Niu Technologies (NASDAQ:NIU) Q4 2022 Earnings Conference Call March 20, 2023 8:00 AM ET Company Participants Wendy Zhao - Senior Investor Relations Manager Yan Li - Chief Executive Officer Fion Zhou - Chief Financial Officer Conference Call Participants Alice Ma - UBS Operator Good day, and thank you for standing by. Welcome to Niu Technologies Fourth Quarter 2022 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a qu ...

Financial Data and Key Metrics Changes - Total sales volume decreased by 19.2% year-over-year, reaching 321,000 units in Q3 2022 [5][28] - Sales volume in the international market was nearly 58,000 units, while sales volume in China was 263,000 units, down by 32.9% year-over-year [5][28] - Total revenue for Q3 was RMB 1.15 billion, a decrease of 6% compared to the same period last year [30] - Gross margin improved to 22.1%, up by 2.1 percentage points year-over-year [32] Business Line Data and Key Metrics Changes - Premium series sales volume remained stable at 224,000 units, accounting for 85% of total sales volume in China [28] - Kick-scooter sales volume surged to 55,000 units, a growth of 162% quarter-over-quarter [16][28] - E-motorcycle sales volume in the international market decreased by one third to 3,000 units [28] Market Data and Key Metrics Changes - Sales volume in the Southeast Asia market grew by 166.5% year-over-year, driven by Indonesia and Thailand [15] - The kick-scooter category saw significant growth, with models ranking as best sellers on platforms like Amazon [16][18] Company Strategy and Development Direction - The company is focusing on premium and high-end products to improve gross margins and strengthen its brand [12][22] - Plans to expand product offerings and sales channels, including offline retail partnerships [18][25] - The strategy includes exploring battery swapping solutions to enhance market penetration in Southeast Asia [15][26] Management's Comments on Operating Environment and Future Outlook - The management acknowledged challenges from rising raw material prices, market demand fluctuations, and COVID-19 impacts [5][20] - A cautious outlook for Q4 2022, anticipating continued low demand and price increases [20] - Despite challenges, the company is optimistic about recovery and growth in 2023, focusing on premium products [26] Other Important Information - The company has made significant investments in marketing and product development, with a focus on enhancing brand recognition [19][34] - The total operating expenses for Q3 were RMB 263 million, a 72% increase year-over-year [32] Q&A Session Summary Question: Selling and marketing expenses outlook - Management indicated that selling and marketing expenses are expected to remain around RMB 100 million to RMB 130 million for the next two to three quarters, with a potential 20% decrease thereafter [42][45] Question: Product strategy for next year - The focus will be on premium and mass premium products, particularly in the RMB 3,500 to RMB 5,000 range, due to low gross margin contributions from entry-level products [48][49] Question: Product strategy for overseas markets - The company plans to grow in Southeast Asia and explore battery swapping solutions to lower upfront costs for consumers [53][54]

Financial Data and Key Metrics Changes - In Q2 2022, total sales volume decreased by 17.4% year-over-year to 209,000 units, with the China market down by 26.7% to 180,000 units [5][24] - Total revenue for Q2 was RMB 828 million, a decline of 12.4% year-over-year, while the average selling price (ASP) increased by more than 10% from RMB 3,222 to RMB 3,557 [25][26] - Gross margin for the quarter was 20.3%, down 2.4 percentage points year-over-year but up 1.2 percentage points from the previous quarter [29] Business Line Data and Key Metrics Changes - International sales volume surged by 200% year-over-year, reaching nearly 29,000 units, primarily driven by kick-scooter sales [5][24] - Kick-scooter sales volume doubled quarter-over-quarter to 21,000 units, marking a record high since its launch [25] - E-motorcycles and e-mopeds sales volume increased by nearly 10% to over 7,700 units [25] Market Data and Key Metrics Changes - The China market