-- Total volume of e-scooter sales up 76.3% year
over year
Niu Technologies (“Niu”, or “the Company”) (NASDAQ: NIU), the
world’s leading provider of smart urban mobility solutions, today
announced its financial results for the third quarter ended
September 30, 2018.
Third Quarter 2018 Financial Highlights
- Net revenues for the third quarter of 2018
were RMB493.2 million, an increase of 86.1% year over year.
- Gross margin was 12.4%, up from 8.8% for the
third quarter of 2017.
- Net loss for the third quarter of 2018 was
RMB2.2 million, improved by RMB37.1 million compared with net loss
of RMB39.3 million in the third quarter of 2017.
- Adjusted net income (non-GAAP) was RMB4.9
million, improved by RMB16.5 million compared with adjusted net
loss of RMB11.6 million in the third quarter of 2017.
Third Quarter 2018 Operating Highlights
- The number of e-scooters sold reached 120,961 in the third
quarter of 2018, up 76.3% year over year.
- Sales network in China expanded to 215 city partners and 642
franchised stores as of September 30, 2018.
- Sales network in overseas markets expanded to 20 distributors
covering 25 countries as of September 30, 2018.
- NIU launched new e-scooter model “UM” and new service “Niu
Care”.
- The Company started to plan for new production facility in
Changzhou, China.
- NIU launched the McLaren GT Customer Racing co-branded limited
edition smart e-scooters in August 2018.
Dr. Yan Li, Chief Executive Officer of the Company, commented:
“NIU delivered a solid third quarter with impressive financial and
operational results. We continued the strong revenue growth and
generated positive adjusted net income for the first time. We
expanded our product line with the new UM entry-level e-scooters,
and we started to plan for a new production facility.”
Dr. Li continued, “We now have established relationships with
215 city partners and 642 franchised stores in China, as well as
relationships with 20 distributors overseas across 25 countries.
We also launched “Niu Care”, a service plan that incorporates
the rider data collected by our smart e-scooters. Niu Care
enables a highly optimized service recommendation, and demonstrates
how we use advanced technology and big data to accommodate customer
needs and offer a premium experience. As of November 16, we had
accumulated approximately 1.8 billion kilometers of riding distance
of data.”
Third Quarter 2018 Financial Results
Net revenues for the third quarter of 2018 were
RMB493.2 million, representing an increase of 86.1% year over year,
mainly due to the increases in e-scooter sales volume by 76.3% and
net revenues per e-scooter by 5.5%.
- E-scooter sales represented 93.2% of net revenues, while the
accessories and spare parts sales and service revenues represented
6.8% of net revenues, increased from 6.6% in the third quarter of
2017.
- The increase of e-scooter sales was mainly driven by the new
product launch of M+ model in June and UM model in August, as well
as the expansion of sales network in both China and overseas
markets.
- The increase of net revenues per e-scooter was mainly driven by
the increase of retail prices for certain e-scooter models in
January and August 2018.
- By geography split, China represented 94.9% of the net revenues
from e-scooter sales, and overseas markets represented 5.1%,
compared with 2.7% from overseas markets in the third quarter of
2017.
Cost of revenues for the third quarter of 2018
were RMB432.0 million, representing an increase of 78.8% year over
year, mainly due to the increase in e-scooter sales volume. The
cost per e-scooter, defined as cost of revenues divided by the
number of e-scooters sold in a specified period, was RMB3,571,
slightly increased from RMB3,523 in the third quarter 2017 as a
result of product mix change and performance upgrade of existing
e-scooter models.
Gross margin for the third quarter of 2018 was
12.4%, increased substantially from 8.8% in the same period of
2017, reflecting a higher net revenues per e-scooter mainly driven
by the increase of retail prices. To promote the two new models M+
and UM, the Company set lower retail prices initially and gave
additional sales volume rebates to city partners, which affected
our gross margin in the quarter. On October 26, the Company
increased retail prices of certain products under the M+ model,
which we believe will help drive further margin expansion in the
near future.
