EHang Holdings Limited (EH) Q2 2026 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the EHang Second Quarter 2026 Earnings Conference Call. Please note that management's prepared remarks and the subsequent Q&A session will be primarily conducted in Chinese and the corresponding simultaneous or consecutive interpretation can be accessed on the English line. As a reminder, all translations are for convenience purposes only. In case of any discrepancy, the management's statement in the original language will prevail. To listen to the original remarks by management, please join the Chinese line. Additionally, both the Chinese and English lines are open for questions, and today's call is being recorded. Now I will turn the call over to Anne Ji, EHang's Senior Director of Investor Relations. Ms. Anne, please proceed.

[Interpreted] Hello, everyone. Thank you all for joining us on today's conference call to discuss the company's financial results for the second quarter of 2026. The earnings release is available on the company's IR website. Please note the conference call is being recorded, and the audio replay will be posted on the company's IR website. On the call today, we have Mr. Hu Huazhi, our Founder, Chairman, CEO; Mr. Feng Shuai, CTO; Mr. Wang Zhao, COO; and Conor Yang, CFO. Before we continue, please note that today's discussion may contain forward-looking statements made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding these and other risks and uncertainties is included in the company's public filings with the SEC. The company does not assume any obligation to update any forward-looking statements, except as required by law. Also, please note that all numbers presented are in RMB and are for the second quarter of 2026, unless stated otherwise. With that, I'll turn the call to our CEO, Mr. Hu Huazhi. Please go ahead.