was significantly impacted by COVID-19 lockdowns, particularly in top-tier cities, which account for 35% to 55% of total sales [6][24] - International markets showed robust growth, with kick-scooter sales growing rapidly, especially during promotional events like Amazon Prime Day [7][25] Company Strategy and Development Direction - The company launched three new electric bicycle products in August, targeting various market segments and reinforcing its position as an innovation leader [8][14] - Niu Technologies is expanding its offline sales network, aiming to grow its point of sales to nearly 2,000 stores in the U.S. and Europe by the end of Q3 [21] - The company is optimistic about sales growth in international markets, particularly in kick-scooters and e-bikes [20] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the sales rebound in Q3 due to ongoing COVID impacts and rising lithium-ion battery prices [19] - Despite challenges, the company anticipates positive market responses to new product launches, which are expected to fuel growth in late Q3 and Q4 [18] - The company has adjusted its full-year volume guidance to 1 million to 1.2 million units due to uncertainties in economic recovery [33] Other Important Information - The company released its inaugural ESG report, highlighting its commitment to low carbon operations and corporate governance [22] - Operating expenses increased by 26.4% year-over-year, primarily due to higher selling and marketing expenses [30] Q&A Session Summary - No specific questions or answers were documented in the provided content, as the call concluded without a detailed Q&A segment [34]

Company Overview - NIU has sold 3 million scooters globally as of June 30, 2022[1] - The company operates in 52 countries with 3,329 dedicated stores[5, 19] - NIU has 53 country distributors and 336 city partners[18] Product and Market Expansion - NIU is expanding its product lines in China, targeting the mass-medium market with models like NQi, MQi, UQi, and G series[7] - The company is extending its brand into new categories in the EU and US markets with products like KQi, BQi, and RQi series[11] - NIU introduced high-end and mid-end models in Indonesia as a starter in Asian markets[12] Financial Performance - The company has a solid balance sheet with a strong cash position, holding RMB 1,050 million in cash, restricted cash, deposits, and short-term investments as of June 30, 2022[38] - Total assets amounted to RMB 2,453 million, with total liabilities and equity also at RMB 2,453 million[38] - As of June 30, 2022, notes and accounts payable were RMB 690 million, and short-term bank borrowings were RMB 180 million[36]

Niu Technologies (NASDAQ:NIU) Q1 2022 Earnings Conference Call May 23, 2022 8:00 AM ET Company Participants Wendy Zhao - Investor Relations Manager Yan Li - Chairman, Chief Executive Officer & Chief Operating Officer Fion Zhou - Chief Financial Officer Conference Call Participants Operator Good day and thank you for standing by. Welcome to Niu Technologies First Quarter 2022 Earnings Release Conference Call. At this time all participants are in a listen only mode. After the speaker's presentation there will ...

Part I [Key Information](index=7&type=section&id=Item%203.%20Key%20Information) Niu Technologies operates as a Cayman Islands holding company through PRC subsidiaries and a VIE, facing risks from its structure, regulations, potential delisting, and cash flow restrictions - Niu Technologies operates as a Cayman Islands holding company through PRC subsidiaries and a VIE, with the VIE contributing **100% of total revenues** from 2019 to 2021[12](index=12&type=chunk) - Significant risks stem from the VIE structure, including enforceability of contractual arrangements and potential PRC government intervention, which could result in severe penalties or operational relinquishment[13](index=13&type=chunk)[14](index=14&type=chunk) - The company's ADSs face delisting risk from U.S. exchanges under the HFCAA due to the PCAOB's inability to inspect its China-based auditor[16](index=16&type=chunk) - Dividend payments depend on PRC subsidiaries, subject to PRC regulations on profit distribution, statutory reserves, and