NIU

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Niu Technologies' first quarter 2026 earnings conference call. Now I will turn the call over to Miss Kristal Li, Investor Relations Manager of Niu Technologies. Miss Li, please go ahead.

Thank you, operator, and hello, everyone. Welcome to today's conference call to discuss Niu Technologies results for the first quarter of 2026. The earnings press release, corporate presentation, and financial spreadsheets has been posted on our investor relation website. This call is being webcast from companies 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 provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statement involves 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 company's public filings with the Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statement 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 a reconciliation of GAAP to non-GAAP financial results. On the call with me today are our CEO, Dr. Yan Li, and CFO, Miss Fion Zhou. Let me turn the call over to CEO Yan.

Thank you, Kristal. Hello, everyone. Thank you for joining our first quarter 2026 results call. The first quarter of 2026 was a period of high-quality execution and strategic resilience within a complex regulatory environment. The total sales volume reached 261,000 units, representing a robust of 28.7% year-over-year increase. Revenue for the quarter reached RMB 909.52 million, up 33.4% year-over-year. In China, the sales volume increased 35.4% to nearly 248,000 units. This growth was powered by a major structural breakthrough in our electric motorcycle segment, which successfully offset a temporary contraction in the electric bicycle market as the new national standard took full effect. Overseas, the sales of 13,686 units reflected a 32.4% decline.

This remains a planned result of our ongoing channel structure optimization and disciplined inventory management. We're staying completely focused on our core objective, prioritizing healthy retail sales growth and long-term profitability over short-term shipping volume. Let me walk through our China overseas operation in more detail. In China, our first quarter sales volume reached 247,938 units, a 35.4% increase year-over-year. While this growth is robust, internal data reveals a significant positive structural evolution of our brand. To end this quarter, we must look at a divergence between two product categories. First, in the electric motorcycle category, the segment surged by a staggering 3x year-over-year increase.

Building on our momentum that begins in Q4 last year with our Windstorm product line, we further accelerate our growth in the electric motorcycle market, expanding our footprint directly into tier 2 and tier 3 cities. This is no longer just a temporary trend. It's a definitive market breakthrough, proving NIU's ability to rapid scale and capture the meaningful volume in the segment. In the electric bicycle segment, the sales have softened. This was fully anticipated as the market remains transitional waiting period as the new standard rolling out last December. We're managing this period deliberately by rolling out our new product lines in a phased approach, ensuring we're perfectly positioned to capture the high quality volume as consumer demand returns. Now, this shift has fundamentally redefined our geographic footprint as well.

Historically, NIU has been perceived as a tier 1 city brand, with the market represents 60% of sales. In Q1, we saw the tier 1, the new tier 1 city softened, where the tier 2 and tier 3 cities grow on a faster pace, fueled by the rapid adoption of electric motorcycles. This represent a massive strategic milestone, improves NIU's brand equity, successfully scaling beyond the urban elites and penetrating the broader mass premium China market. Now, this shift has set a powerful foundation for 2026. By breaking through the lower tier motorcycle market, we have added a new growth engine. When the electric motorcycle market inevitably recovers, our total growth will rebound with double the force. To ensure we're the first to capture that recovery, we made deliberate strategic decision to front-load our investment in branding, R&D, and the new product launch in Q1.

In branding and marketing, recognizing 2026 is a pivotal year for our brand's revolution, we made a proactive decision to front-load our marketing investment in this quarter. We chose to capture the consumer mindshare ahead of curve by building a massive brand awareness in Q1. We have ensured as the new national standard transition stabilized, Niu is well-positioned to capture its unmet demand. In Q1, we executed 3 major saturation initiatives. First, our 2 global ambassador strategy. In late January, we officially announced Wu Lei and Song Yuqi as Niu's 2 global brand ambassadors, the first strategy of this kind in our industry. Wu Lei's image as a high-performance outdoor enthusiast resonated with our core premium users, while Song Yuqi significantly extended our reach among Gen Z as female audiences.

This campaign was activated across 40-plus cities and 80-plus global landmarks, generating an unprecedented 3.4 billion impressions. Second, our Spring Festival saturation campaign, which capitalized on the highest frequency travel period in China, a large-scale offline campaign across 37 cities, 42 transportation hubs, and nearly 3,000 cinemas. This generated over 400 million impressions, firmly embedded the message, premium, smart, Niu, in the mind of travelers. Third, the 2026 technology launch event. On March 17, we unveiled our next-generation AI mobility strategy. This event was not just a product review, but also repositioned Niu as a technology leader in the AI era. With over 130 media outlets and 450 million impressions, we have redefined what smart two-wheelers can be. Those intensive branding activities led to a 4x-plus year-over-year increase in the marketing expense for Q1.

