Niu Technologies (NIU) Q1 2023 Earnings Report, Transcript and Summary

Good day and thank you for standing by. Welcome to the Niu Technologies First Quarter 2023 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today Wendy Zhao, IR Manager. Please go ahead.

Thank you, Operator. Hello, everyone. Welcome to today's conference call to discuss Niu Technologies results for the first quarter of 2023. The earnings press release, corporate presentation and financial spreadsheets have been posted on our Investor Relations website. This call is being webcast from company's IR website 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 US 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 discussions of certain non-GAAP financial measures. The press release contains the 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, Ms. Fion Zhou. Now, let me turn the call over to Yan.

Thank you, everyone, for joining us on the call today. In Q1 2023 our total sales volume was 94,407 units representing a year-over-year decrease of 42%. Specifically, sales volume in the China market dropped by 45% year-over- year to 81,518 units and the sales in the overseas market dropped by 12% to 12,889 units. Total revenue in Q1 was RMB417 million, a decrease of 27.5% year-over-year. Now the decrease in sales volume in the China market is primarily due to two factors. Firstly, the price increase caused by the rise in the lithium battery cost last year and secondly, the expectation of new product launches in Q2. In response to the lithium battery price hike in 2022, we increased the prices by average 7% across our product in the China market in Q2 2022 to maintain a healthy margin. However, this led to a decrease in sales. The impact of rising prices on the sales volume continued in Q1 2023 this year compared to the pre-price adjustment in Q1 2022 on a year-over-year basis. For instance, our entry level Gova Zero series, which targeted more price conscious market, experienced the biggest year-over-year drop in sales of nearly 90%. Secondly, the expectation of new product being launched in Q2 also contributed to the decrease in sales volume in Q1. Our distributors delayed orders in anticipation of new product launch event that were hosted in Q2 where we released the mid end to premium products. Despite the drop in sales volume, the retail sales number remained on par with Q1 2022 last year. Many of our retail partners choose to delay orders from traditional low Q1 to Q2 this year given the on-time rollout of our product in 2023. Now for the China market, we focused on the premium series and high quality mid-end series as the premium high-end flagship products have enabled us to improve our margin and strengthen our brand positioning where our mid-end product have allowed us to reach a mass market and achieve volume. With this focus in mind, we have developed products that combine design, aesthetics and technology and functionalities to bring to the market. In the previous earnings call, I introduced the revolutionary high-end [Stratellite] (ph) Electric Bicycle, SQi and the newest addition to the most popular U series, the UQi+, which we launched in Q3 2022 last year. Since their launch, both products have received recognition from both industry and our customers. The SQi won the Red Dot Design Award, Best of Best 2023, which is the highest honor that the Red Dot Design Awards can bestow. The SQi have also won the IF Design Awards 2023, making it potentially the third product to win all major awards after legendary U1 M1. The new UQi+ have also won the Prestige Red Dot Design Awards and have been met with immense popularity in the market. Sales volumes for the new UQi+ accounted for over 50% of total sales of our premium product lines. Those awards and sales performance are testament to our unwavering pursuit of creating a premium product that resonate with consumers. We also rolled out a B2 product, which is the mid-end range form factor product, which has been very popular since its launch, accounting for nearly 30% of mid-end series sales in the first three quarters since its launch. In Q1 2023, we recently made an upgrade to the popular models, bringing a new look based on the original design and bring out the old fashioned style from the minimalist appearance. Now, building on the momentum generated by the product we launched last year, we released four new products in May during the Annual Distributor Conference that will be launched into the market in Q2 this year. The full product we recently launched are MQiL, the G400 and G400T and RQi. I'll share some of the product highlights with you. First, we introduced the MQiL, the Niu's next level flagship product that inherits the design of our all-time classic M series, but with significant upgrade in performance and smart functionalities. The M series is one of our two products that won all seven major international design awards in the mobility industry. The MQiL is the first major model we released, hoping to bring back the classic M series in the last few