Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Niu Technologies Third 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 will 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 third 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 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, Ms. Wenjuan Zhou. Now let me turn the call over to CEO, Yan.
Thank you, Kristal. Hello, everyone. Thank you for joining us today. In Q3, we delivered solid and sustained progress across all key strategic priorities, supported by disciplined execution in product innovation, channel expansion, and brand elevation. Our results reflect the continued 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 strengthened product portfolio and effective channel expansion. Overseas volume reached 14,000 units, declining year-over-year, mainly due to weakness in the micromobility sector. Our total revenue grew 65% year-over-year to RMB 1.69 billion, accompanied by gross margin expansion to 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 China sales. Net profit for the quarter was RMB 81.69 million, extending the profitability momentum established in Q2. This improvement reflects efficiencies from higher volume and our continued focus on operational 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 remained our primary 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 demand, and steady channel expansion. The momentum built through 2024 into 2025 reflects our refined strategy, enhanced competitiveness, and growing consumer preference for Niu. 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 31, retail sales of existing inventories are permitted until November 30, 2025. This prompted distributors and retailers to build inventories in July and August, effectively pulling forward demand from October and November, which created a temporary sales boost in Q3. Now to prepare for this regulatory shift, we emphasized three actions: upgrading the existing high-end electric bicycle models to capture the short-term demand, rolling out new electric motorcycles unaffected by this regulation to target lower-tier cities, and redesigning and retuning our entire electric bicycle lineup to fully comply with the new standard for the rollout in Q4 2025 and Q1 2026. First, to capture the premium electric bicycle demand surge under the old standard, we launched the upgraded flagship models, the NXT Ultra 2025 and FXT Ultra 2025 version, each priced at RMB 11,999. The NXT Ultra 2025 introduced 10 major upgrades with 77% of core components redesigned to elevate the benchmark standards across safety and power intelligence. The FXT Ultra 2025 featured a futuristic performance-driven design on the same technology platform as the NXT Ultra, equipped with automotive-grade millimeter-wave radar and dual-channel ABS, setting a new safety benchmark for the segment. Together, those Ultra models contributed 8% of 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 and channel footprint, making it a key growth priority for us. As highlighted in the previous earnings calls, expanding presence in lower-tier cities is a core strategy reflected in our store expansion and strengthened product line. In Q2, we completed a full N-Series motorcycle portfolio covering mainstream price points from entry-level NS at RMB 3,000 to NL at RMB 4,000 and NXL at RMB 6,000 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 enhanced motorcycle portfolio supported a healthy 14% revenue contribution from motorcycle sales. We expect this share to increase in the coming quarters. A key milestone in Q3 was the successful launch of the FX Windstorm version on September 28. Known for its sharp distinctive styling that resonates strongly with Gen Z riders, the FX Windstorm reinforced the F-Series' positioning as a performance powerhouse. Priced at RMB 4,799, it targets the RMB 4,000 segments as its first high-speed motorcycle for young riders, equipped with a 3,000 mass motor reinforced frame, a full-size TFT display, and 4% disc brakes. It delivered performance comparable to models priced above RMB 10,000, including a top speed of 80 kilometers per hour and 0 to 50 kilometers in 4.7 seconds. The FX Windstorm was an instant success with 14,000 units sold in the first 5 hours and generated RMB 68 million in GMV, ranking #1 on Douyin, Tmall, JD.com, and Kuaishou in GMV and popularity. This success validates our strategic expansion into electric motorcycles and creates strong momentum for upcoming launches such as FS targeting entry-level users. Now alongside the high-end electric bicycle motorcycles, we dedicated significant R&D resources to the new standard compliant electric bicycles. The updated regulation requires substantial redesigns from the limited 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 renewed and new series offerings and also introduce new series designed to reach specific consumer segments, including products optimized for female riders. Beyond the new product development, we continue to invest in core technologies, including the smart riding system, powertrain innovation, and R&D platformization to enhance efficiency and capabilities. Our smart riding under AI efforts focus on three areas: expanding foundational safety technologies such as ABS and millimeter-wave radar; developing assisted riding features for premium models such as the two-way throttle and cruise Assist; and building an intelligent ecosystem for broader third-party integrations. Through partnerships with Apple and Oracle, along with other industry leaders, we expand cross-device connectivity, including off-bike safety alerts and Apple Wallet access, enhancing the overall user experience. In the powertrain system, we advanced several next-generation initiatives through deeper motor controller R&D and collaboration with our battery partners. Our efforts focus on two key objectives: delivering higher peak current output for stronger acceleration and fine-tuning overall system efficiency to extend riding range under diverse conditions. The NXT FX Ultra and FX Windstorm are strong examples of this R&D achievement. The enhanced powertrain architecture enables 0 to 25 kilometers power 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 delivered a top speed of 80 kilometers per hour while maintaining