currency conversion controls[17](index=17&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) Selected Consolidated Statements of Comprehensive Income Data (2019-2021) | Indicator | 2019 (RMB thousands) | 2020 (RMB thousands) | 2021 (RMB thousands) | 2021 (US$ thousands) | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | 2,076,289 | 2,444,329 | 3,704,537 | 581,323 | | **Gross profit** | 486,551 | 559,149 | 812,779 | 127,543 | | **Operating income** | 186,709 | 170,634 | 252,481 | 39,620 | | **Net income** | 190,085 | 168,652 | 225,820 | 35,436 | | **Net income per ordinary share — Basic** | 1.28 | 1.12 | 1.47 | 0.23 | | **Net income per ordinary share — Diluted** | 1.24 | 1.07 | 1.41 | 0.22 | Selected Consolidated Balance Sheets Data (as of Dec 31, 2020 & 2021) | Indicator | 2020 (RMB thousands) | 2021 (RMB thousands) | 2021 (US$ thousands) | | :--- | :--- | :--- | :--- | | **Cash and cash equivalents** | 227,004 | 208,374 | 32,698 | | **Total assets** | 1,846,809 | 2,441,213 | 383,080 | | **Total liabilities** | 853,435 | 1,176,659 | 184,644 | | **Total shareholders' equity** | 993,374 | 1,264,554 | 198,436 | Selected Consolidated Statements of Cash Flows Data (2019-2021) | Indicator | 2019 (RMB thousands) | 2020 (RMB thousands) | 2021 (RMB thousands) | 2021 (US$ thousands) | | :--- | :--- | :--- | :--- | :--- | | **Net cash provided by operating activities** | 178,680 | 465,599 | 334,175 | 52,439 | | **Net cash used in investing activities** | (467,889) | (535,232) | (295,059) | (46,301) | | **Net cash provided by (used in) financing activities** | 35,282 | (13,164) | 6,246 | 980 | [Risk Factors](index=29&type=section&id=D.%20Risk%20Factors) This section outlines principal investment risks, categorized into business, VIE structure, China operations, and ADSs, including brand dependency, competition, regulatory oversight, delisting, and dual-class voting - **Business and Industry Risks**: Dependence on brand strength, product innovation, consumer preferences, city partners, franchised stores, external suppliers, intense competition, product quality issues, and intellectual property protection[55](index=55&type=chunk) - **Corporate Structure Risks**: The VIE structure may be less effective than direct ownership, potentially non-compliant with PRC regulations, and subject to uncertainties in China's Foreign Investment Law[56](index=56&type=chunk)[57](index=57&type=chunk) - **Risks of Doing Business in China**: Adverse impacts from changes in China's economic and political policies, significant PRC government oversight on internet, data, and cybersecurity, and delisting risks under HFCAA due to PCAOB inspection inability[58](index=58&type=chunk) - **Risks Related to ADSs**: Volatile trading price, limited influence of Class A shareholders and ADS holders due to dual-class voting structure, and potential adverse impact on market price from substantial ADS sales[59](index=59&type=chunk) [Information on the Company](index=96&type=section&id=Item%204.%20Information%20on%20the%20Company) This section details Niu Technologies' history, business operations, and structure, focusing on its smart electric two-wheeled vehicle portfolio, omnichannel retail, data analytics, manufacturing, and critical VIE structure [History and Development of the Company](index=96&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) Niu Technologies began operations in 2014, launched its first e-scooter in 2015, established its VIE structure for PRC compliance, and completed its Nasdaq IPO in October 2018 - The company was founded in **2014** and launched its first product, the NQi-series, in **June 2015**[297](index=297&type=chunk) - A VIE structure was established in **May 2015** to comply with PRC foreign ownership restrictions, facilitating online and related business operations[298](index=298&type=chunk) - The company's ADSs commenced trading on Nasdaq on **October 19, 2018**, raising approximately **US$55.2 million** in net IPO proceeds[299](index=299&type=chunk) [Business Overview](index=96&type=section&id=B.