years. Retaining the classic style, the new MQiL feature significant improvements in the light design range charging features, new smart control, riding ergonomics and additional personalized features. The MQiL is equipped with Niu Energy 9.0 battery, delivering an impressive 170 kilometer max range and can charge for 100 kilometer driving range in just over two hours. In addition, the new MQiL bike is equipped with the new Smart 5.0 with 20 smart features to make this scooter an industry leading smart vehicle. Those include the New Smart dashboard with navigation display incoming call notice. The New Smart Lighting System with Automatic Turning Lights the [indiscernible] control system that is fully integrated with the Apple Ecosystem allowing users to control the scooter with just your Apple Watch or Siri. Targeting the premium electric scooter users, the MQiL is priced from RMB4,999 to RMB8,299. We have received more than 15,000 orders from our dealers within the first week of its launch. Now for the mid-end product lines, we announced the G400 and G400T, we took an innovate approach to use the same platform to build two vehicles. The G400 is the light motorcycle and G400T is an electric bicycle, both vehicles are built with the same modern design and chassis platform, combining design aesthetics and practical functionalities like large storage space. Both of them are equipped with a full set of new smart system features. The G400/G400T are set to launch in early June. We have also recently announced the market launch of our first class electric motorcycle, RQi. The RQi has top speed of 100-kilometer power and driving range of 119 kilometers. Equipped with the 18-watt kilowatt motor, the RQi can accelerate 50-kilometer power within just 2.9 seconds. The RQi also incurred many of smart features. The RQi priced at RMB32,980 and went online to live streaming on May 20. The product is perfectly suitable for motorcyclist who plan to switch from petrol to electric for the fast acceleration experience with the pursuit of environmental friendliness in mind. Now we are confident that with this premium product, we have introduced the market will not only increase sales, but also enhance our brand image and strengthen our leadership in the high-end electric two-wheeler market in China. Our focus on developing premium products complementing with our effort to build a premium brand through a user engage activities and marketing campaigns. The new Innovative Ambassador program where selected core users and KOLs serving as a culture ambassador for new brand launch in 2022 has become a core part of a user center event planning strategy. Since its launch in Q3 last year, we had planned and hosted over 80 events in 30 cities in China. Now along with the product launch, we have organized a series of marketing branding campaigns through our online social media, KOL collaborations, offline product launch events and PR. For online marketing, we invited over 150 KOLs and KOC content creators with large fan base to generate content showing cases of new products and we expect those content to gain over 150 million news throughout the launch of the event. For the offline event, we are planning to host four official events and utilize our Innovative Ambassador network to support another 15 events, bringing new scooters to the market. We believe that with those marketing content and offline event will gain significant media exposure for the new products, further strengthening our brand image as an innovative leader in the urban mobility scenarios. Now turning into the overseas market. We have experienced a year-over-year decrease of 12% in sales in Q1 2023. The electric multi category saw a significant 70% decrease, while the micromobility category enjoyed a moderate 16% increase in sales. The price adjustment made in Q2 2022 in response to the increase in the lithium battery price continued to have the impact on the electric moped sales when compared year-over-year. The international distribution partner have also been waiting for a planned performance upgrade for our high-end performance 125 CC bikes in Q2. Now for the European market, we're rolling out the improved 125 CC products in Q2 2023 to regain growth. In the Southeast Asian market, we are also developing a battery swapping and enabled solutions electric moped smartphone batteries and battery charging cabinets. This solution will be suitable for battery swapping operator to sell multi-chassis, but also charging the batteries on a rental basis, lowering the upfront purchasing cost of electric moped in the region. We expect to roll out of the solutions in second half 2023. Together with the solutions, we're also actively expanding stores and developing partnerships with local operators and enhancing factory assembly capacity in Southeast Asia. Despite being in the low season, our micromobility category still experienced a moderate of 16% year-over-year growth in sales in Q1 2023. We have already established a solid foundation with our product portfolio, sales channel