stable power delivery, improved thermal performance, and consistent power output even during extended high-speed riding. Those advancements not only elevate riding performance but also form a foundation for the new generation of powertrain platforms that will scale across future product lines. Now 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 economies of scale. The improvement supported the smooth delivery of 450,000 units, surpassing our previous peak by roughly 20%, while enhancing margins through shared components and module design across product lines. Now in Q3, we continued elevating the new brand and deepening engagement with our core audiences, particularly among premium consumers and Gen Z riders. Our approach integrated lifestyle campaigns, product launches, and targeted digital engagement to strengthen brand equity and drive conversion. We acted on a series of youth-focused lifestyle campaigns, such as the Summer Ride and Splash campaign, embedding Niu into outdoor leisure experiences like lake diving and quick hiking across major cities, generating 130 million impressions across online and offline channels. Following the FX Windstorm launch, we hosted large-scale test ride events in Chengdu and Chongqing, engaging riders in real mountain environments. This created authentic word-of-mouth within the key user segment to provide valuable feedback. Our launch event continued to highlight new technology leadership. The June 17, Du Ultra flagship launch generated about 20,000 units sold in 5 hours with GMV exceeding RMB 228 million. The FX Windstorm launch delivered 14,000 units sold in 5 hours with 93% positive ratings, resonating strongly with Gen Z and delivery riders. Now strength in both offline and online channels has seen Niu surpass 4,500 stores nationwide, with 238 net new stores added in Q3 and 800 year-to-date. Nearly half of the new stores were in lower-tier cities, supporting deeper market penetration. Our digital ecosystem also scaled rapidly. Niu now manages 9 official flagship accounts supported by 1,062 dealers' operated accounts. In Q3, the network generated over 30,000 live streams, 69,000 content pieces, and millions of impressions. Online sales represented close to 70% of our total work. We also expanded onto a new e-commerce platform, Meituan, piloting with 10% of stores generating RMB 40 million to RMB 50 million in monthly sales. We plan to expand store coverage and motorcycles next. On Kuaishou local services, more than 2,200 stores have joined, and the FX Windstorm ABS launch ranked #2 nationally, reinforcing our brand resonance among Gen Z riders in the lower-tier market. Now turning to our overseas market. Q3 unfolded as expected, a transitional quarter as we continue to optimize operations and prepare for our next growth cycle. The overseas sales volume reached 14,000 units, with a decline in micromobility, 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, up 160% year-over-year. The self-operated sales accounted for 76% of total. We further accelerated our self-operated dealer network expansion. Dealers in those direct distributor regions grew from 120 at the start of the year to 289 in Q3, exceeding our initial target of 250. This reflects strong brand recognition, product competitiveness, and growing retailer confidence in the direct distribution model. With channel foundations now established, we will shift from capability building towards product rollout and deeper channel market penetration. The product lineup unveiled at EICMA positions us strongly for multiyear growth. At EICMA, the largest two-wheeler show in Milan, we showcased our international product road map, expanding from smart e-scooters to broader electric mobility portfolios. Highlights included the 2026 NQi X-series with Google Map integration, featuring 125-kilometer per hour NQiX 1000 launching in Q3 2026; the all-new FQiX Series for working commuters in L1e and L3e versions for Q3 2026; and the expanded XQi Series, including the 110-kilometer per hour XQi 500 Street version for the second half of 2026. Lastly, the Concept 06 is a forward-looking 155-kilometer per hour platform featuring AI-assisted intelligence and advanced safety. The new NQi 500 was awarded the Top Award 2025 by a leading German motorcycle media outlet, 1000 PS, a strong validation of our product excellence. Our micromobility volume reached 11,900 units, down 77% year-over-year, reflecting market headwinds in the U.S., Europe, and Asia. Europe saw intensified price competition, while the U.S. shifted towards lower price models due to tariff dynamics. In Q3, we intentionally reduced promotions and shipments to avoid overstocking and 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 of quarters. Now looking 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 micromobility operation. We expect China to remain our primary growth driver through strong execution across the first three quarters. We will break out products each quarter, demonstrating our capability in product definition, channel activation, and brand influence. However, we expect some uncertainty and softening in Q4 this year due to the timing of the new standard implementation. Retailers are preloading inventory in Q3, shifting some demand from Q4. And new standard compliant products will ramp up from late November through Q1 2026, shifting part of the Q4 demand into Q1 2026. Combined, those factors will likely result in a relatively flat year-over-year volume in Q4. We expect growth to re-accelerate in Q1 2026 as the regulatory transition completes and the market stabilizes. The fourth new standard electric bicycle lineup, along with the addition of 300 to 400 new stores in Q4, will support strong momentum into 2026. Now turning to the overseas market. For electric two-wheelers, we expect strong year-over-year growth in Q4, supported by ongoing expansion of direct distribution networks. The new products introduced at EICMA will fuel multiyear growth starting in 2026. In micromobility, we will continue prioritizing profitability in Q4, reducing promotions and focusing on clearing existing inventories. This will lead to a lower Q4 volume. We expect the adjustment to conclude in the first half of 2026, with margin returning to normal levels in the second half of 2026.
