Niu Technologies (NASDAQ:NIU), a leading electric scooter manufacturer, reported a mixed fourth quarter for 2023, with total sales volume slightly down by 0.6% year-over-year to 137,000 units. The company experienced a sales decline in the China market by 6.4% but saw an increase of 33% in overseas sales. Total revenue for the quarter decreased by 21% to RMB478.7 million.
Despite operational challenges and market shifts, Niu Technologies launched new products and plans to target specific consumer segments and expand its retail channels in 2024.
Key Takeaways
- Total sales volume for Q4 2023 was 137,000 units, a minor decrease from the previous year.
- Sales in China decreased by 6.4%, while overseas sales grew by 33%.
- Total revenue for Q4 2023 was RMB478.7 million, marking a 21% decrease.
- The company introduced the NX series, with positive pre-order results for the NXT model.
- Niu Technologies plans to focus on the premium market and expand product offerings in 2024.
- The company anticipates a sales volume of 1 to 1.2 million units in 2024.
- Gross margin for Q4 stood at 19%, with operating expenses increasing due to overseas expansion.
Company Outlook
- Niu Technologies aims to target the premium market segment and expand its product portfolio.
- The company plans to restart channel expansion and build sales fronts in lower-tier cities.
- They expect Q1 2024 revenue to be between RMB438 million to RMB480 million, a 5% to 15% increase year-over-year.
Bearish Highlights
- The electric moped market in Europe declined, affecting sales.
- Operational disruptions with distribution partners were experienced.
- Total revenue and scooter revenue in China and overseas markets decreased compared to the previous year.
Bullish Highlights
- New product launches, including the NX series, received positive pre-orders.
- Operational adjustments in overseas markets are expected to bolster direct distribution to retailers.
- The company plans to double the point of sales for micro-mobility products by the end of 2024.
Misses
- The company's average selling price (ASP) for scooters in China decreased by 15% year-over-year.
- Overseas scooter ASP decreased by 49% year-over-year.
- Gross margin decreased by 3.4 percentage points compared to the same period last year.
Q&A Highlights
- Niu Technologies addressed safety concerns by ensuring scooters work only with their own batteries.
- The company targets expanding market share in Tier 2 and Tier 3 cities with suitable products.
- They aim to maintain the selling expense ratio within 20% to 24% of revenue.
- The company anticipates stable cash flow and enough inventory for 2024 without expanding facilities beyond the current capacity of 2 million units.
Niu Technologies' earnings call revealed a company grappling with market fluctuations and operational challenges but also one that is proactive in its approach to new product development and market expansion. The company's strategic focus on the premium market segment and specific consumer groups, along with its operational adjustments, indicate a forward-looking stance aimed at overcoming the current headwinds and capturing growth opportunities in 2024.
InvestingPro Insights
Niu Technologies (NIU) has been navigating a complex market landscape, as evidenced by the mixed results in their latest financial report. As they continue to adapt and innovate in the electric scooter industry, here are some key insights from InvestingPro that may shed light on their financial health and market position:
- The company's market capitalization currently stands at 133.37 million USD, signaling a relatively modest size within the sector. This could provide room for growth but also indicates that the company may be more susceptible to market volatility.
- With a negative P/E ratio of -5.41 and an adjusted P/E ratio for the last twelve months as of Q3 2023 at -5.37, NIU has faced profitability challenges. This is reflective of the operational difficulties the company has encountered, as mentioned in the article.
- Revenue for the last twelve months as of Q3 2023 is reported at 381.5 million USD, with a significant revenue decline of -21.37%. This aligns with the reported decrease in total revenue for Q4 2023 in the article, underscoring the need for the company's strategic shifts and new product offerings.
InvestingPro Tips for Niu Technologies highlight several key points for potential investors and stakeholders:
1. Despite recent challenges, NIU holds more cash than debt on its balance sheet, which may provide a cushion against short-term financial obstacles and enable continued investment in product development and market expansion.
2. Analysts predict the company will be profitable this year, suggesting a potential turnaround from the current profitability issues.
For those interested in a deeper analysis, there are additional InvestingPro Tips available, including insights on shareholder yield, net income growth expectations, and the company's performance in the Automobiles industry. With 13 more tips listed on InvestingPro, users can gain a comprehensive understanding of NIU's financial and market position.
