Continuous adaptation in a dynamic eVTOL sector Reaction to earnings August 26, 2025 03:22 PM GMT EHang Holdings Ltd | Asia Pacific Resilient gross margin in 2Q and lower opex growth ahead: Despite the revenue shortfall, gross margin expanded 0.2ppt YoY/QoQ, to 62.6%, likely thanks to better scale and lower procurement cost. Management now targets <30% opex growth for 2025 (vs. 40% previously), where operating leverage could become more evident in 2H25. Net loss widened slightly: While 2Q25 net loss of Rmb8 ...

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 ...

EHang (EH) Q2 2025 Earnings Call August 26, 2025 08:00 AM ET Speaker0Good 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 the English line. As a reminder, all translations are for convenient purpose only. In ...

Market Opportunity - The global UAM/eVTOL market is projected to grow from $3 billion in 2025 to $23 billion in 2030 and $61 billion in 2035, representing a CAGR of 85%[12] - China's low-altitude economy market size surpassed RMB 500 billion in 2023 and is estimated to reach RMB 2 trillion by 2030[15] - By 2030, it is estimated that 100,000 eVTOLs will enter households or become air taxis[18] Product and Technology - EHang has launched autonomous eVTOLs and obtained pilotless eVTOL TC, PC, AC and OC from CAAC[10] - The company has a global flight footprint in 19 countries as of March 31, 2025[10, 93] - EHang has 746 issued and pending patents as of March 31, 2025[10] - The company plans to unveil the VT35, a next-generation long-range pilotless human-carrying lift-and-cruise eVTOL, in the third quarter of 2025[27] Regulatory and Policy Support - China is implementing favorable policies and regulations to support the UAM/low-altitude economy, including the establishment of national departments and comprehensive transportation networks[60] - Over 59 cities across China have prioritized the development of the low-altitude economy in their 2024 government plans[61] - Multiple cities and provinces are offering operational subsidies and manufacturing incentives for eVTOL operations, such as a reward of RMB 400,000 for launching a new route in Hubei[63] Strategic Partnerships and Production - Guangzhou city established a low-altitude industry venture capital fund with a size of RMB 10 billion[66] - Suzhou has newly signed 16 low-altitude economy industry funds with a total scale exceeding RMB 20 billion this year[66] - EHang is planning to expand its Yunfu Manufacturing Base to an annual production capacity of 1,000 units by 2025[68]

Core Viewpoint - The eVTOL industry is transitioning from pilot projects to commercial operations, with EHang's operational certificate marking a significant milestone in the low-altitude economy [1][27]. Industry Overview - The eVTOL industry is recognized as a leading sector in the low-altitude economy, with increasing commercial viability and consumer accessibility [1][27]. - EHang has received the first operational certificate for manned civil unmanned aerial vehicles in China, indicating the start of commercial low-altitude services [27][30]. Company Performance - In Q1 2025, EHang reported total revenue of 26.09 million yuan, a year-on-year decrease of 57.7% and a quarter-on-quarter decrease of 84.1% [2][3]. - The net profit attributable to shareholders was -78.08 million yuan, compared to -63.33 million yuan in the same period last year [2][3]. - The decline in revenue is primarily attributed to a reduction in sales of the EH216 series, with only 11 units delivered in Q1 2025, a decrease of 57.7% year-on-year and 85.9% quarter-on-quarter [2][3]. Financial Metrics - EHang's gross margin for Q1 2025 was 62.4%, showing a year-on-year increase of 0.6 percentage points, while the net margin was -300.4%, reflecting a significant year-on-year decline of 197.8 percentage points [13][2]. - The increase in gross margin is attributed to a rise in the average selling price of the EH216 series products [13][2]. Order and Production Capacity - EHang has over 1,500 units of the EH216 series in hand orders, with more than 1,200 new purchase and pre-orders from Q3 2023 to December 2024 [21][27]. - The company is expanding its production capacity, with plans to double the size of its Yunfu production base to 48,000 square meters and increase annual production capacity to 1,000 units by the end of 2025 [34][34]. Strategic Partnerships and Collaborations - EHang is collaborating with various partners to develop new technologies and infrastructure for eVTOL operations, including partnerships with universities and engineering firms [41][44]. - The company has signed strategic agreements with automotive manufacturers to explore the development of flying cars, expanding its product line for the consumer market [51][51]. Global Expansion - EHang has successfully completed over 66,000 safe flights across 19 countries, indicating its growing international presence [23][24]. - The company is actively pursuing market opportunities in Brazil, Thailand, Japan, and the UAE, with successful test flights and regulatory approvals in these regions [24][24]. Technological Advancements - EHang has made significant progress in solid-state battery technology, achieving a 60%-90% increase in flight duration compared to traditional lithium batteries [46][46]. - The company is also developing advanced integrated electric drive systems in collaboration with leading suppliers to enhance the performance of its eVTOL products [48][48].

