talk about the electric moped segments. Our strategic transition to a direct distribution model in key markets has begun to yield tangible results. In Q2, we delivered over 3,200 electric 2-wheeler units in overseas markets, marking a more than 4x increase compared with the same period last year.
Close to 45% of those sales came from our direct distributor channels, representing a significant shift from last year and confirming the growth traction of our direct sales approach. Our core markets, including Germany and Italy, have now secured leading positions in market share, a direct outcome of this robust and efficient direct distribution system we have built over the past years. Our retail network for the direct distributor regions has also expanded; in Q2, we increased the number of direct distributed stores from 181 to 244, adding 63 locations. This figure is 3x the number of stores we had during the same period last year and aligns closely with our target of building a 250 store network. On the micromobility segment, it declined by 41% year-over-year, although we saw a 50% quarter-over-quarter increase. The year-over-year downturn is primarily attributed to challenging market conditions in Europe and the United States market, where the emerging bright spot has appeared in the Asian market.
Our U.S. sales declined by 17% in Q2, particularly due to strategic channel management and market trend shifts. In Q2, the retail and sell-through prices were not adjusted to reflect recent tariff changes. To avoid channel stuffing, we proactively reduced selling volume. Notably, the activation number, basically the sell number to consumers still grew by 10% year-on-year, indicating healthy end-user demand. We also observed that customer preferences in the U.S. are shifting towards lower to mid-priced scooters, leading to a decline in sales of our premium scooter models. To address this, we will provide our entry-level K90 model, which is scheduled to be launched in Q4. The European market faced significant headwinds due to intensified price competition across key markets, including Germany, France, Italy, and Spain. This aggressive pricing environment has pressured our sales performance in the region, contributing substantially to the overall segment decline.
In contrast to the Europe and U.S. markets, the Asian market delivered healthy growth with a 21% year-over-year increase. This positive performance reflected strong market demand and effective execution of our regional strategy. On the retail coverage side, our channel expansion has reached maturity with over 2,100 retail locations now carrying new mobility products globally. A key highlight in Q2 is our participation in the Best Buy Achievers event in the U.S., where we connected with top-performing sales associates, conducted 68 test rides, and explored new service partnerships such as in-store repair solutions with Best Buy's Geek Squad. These interactions paved the way for deeper retail integration and long-term growth in the United States market. Looking ahead, we remain optimistic about the performance in both China and overseas markets in the second half of the year. In China, we believe in Q3 we will benefit from both seasonal trends, strong product momentum, and the potential temporary demand surge due to the new regulations.
The launch of our highly competitive NX electric motorcycle and upgraded smart electric bicycle product in Q2 has positioned us effectively to meet evolving consumer preferences. Our channel expansion efforts throughout 2024 and the first half of 2025 will be the second driver of sales growth as we target to add about 1,000-plus stores in 2025. We have net added about 589 stores in the first half with more to come in Q3 and Q4. Furthermore, the upcoming implementation of new national regulations for electric bicycles indicate that manufacturers cannot manufacture old standard bicycles after August 31, and retailers cannot sell old standard bicycles after November 30. This will drive distributors to build up inventories in Q3 and also spur a bit of a demand surge in Q4 as consumers won't be able to buy old standard products after November 30. Our efforts in product portfolio optimization and platformization have also demonstrated positive results in gross margin improvement and ASP enhancement.
Looking forward, we are confident that we can maintain a healthy gross margin and stable ASP throughout the second half of the year. Now looking forward for the overseas market, we're on a path towards recovery and profitability. The significant growth in electric 2-wheelers, i.e., electric motorcycle and moped sales, and the strong performance of our direct distributor regions this year validates both the market competitiveness of our products and the retail capability of our channels. Our direct distributed electric moped business has demonstrated a distinct local advantage by adhering to the strategy of continuing to expand stores in these direct distributed regions. We expect to continue the growth trend observed in Q2. In the micromobility segment, we're closing the gap between the losses and breakeven. In the U.S. market, as tariffs are finalized and clarified for Southeast Asia and China, we continue to negotiate price increases for existing products with retailers and roll out a low-cost version to better address the market.
This will help the U.S. market attain profitability. In the European market, we're planning to recover from the decline in the first half and focus more on profitability in selected markets. Now with that, let me turn the call to Fion.
Hi 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 second quarter figures unless I say otherwise, and all monetary figures are in RMB, if not specified. As Yan just mentioned, our total sales volume for the second quarter was 350,000 units, up 37% compared to the same period last year. 319,000 units were sold in China, while the remaining 31,000 units were sold overseas. Nearly 50% of our sales volume in China came from our top 3 models this quarter. The total revenue for the second quarter amounted to RMB 1.26 billion, an increase of RMB 315 million or nearly 34% compared to the same period last year. China revenue was RMB 1.15 billion, accounting for 91% of total revenue. Of this, scooter revenues were RMB 1.6 billion, a year-over-year increase of 45%, mainly due to the increase in sales volume.