This was a one-time front-loading of our annual budget. Historically, the first quarter has seen a lower marketing spend due to a seasonal retail trend. However, we choose to strategically shift our marketing weights in Q1 this year to ignite the brand momentum for the entire fiscal year. As we move into Q2 and beyond, you will see that our marketing-to-revenue ratio normalized. We have already established deep brand equity required to drive our 2026 growth target. We're transitioned directly from this investment phase to execution, the harvest phase. In terms of R&D and technology, the technology and continuous innovation remain core to Niu's long-term strategy as they are fundamental to our ability to compete far beyond simple pricing and basic hardware specifications.

Our primary technology focus this year is to bring the power of AI to the electric two-wheeler industry, zeroing in on three major development areas: the AI Operating System, intelligent chassis system, and intelligent riding technology. First on the Niu's AI OS. Launched at our March seventeenth event, the Niu AI OS is our cornerstone to redefining the next era of intelligent riding. As the industry's first mass-produced AI dashboard system, it represents a technological milestone, integrating AI-enabled voice assistant with high-performance automotive-grade operating system. Now, the second is the intelligent chassis platform. We also introduced our next-generation intelligent chassis platform. This platform is engineered to integrate advanced safety and performance system, including ABS, TCS, continuous damping control, battery management system, and lighting system into a single unified vehicle-level architecture.

Based on this platform, we aim to introduce several industry-first features for mass-produced two-wheelers, such as adaptive driving beam AI headlights and adaptive CDC suspension. The last is through a strategic partnership with the leading automotive-grade technology companies. We're bringing advanced rider assistant functionality to the two-wheeler segments. This includes integrating cutting-edge hardwares like advanced visual recognition systems and high-performance processing chips. Supported directly by those core technologies, we launched the industry's first AI-enabled electric bicycle, the NQi2 Ultra, as our flagship model. Talking about our product matrix. Our product strategy in Q1 was clear. It's driving a aggressive growth in the electric motorcycle segment while building a dominant portfolio for the electric bicycle recovery. First, to lead the electric bicycle transition, we launched the NQi2 series, priced from RMB 5,299 to RMB 12,999.

The flagship NQi2 Ultra is the industry's first AI-powered e-bicycles, featuring our AI OS, the two-channel ABS, and millimeter wave radar. This isn't just a bike, it's a statement that Niu's own the high-end market. Second, we expand our total addressable market with the Y series. We officially entered the female mobility segment with the Y series, endorsed by our ambassador, Song Yuqi, at a competitive RMB 3,000 to RMB 4,000 price point. Third, the NX Marathon, our new volume engine. To capitalize our 3x growth in the electric motorcycle market, we launched the NX Marathon at a RMB 6,499. This model target a long-range family commuters, offers a 146 km drive range and flagship features such as magic wheel at a mainstream price point. The market response was immediate.

Within just 5 hours of launch, the NX Marathon generated over RMB 91 million in sales, ranking at number 1 across major e-commerce platforms. Those performance proves our hero product strategy is working. Now, in Q1, we continued to strengthen our both the offline retail sales and online ecosystem operations. In terms of online channels, we delivered another stand-up quarter. The online sales increased by 53%, accounting for approximately 46% of domestic retail sales, demonstrating a continuous strength of our online-to-offline operation model. Also, on Douyin, we conduct more than 32,000 live streams, generating over 270 million impressions. We also continue to expand on Kuaishou and Meituan, further broaden our digital retail coverage. Now turning to our international operations, we're navigating a deliberate structural transition to prioritize the healthy fundamentals.

Our high-margin electric motorcycle business remain a key strategic priority, and it's showing a strong momentum. Shipment reached more than 2,000 units and 29% year-over-year increase. Our European dealer now expanded from 307 to 360 active locations this quarter. In the micro-mobility segment, international sales was down 37% year-over-year. First, this is regarding the channel distribution structuring. During the first quarter, we complete a major structural shift to a linear distribution model in our key market like Germany and U.S. This critical action allows us to significantly minimize the ongoing channel operation expenses. Consequently, Q1 serve as the transition phase where the major retail partners, such as Best Buy in the United States and MediaMarkt in Germany, focus primarily on sell-out of their existing retail inventories.

The fresh stock-up period, under the new distribution model is only in the beginning now in Q2. Secondly, reflecting our current inventory positions, we are holding an elevated volume of micro-mobility inventories in Europe and the U.S., stemming from lower than anticipated sales in 2025. Our primary mandate for the remainder of 2026 is clear, is to accelerate unit sales volume and aggressively reduce the inventory backlog back to a lean and healthy baseline. To execute this inventory clearance swiftly and protect against long-term operation drag, we're implementing targeted price promotions throughout the rest of the year, especially on older model products. Those efforts will depress our micro-mobility contribution margins throughout the year.

While this discounting strategy present a short-term headwind to our profitability matrix, it is necessary to bring our global micro-mobility operation back to a clean, optimized, and highly stable foundation for the close of 2026. Looking ahead, we'll continue executing our strategy with a focus on sustainable and quality-driven growth. In China, we expect the electric bicycle market will recover gradually throughout Q2. We're taking cautious view. To lead this market, we're executing a phased out rollout of our full compound product mix, anchored by the NXT2 and the Y Series. Those position us with a comprehensive premium lineup ahead of a critical June and then Q3 selling season. Our electric motorcycle category will continue to be our primary growth engine. We have additional model targeting female riders and technology enthusiasts planned for Q2 and second half of the year.