Operating expenses for the third quarter of
2018 were RMB65.8 million, increased by 27.5% from the same period
of 2017. Operating expenses as a percentage of net revenues was
13.3%, compared with 19.5% in the third quarter of 2017.
- Selling and marketing expenses were RMB38.1
million including RMB0.6 million share-based compensation,
increased by 68.0% from RMB22.7 million in the third quarter of
2017. The increase was mainly attributable to the increases in
advertising and promotion expense of RMB7.8 million, staff cost of
RMB3.3 million and depreciation and amortization expense of RMB1.9
million, which resulted from the UM model launch event in August,
growth in e-scooter sales volume and opening of new franchised
stores. The selling and marketing expenses as a percentage of net
revenues was 7.7% compared with 8.6% in the third quarter of
2017.
- Research and development expenses were RMB13.7
million including RMB3.5 million share-based compensation,
increased by 42.2% from RMB9.6 million in the third quarter of
2017, which was mainly attributable to the increase in staff cost
of RMB3.4 million as a result of the Company’s continued efforts to
enhance the research and development team and capability. The
research and development expenses as a percentage of net revenues
was 2.8%, compared with 3.6% in the third quarter of 2017.
- General and administrative expenses were
RMB14.1 million including RMB2.9 million share-based compensation,
decreased by 27.4% from RMB19.4 million in the third quarter of
2017, which was mainly attributable to the decrease of share-based
compensation expense of RMB8.6 million, offset by the increases in
staff cost of RMB1.2 million and professional fee of RMB1.2
million. The general and administrative expenses as a percentage of
net revenues was 2.9%, compared with 7.3% in the third quarter of
2017.
Operating expenses excluding share-based
compensation for the third quarter of 2018 was RMB58.8
million, increased by 62.2% year over year, and represented 11.9%
of net revenues, compared with 13.7% in the third quarter of
2017.
- Selling and marketing expenses excluding share-based
compensation were RMB37.5 million, increased by 68.5% year
over year, and represented 7.6% of net revenues, compared with 8.4%
in the third quarter of 2017.
- Research and development expenses excluding share-based
compensation were RMB10.1 million, increased by 63.7% year
over year, and represented 2.0% of net Revenues, compared with 2.3%
in the third quarter of 2017.
- General and administrative expenses excluding
share-based compensation were RMB11.2 million, increased
by 42.7% year over year, and represented 2.3% of net revenues,
compared with 3.0% in the third quarter of 2017.
Change in fair value of a convertible loan was
nil in the third quarter of 2018, compared to a loss of RMB12.3
million associated with change in fair value of a convertible loan
in the same period of 2017.
Net loss for the third quarter of 2018 was
RMB2.2 million, improved by RMB37.1 million compared with a net
loss of RMB39.3 million in the third quarter of 2017.
Adjusted net income (non-GAAP) was RMB4.9
million in the third quarter of 2018, compared with an adjusted net
loss of RMB11.6 million in the third quarter of 2017. The adjusted
net income margin2 was 1.0% in the third quarter of 2018, compared
with an adjusted net loss margin of 4.4% in the same period of
2017.
Balance Sheet
As of September 30, 2018, the Company had cash, term
deposit and short-term investments of RMB483.6 million in
aggregate. For the third quarter of 2018, the Company generated
positive operating cash flow of RMB95.8 million,
and incurred RMB23.0 million capital expenditure
for purchase of property and equipment and prepayment for land use
right.
Business Outlook
For the fourth quarter of 2018, NIU expects net revenues to be
in the range of RMB370 million to RMB390 million, representing
year-over-year increase of 69% to 78%.
The above outlook is based on information available as of the
date of this press release and reflects the Company’s current and
preliminary expectation, which is subject to change.
Conference Call
The Company will host a conference call at 8:00 a.m. on November
20, 2018, Eastern Time (9:00 p.m. November 20, 2018 Beijing/Hong
Kong time), to discuss its third quarter 2018 financial results and
provide a corporate update.