[Interpreted] Good day, everyone. Thank you for joining our Q2 earnings call. Since Q2, EHang has entered a vital strategic transition moving beyond the certification toward operational readiness, scenario validation, capability development, and global expansion. Certification is just the entry ticket to commercial operations. What really determines whether a company can sustain flights and commercial operations. It's not just about having an aircraft or a certificate, it's about having an end-to-end operational capability, replicable solutions, a solid product pipeline and ability to deliver standardized solutions to global markets. We have been investing in these areas and have made meaningful progress. Of course, all of these rely on a sound regulatory environment. That's the foundation that enables qualified capable companies to grow. In late June, a serious accident involving a piloted light-sport aircraft in China has led regulators to adopt a more cautious approach to safety oversight. While unrelated to EHang's pilotless eVTOLs, this has affected our human-carrying commercial operations approval process in Hefei and the time line remains uncertain. To be clear, this is a temporary industry-wide timing issue, reflects no change in demand for EHang's products, nor does it indicate any issue with our technology or safety record. Recent accidents highlight that safety, regulation and traceability are baselines for low-altitude commercialization. EHang operates with a pilotless aircraft, preset of fixed routes, intelligent fleet dispatching, centralized monitoring. Our goal is to make urban air mobility safer, more transparent, and easier to regulate. Pilotless passenger-carrying aviation fundamentally changes in how we travel. We fully understand the regulators' caution, and we respect that. It is a responsible commitment to the public safety. However, technology innovation and regulation must evolve together. More than a century ago when automobiles first appeared, people had similar concerns about this new form of transportation, and U.K. passed the Red Flag Act, which required a person to walk in front of a motor vehicle carrying a red flag to warn pedestrians and limiting vehicle speed. The law was essentially old rules overregulating new technology. History shows that safety validation, operational rules and regulatory frameworks for disruptive transportation technologies all take time to mature. History shows technology and regulation eventually align. New forms of transport don't mature overnight. EHang's role isn't to sit and wait, but to proactively provide regulators with a real safety data, proven operations and a reliable technology. The EH216-S and its operating system has obtained all key certificates under China civil aviation regulatory framework, TC, PC Airworthiness Certificate and Air Operator Certificate. Our end-to-end system in Guangzhou and Hefei are fully operational. Within our internal trial operations, both have been operating continuously and safely for around 1.5 years with a 4.94 out of 5 passenger satisfaction score. The EH216 series have accumulated nearly 100,000 safety flights. With the demand in product certification and safety records in place, we only wait regulatory approval for public ticket sales. Despite of this critical transition point, we are confident that commercialization window will eventually open. Amidst uncertainty, EHang isn't sitting still. We're tackling challenges head on and finding new opportunities. Since Q2, we've been pushing hard on 3 things: first, expanding globally on lot of fronts, strengthening domestic readiness while accelerating overseas deployment. In China, we continue to strengthen our end-to-end operations, develop standardized and replicable operating models and solutions. We have completed the preparations across full operating cycle including personnel training, maintenance, insurance services, airspace coordination and emergency response in Guangzhou and Hefei, accumulating practical operating experience. We initiated a point-to-point trial operations to build experience in advance. Once the regulatory window opens, we will rapidly deploy and help customers operate to standard. Overseas, our footprint expanded to 23 countries, adding Mexico and Switzerland since Q2. Thailand is running validating flights via Sandbox, and the Civil Aviation Authority of Thailand has established a clear path forward. We're targeting a commercial approval in 2026. We were also selected for Hong Kong's Low-Altitude Economy Regulatory Sandbox X trial project, with flight validation underway and a public event coming soon. Furthermore, we advanced our Global Fast Track program. Many countries want to bring in pilotless eVTOLs but lack the regulatory framework on how to build a complete path from safety validation to operational standards to commercial deployment. Drawing on a decade experience as well as our engagement with the civil aviation authorities in multiple countries, EHang is turning this experience into a standardized market entry framework. This is the basis of our Global Fast Track Program. It's not simply about selling an aircraft. EHang is providing a standardized methodology, from validation to operational preparation, to commercial deployment, helping local regulators and partners move more efficiently. Sri Lanka has become the first country to join our Fast Track Program, and we are also engaging with multiple other countries regarding framework. This shifts our global strategy from merely selling products to exporting experience, standards and capabilities. Second, revenue diversification. Keeping passenger transportation as our strategic focus, while developing nonpassenger carrying business and a broader product portfolio. Passenger air mobility remains our strategic focus while domestic passenger commercialization is still pending regulatory approval. We're actively developing logistics, firefighting and [ aerial building ] media to build additional revenue streams. We are developing and validating logistics and firefighting aircraft based on our passenger-grade safety technology. These products address real needs such as forest firefighting, port logistics and emergency response. They are moving through testing, certification and customer validation with the potential for faster market deployment. Alongside a steady progress on the EH216 platform and the VT35 certification and flight test, EHang is building a multi-scenario product matrix rather than relying on a single aircraft. Meanwhile, aerial media revenue surged over 270% year-over-year in Q2 and now expanding to Europe, Japan, Thailand and other overseas countries. We're expanding one-off event performances to regular on-site shows for sustainable revenue and replicable business models. Third, improving cost efficiency and focusing our resources on long-term competitiveness. Since Q2, we streamlined the organization, refreshing talent structure, cutting non-intentional CapEx, improving efficiency. The outcomes will be visible in the second half. We are focusing resources on things that matter most: core product development, certification capability, operating system, overseas commercialization and business that can generate revenue, deliveries and cash flow. Over the past decade, EHang's core strength has been getting aircraft flying and our operations running. Now we are turning that into a standardized scalable capabilities. Customers value our ability to guide them from 0 to commercial operations, not just the aircraft itself. We are validating our development capabilities in China and scaling them overseas, two tracks, reinforcing each other. The demand is real, and the path is proving out. Now we're focused on execution, converting operational capability into orders, deliveries and cash. Finally, EHang is leading a long-term business. We are breaking technology barriers and help shape industry rules. While navigating the evolving regulatory frameworks requires careful management, our long-term vision remains unchanged. The end game for low-altitude air mobility remains pilotless flight, but regulation and ecosystems take time to mature. Short-term friction will not alter our direction. When the window opens, EHang will be the first to run through, with the credentials, capabilities and readiness. And the moat we're building through standardized operations will only get deeper. The strategic direction of the low-altitude economy will not be disrupted by short-term volatility. For 12 years, EHang has focused on making safe flight accessible. We will maintain a pioneer discipline and execute what needs to be done. Thank you. I would like to invite our CTO, Feng Shuai, to introduce our latest progress in technology and R&D.