The upcoming 618 shopping festival will be the first major retail test of those expanded portfolios. Overseas, our direct-to-retail strategy in the electric motorcycles is gaining speed. We expect dealer count to surpass 400 locations by the year-end, supporting both volume growth and improved profitability. In the micro-mobility, as I detailed moments ago, our absolute operation priority for the remainder of 2026 is to aggressive inventory normalization and maximizing retail sell-through. We expect our linear operate channel transition to finalize throughout the first half of this year, with our broadened promotional clearance and inventory normalization largely conclude by the second half of 2026. In summary, we have used the first quarter to do the heavy lifting required for a transformative year.

By front-loading our marketing, investing deeply in our AI technology roadmap, and diversifying our product portfolios, and clean up our global channels, we have moved beyond the transition phase. We believe those strategic actions have laid a solid foundation to drive sustainable and high-quality growth in Q2, and will serve as a catalyst to accelerate our growth in the latter half of the year. We're confident in our path and focused on execution. Now I'll turn over to our CFO, Fion Zhou, to talk about the financials.

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 the Excel format figures to our IR website for your easy reference. As I review our financial results, I'm referring the first 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 first quarter was 262,000 units, up 29% compared to the same period of last year. 248,000 units were sold in China, while the remaining 14,000 units sold overseas. Over 60% of our sales volume in China came from the top 3 bestsellers.

The total revenue for the first quarter amounted to RMB 910 million, an increase of RMB 228 million, or 33% compared to the same period of last year. China revenue were RMB 854 million, accounting for 94% of the total revenue. Of this, the scooter revenue was RMB 774 million, a year-over-year increase of 42%, and this growth was primarily driven by a sales volume and improvement in the revenue per e-scooters. China scooter ASP were RMB 3,120, up nearly 5% year-over-year.

While the overseas revenue were 56 million, representing a 6% of the total revenue, the scooter revenue, including electric motorcycles, mopeds, kick scooters, and e-bikes, amounted to 51 million, down from 60 million in the same period of last year. This decline was driven by the lower sales volume and reduced the revenue per kick scooters. Partially offset by a higher revenue per electric motorcycle and mopeds, which command higher retail prices. The sales volume in the international market shifted in favor of the electric motorcycle and mopeds category. The premium pricing of this product further contributed to a year-over-year increase in the ASP of overseas scooters, which rose from RMB 2,962 to RMB 3,716.

The revenue from accessories, spare parts and services were CNY 85 million, a 13% increase compared to the same period of last year, mainly driven by the higher revenue from new services. The gross profit for this quarter exceeded CNY 159 million, marking a significant improvement compared to CNY 180 million during the same period of last year. The gross margin was 17.4%, 0.1 ppt higher compared to the same period of last year, and 2.1 ppts higher than the previous quarter. The domestic gross margin improved due to a favorable high margin product mix, which boosted a overall gross margin by 2 ppts. However, these gains were offset by a 1.9 ppts drag from the lower kid scooters margin.

The operating expenses for the first quarter were CNY 264 million, increased CNY 99 million or 60% compared to the same period of last year. The OPEX ratio was 29% compared from the 24.2% in the same period of last year, but down from 30.5% in the last quarter. Selling and marketing expenses rose by CNY 65 million year-over-year to CNY 180 million, primarily driven by the intensified marketing initiatives in domestic market during the holiday season, as well as a higher depreciation and amortization expenses and staff cost. Selling and marketing expenses accounted for 19.8% of revenue, up from 16.8% in the same period of last year, but down from 21.3% in last quarter.

R&D expenses increased by CNY 12 million year-over-year to CNY 41 million, primarily due to an increase in design and testing cost, as well as the staff cost. The R&D expenses representing 4.5% of revenue compared to 4.4% in the same period of last year, but down from 7.3% in last quarter. G&A expenses increased by CNY 22 million year-over-year to CNY 42 million, largely driven by an increase from foreign currency exchange losses. The G&A expenses constitute 4.7% of revenue, up from 3% in the same period of last year and 1.8% in last quarter. Excluding the impact of foreign currency exchanges, the G&A expenses were CNY 23 million compared to CNY 30 million in the same period last year.

In the first quarter, we had a net loss of RMB 94 million with a net loss margin of 10.3% under GAAP accounting, compared to a net loss of RMB 39 million with a net loss margin of 5.7% for the same period of last year. The non-GAAP net loss was RMB 88 million, with a non-GAAP net loss margin of 9.7%. Turning to our balance sheet and cash flow, we ended this quarter with R&D RMB 1.4 billion, remain flat compared to the end of last year. In cash, restricted cash, term deposits, and short-term investments, our operating cash inflow amounted to RMB 131 million. CapEx for the first quarter amounted to RMB 70 million, reflecting an increase of RMB 46 million compared to the same period of last year.