%20Business%20Overview) Niu Technologies provides smart urban mobility solutions, manufacturing electric two-wheeled vehicles through an omnichannel model, supported by the NIU app, data analytics, R&D, and a Changzhou manufacturing base - The company aims to redefine urban mobility with a diversified product portfolio including electric scooters, motorcycles, kick-scooters, and e-bikes[300](index=300&type=chunk)[306](index=306&type=chunk) - Niu utilizes an omnichannel retail model, with **3,108 franchised stores** in China and **42 distributors** across **50 countries** as of December 31, 2021[300](index=300&type=chunk)[372](index=372&type=chunk) - The NIU app serves as a central user experience platform, providing real-time scooter data, service access, an e-commerce store, and a social forum[314](index=314&type=chunk)[315](index=315&type=chunk)[317](index=317&type=chunk) - Big data analytics from its connected fleet, comprising **1,843,000 e-scooters** and **10 billion kilometers** of riding data by year-end 2021, are leveraged for product and service improvement[328](index=328&type=chunk)[330](index=330&type=chunk) - Core technologies include NIU Energy smart power with a proprietary Battery Management System (BMS), Cloud ECU for control and connectivity, and OTA firmware updates[336](index=336&type=chunk)[337](index=337&type=chunk)[343](index=343&type=chunk) - Manufacturing is based in Changzhou, China, with operations commencing in **December 2019** and expanding in **September 2021**, increasing total production capacity to over **2,000,000 units per annum**[357](index=357&type=chunk)[359](index=359&type=chunk) [Organizational Structure](index=138&type=section&id=C.%20Organizational%20Structure) This section details Niu Technologies' corporate structure, including its Cayman Islands holding company, Hong Kong subsidiary, PRC WFOE, and critical VIE contractual arrangements for control and economic benefits, ensuring PRC regulatory compliance - The company uses a VIE structure, Beijing Niudian, for its PRC online business due to foreign ownership restrictions, controlled via contractual agreements[447](index=447&type=chunk)[298](index=298&type=chunk) - Effective control is secured through key contractual agreements, including Powers of Attorney, an Equity Pledge Agreement, and an Exclusive Option Agreement for VIE equity purchase[448](index=448&type=chunk)[449](index=449&type=chunk)[452](index=452&type=chunk) - An Exclusive Business Cooperation Agreement enables the WFOE to receive substantially all economic benefits from the VIE via service fees[450](index=450&type=chunk) - PRC legal counsel believes the ownership structure and contractual arrangements are valid under current PRC laws, but acknowledges significant uncertainties in legal interpretation and application[453](index=453&type=chunk)[454](index=454&type=chunk) [Property, Plants and Equipment](index=141&type=section&id=D.%20Property%2C%20Plants%20and%20Equipment) The company's physical assets include leased offices in Beijing and Shanghai, a large Changzhou manufacturing facility, and a new manufacturing facility completed in August 2021 for expanded capacity Owned and Leased Facilities | Location | Approx. Size (sq. meters) | Primary Use | Ownership/Lease Expiry | | :--- | :--- | :--- | :--- | | Changzhou | 111,467 | Manufacturing and Maintenance | Owned | | Beijing | 1,394 | Office | Leased (Dec 31, 2024) | | Shanghai | 1,720 | Office | Leased (Apr 30, 2026) | | Changzhou | 12,000 | Manufacturing Facility | Leased (Dec 31, 2024) | - A new manufacturing facility was completed in **August 2021** to expand production capacity, with operations starting in **September 2021**[457](index=457&type=chunk) [Operating and Financial Review and Prospects](index=141&type=section&id=Item%205.%20Operating%20and%20Financial%20Review%20and%20Prospects) This section analyzes financial performance, highlighting a **72.5% increase** in e-scooter sales and **51.6% revenue growth** to **RMB 3.7 billion** in 2021, alongside liquidity, capital resources, and critical accounting policies [Operating Results](index=141&type=section&id=A.