Participants may access the call by dialing the following
numbers:
|
Phone
Number |
Toll-Free
Number |
|
|
|
United States |
+1 (845) 675-0437 |
+1 (866) 519-4004 |
Hong Kong |
+852 3018 6771 |
+852 8009 06601 |
Mainland China |
+86 (800) 819 0121 |
|
|
+86 (400) 620 8038 |
|
Other
International |
+65 6713 5090 |
|
A replay will be accessible through November 27, 2018, by
dialing the following numbers
|
Phone
Number |
Toll-Free
Number |
|
|
|
United States |
+1
(646) 254-3697 |
+1 (855) 452-5696 |
Hong Kong |
+852 30512780 |
+852 800963117 |
Mainland
China |
+86 8008700206 |
|
|
+86 4006022065 |
|
Other
International |
+61 281990299 |
|
Additionally, a live and archived webcast of the conference call
will also be available through the Company’s investor relations
website at www.ir.niu.com.
About NIU
As the world’s leading provider of smart urban mobility
solutions, NIU designs, manufactures and sells high-performance
smart e-scooters. NIU has a streamlined product portfolio
consisting of three series, N, M and U that address the needs of
different segments of the modern urban resident, while being united
through a common design language that emphasizes style, freedom and
technology. NIU has adopted an omnichannel retail model,
integrating the offline and online channels, to sell its products
and provide services. For more information, please visit
www.niu.com.
Use of Non-GAAP Financial Measures
To supplement NIU’s consolidated financial results presented in
accordance with the accounting principles generally accepted in the
United States of America (“GAAP”), NIU uses the following non-GAAP
financial measures: adjusted net income/loss and adjusted net
income/loss margin. The presentation of these non-GAAP financial
measures is not intended to be considered in isolation or as a
substitute for the financial information prepared and presented in
accordance with GAAP.
NIU believes that these non-GAAP financial measures provide
meaningful supplemental information regarding its performance and
liquidity by excluding certain items that may not be indicative of
its operating results. The Company believes that both management
and investors benefit from referring to these non-GAAP financial
measures in assessing its performance and when planning and
forecasting future periods. These non-GAAP financial measures also
facilitate management’s internal comparisons to NIU’s historical
performance. The Company believes these non-GAAP financial measures
are useful to investors in allowing for greater transparency with
respect to supplemental information used by management in its
financial and operational decision making. A limitation of using
these non-GAAP financial measures is that these non-GAAP measures
exclude certain items that have been and will continue to be for
the foreseeable future a significant component in the Company’s
results of operations. These non-GAAP financial measures presented
here may not be comparable to similarly titled measures presented
by other companies. Other companies may calculate similarly titled
measures differently, limiting their usefulness as comparative
measures to the Company’s data.
Adjusted net income/loss is defined as net income/loss excluding
share-based compensation expenses and change in fair value of a
convertible loan. Adjusted net income/loss margin is defined as
adjusted net income/loss as a percentage of the net revenues.
For more information on non-GAAP financial measures, please see
the tables captioned “Reconciliations of non-GAAP financial
measures to the nearest comparable GAAP measures.”
Exchange Rate
This announcement contains translations of certain RMB amounts
into U.S. dollars (“US$”) at specified rates solely for the
convenience of the readers. Unless otherwise stated, all
translations from RMB to US$ were made at the rate of RMB6.8680 to
US$ 1.00, the exchange rate in effect as of September 28, 2018, as
set forth in the H.10 Statistical release of the Board of Governors
of the Federal Reserve System. The Company makes no representation
that the RMB or US$ amounts referred could be converted into US$ or
RMB, as the case may be, at any particular rate or at all.
Safe Harbor Statement
This press release contains forward-looking statements. These
statements are made under the “safe harbor” provisions of the U.S.