[Interpreted] Thank you, Mr. Hu, and hello, everyone. In Q2, our R&D focus on 3 aspects: First, we continued to upgrade existing products and validate operations for current customers and scenarios. Second, accelerated R&D for new products and new applications. Third, deepen core underlying system capabilities. These 3 aspects together build a more complete technology foundation for scaled commercial operations. First, upgrading the existing products and operational validation. This quarter, we completed a series of upgrades and validations for EH216-S route operations. We established our first point-to-point test route at our Guangzhou headquarters, continuously accumulating trial data. This marks a meaningful step moving EH216-S operations from a single-point takeoff and landing toward a regular route-based operations. On passenger experience, we completed several key updates. We validated the operational capability of our new battery cooling vehicle. Under test conditions, it increases daily [ sorties ] per aircraft from about 6 to 12 to 15, a meaningful boost for daily capacity. With the same fleet infrastructure, each aircraft can handle significantly more flights per day, which matters a lot for operational efficiency and unit economics. Additionally, our new independent air conditioning system rapidly reduce cabin temperature by 10 to 15-degree Celsius, enhancing passenger comfort. Second, new product development and scenario expansion. For the VT35, we completed a truck wind tunneling testing and lightning direct effects and [ Li ] production testing for key components alongside multiple flight tests in China to support aerodynamic calibration and airworthiness validation. Meanwhile, we are extending our technology into new applications. For forest firefighting, we're testing Airbus delivery system with our existing products to enable early-stage crown fire response. Based on the certified EH216-S platform, we're also developing a cargo version. Adapting this mature platform is expected to shorten development and certification time lines. Our prior work on the EH216-L will also be integrated into this new configuration, ensuring logistic capability continuity. Third, deepening core systems. On the operational system front, we're building differentiated product globally for 2 key customer types: First, low-altitude operations control systems for operators and aircraft consumer. Second, city-level low-altitude integrated supervision platform for government agencies. The latter covers aircraft use applications, plan filing and review, airspace designation, real-time monitoring, information publication. This quarter, we focused on 2 key areas. First, improving our platform situational awareness, tiered supervision and emergency response efficiency. Second, deepening system integration with Hefei government Flight Service Center. We've developed a set of framework documents covering airspace destination, operational standards and service process, helping the Hefei Flight Service Center build a city-level low-altitude supervision system. Think of it as a software plus hardware foundation for future large-scale high-density urban operations. We'll continue holding our product and system development to aviation-grade standards, translating technological breakthrough into a tested, validated and deliverable commercial capability to sustain EHang's long-term leadership in global low-altitude mobility market. Next, I'll turn the call over to our COO for sales and operational updates. Thank you.