%20Operating%20Results) Operating results show e-scooter sales volume increased **72.5%** to **1,037,914 units** in 2021, driving **51.6% revenue growth** to **RMB 3.7 billion**, while gross margin slightly declined to **21.9%** and net income rose to **RMB 225.8 million** E-Scooters Sold by Series (2019-2021) | Series | 2019 (Units) | 2020 (Units) | 2021 (Units) | | :--- | :--- | :--- | :--- | | NQi Series | 116,693 | 103,345 | 100,111 | | MQi Series | 75,802 | 136,032 | 106,914 | | UQi Series | 206,747 | 193,718 | 180,491 | | Gova Series | 22,085 | 168,537 | 634,358 | | KQi Series | — | — | 15,908 | | NIU Aero Series | — | 20 | 132 | | **Total** | **421,327** | **601,652** | **1,037,914** | - Total revenues increased by **51.6%** from **RMB 2,444.3 million** in 2020 to **RMB 3,704.5 million (US$581.3 million)** in 2021, driven by a **72.5% increase** in e-scooter sales volume[502](index=502&type=chunk) - Gross margin slightly decreased from **22.9%** in 2020 to **21.9%** in 2021, primarily due to higher raw material costs and product mix changes[506](index=506&type=chunk) - Net income increased to **RMB 225.8 million (US$35.4 million)** in 2021 from **RMB 168.7 million** in 2020[510](index=510&type=chunk) [Liquidity and Capital Resources](index=158&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) Liquidity is primarily from operating and financing activities, with **RMB 432.3 million** in cash as of December 31, 2021, and **RMB 334.2 million** net cash from operations, alongside working capital trends, **RMB 180.0 million** in short-term borrowings, and PRC cash repatriation restrictions Cash Flow Summary (2019-2021) | Indicator (RMB thousands) | 2019 | 2020 | 2021 | | :--- | :--- | :--- | :--- | | **Net cash provided by operating activities** | 178,680 | 465,599 | 334,175 | | **Net cash used in investing activities** | (467,889) | (535,232) | (295,059) | | **Net cash provided by (used in) financing activities** | 35,282 | (13,164) | 6,246 | - As of December 31, 2021, the company held **RMB 432.3 million (US$67.8 million)** in cash, cash equivalents, and restricted cash[521](index=521&type=chunk) - Working capital metrics for 2021 included accounts receivable turnover days at **18**, accounts payable turnover days at **68**, and inventory turnover days at **26**[523](index=523&type=chunk)[524](index=524&type=chunk)[526](index=526&type=chunk) - Outstanding short-term bank borrowings totaled **RMB 180.0 million** as of December 31, 2021, primarily from SPD Silicon Valley Bank and China Merchants Bank[528](index=528&type=chunk)[530](index=530&type=chunk)[894](index=894&type=chunk) - Cash transfers from PRC subsidiaries are restricted by the holding company structure and PRC laws, requiring statutory reserves before dividend distribution[543](index=543&type=chunk)[544](index=544&type=chunk) [Critical Accounting Policies and Estimates](index=166&type=section&id=E.%20Critical%20Accounting%20Policies%20and%20Estimates) This section details critical accounting policies, including VIE consolidation, revenue recognition under ASC 606, and income tax accounting, emphasizing management judgment and estimates - The company consolidates its VIE, Beijing Niudian, as the primary beneficiary under ASC 810, based on contractual arrangements providing effective control and economic benefits[549](index=549&type=chunk) - Revenue is recognized under ASC 606 upon satisfaction of performance obligations and transfer of goods control, typically at acceptance by distributors or individual customers for product sales[551](index=551&type=chunk)[552](index=552&type=chunk)[555](index=555&type=chunk) - Deferred income taxes are provided using the liability method, with a valuation allowance established if realization of deferred tax assets is unlikely[558](index=558&type=chunk)[560](index=560&type=chunk) [Directors, Senior Management and Employees](index=170&type=section&id=Item%206.