To access these insights and more, consider subscribing to InvestingPro using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. This offer could be particularly valuable for investors seeking to make informed decisions based on real-time data and expert analysis.
Full transcript - Niu Technologies (NIU) Q4 2023:
Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to Niu Technologies Fourth Quarter 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we'll conduct a question-and-answer session, and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Now I’d turn the call over to Ms. Kristal Li, Investor Relations Manager of Niu Technologies. Ms. Li, please go ahead.
Kristal Li: Thank you, operator. Hello, everyone. Welcome to today's conference call to discuss new technologies results for the fourth quarter 2023. The earnings press release, corporate presentation and financial spreadsheets have been posted on our investor relations website. This call is being webcast from our company's IR site as well, and the 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 Security Litigation Reform Act of 1995. Forward-looking statements involve risks, uncertainties, assumptions, and other factors. The company's actual result 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 included discussion of certain non-GAAP financial measures. The press release contains 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.
Yan Li: Thanks, Kristal. And hello, everyone. In the fourth quarter of 2023, our total sales volume was 137,000 units. Maintaining the same level one year ago with slight year-over-year drop of 0.6%. Specifically, sales volume in the China market dropped by 6.4% to 110,000 units, while sales in the overseas market had a significant increase of 33% to 27,000 units. Total revenue in Q4 was RMB478.7 million, a decrease of 21%. Those results wrapped up the financial year of 2023. In 2023, the total sales volume was 709,000 units, total revenue for the entire year was RMB2.7 billion. Now, the year of 2023 presented significant challenges for Niu’s operations. The lingering effect of lithium battery price hike in 2022 continued to impact our sales in the first half of 2023. While the price of lithium battery returned to the normal level in the second half of the year, our business faced additional setbacks due to consumption upgrades or downgrades in the top tier cities in China. This trend characterized by cautious spending behaviors among the premium market customers resulted in a slowdown in sales. Now in the international electric two-wheeler market we encounter challenges both internally and internally. The decline of electric moped market in the key European countries such as Germany and the Netherlands coupled with temporary operation disruptions due to issues faced by our distribution partners in Europe further hindered our growth in 2023. Now despite the headwinds, our 2023 presented itself a year with opportunities to reflect and refocus our strategy. In the China market, our product strategy remains focused on the premium market segment, enhancing our product line by growing our classic series and also by successfully introduce a more sporty style Falcon series. One notable product released in 2023 is the MQiL, the legacy return product updates our iconic M-series with significant design and performance improvements. In just seven months of launch, the MQiL sales volume in 2023 represents 16% of China's total sales. The Falcon series is also another popular series that we introduced in 2023 that quickly become well-known style besides the classic Halo light series with the recent launch of F400T and F200, F100 products. The new F-series together represents nearly 35% of total China sales. Now, our dedication to craft a premium product is complemented by our unwavering commitment to build a premium brand. Throughout 2023, we remain deeply engaged in branding and marketing activities, leveraging various user events and cross-brand collaboration to strengthen our presence in China market. We actively participated in exhibitions and road shows, collaborating with leading lifestyle brands such as the North Face Mountain Festival, Sneaker Con, G-Fusion Game Fest, and the Designer Toy Expo. These events provided us with valuable opportunities to showcase our products and elevate our brand presence. Simultaneously, we maintained a robust online presence through a strategic communication and a marketing campaign, predominantly on short video platforms like Xiaohongshu and Douyin. Collaborating with over 600 KOLs and KOCs, our content generated over 250 million views, further solidifying our brand's digital footprint. Furthermore, 2023 saw us embark on an impactful cross-brand collaboration, such as our partnership with globally recognized IP Kumamon resulting the launch of new cross Kumamon G100 scooters. Additionally, in Q4 2023 we established a significant official partnership with JD (NASDAQ:JD) Gaming, a leading e-sports team in China and a finalist in the League of Legends World 2023. Moving forward, we'll continue to leverage our strategic collaboration and high-profile events to amplify our brand visibility and reinforce our position in the market. Now turning into the overseas market, in 2023 we encountered a mix of challenges and opportunities. Our electric two-wheeler sales experienced a significant decline of 70%, primarily attributed to the operation disruption faced by one of our key