[Interpreted] Thank you, Mr. Feng, and hello, everyone. I'll discuss our Q2 operational progress and how we are approaching lean operations, product diversification, overseas markets and safety systems. In Q2, we delivered 35 units of EH216-S and 1 VT35. On aerial media side, we completed 22 aerial media shows and delivered 520 units of GD4 drones. Beyond these numbers, I want to be transparent about our current environment. This year, China's low-altitude economy entered a more cautious phase across safety oversight, airworthiness management and operational regulations. This has been reinforced by the new airworthiness frameworks and civil aviation laws. Recent industry safety incidents have heightened regulation and public attention on low-altitude flight safety, leading to intensified safety inspections of general aviation and low-altitude economy operators, aircraft and operational projects. As a result, it slows our progress our progress, delivery acceptance and commercial operations for some projects, and the passenger carrying commercial operations for low-altitude aircraft has also been affected. So we are being more cautious about our operational expectations and resource allocations. Our CFO will address our adjusted full year revenue guidance shortly. However, we firmly believe that in passenger aviation, safety and compliance must always precede commercial speed. To be clear, only the local time line for commercialization has shifted, not long-term market demand or EHang's competitiveness. Going forward, we'll keep the market informed with a clear operational progress updates. Mr. Hu talked about our 3 strategic priorities: global expansion, revenue diversification, and cost efficiency. On the operational level, our approach covers the following areas. First, improving internal efficiency through data management and AI integration. During the period of external adjustment we haven't been waiting passively. We have been proactively streamlining our organization and focusing our resources. On R&D, we're concentrating our core talent, improving technology reuse across the platforms. On the digital side, we're integrating AI tools into R&D, knowledge management, cross-functional workflow to shorten development cycles and boost productivity. Our rule is simple. Cost reduction will never compromise safety, product quality or core R&D. We won't sacrifice long-term competitiveness for short-term financials. But we're strictly scrutinizing expenses to strengthen cash reserves and ensure sustainable operations. Second, strengthening our operational foundation for passenger commercialization. Our Guangzhou and Hefei sites continue to refine flight operations, current support, emergency response and regulatory data integration. Through internal trial operations, we are accumulating real operation data to ensure we're ready to start safe and stable commercial operations as soon as regulatory approval. We're also building -- pilot -- to point capabilities in advance, including route planning, vertical coordination, ground support, aircraft dispatch, contingency handling and passenger services. These are fully operational capabilities for future low-altitude transport. Take the Erhai Lake project. Ground trip across the lake takes an hour. Our planned route reduces the time to about 10 minutes. The Hainan, Lingao cross-sea low-altitude corridor project has also broken ground. This is the first project under our strategic partnership with the China State Construction Engineering Corporation Sixth Bureau. The key -- first key flight station, the WingHub South Sea is currently under construction. Together, we are building a closed-loop economy that combines infrastructure and operations. For local governments and partners, EHang delivers more than just an EH216-S. We'll provide a comprehensive solution, including aircraft, command and control systems, scenario planning, route design, vertiport infrastructure planning and personnel training, maintenance, regulatory coordination and safety assurance. Third, we are leveraging the mature safety architecture of the EH216-S to accelerate the nonpassenger products and specialized applications. Passenger carrying operations are our core direction, but they're not our only growth plan -- our path. We're leveraging the EH216 mature aviation-grade safety architecture, including its flight control, powertrain, redundancy design and command and control for logistics, firefighting, aerial media products, building a diversified portfolio less reliant on passenger commercial approval. Aerial media remains a key revenue driver. In Q2, completed 22 shows and delivered 520 units of GD4 drones. The business is evolving from a onetime event to regular onsite services. Projects like Chongqing Media Group and [Xing Yi] in Shanxi are helping us to build experience in continuous operations, content production, fleet management and on-site support. Regular commercial shows improve equipment utilization, customer stickiness and revenue predictability. Overseas, we also deployed GD4 drones across Japan, Thailand and Europe, accelerating international expansion. On firefighting and logistics, we are working with the customers on product customization, advancing VT35 firefighting drone prototypes and logistic aircraft and trial flagship scenarios in forest firefighting and port logistics. Fourth, we are accelerating center overseas commercial [ Sandbox ] deployment to build a reputable international pathway. Overseas market is a key part of EHang's long-term strategy and an important platform for validating adaptability, regulatory coordination and business models. In Hong Kong, we're selected as an early participant in the Regulatory Sandbox X trial project. We've chosen [ Cyberport ] as our first sandbox site. Test flight started this month with a public demo coming soon, and additional flight validation and scenario deployment will follow under regulatory oversight. In Thailand, we have established an efficient communication coordination with the CAAT, and are targeting commercial operations certificate in 2026. This work will proceed according to CAAT review process with the final time line subject to the regulatory schedule. Based on the Sandbox experience, we launched at the Global Fast Track Program, a 4-stage framework of regulatory alignment Sandbox build validation flights and commercial launch designed to compress the time line for market entry to commercial operations. Sri Lanka is the first country to formally adopt the program. Over the coming months, we'll accept the project deployment in Sri Lanka according to the Fast Track road map. Fast Track does not bypass local regulatory processes or lower safety or airworthiness standards. Instead, it reuses technical documentation, safety data and our accumulated operational experience to reduce duplication and improve the efficiency of project collaboration, regulatory engagement and local operational setup. Beyond Sri Lanka, we are also exploring this program in Central Asia. Through the program, we aim to transform individual overseas projects into a standardized replicable capability, providing a clear, compliant and efficient implementation pathway for more countries and regions to introduce pilotless eVTOLs. Fifth, we are building operational standards and safety foundation to convert our first-mover advantage into a sustainable competitive moat. Over the years, we have accumulated nearly 100,000 safety flight records and these flights span diverse geographies, weather conditions, terrain application scenarios and operating environments, providing a critical data foundation for continuous improvement in aircraft performance, operational procedures and command and control systems. We are working with airworthiness and operational experts to advance air operator certification standards. The goal is to turn our accumulated flight experience and internal operational capabilities into a standardized, verifiable, replicable operational benchmarks and the industry can use. At the same time, we are building comprehensive aftersales support network covering delivery, personnel training, spare parts, maintenance, data support and emergency response. We need to have the organization systems and service capability in place to support scaled operations before commercial scale-up actually begins. While this may not immediately reflect in short-term revenue, establishing these scalable service capabilities now ensures so we can rapidly capture market demand once the commercial window opens. We'll continue translating investments into efficiency, building quality products and closing the loop on operations by enforcing lean management, diversifying revenue and establishing robust safety standards, we will build a sustainable competitive advantage and earn investor trust with verifiable results. Thank you. Next, I'll pass the floor to our CFO for financial updates.