This can be primarily attributed to an increase in opening of new stores and module cost in China. Now let's turn to guidance. We expected the second quarter revenue to be in the range of RMB 1.57 billion-RMB 1.82 billion, an increase of 25%-45% 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 expectation, which is subject to change due to uncertainties relating to various factors. With that, let's now open the call for any questions that you may have for us. Operator, please go ahead.

Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A queue. Once again, that's star 1 and 1 on your telephone to register a question and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Seeing no 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 on 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.

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Niu Technologies fourth quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will 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 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 fourth quarter of 2025. The earnings press release, corporate presentation and financial spreadsheet has been posted on our investor relations website. This call is being webcast from 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 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, and hello, everyone. Thank you for joining our fourth quarter 2025 results call. 2025 was a year of continuous strategic transformation for Niu. We navigated a complex regulatory shift in China, executed a successful breakthrough in electric motorcycle segment, and overhaul our international distribution for micro-mobility, all while significantly expand our gross margins. While our fourth quarter results reflect the temporary friction inherent in those structural changes, the robust foundation we have built positions us perfectly for accelerated high-quality and profitable growth in 2026. Now let's turn to the numbers. In the fourth quarter, we delivered 172,000 units, represent a 23.8% YoY decline.

This comprised of 158,782 units in China, down 12% YoY, and close to 14,000 units overseas, down 68% YoY. I want to spend a minute to dive deep in both figures, as they are direct results of a proactive strategic transition we outlined early this year. First, regarding with the China market. This decline was fully anticipated results of the transition to the new national standards for the electric bicycles. As we highlighted in our previous call, production of old standard models ceased on August 31st, while the retail window closed on November 30th. This led to a significant inventory front-loading by our distributors and retailers in Q3 2025. Naturally, this pulls the sales forward, temporarily reducing our sell-in volume for Q4.

However, we evaluate the second half of 2025 as a whole. Our China deliveries actually grow 38% YoY, confirming that our continued growth momentum for the entire year. Now turning to our overseas performance. The volume decline was deliberately driven by a strategic realignment of our micro-mobility channels. In the key markets like U.S. and Germany, we have transitioned away from a traditional distributor-led model in favor of direct-to-retailer partnerships. While this structural shift meant our former distributors paused orders to clear legacy inventories, it is a necessary evolution. It allowed us to capture higher margins and establish a closer, more agile relationship with our customers. Now zooming out to the full year 2025, the success of our broader strategy is clear. The total sales volume reached 1.19 million units, a robust 29% YoY increase.

This was fueled by exceptional performance in China, where sales surged 46% to surpass 1.11 million units. While our international volume of 80,000 units, a 51% decline, reflects a year of deliberate channel restructuring, we successfully prioritized a long-term profitability over empty volume. The total revenue for the year reached RMB 4.31 billion, up 31% YoY. Most impressively, our full year gross margin reached 19.6%, expanding by a massive 4.4 percentage points YoY, reflecting our premium product mix and operational efficiencies. Now let me dive deeper into the specific operation dynamics of our China and international markets. Let's first look at China operations.

We conclude the fiscal year with exceptional performance across the China market. Total domestic sales volume successfully surpassed the one million milestone, reached 1.11 million units, representing a robust 46.5% YoY increase. This was the direct result of our highly integrated domestic strategy. Our momentum was propelled by four key pillars. One, the portfolio optimization, expanding into high-growth category like electric motorcycles, while maintaining our high-end market positions in electric bicycles. Second, technological leadership, sustained investment in cutting-edge smart riding innovations. Third, brand elevations, targeted campaigns that solidified our premium positions, particularly among the Gen Z demographics. The last, the channel expansion, aggressive scaling of retail network into the lower-tier cities. Together, those initiatives allowed us to capture a significant market share and drive high volume growth in our home market.

Now, first, in 2025, we further fortified our product foundation laid in 2024. Our core NMUF matrix has become the backbone of our business, representing nearly all of total volume. The N-Series continue to be our standout performers, delivering 43% of our total sales and successfully capturing every tier of the market. Throughout 2025, our focus remained on hero SKU development and rapid innovations. This disciplined approach, where nine major products now account for more than 70% of sales, allowed us to iterate faster and deploy our technology platform more effectively, resulting in a leaner and highly responsive product structure. Perhaps the most defining structural evolution for Niu in 2025 was our breakthrough into the electric motorcycle segment. Led by a phenomenal success of FX Windstorm, the e-motorcycle now represent more than 23% of our total annual sales.