distributors. However, our micro-mobility segments saw a modest increase of 0.5% year-on-year. Despite the decline in the electric two-wheeler sector, we have initiated efforts to make operational adjustments to improve our performance since the second half of 2023. We continue to introduce new products in 2023 in the electric two-wheeler market. In the fourth quarter, we introduced the RQi, a high-performance urban quad-electric motorcycle to the European market. Its cutting-edge design, swift acceleration, and integrated smart features, such as keyless lock/unlock, GPS navigation, OTA] (ph) update, have been met with enthusiasm from the market. Alongside the RQi we launched the XQi electric dirt bike, available in two variants, the XQi3 Street for urban riders and XQi3 Wild for off-road adventures. The XQi quickly garnered acclaims winning the 2023 Gold Winner of the New York Product Design Awards. Furthermore, 2023 marks the official launch of a new battery swapping solution compatible with our newly introduced F600 e-mopeds. This initiative [indiscernible] collaborate with partners across Southeast Asia, South America, and Europe to revolutionize the way riders engage with our product by offering quick, efficient battery swaps, thereby opening doors in the markets that we have previously yet to penetrate. We officially kick offed the solution in Q4 2023 and expect to have battery swapping cabinets available by working closely with three to five operational partners by the end of year 2024. In the micro-mobility sector, we delivered sales volume slightly higher than the previous year with the increase of 0.5%. However, the total activation number in 2023 grew by 2 times compared to 2022. In product strategy, we focused on running our product portfolio to cater a broader spectrum needs. The launch of our premium KQi Air and the KQi Air X models constructed predominantly from lightweight carbon fiber for incredible low weight of under 12 kilogram, solidifies our range in micro mobility categories. With the KQi Air series, we now brought the comprehensive lineup that spans from high innovative design scooters in US dollars thousand plus range to high-performance scooter in the $800 to $900 range to accessible entry-level options in the $300 to $400 bracket. This diverse range lays a strong foundation for anticipated sales growth in 2024. The expanded sales channel of our micro-mobility product also play a big role in the growth. In 2023, we transition from focusing on online sales through Amazon (NASDAQ:AMZN) and Shopify (NYSE:SHOP) to a combination of online and offline sales by working with official retail partners like Best Buy (NYSE:BBY), MediaMarkt, [indiscernible] and more. Through those retail partners, we were able to place our products in more than 1,000 physical locations in the United States and Europe. Our active participation in global exports and road shows including the AIMExpo in Las Vegas, [EFA. Please go ahead.
Unidentified Analyst: Hello, Dr. Li. I'd just like to ask a question about the balance sheet in these sort of slightly tough trading conditions. You and your team have done a good job sort of maintaining a good cash level and the balance sheet. Can you just give us a feel for looking forwards this year, particularly as you've explained, you're going to be spending some money on your international expansion and also continuing to launch many new products. Can you just give some feel for what the balance sheet and the cash position is likely to look like going forward, please.
Fion Zhou: Well, this is Fion from Niu. I think I can give the trend of our balance sheet instead of the exact figures. Because we are still at the very beginning of 2024. As Yan just mentioned, except for the operating activities and strategies we introduced, on top of that, we may spend higher CapEx on the store opening in domestic markets. I think this is the big non-operating consumption in the domestic strategy. Well, in the overseas markets, we didn't expect any large CapEx impact. The only operational activities will happen in 2024 is how we launched our products in our strategic partner stores. So those are purely the operational activities. We were selective in the operational cash flow. So this is the cash flow part and the CapEx part. In the meantime, we didn't expect there to be a huge increase in the receivables or the payables since the business model is very straightforward. And we also didn't expect the higher increase in the inventory as well, because right now we already have enough inventory for the big season sales in 2024. And after that, we may remain a relatively secured level of the inventory, but will not reach to the higher one than 2023. So I think the business model doesn't change. The only thing is that, if we want to expand the stores in domestic markets, it will bring up the CapEx. While the current production has already reached to 2 million production capacity and we didn't expect as high as this level sales volume. So we don't have any further demand on the expansion on our facilities. Hope this will address your question.
Unidentified Analyst: Yes, thank you very much.
Operator: Thank you for the questions. With that, I would like to turn the call back to management for closing.
Yan Li: All right. Thanks, everyone, 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.
Operator: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect your lines.
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