Private Securities Litigation Reform Act of 1995. These
forward-looking statements can be identified by terminology such as
“will,” “expects,” “anticipates,” “aims,” “future,” “intends,”
“plans,” “believes,” “estimates,” “likely to” and similar
statements. Among other things, the business outlook and quotations
from management in this announcement, as well as NIU’s strategic
and operational plans, contain forward-looking statements. NIU may
also make written or oral forward-looking statements in its
periodic reports to the U.S. Securities and Exchange Commission, in
its annual report to shareholders, in press releases and other
written materials and in oral statements made by its officers,
directors or employees to third parties. Statements that are not
historical facts, including statements about NIU’s beliefs, plans
and expectations, are forward-looking statements. Forward-looking
statements involve inherent risks and uncertainties. A number of
factors could cause actual results to differ materially from those
contained in any forward-looking statement, including but not
limited to the following: NIU’s strategies; NIU’s future business
development, financial condition and results of operations; NIU’s
ability to maintain and enhance its “NIU” brand; its ability to
innovate and successfully launch new products and services; its
ability to maintain and expand its offline distribution network;
its ability to satisfy the mandated safety standards relating to
e-scooters; its ability to secure supply of components and raw
materials used in e-scooters; its ability to manufacture, launch
and sell smart e-scooters meeting customer expectations; its
ability to grow collaboration with operation partners; its ability
to control costs associated with its operations; general economic
and business conditions in China and globally; and assumptions
underlying or related to any of the foregoing. Further information
regarding these and other risks is included in NIU’s filings with
the Securities and Exchange Commission. All information provided in
this press release is as of the date of this press release, and NIU
does not undertake any obligation to update any forward-looking
statement, except as required under applicable law.
Investor Relations Contacts:
NIUManager of Investor RelationsJason
YangE-mail: ir@niu.com
The Blueshirt Group Gary Dvorchak, CFAE-mail:
gary@blueshirtgroup.com
NIU TECHNOLOGIES |
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
|
|
|
|
|
As of December 31, |
|
As of September 30, |
|
2017 |
|
2018 |
|
RMB |
|
RMB |
US$ |
ASSETS |
|
|
|
|
Current assets |
|
|
|
|
Cash |
111,996,325 |
|
89,193,058 |
|
12,986,759 |
Term
deposit |
- |
|
68,791,862 |
|
10,016,287 |
Restricted cash-current |
104,547,200 |
|
179,474,917 |
|
26,132,050 |
Short-term investments |
85,187,718 |
|
325,582,123 |
|
47,405,667 |
Accounts receivable, net |
10,382,112 |
|
30,535,797 |
|
4,446,097 |
Inventories |
88,225,965 |
|
131,795,922 |
|
19,189,855 |
Prepayments and other current assets |
7,349,583 |
|
46,626,404 |
|
6,788,935 |
Total current assets |
407,688,903 |
|
872,000,083 |
|
126,965,650 |
|
|
|
|
|
Non-current assets |
|
|
|
|
Restricted cash-non current |
65,342,000 |
|
- |
|
- |
Property and equipment, net |
28,696,602 |
|
39,288,745 |
|
5,720,551 |
Intangible assets, net |
1,277,467 |
|
8,337,816 |
|
1,214,009 |
Other
non-current assets |
626,605 |
|
15,338,379 |
|
2,233,311 |
Total non-current assets |
95,942,674 |
|