development and marketing and branding activities. With this foundation, we expect a micromobility category to continue to drive high-quality growth in the coming quarters. In Q1 2023, we launched the KQi1 Pro as addition to our kick-scooter product offerings. The KQi 1Pro featured a patented folding mechanism added to the original KQi1 Sports kick-scooter with the newly added KQi1 Pro, we have completed the product offering that covers wide range of product from high-end $900 price range to the entry level of $300 price range. The established kick-scooter product mix have generated higher volume growth since its launch. Beyond the growth in sales, our kick-scooters product has received a prestige awards such as the IF Design Award and New York Product Design Award. Our KQi2 and KQi Youth+ won the IF Design Awards 2023 and the KQi3 Pro was selected as a Gold Winner of 2023 of New York Product Design Awards as the only product in the vehicle technology category. Additionally, Niu was awarded the Riders Choice Award 2023 as the Best Scooter Company by the Micromobility World. With the market presence we have built throughout the micromobility products, while our current focus is on sales and channel expansion on the target market. As of May 2023, Niu products are available in approximately 500 retail stores in the US and over 400 in Europe throughout retail partners such as Best Buy and MediaMart. This sales network translated a solid foundation for ramping up our product sales in the upcoming quarters. In addition to the sales channel expansion, we continue to collaborate with the influencers and product marketing campaigns to further establish our presence in the market. We have worked with over 300 influencers across various platforms to showcase our kick-scooters and the moped and their content gathered more than 40 million views only to their broad reach and wide acceptance. Our product also be featured and placed in multiple TV shows like and movies. We are pleasantly surprised to see our product appears in movies like Murder Mystery 2 and TV shows The Drew Barrymore Show and The Price is Right. In conclusion regarding to the overseas market, we anticipate a sustainable growth driven by our strategy to diversify our product offering beyond the electric two-wheelers and expanded into geographic regions beyond our primary European market. Despite a temporary low quarter due to seasonality, we see growth potential stemming from our diversification strategy based on our product offerings and increasing brand recognition. Now looking forward, we target to regain growth throughout 2023 in both China and international markets gradually recovering from the negative impact of price increase and delayed product launch in 2022, we have put a focused strategy in place for product development, brand marketing and sales channel expansions. In the China market, our strategic product positioning have generated growth opportunity for us in 2023 by focusing on the premium and also the mass premium segment. By combining the high-end, high-quality product with user center activities and marketing campaigns, we aim to maintain our brand leadership in the premium urban mobility sector. With new product rollout and brand activities in place, we expect to see a strong rebound from last year starting in Q2 2023. For the overseas market, we anticipate returning to a fast growth path through a product and geographic expansions. In the electric two-wheeler sector with a product ready for release in our respective markets, we believe we will see a sales ramp up in the new quarter. As for the micromobility sector with the comprehensive product offerings extensive sales channel coverage, and the growing brand awareness, we expect this sector to experience a faster growth in both sales volume and margin performance. Now I will turn the call to our CFO, 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 excel format figures to our IR website for your easy reference. As I review our financial results, I'm referring to the first quarter figures unless I say otherwise and all monetary figures are in RMB, if not specified. During the first quarter, our company achieved a total sales volume of 94,000 units. Of this figure, 81,000 units was sold in the Chinese market, while the remaining 13,000 units was sold overseas. And the sales performance in China was mainly driven by the premium Niu series and mid-end Gova series, which accounted for a significant percentage of the sales volume. Those two series represented 94% for the total sales volume for the quarter, which is a notable increase compared to 70% shares in the same period of last year. In terms of the overseas sales, we continue to experience stable year-over-year growth in micromobility sales. Total revenue for the first quarter amounted to 417 million reflecting a 28% decrease compared to the same period of last year. Scooter sales contributed 358 million to the total revenues. Analyzing the scooter revenue by region, we observed the revenue from the Chinese market amounted