This achievement validates our diversification strategy and proves our unique capability to accelerate the new market catigories. The FX Windstorm has democratized high-end performance by integrating high torque powertrains, strong durable frames supporting a top speed of 80 kph, and flagship technologies like dual-channel ABS and millimeter wave radar into accessible RMB 4,000-5,000 range. We created a mass competitive moat. As the first high-speed e-motorcycle for the Gen Z segment, its momentum surged to a remarkable 42% of our total sales in the fourth quarter. Beyond its appeal to a young enthusiast, the Windstorm spec defined by high torque powertrain and durability served as our primary engine to break through the high-growth delivery segment. Recognizing that professional riders were underserved, we responded with a targeted multimodal ladder strategy.

The FX Windstorm, with its robust frame and high-performance motor, the FX was our first model to successfully penetrate the delivery market, proving our consumer tech could meet the intensive commercial demands. The NX Windstorm. In Q4, we launched the NX specifically for the delivery professional who requires a higher capacity storage. Built on our newly developed high durability frames with a class-leading 40-liter compartment, the NX contributed 10.5% to our Q4 volume in its debut quarter. Lastly, the NS and FS Windstorm, the entry-level anchors. To complete our coverage, those entry-level anchors serve as our high-value entry-level performance offerings, allowing us to capture the budget-conscious professionals and daily commuters while maintaining a core Windstorm DNA. This expansion, alongside with our premium daily commute specs, has built a highly resilient and diversified revenue base for electric motorcycle segments.

Now looking ahead to 2026, we'll continue to scale this leadership by developing a tailored e-motorcycle offerings for female riders and technology enthusiasts, accelerating our growth in this segment. Now moving to our electric bicycle segment. 2025 was a pivotal transition year as the industry prepared for China's new national standard. Our strategy was twofold, maintaining our dominance in the premium tier while aggressively populating our pipeline with the next generation compliant product. Now to capture the high-end demand, we launched the NXT Ultra 2025 and FXT Ultra 2025. The NXT Ultra features the 10 major upgrades, with 77% core components redesigned to solidify its position as the premium market leaders. Meanwhile, FXT Ultra also added safety benchmarks such as millimeter wave radars and dual-channel ABS. The market response was exceptional.

We achieved over 20,000 units sold within the first five hours, generating more than RMB 220 million in sales and ranking as a top-selling item across major e-commerce platforms. We also continue to iterate our key models. The MT, our best-selling urban commuter, now accounts for more than 20% of our total annual sales. With its compact design, a vibrant style, and the OkGo assist system, it has become particularly popular with our female demographics, proving our ability to design specific lifestyle segments. The U3 Pro, we upgraded Gen Z favorites with a fine-tuned dual-channel ABS, offering the perfect blend of a trend-driven design and high-performance safety. Now to lead the transition to our new national standard, we strategically launched two key compliance series. The first one, the U11, as our first new standard compliant bicycle. The U11 redefined the urban style.

Priced between RMB 4,199-RMB 4,699, it features a lightweight design and a smart integration like TCS and keyless entry. The K-series, launching in late 2025, is the lifestyle-first platform. Starting at RMB 3,799, it features the innovative sled-type ring arm skeleton frame for unmatched stability. With a 4.3-inch TFT display and Magic Wheel smart features, it is a personalized mobility statement that drives the trend towards intelligent commuting. Our full matrix of new standard products is progressing steadily, with a complete portfolio on track for a full rollout by Q2 2026. In fact, we'll be showcasing a selection of those upcoming products at our launch event tomorrow. Now, beyond our product expansion, 2025 was also a year of rapid advancement in our core technology stack.

Our R&D strategy focused on the two primary objectives, democratizing the intelligent technology and pioneering the next generation of assisted mobility. In 2025, we successfully migrated high-end intelligent safety features previously exclusive to our flagship models down into our mid-range and entry-level products. This includes a broader implementation of ABS braking system and the radar technology, significantly raising the safety floor for the entire industry. Furthermore, we have introduced a suite of advanced smart functions across more product tiers, including full screen navigation and our signature Magic Wheel interface, the dual direction smart throttles, and adaptive hill descent system. Those features ensure a broader demographic of new riders can enjoy a premium flagship level experience regardless of their price point. At the high end of R&D, we continue to push the boundary of what is possible in the two-wheel industry.

Looking ahead to 2026, our focus shifts towards a collaborative and experiential intelligence. We are integrating scenario-based interactions and AI agent capabilities across our entire product ecosystem to create a more intuitive interaction between the rider and the machine. In fact, we're incredibly excited to announce that we'll be unveiling the industry's first AI-enabled smart scooter at our product launch event tomorrow on March 17th. We look forward to sharing more details during this event. Our platform-based R&D strategy continued to deliver a significant operational benefit throughout 2025. By really standardizing the core components and the chassis architecture, we have not only accelerated our product development cycles, but also improved the manufacturing consistency and the cost efficiency.