62,964,940 |
|
9,167,871 |
|
|
|
|
|
Total assets |
503,631,577 |
|
934,965,023 |
|
136,133,521 |
|
|
|
|
|
LIABILITIES |
|
|
|
|
Current liabilities |
|
|
|
|
Short-term bank borrowings |
168,234,207 |
|
178,234,207 |
|
25,951,399 |
Convertible loan |
151,557,796 |
|
- |
|
- |
Accounts payable |
124,937,465 |
|
353,009,155 |
|
51,399,120 |
Advance from customers |
48,503,389 |
|
47,984,353 |
|
6,986,656 |
Deferred revenue-current |
9,853,361 |
|
9,696,876 |
|
1,411,892 |
Accrued expenses and other current liabilities |
75,412,869 |
|
125,209,660 |
|
18,230,876 |
Total current liabilities |
578,499,087 |
|
714,134,251 |
|
103,979,943 |
|
|
|
|
|
Warranty-non
current |
12,378,751 |
|
18,094,470 |
|
2,634,606 |
Deferred revenue - non current |
144,700 |
|
3,407,711 |
|
496,172 |
Total non-current liabilities |
12,523,451 |
|
21,502,181 |
|
3,130,778 |
|
|
|
|
|
Total liabilities |
591,022,538 |
|
735,636,432 |
|
107,110,721 |
|
|
|
|
|
MEZZANINE
EQUITY |
|
|
|
|
Series A-1 Redeemable
Convertible Preferred Shares |
130,684,003 |
|
137,584,003 |
|
20,032,615 |
Series A-2 Redeemable
Convertible Preferred Shares |
39,205,192 |
|
41,275,192 |
|
6,009,783 |
Series A-3 Redeemable
Convertible Preferred Shares |
67,955,320 |
|
268,397,780 |
|
39,079,467 |
Series B Redeemable Convertible Preferred Shares |
- |
|
175,419,600 |
|
25,541,585 |
Total mezzanine
equity |
237,844,515 |
|
622,676,575 |
|
90,663,450 |
|
|
|
|
|
SHAREHOLDERS’
DEFICIT: |
|
|
|
|
Ordinary Shares |
39,948 |
|
39,682 |
|
5,778 |
Series Seed Convertible
Preferred Shares |
18,436 |
|
18,436 |
|
2,684 |
Additional paid-in
capital |
440,265,896 |
|
681,308,759 |
|
99,200,460 |
Accumulated other
comprehensive income/(loss) |
5,596,238 |
|
(12,328,497) |
|
(1,795,064) |
Accumulated
deficit |
(771,155,994) |
|
(1,092,386,364) |
|
(159,054,508) |
Total
shareholders’ deficit |
(325,235,476) |
|
(423,347,984) |
|
(61,640,650) |
|
|
|
|
|
Total
liabilities, mezzanine equity and shareholders’
deficit |
503,631,577 |
|
934,965,023 |
|
136,133,521 |
|
|
|
|
|
NIU TECHNOLOGIES |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE LOSS |
|
|
|
|
|
|
|
|
Three months ended September 30, |
Nine months ended September 30, |
|
2017 |
2018 |
2017 |
2018 |
|
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
Net revenues |
265,048,301 |
493,196,944 |
71,810,854 |
550,122,563 |
1,050,276,220 |
152,923,154 |
Cost of revenues
(a) |
(241,624,965) |
(432,008,871) |
(62,901,700) |
(505,118,841) |
(909,193,943) |
(132,381,180) |
Gross
profit |
23,423,336 |
61,188,073 |
8,909,154 |
45,003,722 |
141,082,277 |
20,541,974 |
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
Selling and marketing
expenses (a) |
(22,687,662) |
(38,118,554) |
(5,550,168) |
(58,539,554) |
(108,347,926) |
(15,775,761) |
Research and
development expenses (a) |
(9,601,810) |
(13,652,474) |
(1,987,838) |
(30,767,848) |
(69,706,558) |
(10,149,470) |
General and
administrative expenses (a) |
(19,363,738) |
(14,059,924) |
(2,047,164) |
(56,329,030) |
(247,377,044) |
(36,018,789) |
Operating
loss |
(28,229,874) |
(4,642,879) |
(676,016) |
(100,632,710) |
(284,349,251) |
(41,402,046) |
|
|
|
|
- |
|
|
Changes in fair value
of a convertible loan |
(12,317,728) |
- |
- |
(37,133,145) |
(34,499,858) |
(5,023,276) |
Interest expense |
(814,363) |
(2,357,501) |
(343,259) |
(1,903,298) |
(6,262,816) |
(911,884) |
Interest income |
309,164 |
590,001 |
85,906 |
759,589 |
1,918,690 |
279,367 |
Investment income |