[Interpreted] Hello, everyone. I am Conor, CFO of EHang. Before I go into details, please note that all numbers presented are in RMB unless otherwise stated. A detailed analysis is available in our earnings press release on the IR website. Next, let me walk you through the key financial data for Q2. In Q2, revenues were RMB 77.9 million, down from RMB 113.3 million in Q2 2025, but up significantly by 203% from RMB 25.7 million in Q1 2026. The sequential increase was mainly driven by higher sales volume of the EH216 series and with the additional contribution from VT35 aircraft. The year-over-year decline was due to lower sales volume of the EH216 series compared to the same period last year. Gross margin in Q2 was 61.2% compared with 61.5% in Q2 2025 and 62.5% in Q1 2026. Overall, gross margin remained stable. Our stable margin profile reflects the competitiveness of our products as well as our continued strength in manufacturing efficiency and supply chain management despite changes in quarterly revenue and product mix. Turning to operating expenses. Adjusted operating expenses, defined as the total operating expenses excluding share-based compensation, were RMB 112.7 million in Q2, representing a 16.9% increase year-over-year and 11.5% increase quarter-over-quarter. The increase in operating expenses primarily reflects the combined effect of our phased strategic business investments and the transition costs associated with the organizational optimization during the period. We continue to make targeted investments in commercialization, global expansion and R&D to reinforce our long-term competitiveness. It's worth noting that Q2 expenses haven't yet fully reflected the outcomes of our organizational optimization and CapEx control measures. As these initiatives were mostly rolled out during the quarter, we expect the outcomes to gradually show in the coming quarters. Going forward, while protecting our core R&D, airworthiness, operating and global expansion facilities, we'll continue to improve the resource efficiency and reduce nonessential spending and maintain strict cash discipline. As we continue to invest in our future growth, our Q2 profitability was affected by both revenue scale and operating expenses. Adjusted operating loss in Q2 was RMB 62 million, compared to RMB 77.1 million in Q1 2026. Adjusted net loss was RMB 58.5 million, compared to RMB 75.6 million in Q1 2026. As of June 30, 2026, our combined cash and cash equivalents, short term and treasury investments totaled RMB 929.4 million. This healthy cash position provides strong support for our continued commercialization efforts, corporate development, global expansion and day-to-day operations. Turning to our full year guidance. Given the regulatory policies and supporting mechanisms for low-altitude human-carrying commercial operations are still evolving, there remains uncertainty around the timing of domestic commercial operations. Accordingly, the company has decided to withdraw its previously-issued 2026 annual revenue guidance of RMB 600 million. The company will not provide a replacement of full year revenue guidance at this time. As the regulatory environment and business visibility become clear, we'll provide an updated outlook to the market when appropriate. In the meantime, the company will continue to provide a transparent and timely updates on key operating milestones. This includes preparation for an approval process of domestic commercial operations, process in international markets, product development orders and deliveries for nonpassenger such as logistics, firefighting and aerial media, as well as continued improvements in operating efficiency and our cash position. Going forward, we will stay focused on driving commercialization and core tech development while continuing to improve operating efficiency and resource allocation. We believe these efforts will strengthen our foundation for long-term growth and create sustainable value for our shareholders. Thank you all.