to 305 million, representing a 33% increase. This decline was primarily driven by the decrease in sales volume and entry-level series as discussed earlier. However, with the change in product mix particularly with the introduction of the high ASP SQi model, our China scooter market had an increase in ASP from RMB3,072 to RMB3,743 marking a 22% year-over-year growth and maintaining a stable level quarter-over-quarter. The overseas scooter revenue, including the motorcycles, the moped, kick-scooters and e-biked amounted to 53 million compared to 66 million in the same period of last year. This decline is primarily due to the lower sales volume of the e-moped and e-motorcycle. However, there was a significant growth in micromobility revenue, which witnessed a remarkable year-over-year increase of nearly 90%. In particular, kick-scooters revenue surged by 62%. It is worth noting that the kick-scooters ASP also experienced a significant rise of 46% apart from the consistent increase in the sales volume and this impressed results were largely driven by the high-end KQi3 series, which accounted for two-thirds of the total kick-scooters sales. Due to the higher proportion of kick-scooters revenue, which has an ASP around one-fourth to one-third of the e-motorcycle and e-moped, the blended ASP for overseas scooters decreased by 8% to RMB4,138. The revenue from accessories, spare parts and services amounted to 59 million, marking a 13% increase compared to the fourth quarter of last year and this growth can be primarily attributed to the expanding popularity of our Niu application service subscription. And the fourth quarter gross margin increased by 2.6 PPT year-over-year, reaching a 21.7% and this improvement was driven by various factors, including 0.9 PPT increase in kick-scooters gross margin, 0.8 PPT improvement in product mix and price increase in domestic market and 0.9 PPT boost from the non-scooter sales with a higher gross margin. Our first quarter OpEx amounted to 157 million representing a 10.3% compared to the same period of last year. Among the total expenses, selling and marketing expenses reached 72 million, slightly rising by 2 million year-over-year primarily due to the increase in depreciation and amortization expenses. Research and development expenses amounted to 35 million reflecting a reduction of 7 million as we have successfully lowered the cost and improve efficiency in this area. G&A expenses were 50 million, 19 million higher and we have made a provision for credit loss for 21 million. However, if we exclude this provision, G&A expenses decreased by 6% compared to the previous year. With the expansion of our overseas business, the sale of account receivables, which served as the basis for calculating the bad debt provision had also grown accordingly and we have observed the European consumer sentiment remains cautious leading our distributors to request extended payment terms due to the weak retail sales. Despite the increase in credit loss provisions for overdue payments in a prudent matter, we maintain an optimistic outlook on receivable collections in the future. As our partners are in sound financial position and have continued making payments during this period. The OpEx as a percentage of revenue increased primarily due to the lower revenue base. In the first quarter, our net loss was 60 million with a net margin of negative 14.5% under the GAAP measurement compared to the net loss of 29 million with the net margin of negative 5.1% at the same period of last year. And turning to our balance sheet and cash flow. We ended the quarter with 860 million in cash, restricted cash, term deposits and short-term investments. Our operating cash flow amounted to 66 million, primarily by a seasonal settlement of 95 million in payments to the upstream suppliers. However, we successfully decreased our operating cash outflow by 101 million compared to the first quarter of the previous year, thanks to the negotiated improvements in credit terms with our suppliers. Our CapEx for the first quarter amounted to [16] (ph) million reflecting a decrease of 44 million compared to the same period of last year and this reduction can be attributed primarily to the decrease in the opening of new stores in China. Since the second half of last year, our China strategy in the Chinese market has shifted from the rapid store expansion, the same-store sales performance improvement. And now let's turn to the guidance. As we enter the peak season and launch our new products. We are aiming to get back to the growth track and we expect in the second quarter revenue to be in the range of RMB828 million to RMB952 million, representing a year-over-year flat to 15% increase. And please be aware that this outlook is based on the information available for the date and reflects the company's current and preliminary expectations, which was subject to change due to the uncertainties relating to various factors. And with that let's now open the call for any questions that you may have for us. Operator, please go ahead.

