EHang (EH) Q2 2025 Earnings Call August 26, 2025 08:00 AM ET Company ParticipantsAnne Ji - Senior Director - IRLaura Li - Equity Research AssociateOperatorGood day, ladies and gentlemen, and thank you for standing by, and welcome to the Ehang Second Quarter twenty twenty five Earnings Conference Call. Please note that the management's prepared remarks and the subsequent Q and A session will primarily be conducted in Chinese and the corresponding simultaneous or consecutive interpretation can be accessed on ...

Financial Performance - In Q1 2025, the company reported total revenue of RMB 26.1 million, a 58% decrease compared to RMB 61.7 million in Q1 2024 [2] - Operating loss was RMB 89.9 million, compared to an operating loss of RMB 65.8 million in Q1 2024 [2] - Net loss amounted to RMB 78.4 million, compared to a net loss of RMB 63.4 million in Q1 2024 [2] - Gross margin improved to 62.4%, up 0.5 percentage points year-over-year and 1.7 percentage points from Q4 2024 [2] - The company sold and delivered 11 units of the EH216 series unmanned aerial vehicles [2] Regulatory Milestones - The company received the first operational qualification certificates (OC) for the EH216-S from the Civil Aviation Administration of China (CAAC), allowing commercial operations [3] - The EH216-S operators can conduct commercial passenger flights in designated bases within China [3] Product Development - The new long-range composite wing unmanned aerial vehicle, VT35, has entered the type certification application process with CAAC [3] - The first VT35 prototype has been produced for airworthiness verification and is undergoing flight tests [3] - The VT35 is expected to be launched in Q3 2025, expanding the company's product offerings [5] Production Capacity Expansion - The company has initiated the expansion of its Yunfu production base, increasing the factory area to 48,000 square meters and plans to boost annual production capacity to 1,000 units by the end of the year [4] - A strategic partnership has been established to build an advanced eVTOL production base in Hefei, integrating automation and standardization to meet market demand [4] International Market Expansion - The EH216-S successfully completed flight demonstrations in Spain and Mexico, expanding the company's global footprint to 19 countries [4]

Financial Data and Key Metrics Changes - In Q4 2024, the company delivered 78 units of the EH216 series, generating revenues of RMB 164 million, representing a year-over-year increase of 239.1% [6] - For the full year 2024, total deliveries reached 216 units, with total revenue of RMB 456 million, marking a year-over-year increase of 288.5% [6][27] - The company achieved positive adjusted net income for the first time, with an annual adjusted net income of RMB 43.1 million, a significant improvement from an adjusted net loss of RMB 139 million in 2023 [30] - The gross margin for Q4 was 60.7%, slightly down from 64.7% in Q4 2023, while the annual gross margin for 2024 was 61.4%, down from 64.1% in 2023 [27][28] Business Line Data and Key Metrics Changes - The EH216S autonomous eVito received significant orders, including 30 units from Shandong province and 30 units from Zhejiang province, contributing to the record deliveries in Q4 [16] - The company is focusing on enhancing production efficiency and scaling production capabilities to meet growing order demands [16][17] Market Data and Key Metrics Changes - The low altitude economy was highlighted as a strategic emerging industry in China's government work report, with local governments in over 50 cities introducing development plans for the sector [7][8] - The company has established over 20 operational demonstration sites across 16 cities in China, indicating strong market penetration [9] Company Strategy and Development Direction - The company aims to launch operational demonstration projects in key cities to allow the public to experience eVito flights firsthand [10] - The focus for 2025 includes expanding urban air mobility (UAM) operations and developing a comprehensive low altitude economy flight service system [21][22] - The company is committed to advancing technological innovation and operational demonstration of pilotless vehicles, aiming to lead the transformation of urban air mobility [15] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong demand for eVito products and operational services, projecting total revenue for 2025 to reach RMB 900 million, representing a 97% year-over-year increase [24][32] - The company is actively pursuing international market expansion, with flight demonstrations conducted in multiple countries, including Thailand, Japan, and Spain [23][55] Other Important Information - The company has achieved its first-ever annual positive operating cash flow of approximately RMB 160 million in 2024, demonstrating sustainable cash generation capabilities [31] - The company plans to invest in scaling production capacity and developing new models for emergency response and logistics [42][47] Q&A Session Summary Question: What is the added production capacity for the Hefei production facility by the end of 2025 and 2026? - The company plans to complete the capacity expansion for Yunfu Phase II this year, reaching a total annual capacity of 1,000 units [34][35] Question: What is the timeline for the IOC application and milestones expected? - The CAAC has completed inspections for two applicants, and the company is awaiting final regulatory approval, which will enable commercial operations [39][40] Question: When will the company achieve GAAP profitability? - The company expects to achieve quarterly GAAP profitability in the second half of 2024, with full-year GAAP profitability anticipated in 2026 [42] Question: What is the outlook for gross margin and financing plans in 2025? - The targeted gross margin is around 60%, with plans to diversify product offerings to support this goal [45][46] Question: What is the progress on the next generation lithium batteries and the VT35 product? - The company is pursuing fast charging and solid-state battery developments, aiming for mass production by the end of the year [67]