[Operator Instructions] Your first question comes from Tim Hsiao with Morgan Stanley.

This is Tim from Morgan Stanley. I have 2 questions about commercialization. The first question is, as we just discussed, I think the company target to get a commercial operation permit in Thailand this year. So I just wanted to get more details when do you think that would happen? Like in third quarter? In fourth quarter? And if it happens, how many units of 216 do you think we can -- we are going to ship this year based on the contract? So that's my first question. My second question is about the commercialization in China. Although, I think, management just mentioned, we are not going to provide updated guidance and attributable to the uncertainty to the incidents that took place in June. But as we remember, the incident was caused by human factors. And if there is any potential barrier, as we discussed with the management, I think previously, management believed that that's with favor Ehang because Ehang's drone products are designed to follow the scheduled route and would fly autonomously and can be under system control. So just wondering what really changed management's view on the impact to the OC's schedule. Just what happened over the past few months? Yes, those are my 2 questions.

[Interpreted] Let me take your first question. We are deploying both passenger carrying and nonpassenger carrying operations in Thailand in parallel. On the passenger carrying side, we have further clarified the approval pathway for flight qualifications with the Thailand Civil Aviation Authority. And we expected to obtain an experimental flying permit in Q3. And we also expected to secure a formal commercial operation certificate by the end of the year. By then, we'll start. So by that milestone, it represents that our eVTOL will be officially registered within the Thailand's Civil Aviation Authority, though we may not be able to directly sell tickets to the public, but that is indeed a milestone that we are hoping to achieve within the year.

[Interpreted] So we are striving to secure the operational certificate in Thailand by the end of the year. And we are working with the local civil aviation regulator to plan 10 routes. That will cover Bangkok, Phuket, Samui Island and Pattaya. Official deliveries of our EH216 models will start sometime next year. According to the plans, each location will require at least 5 units of EH216-S. So we are going to see a significant increase in our eVTOL deliveries next year.

On the nonpassenger side, the company has shipped over 1,000 GD4 formation drones by sea to the Thai market. And we plan to launch regular drone light show operations in Bangkok and Pattaya.

[Interpreted] The incident you -- regarding the impact of the June flight incident, the incident you mentioned, manned light-sport aircraft incident -- accident in China at the end of June was indeed primarily caused by human factors. The subsequent regulatory tightening has been noticeable, particularly around manned aircraft and their pilot. We continue to hold our original view. Our unmanned, preprogrammed, fixed-route, fleet-oriented, coordinated operating model has inherent safety advantage. And stricter safety regulation is a net positive for us in the long run.

[Interpreted] Regarding the change in our outlook on the OC, Operator Certificate time line, however, the regulatory response has been far -- more far-reaching than we initially anticipated. This incident has prompted the regulators to adopt a more cautious stance toward the entire low altitude industry. Although it is not directly related to our unmanned eVTOLs, the overall cautious regulatory environment has indeed slowed the approval time line for domestic carrying commercial operations, specifically the commercial operation approval process for the Hefei project has been delayed. And the timing of regulatory clearance remains uncertain.

[Interpreted] So our assessment is that the actual regulatory tightening and the enforcement level -- and this is not a rejection of our technology pathway, but rather a periodic, temporary impact on the approval cadence across the industry. We respect and understand the regulators' strong commitment to public safety. And hope -- at the same time, we hope that the regulators would provide reasonable policies while ensuring safety. And for us, we're going to focus on executing what can be done from our side. In the meantime, we are proactively pursuing our global overseas initiatives so that we can move the industry forward.

[Interpreted] Just a quick add. We are working with the local civil aviation authorities to clarify validation pathways and shorten the time from validation to market access through our overseas Fast Track Program.

Your next question comes from [ Wei Gu ] with Jefferies.