%20Directors%2C%20Senior%20Management%20and%20Employees) This section details the company's leadership, governance, and workforce, covering director and executive biographies, compensation, share incentive plans, board committees, employee demographics, and share ownership - The board of directors comprises **six members**, including Chairman and CEO Dr. Yan Li, with detailed biographies provided for all directors and the CFO[564](index=564&type=chunk)[566](index=566&type=chunk)[572](index=572&type=chunk) - In 2021, executive officers received approximately **RMB 5.06 million** in cash, non-executive directors received **RMB 1.0 million**, and the company maintains the **2016 Plan** and **2018 Plan** share incentive programs[573](index=573&type=chunk)[574](index=574&type=chunk)[575](index=575&type=chunk) - The board operates with three committees: Audit, Compensation, and Nominating and Corporate Governance, each with defined compositions and responsibilities[587](index=587&type=chunk)[588](index=588&type=chunk)[590](index=590&type=chunk) - As of December 31, 2021, the company had **702 full-time employees**, with **40.3%** in sales and marketing, **31.9%** in R&D, and **27.8%** in supply chain and administration[601](index=601&type=chunk)[602](index=602&type=chunk) Principal Shareholder Ownership (as of March 31, 2022) | Shareholder | % of total ordinary shares | % of aggregate voting power | | :--- | :--- | :--- | | Glory Achievement Fund Limited | 28.1% | 21.2% | | Niu Holding Inc. | 6.5% | 19.5% | | All Directors and Executive Officers as a Group | 10.2% | 29.6% | [Major Shareholders and Related Party Transactions](index=184&type=section&id=Item%207.%20Major%20Shareholders%20and%20Related%20Party%20Transactions) This section details major shareholder relationships and related party transactions, including essential VIE contractual arrangements, and historical shareholder agreements and registration rights that terminated post-IPO - Company operations rely on contractual arrangements with its VIE and shareholders, which are classified as related party transactions[615](index=615&type=chunk) - A historical shareholders' agreement, providing participation, right of first refusal, and co-sale rights, terminated upon the company's IPO[616](index=616&type=chunk) - Certain shareholders hold registration rights (demand, piggyback, and Form F-3) for their shares, terminating five years post-IPO or when Rule 144 sales are permissible[617](index=617&type=chunk)[618](index=618&type=chunk)[619](index=619&type=chunk) [Financial Information](index=186&type=section&id=Item%208.%20Financial%20Information) This section confirms appended consolidated financial statements, absence of material legal proceedings, and a dividend policy focused on retaining earnings for business expansion - The company is not currently involved in any material legal or administrative proceedings[625](index=625&type=chunk) - The company has no current plans to pay cash dividends, intending to retain future earnings for business operations and expansion[627](index=627&type=chunk) [Additional Information](index=187&type=section&id=Item%2010.%20Additional%20Information) This section provides supplementary corporate framework details, including memorandum and articles, dual-class shares, anti-takeover measures, material contracts, exchange controls, and tax analysis across Cayman Islands, PRC, and U.S., including PFIC risk - The company operates with a dual-class share structure: Class A ordinary shares carry **one vote** per share, Class B ordinary shares carry **four votes** per share, and Class B shares are convertible to Class A shares[633](index=633&type=chunk)[634](index=634&type=chunk)[636](index=636&type=chunk) - As an exempted company under Cayman Islands law, the company benefits from corporate flexibilities, including exemption from holding an annual general meeting[652](index=652&type=chunk) - The company does not consider itself a PRC resident enterprise for tax purposes, but if classified as such, it could face a **25% tax** on global income and PRC withholding tax on foreign dividends[659](index=659&type=chunk)[660](index=660&type=chunk)[661](index=661&type=chunk) - There is a risk of the company being classified as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, leading to adverse tax consequences for U.S. holders of its ADSs or shares[670](index=670&type=chunk)[672](index=672&type=chunk)[682](index=682&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=203&type=section&id=Item%2011.