Thank you. [Operator Instructions] We'll now go ahead with our first question. Our first question comes from the line of Yating Chen from CICC. Please go ahead. Your line is open.

Hello. My first question is the number of our channels has decreased in quarter one and how should we understand this trend? And how should we look forward in the whole year about the number of our channels?

So let me address this question. So I think basically if you look at the channel has decreased by about, I think, roughly about 150 or 160 stores in Q1. I think this is actually reflected to the status in 2022, because in -- towards the end of 2021, if you look at -- we actually add about 1,600 stores in 2021. And many of the stores actually target to lower tier cities, where the entry-level priced products are being sold. And then I think in 2022, with the lithium battery price went up significantly you can see our entry-level product percentage actually drop significantly from representing -- it used to be 38% of the sales volume dropped to almost a single-digit percent of volume. So that's where in some of the cities or some of the places where those stores have become unsustainable. So we actually took an active approach and then sort of optimize the stores I think that's what happened. Now going forward, I think typically in Q2 and Q3, it's the peak season. We don't expect we will actually increase the number of stores. I think looking at this year, I think, we'll go back on sort of a sales store expansions trend probably Q4 this year when it's actually coming to a low season sales.

Okay. Thank you very much. And my second question is about -- we all know maybe the two-wheeler industry is witnessing the price war. So how do you view the price war and will join the price war?

So, yes. So I think this year, we do observe there's a price war with the big players competing basically competing in the low-end basically in the low-end market, basically below the -- in reality, basically below the 3,000 below the RMB2,500 sectors. I think the reality is, we don't have -- we don't actually have the product in that range in that price range. So I think we were less affected by the price war. So I think our focus is still sort of at a -- what I call the end market and the premium market, but mid-end market, basically product price above RMB3,500 to RMB5,000 and the premium market are the product priced above RMB5,000. I think in those price ranges I think there are -- in reality, there are less price war involved.

Okay. All right. Thank you very much.

Thank you. We'll now move on to our next question. Our next question comes from the line of Jing Chang from CICC. Please go ahead. Your line is open.

[Foreign Language] [Interpreted] So this is my first question. Seeing that our income guidance -- revenue guidance in the second quarter was very positive. We achieved year-on-year positive growth. And at the same time in May, we also released several new products. So what is the feedback from our dealers and the market after the product listing? And how do we expect the domestic sales volume recovery in the second quarter and third quarter? In addition, now we have other new products to be launched in the second half of this year and what are their main market segment target?

So Jing I guess you okay I'll respond in English for the general audiences. I think, one, with the new product with the four new products, I think the ML is already out. The G400/G400T, we haven't really announced the price or taking orders yet. But with our first product, MQiL, we actually got a huge response from dealers from the consumers and from the market and even from social media. So I think that's even the first week within the first week or so. I think some of the sort of the dealers are committing almost like more than [15,000] (ph) units. And so we're actually in a rush I think the issue looking at in a month basis is probably somewhere around 30,000 to 40,000 units ordered. But we're actually -- the issue we have right now is actually need to ramp up the production. I think that was -- it's a good response from the market. I think the reason it has a good response to the market because it's come from a legendary product. It's a M Series or into M Series announced in 2016, basically with all-time award-winner product. So we actually have people sort of yelling out saying they want to have some big product that looks like M, the upgrade M, but actually that also compatible with the new China new standard. I think that's what that is. Now the -- what's going forward to Q2 and Q3, I think we have, I think we had two or three products in the pipeline. So basically, we're looking at -- this year, we probably have a product coming out in May, June, July and August and potentially September. So I think that's the layout. We have quite a few products -- new products. Most of those products are going to focus on one, the premium end and the second the mid-end. With one or two -- with potentially one sort of entry -- entry-level upgrades. I think that -- so we actually -- I think we're very optimistic. We're very confident with the new product offerings. I think this actually reflects how we forecast our Q2 earnings. Having said that, I think, the -- with the response the market itself, we do take a more cautious view. One is we're -- I think in terms of overall market sizing, we take a cautious view in terms of the market did observe some sort of -- at least in some of the provinces we observed like the market slowdown because the product replacement happened last year. And the second, I think some of the previous question mentioned was the price war, we do see it happen at the low-end, but we don't know whether actually will extend to the mid-end prices. So this is something we took a cautious view. On the positive note, it's -- there is a trend where we do see the lithium carbonate pricing came down quite a bit from the peak of last year, which means there will be a downward pressure on the lithium battery prices, which means that with the lithium battery prices coming down, the percentage of lithium scooters as an overall percentage of the electric scooters sold in China that percentage will start to come back up. And that's where our targeted market mainly. So I think that will actually help us a little bit basically on the Q2 and Q3, especially in Q3.

Thank you, Mr. Yan. [Foreign Language] [Interpreted] So my second question is about how is the offline distribution network expansion of our kick-scooters? And the sales volume of kick-scooters in the first quarter is not very high. So from our perspective, what is the overall market demand of kick-scooters in the overseas market? In addition, what is the acceptance of our products and also new products by the market and dealers? What is our annual sales target and how to look forward to the quarterly performance in the future?