From Jefferies. Two questions, please. The first one being, given the full year guidance on the revenue has been withdrawn, and I understand it could be difficult to quantify, but do you mind give us a little bit color on the kind of like the second half run rate versus the 2Q kind of numbers? It would be great if you kind of split it out between eVTOL and the nonpassenger segment. And my second question will be coming towards the accounting adjustment that we mentioned in the 1Q call. So do you mind give us some sense on the numbers being delivered in this second half -- second Q? And any more to be delivered down the line?

Can you repeat the second question? I didn't quite -- okay, got it.

[Interpreted] Given the uncertainties, the company has decided not to update its full year 2026 revenue guidance at this time, and nor do we -- nor will we provide any specific quantitative expectations on the revenue mix between passenger carrying and nonpassenger business. However, based on the actual operating data that has already been achieved, air mobility revenue accounted for around 92% of our Q2 revenue, while nonpassenger business, primarily GD4 formation drone performance accounted for approximately 8%.

[Interpreted] Nonpassenger revenue is expected to trend upward, both in percentage as a share of the total revenue as well as the absolute amount in the second half of the year, driven mainly by increased deliveries of formation drones as well as a number -- a small number of other model deliveries such as firefighting series. Passenger business revenue will continue to dominate largely depending on the pace of commercial operation launches on passenger routes in Guangzhou and Hefei as well as the overseas market expansion. The company will continue advance both passenger commercial operations and nonpassenger use case expansion in parallel, with a specific revenue mix evolving dynamically as each business line progresses.

[Interpreted] In the second quarter, the company recognized revenue for a portion of the EH216 series aircraft that had been previously delivered. And going forward, we will recognize revenue as the contracts meet the certain criteria according to applicable accounting policies, and that the company will disclose them to the market in a timely fashion.

Your next question comes from Laura Li with Deutsche Bank.

So 2 follow-ups on the topics that you mentioned before. So firstly, on the regulation side, I think you mentioned a certain level of cautiousness. But just trying to see like for this current regulatory sentiment, what kind of safety evidence or milestones will likely be needed for this approval phase to normalize? And my second question around the diversification of your revenue stream. So could you update us on the progress across the non-passenger businesses like the logistics or firefighting streams like which area is more promising in the near term or any contract program you're pursuing? Yes, that's my 2 questions.

[Interpreted] Now let me take your questions. First, the review and approvals are conducted with a strong emphasis on ensuring safety. So there are still ongoing reviews. It doesn't mean that the review and approvals have completely come to a grinding halt because you know the low-altitude economy represents a worldwide trend. And with regard to operations, we are still advancing our operation capabilities. And the operational model will still need to be reviewed and approved. And for approval to become normalized, our operational model needs to pass regulatory review and enter regulatory operations.

[Interpreted] I think to see a full-scale back-to-normal review and approval condition, we need to see that the trial operations that we have in Hefei moving into routine operations. And then we will establish this routine operation, this site as a role model for other operators, even industry benchmark. So currently, we are helping our customers, putting together related documents and et cetera. As regulatory clearance clears its way and the industry goes back to its normal cadence of review and approval, then our customers will be able to expedite their approval process and move into routine operations.

[Interpreted] Well, there is clear and genuine demand across all of these areas, and EHang has a deep tech reserve, and we are reusing some of our technologies from the human-carrying products onto the nonhuman-carrying products. And to give you some examples, there are some short-range emergency logistics and long-range logistics and et cetera. And those are some of the critical use cases where we can use our products. And looking into the second half of the year, we are also going to ship firefighting products. And there is quite a very -- quite promising prospects for the orders of these products.

[Interpreted] And this is exactly where our strategy is. This year, we're going to continue to focus on diversifying use cases, particularly in terms of the revenue mix. As you've already seen, nonpassenger business has already reached 8% of the total revenue. And we expect this to further expand and the share to continue to grow as our business progresses. Thank you.

Thank you all. Given the time is limited, let me turn the call back to Ms. Anne for closing remarks.

[Interpreted] Thank you once again for joining us today. If you have any further questions, you can reach out to us through the e-mail on our IR website. Additionally, we are going to host some offline sessions where we are going to have more in-depth communications with you. We look forward to seeing you in our next earnings call. Thank you, once again. Bye. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]