NIU Technologies (“NIU”, or “the Company”) (NASDAQ: NIU), the world’s leading provider of smart urban mobility solutions, today announced its financial results for Q1 2020.
Road to Recovery with a Revenue of RMB 232.9 Million
For Q1 2020, the revenue is RMB 232.9 million, which decreased by 34.4% YoY due to lower sales volume. The total number of e-scooters sold worldwide was 40,160 units, decreased by 39.4% YoY, which is attributed to the damaging effects of the global pandemic. The number of e-scooters sold in China reached 34,316 units, decreased by 43.5% YoY. On the other hand, the number of e-scooters sold in international markets reached 5,844 units, increased by 5.9% YoY. The number of franchised stores in China is 1,033, which decreased by 17 stores. The international sales network has expanded to 33 distributors covering 42 countries.
The revenues per e-scooter increased by 8.2%. The higher revenues were attributed to increased accessories, spare parts, and services per e-scooter, which is now RMB 1,168 compared to RMB 671 in the same period last year. In addition, the gross margin was 23.6%, compared to 21.3% in the same period of 2019. This increase is driven by higher e-scooter revenues from the Company’s international markets, and a higher proportion of revenues from accessories, spare parts, and services.
Many aspects of the Company’s operations were damaged because of the ongoing pandemic. The two-wheeler e-scooter market has been hit by shutdowns of factories and retail stores. However, the Company was able to persevere and provide support to distributors and dealers with its strong cash and financial position.
The company extended credit payment date for selective distributors and granted full rebate to dealers that suffered from the pandemic – including those who missed the sales volume target in the Q1 2020. The Company also provided training to dealers in China on e-commerce and organized branding and marketing activities to support dealers to accelerate retail sales.
The Company benefited from the strict measures and recovery actions by the Chinese authorities. Supply chain and operations has returned to normal in early April 2020. The Company expects revenues of Q2 2020 to be in the range of RMB 585 million to RMB 655 million, which represents a YoY increase of 10% to 23%.
Arrival of New Products and Expectation to Return to Healthy Growth in Q2 2020
The Company has continued to expand its product portfolio in 2020 and has continued growing its business. Q1 2020 R&D expenses were RMB 22.7 million (including RMB 2 million of share-based compensation), which increased by 58.6% compared to Q1 2019. It increased by RMB 14.3 million and represents 9.8% of the total revenue. In May 2020, the Company launched a new product called MQi2. This is NIU’s flagship product under the new national standard for electric bicycles in China. The MQi2 inherits the design language of MQi series and it is also equipped with the Company’s most up-to-date technologies. The NIU app is now upgraded to 4.0 version, which is optimized for better interactive experience, improved GPS positioning and anti-theft security. The Company also plan to launch another model under the Gova series in June 2020.
Meanwhile, the Company’s long-term expansion plans are in good progress. Retail sales network expansion in China will resume in Q2 2020 and there is also plans to acquire land use right for a new piece of real estate in Changzhou for further factory expansion in light of the rebounding recovery demand in China.
After being listed on NASDAQ for around 1.5 years, the Company is now added into MSCI’s China Small Cap Index, which will take place on May 29th 2020. This demonstrates recognition from the capital market.
NIU Technologies CEO Dr. Yan Li said “Since May, distributors and dealers in selective international markets resumed operation and we are working closely with them to re-activate our expansion plans. We are very excited about the enriched product portfolio and we are looking forward to the continued growth of our business and pleased to see demand is recovering in China. Our China sales are expected to return to healthy growth in the second quarter.”