Now, throughout 2025, we proactively leveraged event-driven initiatives to expand our core user communities while making a targeted effort to solidify our position among the critical Gen Z demographics. Over the past year, we host more than 50 integrated brand activities, directly engaging over 500,000 offline participants, and generate 346 million total impressions. Those initiatives were strategically synchronized with our product launches to maximize impact. Key highlights included a high-profile crossovers, such as partnering with popular titles like Game for Peace, online gaming to resonate with the younger gamers. A performance validation, setting up a lap record for electric two-wheelers at the Shanghai F1 event, showcasing our engineering power. A community milestones, our tenth anniversary playful festivals, and dedicated outdoor scenario-based campaigns ranging from hiking to competitive cycling, which embedded the new brand deeply within the outdoor enthusiast community.

As we enter 2026, we're strategically pivoting back to the brand-driven growth. We initiated this shift with the high-profile announcement of our two global brand ambassadors, Wu Lei and Song Yuqi. NIU is the first in our industry to launch a two global ambassadors simultaneously, perfectly embody our core value of performance, trend, and use. This appointment ignite a media blitz that generated over 3.4 billion online impressions. We leveraged this momentum through a saturated offline presence, activating landmark digital displays, and dominating a high-speed rail hubs across 35 cities, reaching an estimate of 500 million travelers. Now, this integrated brand campaign serve a clear purpose, to really reinforce NIU's position as the leading premium electric mobility brand. By combining a massive digital reach with a physical presence, we're building the brand equity necessary to support our next phase of expansion.

Now, in 2025, we continue to aggressively strengthen both our retail footprint and our digital ecosystem. Our nationwide store network has now surpassed 4,500 locations. Throughout this year, we added over 800 new stores with a strategic focus on lower tier cities. This deliberate expansion is driving a deeper market coverage. Our digital channels maintained exceptional momentum in 2025. The total online sales reached approximately 500,000 units, supported by remarkable high online conversion rate of near 50%. This metric is a testament to the health of our consumer demand and seamless efficiency of online to offline model, which successfully bridged the online purchase with the physical retail fulfillment. Now, with the social e-commerce, Douyin has solidified its position as our primary social e-commerce engine.

Our ecosystem there, powered by nine official flagship accounts and close to 1,000 dealer-operated accounts, generates over 95,000 live streams and 2.51 billion annual impressions. Having a perfected social e-commerce playbook, we plan to rapidly replicate the success model on Kuaishou in 2026. We are also expanding our online coverage to Meituan with 73 of our retail stores with Meituan accounts, another mass online channel for broader reach. Now, moving to our international operation. While 2025 was a transition year for our overseas market, the underlying data reveals a significant structural improvement and a much healthier foundation for the year ahead. For the full year, overseas sales totaled 80,000 units, with close to 14,000 units delivered in the fourth quarter. First, our performance in international electric motorcycle segment was a major highlight.

In Q4, we have delivered more than 2,000 units, a 187% YoY increase. For the full year, the sales units surged to 9,600 units, up 227% compared with 2024. This success was directly driven by our direct-to-retailer model. By bypassing the traditional distributors, we significantly expand our dealer networks from 120 to close to 300 by Q4, surpassing our initial expansion target and giving us the direct control over the brand experience and the pricing. We also used 2025 to seed our future growth. In EICMA 2025, we unveiled a strong global pipeline, including a FQiX Urban Series, a NQi 1000 High Performance Motorcycle, and XQi 500 Off-Road Series. Those models will enter global markets through our DTR channels in 2026.

Furthermore, we pioneer a new territory such as North Africa, marked by our successful commercial launch in Algeria, with our first 900 units CKD shipment in June. With this operation foundation in place, we expect a continued rapid growth in the electric motorcycle segment throughout 2026. Now, in the micromobility segment, we execute a planned transition to prioritize the long-term health over short-term volume. A full-year sales total of 70,000 units with a YoY decline, reflecting our strategic decision to restructure channels in the U.S. and Germany. We have successfully moved away from distributor-heavy models in favor of direct retail partnership. This transition allows us to capture a higher margin, exert greater control over our brands, and respond with much more agility to shifting retail trends. Now, the most critical indicator of brand health is on the retail end.

We saw over 100,000 scooters activated in consumer this year. The fact that activation are significantly higher than our sales in volume is a definite sign of a robust consumer demand. With this new channel model, our priority is to finalize the inventory normalization and position this business for sustainable and profitable growth. Now, looking ahead, we see 2026 as a year defined by strategic acceleration across our entire diversified portfolio. Our groundwork in 2025 has set the stage for significant scaling in both our domestic and international operations. In the China market, in the electric bicycle segment, we expect the market to continue navigating a transitional phase through the Q1 of 2026 this year as the new standards are fully implemented.

We anticipate the consumer demand to remain measured through Q1, followed by a pronounced recovery as the regulatory framework stabilizes and the supply chain adapts. To lead this recovery, we'll execute a phased rollout of our new standard product matrix, with the full compliant lineup on track for completion by Q2 2026. Conversely, our electric motorcycle segment is poised for a major breakout, supported by an increasingly favorable regulatory environment and a powerful market validation of our Windstorm platform. We are strategically positioned to capture the accelerated growth in this category. With expanded product portfolios to cover more consumer segments, we believe we have built the most resilient and comprehensive e-motorcycle lineup, capable of capturing market shares across both professional and the lifestyle segments. Now, turning to our international operations, we are transitioning from a period of restructuring to one for profitable scaling.