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section addresses market risks, including interest rate risk on borrowings, foreign exchange risk from RMB-USD currency differences, and inflation risk in China - The company's primary market risks encompass interest rate risk on bank borrowings, foreign exchange risk, and inflation[693](index=693&type=chunk)[694](index=694&type=chunk)[697](index=697&type=chunk) - Significant foreign exchange risk exists due to RMB-denominated revenues and expenses versus USD-traded ADSs, where RMB depreciation could adversely affect USD-reported financial results[694](index=694&type=chunk)[696](index=696&type=chunk) [Description of Securities Other than Equity Securities](index=204&type=section&id=Item%2012.%20Description%20of%20Securities%20Other%20than%20Equity%20Securities) This section details ADS holder fees and charges to the depositary bank for services like issuance and distributions, and notes depositary reimbursements for ADR program expenses ADS Holder Fees and Charges | Service | Fee (US$) | | :--- | :--- | | Issuance of ADSs | Up to 5₵ per ADS issued | | Cancellation of ADSs | Up to 5₵ per ADS cancelled | | Distribution of cash dividends | Up to 5₵ per ADS held | | Distribution of ADSs (stock dividends, etc.) | Up to 5₵ per ADS held | | ADS Services | Up to 5₵ per ADS held on the applicable record date(s) | - In 2021, the company received approximately **US$0.6 million** in reimbursement from the depositary bank for ADR program expenses[705](index=705&type=chunk) Part II [Controls and Procedures](index=206&type=section&id=Item%2015.%20Controls%20and%20Procedures) This section reports effective disclosure controls and internal control over financial reporting as of December 31, 2021, affirmed by management and an unqualified auditor's opinion - Management concluded that the company's disclosure controls and procedures were effective as of **December 31, 2021**[711](index=711&type=chunk) - Based on the COSO framework, management concluded that internal control over financial reporting was effective as of **December 31, 2021**[712](index=712&type=chunk)[713](index=713&type=chunk) - KPMG Huazhen LLP, the independent auditor, issued an unqualified opinion on the effectiveness of internal control over financial reporting as of **December 31, 2021**[715](index=715&type=chunk)[716](index=716&type=chunk) [Other Information](index=208&type=section&id=Item%2016.%20Other%20Information) This section covers corporate governance, identifying the audit committee financial expert, code of conduct adoption, principal accountant fees, and reliance on Cayman Islands home country practices for Nasdaq exemptions - The board has identified **Mr. Changqing Ye** as the audit committee financial expert[722](index=722&type=chunk) - The company has adopted a code of business conduct and ethics applicable to all directors, officers, and employees[723](index=723&type=chunk) Principal Accountant Fees (KPMG Huazhen LLP) | Fee Type | 2020 (US$) | 2021 (US$) | | :--- | :--- | :--- | | Audit fees | 861,488 | 1,296,108 | | Tax fees | 13,042 | Nil | - As a foreign private issuer, the company follows Cayman Islands practice, exempting it from Nasdaq's annual shareholder meeting requirement[728](index=728&type=chunk) Part III [Financial Statements](index=211&type=section&id=Item%2018.%20Financial%20Statements) This section presents the complete audited consolidated financial statements for 2019-2021, prepared under U.S. GAAP, including the auditor's report and detailed financial statements - KPMG Huazhen LLP, the independent auditor, issued an unqualified opinion on the consolidated financial statements for the three-year period ended **December 31, 2021**[744](index=744&type=chunk) - The auditor's report highlights revenue recognition timing for electric scooter sales to distributors as a critical audit matter, requiring significant effort and judgment[748](index=748&type=chunk)[750](index=750&type=chunk) - The company adopted ASC 842 (Leases) on **January 1, 2021**, recognizing operating lease right-of-use assets of **RMB 79.1 million** and lease liabilities of **RMB 31.3 million**[745](index=745&type=chunk)[807](index=807&type=chunk) [Exhibits](index=211&type=section&id=Item%2019.%20Exhibits) This section lists all exhibits filed, including corporate documents, ADS deposit agreement, share incentive plans, employment and VIE contractual agreements, and required certifications - A comprehensive list of exhibits is provided, including foundational corporate documents, VIE structure agreements, share incentive plans, and material business contracts[731](index=731&type=chunk)[735](index=735&type=chunk)