623,198 |
1,704,722 |
248,212 |
1,398,108 |
2,909,312 |
423,604 |
Foreign currency
exchange gain |
970,762 |
2,347,184 |
341,756 |
725,537 |
1,944,522 |
283,128 |
Government grants |
114,000 |
200,000 |
29,121 |
833,000 |
1,311,100 |
190,900 |
Loss before
income taxes |
(39,344,841) |
(2,158,473) |
(314,280) |
(135,952,919) |
(317,028,301) |
(46,160,207) |
Income tax expense |
- |
- |
- |
- |
- |
- |
Net
loss |
(39,344,841) |
(2,158,473) |
(314,280) |
(135,952,919) |
(317,028,301) |
(46,160,207) |
|
|
|
|
|
|
|
Other comprehensive income/(losses) |
|
|
|
|
|
Foreign currency
translation adjustment, net of nil income taxes |
3,469,950 |
(11,470,675) |
(1,670,163) |
7,304,447 |
(18,319,140) |
(2,667,317) |
Unrealized gain on
available for sale securities, net of nil income taxes |
799,621 |
1,998,015 |
290,917 |
1,656,363 |
3,303,717 |
481,030 |
Less: reclassification
adjustment for gain on available for sale securities realized in
net income, net of nil income taxes |
(623,198) |
(1,704,722) |
(248,212) |
(1,398,108) |
(2,909,312) |
(423,604) |
Comprehensive
loss |
(35,698,468) |
(13,335,855) |
(1,941,738) |
(128,390,217) |
(334,953,036) |
(48,770,098) |
Net loss per
share |
|
|
|
|
|
|
—Basic and diluted |
1.23 |
0.04 |
0.01 |
5.57 |
7.21 |
1.05 |
|
|
|
|
|
|
|
Weighted average number of shares
outstandingused in computing net loss per
share |
|
|
|
|
—Basic and diluted |
31,881,510 |
57,216,265 |
57,216,265 |
24,412,609 |
43,992,924 |
43,992,924 |
|
|
|
|
|
|
|
Note:
(a) Includes share-based compensation expenses as follows:
|
Three months ended September 30, |
Nine months ended September 30, |
|
2017 |
2018 |
2017 |
2018 |
|
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
Cost of revenues |
62,778 |
64,306 |
9,363 |
191,052 |
184,739 |
26,899 |
Selling and marketing
expenses |
410,919 |
580,742 |
84,558 |
1,180,162 |
1,605,107 |
233,708 |
Research and
development expenses |
3,424,719 |
3,542,241 |
515,760 |
10,482,456 |
43,660,213 |
6,357,049 |
General and
administrative expenses |
11,546,523 |
2,908,665 |
423,510 |
35,335,343 |
195,592,798 |
28,478,858 |
Total
share-based compensation |
15,444,939 |
7,095,954 |
1,033,191 |
47,189,013 |
241,042,857 |
35,096,514 |
NIU TECHNOLOGIES |
RECONCILIATION OF GAAP AND NON-GAAP
RESULTS |
|
|
|
|
|
|
|
|
Three months ended September 30, |
Nine months ended September 30, |
|
2017 |
2018 |
2017 |
2018 |
|
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
Net loss |
(39,344,841) |
(2,158,473) |
(314,280) |
(135,952,919) |
(317,028,301) |
(46,160,207) |
Add: |
|
|
|
|
|
|
Share-based
compensation expenses |
15,444,939 |
7,095,954 |
1,033,191 |
47,189,013 |
241,042,857 |
35,096,514 |
Change in fair
value of a convertible loan |
12,317,728 |
- |
- |
37,133,145 |
34,499,858 |
5,023,276 |
Adjusted net
(loss)/income |
(11,582,174) |
4,937,481 |
718,911 |
(51,630,761) |
(41,485,586) |
(6,040,417) |
|
|
|
|
|
|
|
____________________________________
1 Adjusted net income/loss is a non-GAAP measure, defined as net
income/loss excluding share-based compensation expenses and changes
in fair value of a convertible loan. For more information on these
non-GAAP financial measures, please see the tables captioned
“RECONCILIATION OF GAAP AND NON-GAAP RESULTS” set forth at the end
of this release.
2 Adjusted net income/loss margin is defined as adjusted net
income/loss as a percentage of the net revenues.
Niu Technologies (NASDAQ:NIU)
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