In the electric motorcycle segments, we project a continued and disciplined expansion fueled by our measured direct-to-retail network. By owning those dealer relationships directly, we're seeing a significant improvement in brand consistency and service quality, which we expect to translate into higher volume growth. In the micro-mobility segment, our primary objective for 2026 remains the finalization of inventory normalization. By prioritizing healthy sell-through over our artificial sell-in volume and maintaining a lean, agile channel structure, we're establishing a sustainable baseline for the near future. Now, in summary, based on our current market visibility and momentum for our new product launches, we expect the total sales volume for the full year 2026 to reach between 1.67 million to 1.91 million units. Now with that, let me turn the call to Fion.

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 the Excel format figures to our IR website for your easy reference. As I review our financial results, I'm referring to the fourth quarter figures unless stated otherwise, and all monetary figures are in RMB if not specified. As Yan just mentioned, our total sales volume for the fourth quarter was 173,000 units, a decrease of 24% compared to the same period of last year. Specifically, China sales volume was 159,000 units, accounting for 92% of total sales volume, and overseas volume was 14,000 units.

For the full year 2025, total sales volume was nearly 1.2 million units, including 1.1 million units in China market and 80,000 units overseas. At the end of 2025, the number of franchise stores in China was 4,540. Total revenue in the fourth quarter was CNY 676 million, down 17% compared to the same period of last year. To break down the scooter revenues by region, the scooter revenues in China were CNY 545 million, down 16% YoY and accounted for 91% of total scooter revenues. The decrease was mainly due to the lower sales volume and revenue per scooter.

China scooter ASP was RMB 3,431, down 3% YoY and up 5% sequentially, mainly driven by the changes in product mix. With the shift from models such as MT, NLT, and NGT to FX, U1, and NX, those new models. Overseas scooter revenues, including electric motorcycles, mopeds, and kick scooters, were RMB 36 million, representing 6% of total scooter revenues. Branded scooter ASP increased to RMB 2,600, up 32% YoY, mainly driven by the greater sales mix contribution from electric motorcycles, which commanded the higher retail prices. Accessories, spare parts, and services revenue were RMB 95 million, up 11% YoY and accounted for 14% of total revenues. This increase was primarily driven by the higher revenues from new smart services as well as from accessories spare parts sales in China market.

For the full year 2025, the total revenue increased by 31% from RMB 3.3 billion last year to RMB 4.3 billion this year. China scooter revenue as a whole saw a nearly 42%YoY increase from RMB 2.6 billion last year to RMB 3.6 billion this year, taking 93% of total scooter revenues. Overseas scooter revenues decreased by 33% from RMB 397 million last year to RMB 267 million this year, taking 7% of total scooter revenues. The total overseas revenues, including scooters and non-scooters, contributing to nearly 7% of the total revenues. Let's take a look at ASP in 2025. The overall scooter ASP increased slightly from RMB 3,203 last year to RMB 3,269 this year.

Among this, the China scooter ASP decreased slightly from RMB 3,377 last year to RMB 3,264 this year, primarily due to the changes in the product mix we mentioned in the previous quarters. In 2024, large-scale scooters like NXT, NT, and N-Play dominated our bestsellers, with the average retail price exceeding RMB 5,000, while the more compact model MT scooters, with a retail price range from RMB 3,700-RMB 4,600, emerged as the best seller in 2025. While in the meanwhile, the large-scale scooter like NXT, NLT still maintain a strong sales momentum in 2025. The overseas branded scooter ASP was RMB 3,330, nearly 40% increase YoY, and driven by the greater proportion of revenue cont-

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Hello, this is Fion. We're reconnecting. We continued by the overseas blended scooter ASP. The overseas blended scooter ASP in 2025 was CNY 3,330, a nearly 40% increase YoY, and driven by a greater proportion of revenue contribution from higher-priced electric motorcycles and mopeds. The gross margin for the fourth quarter was 15.3%, up 2.9 PPT compared to the same period of last year. The increase was primarily attributed to the continued margin improvements in the domestic market. For the full year 2025, our gross margin was 19.6%, up from 15.2% in the previous year, representing a YoY increase of 4.4 PPT. This increase was primarily driven by the China market, reflecting a strategic shift in the product mix towards the higher margin scooters.

For example, the MT, NXT, FXT, and et cetera, along with our continued cost reduction in the domestic market. This was partially offset by a lower growth margin of kick scooters in international markets. The fourth quarter OpEx was CNY 206 million, CNY 13 million higher than the same period of last year, and the OpEx ratio was 30.5%, compared to 23.6% in the fourth quarter of 2024. Selling and marketing expenses were CNY 144 million, CNY 8 million higher than the same period of last year, primarily due to the higher rental expenses in the international markets, along with the increased staff cost and higher depreciation and amortization expenses. This was partially offset by a decrease in advertising and promotion expenses in China market.