So I think one with the kick-scooters at May today we have -- we've been to 400-plus offline channels in the United States. I think those are mainly the Best Buy -- Best Buy mainly and also Walmart. And then we are also in about 400-plus channels in I think in Europe, which is a typical sort of the [MediumR] (ph), ECI, those ones. I think the -- so in terms of offline channel expansion, I think that's completed. The -- now with the Q1 this year, I think the issue with the Q1 has also been -- traditionally has been a low quarter in term of kick-scooters sales. So I think that's why you do see the Q1 year-over-year increase significantly. Second, it's the -- also because I think what happened is, I think one minor detail I did mention on the call is with the typically with our -- with the moped, I think what happened when the moped distributor order, they take a month, 1.5 months to ship the moped to Europe. That's where you ship in Q1, you start seeing sales in Q2. With the kick-scooters, a lot of actually -- our current business model is actually we have kick-scooter inventories in Europe. So there is low season is actually low season. It doesn't -- you don't see this sort of like a three-month lag. I think that's what happened where Q1 is low season, so they decided not to order too much, they just match whatever their sales out. And I think we expect that Q2 and Q3 really start to pick up. I think throughout the full year, we expect this business to grow about 2x to 3x. Whether we land that at 3x or whether we land with 2x, I think it really depends on how we're performing Q2 and Q3. And also depends on how I think the overall market responded. I think historically, in the past, the world market has been saying the market has been growing at a double-digit. And -- but this year, we -- I think we also take a cautious view. But regardless, I think from our point of view, even we do about 3x, that's only a 300,000 unit sales compared to overall markets about 4 million units. So we're still a very, very small -- small player with -- even we do about 300,000 sales out of that 4 million units you're talking about is really just 7% of market share, still a very small market player there, which means actually we do have a tremendous growth potential.

Okay. Thank you. Thank you very much for your detailed answers. And this is all my question. Thank you.

Thank you.

Thank you. We'll now move on to our next question. Our next question comes from the line of Scarlett Ge from Credit Suisse. Please go ahead. Your line is open.

Hi. Thank you management for the introduction and congrats on winning great orders for the new launched product. So I have two questions. The first question is, could you share the order flow of other product models. And my other question is, would you keep your full year 2023 target in both the sales volume and the sales revenue because if I add up the first quarter revenue and the guided second quarter revenue, it totally accounted for around 30% of the whole year revenue target, any actions you would like to take to realize the target or would you like to change? Thank you.

So I think just first respond to the quick address on the revenue percentage question. I think this year, we're looking at -- it's actually a -- you will look at the year sort of a rebounding case where the Q1 this year compared with last year Q1 was a drop because it was the last year Q1 was a pre-price increase. So that was a fair comparison where we expect to really have Q2 start to get back to the growth momentum and with Q3 and Q4 looking for a quite significant growth over the last year issue being that also, I think, this is also related to how our new product building out with the first new product rolling out in May, which means in mid-May, which means that actually only able to impact about half of the Q2, where Q3 and Q4, you're going to see sort of a full impact of the new product coming out. So I think that's on the China side, similar thing in the sort of in the international side as well, where I think really the -- as I mentioned earlier, the Q1, with the kick-scooters is a low season. So it's unfair, it's the year-over-year growth, it's only like was 16% less. We're really the whole year 2x to 3x growth which means that the growth in Q2 and Q3, Q4 will be more significantly than the first quarter. I think that's where you start -- you will see a typical range. And I think it's a combination of rebounding from a downward momentum last year and also a product rollout of schedule. That's where we expect to see a faster growth in the second half this year versus the first half.

Okay. Thank you very much. My other question is that can you share the order flows in hand for the other product models? And for the new product, new launched products, when will you start to deliver?

I think currently I think what we see is actually about -- roughly about 50% of orders from actually the newly launched models and the 50% from the existing models. I think that's what we see in May. So we don't have a forward-looking in June because there are two new products coming out, the G400/G400T coming out in early June and how is that reflected, the orders.

Okay. Got you. Thank you very much.

Thank you. [Operator Instructions] There are no further questions at this time. So I'll hand the call back to CEO, Dr. Yan Li for closing remarks.

All right. 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.