Financial Data and Key Metrics Changes - Total sales volume reached over 238,000 vehicles in Q4 2021, a 58.3% year-over-year increase [6] - Total revenue in Q4 was RMB 986 million, up 46.7% year-over-year, driven by increased sales volume [27] - Gross margin in Q4 was 22.6%, 2.6 percentage points lower than the same period last year [30] - GAAP net income was RMB 47.6 million, with a net margin of 4.8% [35] Business Line Data and Key Metrics Changes - Sales volume in the China market increased by 49.2% year-over-year, reaching 205,000 vehicles [6] - International sales volume reached nearly 33,000 vehicles, including over 18,000 mopeds and nearly 15,000 kick-scooters, a significant 40% year-over-year increase [6][25] - The proportion of N, M, U series products in China rebounded from 24% to 47%, while Gova products accounted for the remaining 53% [25] Market Data and Key Metrics Changes - The company expanded its market coverage to 50 countries with a total of 174 flagship and premium stores globally [16] - The international market saw a 156% increase in revenue, with e-motorcycles and e-mopeds accounting for a significant portion of sales [27] Company Strategy and Development Direction - The company is implementing a 2.0 growth strategy focused on leveraging design technology to create electric urban mobility solutions [8] - Plans to launch five new models and several product upgrades in 2022 to enhance market presence [20] - The company aims to add over 1,000 new branded stores in 2022 to support sales network expansion [23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2022, targeting annual sales volume between 1.5 million to 1.7 million vehicles [23] - The implementation of the China National Standard for electric bicycles is expected to accelerate the conversion to lithium battery-powered models [20] - The company is observing a fast growth in the light electric motorcycle market, driven by enhanced battery and powertrain solutions [21] Other Important Information - The company launched five new products in 2021, which accounted for 27% of total sales [9] - The average selling price (ASP) in Q4 declined by 7.3% year-over-year but improved by 34% quarter-over-quarter [28] - Operating expenses increased by 60.6% year-over-year, primarily due to higher branding and marketing expenses [32] Q&A Session Summary Question: Sales performance in the first two months of 2022 - Management reported sales orders above RMB 100,000, with 78,000 units delivered, including 12,000 kick-scooters [40] Question: Breakdown of full-year volume by product line - Expected sales units for 2022 are around 1.3 to 1.4 million in China and 200,000 to 300,000 in international markets, with a product mix of N, M, U series to Gova series at approximately 3 to 7 [40] Question: Product differentiation for higher-priced products - Management acknowledged the need for stronger product differentiation and plans to focus on extended drive range products in 2022 [43] Question: Expectations for overall expense ratio - Management anticipates operating expenses ratio to remain around 15% to 16% for the year, with selling and marketing expenses at 8% to 9% of revenue [47] Question: Strategy regarding gross margin and battery prices - Management noted that lithium battery prices have increased significantly, and they have raised prices by 5% to maintain margins while exploring cost reductions [49]

Niu Technologies (NASDAQ:NIU) Q3 2021 Earnings Conference Call November 22, 2021 8:00 AM ET Company Participants Jason Yang - Investor Relations Manager Yan Li - Chairman, Chief Executive Officer & Chief Operating Officer Wenjuan Zhou - Chief Financial Officer Conference Call Participants Shenghao Yu - Needham & Company Jing Chang - CICC Bin Wang - Credit Suisse Wei Shen - UBS Investment Bank Operator Good day, ladies and gentlemen. Thank you for standing by and welcome to the Niu Technologies Second Quarte ...