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 cell 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 I say otherwise. 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 were sold in China and the 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 the third quarter. Total revenue for the third quarter amounted to RMB 1.69 billion, an increase of RMB 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 the third quarter. China revenues were RMB 1.62 billion, increased at 84% year-over-year and accounting for 95% of total revenues. Of this, the scooter revenue reached RMB 1.48 billion, and this growth was primarily driven by a 74% increase in sales volume coupled with a higher ASP. China scooter ASP was RMB 3,283, representing nearly 7% year-over-year growth and remaining largely stable compared to the previous quarter. This growth was primarily driven by a favorable shift in our product mix. In Q3, our top seller NT with a retail price range from RMB 3,699 to RMB 4,599 continued to perform well. In the meantime, we received strong contributions from new products like the NLT and NXT, ranging from RMB 3,899 to RMB 6,299. Collectively, these three top sellers accounted for nearly 50% of our total sales volume this quarter. Overseas revenue was RMB 77 million, representing 5% of total revenue. Scooter revenues, including electric motorcycles, mopeds, kick scooters, and e-bikes, amounted to RMB 67 million, down from RMB 130 million in the same period of last year, and this decline was driven by decreases 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, driven by a greater proportion of revenue coming from higher-priced electronic motorcycles and mopeds. Revenue from accessories, spare parts, and services were RMB 145 million, representing 8.6% of total revenue and a 51% increase compared to the same period of last year due to an increase in spare parts sales in China. Gross profit this quarter exceeded RMB 370 million, marking a significant improvement compared to RMB 142 million during the same period of last year and RMB 252 million last quarter. The gross margin was 21.8%, 8 percentage points higher than the same period of last year and 1.7 percentage points higher than the previous quarter, marking our best quarterly gross margin performance this year. This improvement was driven by the ongoing cost reduction initiatives and the economies of scale from higher sales volume in the China market. Operating expenses for the third quarter were RMB 297 million, an increase of 48% compared to the same period of last year and the OpEx ratio dropped to 17.5%, down from 19.6% in the same period of last year and 21.1% in the previous quarter. Selling and marketing expenses rose by RMB 87 million year-over-year to RMB 215 million, primarily driven by higher spending on marketing and online promotion campaigns in China. Selling and marketing expenses represented 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 RMB 13 million year-over-year to RMB 43 million, primarily due to higher staff costs and share-based compensation. R&D expenses represented 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 RMB 4 million year-over-year to RMB 39 million, mainly due to improved cash collection from account receivables, which resulted in the reversal of bad debt provisions. G&A expenses represented 2.3% of revenue, down significantly from 4.2% in the same period of last year, while up from 1.5% last quarter as the company benefited largely from foreign currency exchange gains in the previous quarter. The net income was RMB 82 million with a net margin of 4.8% on the GAAP accounting, compared to a net loss of RMB 41 million for the same period of last year and net income of RMB 5.9 million for last quarter. The non-GAAP net income was RMB 88 million. Turning to our balance sheet and cash flow, we ended the quarter with RMB 1.8 billion versus RMB 1.1 billion last year-end in cash, restricted cash, term deposits, and short-term investments. Our operating cash inflow amounted to RMB 433 million. The CapEx amounted to RMB 73 million, reflecting an increase of RMB 32 million compared to the same period of last year. This can be attributed primarily to an increase in the opening of new stores and module costs in China. Now let's turn to guidance. We expect the fourth quarter revenue to be in the range of RMB 737 million to RMB 901 million, representing a year-over-year change of minus 10% to plus 10%. 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 are subject to change due to uncertainties relating to various factors. With that, we'll now open the call for any questions that you may have for us. Operator, please go ahead.
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.
This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.