China scooter ASP was RMB 3,316, down 5% year-over-year, but up 11% quarter-over-quarter. This decline was primarily attributed to a shift in product mix. In last year's Q2, large-scale scooters like NXT and N-Play dominated our best sellers with an average retail price exceeding RMB 5,000. In this year's Q2, however, the MT models, a more compact scooter, emerged as the top seller, capturing over 1/5 of the total sales units at a retail price range of RMB 3,700 to RMB 4,600. Overseas revenue amounted to RMB 110 million, representing 9% of total revenues. The scooter revenue, including electric motorcycles and mopeds, kick-scooters, and e-bikes, amounted to RMB 103 million, down from RMB 130 million in the same period last year. This decline was driven by a decrease in sales volume and ASP of kick-scooters, while overseas scooter ASP increased 23% year-over-year to RMB 3,288, driven by the increased proportion of electric motorcycles in the total sales volume.
Revenue from accessories, spare parts, and services amounted to RMB 96 million, a 15% increase compared to the same period last year due to the increase in spare parts sales in the China market. The gross margin exceeded RMB 252 million, marking a significant improvement compared to RMB 160 million during the same period last year and RMB 118 million last quarter. The gross margin was 20.1%, 3.1 percentage points higher than the same period last year and 2.8 percentage points higher than the previous quarter. Domestic market gross margin improved due to successful cost reduction initiatives contributing to a 5.1 percentage point increase in overall gross margin. However, overseas margins reduced the overall gross margin by 2 percentage points, primarily due to 3 factors: a change in kick-scooters product mix, the impact of U.S. tariffs, and aged inventory write-downs. The operating expenses for the second quarter were RMB 265 million, which is an increase of 38% compared to the same period last year.
The OpEx ratio rose slightly to 21.1% from 20.4% year-over-year but decreased from 24.2% last quarter and 22.8% for the whole year 2024. Selling and marketing expenses rose by RMB 82 million year-over-year to RMB 202 million, primarily driven by higher spending on online shopping festivals and marketing events in China. Selling and marketing expenses represented 16.1% of revenue compared to 12.8% in the same period last year, but down from 16.8% last quarter. R&D expenses increased by RMB 11 million year-over-year to RMB 44 million, primarily due to higher staff costs, share-based compensation, as well as higher design and testing expenses. R&D expenses represented 3.5% of revenue compared to 3.4% in the same period last year but down from 4.4% last quarter. G&A expenses decreased by RMB 20 million year-over-year to RMB 19 million, largely attributed to foreign currency exchange gains. G&A expenses represented 1.5% of revenue, a notable reduction from 4.2% in the same period last year and 3% last quarter.
Net income was RMB 5.9 million with a net income margin of 0.5% under GAAP accounting compared to a net loss of RMB 25 million for the same period last year. The non-GAAP net income was RMB 13.7 million with a non-GAAP net margin of 1.1%. Now turning to our balance sheet and cash flow, we ended the quarter with RMB 1.4 billion versus RMB 1.1 billion last year in cash, restricted cash, term deposits, and short-term investments. Our operating cash inflow amounted to RMB 519 million. CapEx amounted to RMB 32 million, reflecting an increase of RMB 12 million compared to the same period last year, primarily due to an increase in the opening of new stores and module costs in China. Now let's turn to guidance. We expect third-quarter revenue to be in the range of RMB 1.4 billion to RMB 1.6 billion, an increase of 40% to 60% 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 expectations, which is subject to change due to uncertainties reflecting various factors.
Questions and answers
We will now take our first question from Yating Chen from CICC.
This is Yating from CICC. Congratulations on your outstanding performance. I have one question. I'd like to know the reasons behind the increase of unit price and gross profit margin in the second quarter. What’s your outlook for the unit price and gross profit margin in the third quarter?
Okay. This is Fion. I'll take this question. Regarding the overall blended ASP, the ASP improvement quarter-over-quarter is mainly due to the product mix improvement, especially in China scooters. Last quarter, our ASP was around RMB 3,000 in the domestic market just because we launched 2 smaller or more compact scooters, MT and MMT, which have a retail price range through RMB 3,500 to RMB 4,800. This affected the ASP last quarter. For this quarter, since we launched the upgraded version of the NXT 2025 version and also the NLT and N-Play, which are all large-scale scooters and upgraded versions of our best sellers with retail prices exceeding RMB 5,000. So the blended product mix in the China market rose due to those best sellers. Additionally, in the overseas market this quarter, our electric motorcycles' sales volume increased by more than 3,000 units, and our motorcycle ASP was around RMB 15,000, which includes the FOB models and DDP models.