Selling and marketing expenses accounted for 21.3% of revenue, compared to 16.6% in the same period of last year, and 12.7% last quarter. Research and development expenses were nearly RMB 50 million, RMB 11 million higher than the same period of last year, mainly due to the higher staff costs, share-based compensation, and increased design and testing expenses. Research and development expenses accounted for 7.3% of revenue, compared to 4.7% in the same period of last year, and 2.6% last quarter. General and administrative expenses were nearly RMB 13 million, around RMB 6 million lower than the same period of last year, mainly due to a decrease in taxes and surcharges, which were partially offset by an increase in foreign exchange losses.

G&A expenses accounted for 1.8% of revenue and compared to 2.2% in the same period of last year and 2.3% last quarter. For the full year 2025, the OpEx were RMB 933 million, 24% higher than last year, and OpEx ratio were nearly 21.7% compared to 22.8% last year. Selling and marketing expenses were RMB 676 million, RMB 186 million or 38% higher than last year and about 15.7% of revenue, compared to 14.9% in 2024.

R&D expenses were RMB 166 million, 36 million or 28% higher than last year and about 3.9% of revenue, compared to 4% in 2024. G&A expenses were 91 million, 40 million or 30% lower than last year, and about 2.1% of revenue, compared to 4% in 2024. Non-GAAP operating expenses were RMB 906 million, accounted for 21% of revenues compared to 22.1% last year. In the fourth quarter, we had a net loss of RMB 88 million and a non-GAAP net loss of RMB 82 million. On a full year basis, we had a net loss of RMB 39 million and a non-GAAP net loss of RMB 12 million. Turning to our balance sheet and cash flow.

We ended the year with RMB 1.3 billion in cash, restricted cash, term deposit and short-term investments. On an annual basis, the operating inflow was around RMB 350 million, primarily reflecting the net income after adjusting for non-cash items. Our fourth quarter CapEx was RMB 48 million, and for the full year 2025, the CapEx was RMB 178 million. RMB 58 million higher than last year because of the module cost and store expansion in the domestic market. Now let's turn to guidance. We expect the first quarter revenue to be in the range of RMB 887 million-RMB 1,023 million, an increase of 30%-50% YoY.

The sales volume for 2026 was expected in the range of 1.67 million-1.91 million units, as Yan just mentioned. Please be aware that the sales outlook is based on the information available as of today and reflects the company's current and preliminary expectation, which is subject to change due to the uncertainty related to various factors. With that, we'll now open the call for any questions that you may have for us. Operator, please go ahead.

Thank you. To ask a question you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Please stand by while we compile the Q&A queue. Once again, that's star one and one on your telephone if you'd like to register a question. Please wait for your name to be announced. To withdraw your question, please press star one and one again. We'll now go to our first question. Our first question comes from the line of Yating Chen from CICC. Please go ahead. Your line is open.

Hi, Yan and Fion. This is Yating from CICC, and I have two quick questions. First, could you share the current inventory situation for your kick scooters in overseas markets? And how you are thinking about the kick scooter business in 2026? Second, with the implementation of the new national standard for e-scooters in China, how should we think about the potential cost increase and the company's response? Thank you. That's all my questions.

Okay. This is Fion. I'll take the first question. Regarding the inventory, actually, we already released the balance sheet figures in our earnings release, and the amount is around CNY 650 million for the whole inventory, net inventory level. I should say that more than 50% of our overall inventory are the aged kick scooters, which means more than CNY 300 million inventory are coming from the aged kick scooters. That's why, you know, Yan just mentioned in the call is that in 2026, our top priority on the kick scooters is to improve the turnover of the aged inventory, especially the kick scooters, to change the business model into a more lean and straightforward and with our channel partners.

On top of that, I think, you know, for the whole year, 2026, for the kick scooters, we are going to focus on the inventory itself instead of the new models imports. Now we are expected to spend the whole year, 2026, to improve the inventory clearance and also, you know, to change the channel into a more healthier business model to support our going forward kick scooter business.

Hi, Yating. This is Yan. To address your second question on the cost increase. We have done a few things. First, I think, you know, with the new standard, because there are material changes, yes, there will be cost increase. We also have increased our retail price, not exactly proportionally, but have increased our price to cover part of the cost increase. Second, we are also, you know, through our cost reduction initiatives, really through engineering, to figure out what are really the cost down initiatives to be implemented on each of the scooters, basically, you know, through a platform standardization and also commoditize some of the common parts. That will help us to actually reduce the BOM cost.

By doing so, I think we're in good hands to sort of handle the cost increase with the new standard.

It's very clear. Thank you for your answers.

Thank you. There are no further questions at this time, so I'll hand the call back to Dr. Yan Li for closing remarks.

All right. Thank you, operator. Thank you all for participating on 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.