This will improve the overseas blended ASP as well. As for the gross margin, actually, both on the cost reduction side and our ASP improvement brought up the overall gross margin for the China market. In this quarter, our domestic gross margin for scooters and non-scooters in the domestic market is over 21%, which is a very optimistic and strong figure for the past 6 quarters. This will also improve the total gross margin for our business this quarter. I hope this answers your question.
And I have another question. I'd like to know how you predict sales volume next year for domestic electric 2-wheeled vehicles. Some investors are worried about that.
So this is Yan. Let me address this question. Currently, it is too early to predict the sales for next year. One thing we are looking at is actually with this new regulation. As I mentioned, there is this new regulation that will be effective in 2 stages. One date is September 1, which is for the manufacturers, and the second is December 1, which is for the retailers. If you look at the entire market, there are speculations that some demand from next year will shift to this year because of these regulatory changes. However, we are still being cautious at this point to observe the market. In terms of NIU, what we are doing right now is preparing a multiple line of products that will comply with the new standard, and also we are modifying our existing series to comply with the new standard. Simultaneously, we continue to increase the number of retail stores. These two actions will help us drive growth for next year regardless of market changes.
Our next question comes from the line of Kai Kang from CITIC.
This is Kai Kang from CITIC, and congratulations on your strong performance in the second quarter. I have two questions. The first question is about the overseas market. In the last 2 years, we were under high pressure in the overseas market, and our performance was under pressure. Do we think we are working out of the rules or going out of the bottom and climbing up again due to our NIU driver on e-scooter and also our NIU direct selling channel in the overseas market? Can we expect maybe a better, brighter future in the second half and into next year in the overseas market?
Right. To address your question, the short answer is yes. We really spent the last 2 years building up the direct distribution models in the overseas market for electric 2-wheelers. Europe is actually one of our largest markets, and it required us to set up our own operations, from logistics to dealer financing. We spent last year building on that, and it really started to turn around essentially in the second quarter this year. We look at our market share based on registered vehicles, and in registered vehicles, we're actually ranked #1 in market share in Germany and Italy at this point with a much faster growing rate than our competitors in those markets. We expect continued growth in the electric 2-wheeler market overseas, hopefully getting back to the peak levels we observed in 2020 or 2021.
I have another question about the dealer network in China. We know in the last year, the dealer network was a strong driver of our performance in the domestic Chinese E2W market and revenue. Do you think we'll keep opening more new stores at a very fast pace like this year? Next year, will our dealer network stores number in China reach about 6,000 or 7,000 with some speed like that?
I think right now we're at 4,300. We expect to net add about 1,000 stores this year. We have net added about 589 stores so far. We're looking to add another 400 stores in Q3 and Q4. If we achieve that target, that will get us to about 4,700 stores. If you look at our competitors in the market and the same price range, the ceiling for us will be somewhere around 8,000 to 9,000 stores, so we still have a long way to go. Over the next 3 years, we plan to continue expanding our stores. While opening stores, our per-store sales have not really dropped—it has actually slightly increased by around 7% to 8% per store. This shows that by opening the stores, we didn't dilute the sales per store, demonstrating a trend of healthy growth in channel expansion.
We will now take our next question from Michael Simmonds from GlobalView.
Yes. This is Michael speaking here. Congratulations to Li, and congratulations to Ms. Fion on these very good results for Q2. I noticed that for the last few quarters, you've been posting good volume sales growth, but revenue growth always falls behind that. This last quarter, it seems to be catching up a bit. Ms. Fion, based on your comments, it sounds as though in the next quarter where you're predicting 40% to 60% revenue sales growth, do you think this will be the first quarter where revenue growth will actually be ahead of volume growth in scooters?
So Michael, sorry, I didn't fully get the question. Are you asking if revenue growth will be similar to volume growth for Q3?
Yes, I mean, so far for a little while now, you've been achieving revenue growth that has fallen behind the volume growth. But from what you're saying on this call, it seems that in your guidance of revenue growth of 40% to 60%, that could be ahead of scooter volume growth. Is that assumption correct?
Let me refer back to my data here. If Fion has the data in front of her, she could better answer your question. My sense is that they will be very similar because if you look at our Q3 figures, our ASP for the China market is around RMB 3,000, which is significantly lower than Q2 2024, which was around RMB 3,300. Q3 typically is a low quarter for ASP since it's a top sell season for China. As a result, many of the low-end scooters will represent a higher percentage. At this point, we don't have the full picture on our ASP. We roughly estimate that product growth will be very similar to the revenue growth.
I'm seeing no more questions in the queue. Let me turn the call back to Mr. Li for closing remarks.
Thank you, operator, and thank you all for participating in 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.
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.