Investment Rating - The report maintains an "Outperform" rating for the company [5]. Core Views - The company has received the first batch of operational certificates for manned civil unmanned aerial vehicles in China, marking the beginning of commercial operations in the low-altitude economy [2][31]. - The company has a robust order backlog, with over 1,500 units of the EH216 series aircraft on hand, and expects to receive more than 1,200 new orders from Q3 2023 to December 2024 [2][26]. - The company is expanding its production capacity, planning to double the size of its Yunfu production base to 48,000 square meters and increase annual production capacity to 1,000 units by the end of the year [2][39]. Financial Summary - In Q1 2025, the company reported revenue of 26.09 million yuan, a year-on-year decrease of 57.7% and a quarter-on-quarter decrease of 84.1% [1][8]. - The net profit attributable to shareholders was -78.08 million yuan, compared to -63.33 million yuan in the same period last year [1][8]. - The adjusted net profit (non-GAAP) was -30.82 million yuan, a significant decline from the previous year's -10.03 million yuan [1][8]. - The gross margin for Q1 2025 was 62.4%, showing an increase compared to the previous year [14]. Revenue and Profit Forecast - Revenue forecasts for 2025-2027 are set at 860 million yuan, 1.205 billion yuan, and 1.579 billion yuan, respectively, with expected growth rates of 88.4%, 40.2%, and 31.0% [4]. - The net profit forecasts for the same period are -143 million yuan, 61 million yuan, and 194 million yuan, reflecting a downward adjustment in profit expectations [4][3].

Investment Rating - The investment rating for the company is "Buy" with a 6-month outlook maintained [5]. Core Insights - The company reported a revenue of 26.1 million yuan in Q1 2025, down from 61.7 million yuan in the same period last year, with a gross margin of 62.4% compared to 61.9% year-on-year. The adjusted net loss was 31.1 million yuan, increasing from 10.1 million yuan year-on-year [1]. - The company has received the operational certificate (OC) for its EH216-S model, allowing for commercial flight services in designated areas. This certification is expected to accelerate the company's commercial operations and expand its market presence [2]. - The company is expanding its production capacity with plans to increase annual output to 1,000 units by the end of 2025, supported by the construction of a new production base in Yunfu and a strategic partnership in Hefei [4]. - The revenue guidance for 2025 is set at 900 million yuan, representing a year-on-year growth of 97%, with expectations of continued growth in revenue for the years 2025 to 2027 [4]. Business Progress - The company has successfully obtained the first batch of operational certificates for its EH216-S from the Civil Aviation Administration of China (CAAC), enabling commercial operations [2]. - The international market expansion includes successful test flights in Spain and Mexico, increasing the number of countries where the company operates to 19 [2]. Product Development - The new generation eVTOL, VT35, is currently undergoing airworthiness certification with the CAAC, and the prototype has completed manufacturing and is in the testing phase, with plans for release in Q3 2025 [3].

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 - Total revenues for Q1 2025 were RMB 26.1 million, a decrease compared to Q1 2024 and Q4 2024, primarily driven by decreased sales volume of EH216 series products [31][32] - Gross profit was RMB 16.3 million in Q1, with a gross margin improvement to 62.4% compared to 61.9% in the same period of 2024 and 60.7% in Q4 2024, indicating strong marketing competitiveness and pricing power [32] - Adjusted net loss was RMB 31.1 million in Q1, reflecting a decline in deliveries, but the company expects financial performance to improve as deliveries recover [34][36] Business Line Data and Key Metrics Changes - In Q1 2025, the company delivered 11 units of the EH216S, with the low delivery volume attributed to seasonal slowdown, internal budgeting processes of clients, and deferred orders due to the upcoming OC certification [14][15] - The company is expanding its Yunfu production base, which has doubled in size and will support an annual production capacity of up to 1,000 units once fully operational [16] Market Data and Key Metrics Changes - Following the issuance of operating certificates (OCs), consumer inquiries and order volumes have significantly increased, with expectations for a strong rebound in Q2 [18][19] - Major orders from provinces such as Jilin, Jiangxi, Guizhou, Hainan, Anhui, and Guangdong are expected to convert into deliveries starting in Q2 [19] Company Strategy and Development Direction - The company aims to evolve from manufacturing autonomous aerial vehicles into a comprehensive urban air mobility platform operator, providing a one-stop solution covering aircraft hardware, software, operational services, and standard systems [6] - The company is focused on a phased approach to commercialization, starting with low-risk scenarios like sightseeing flights before expanding into more complex urban air mobility services [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth momentum over the next few quarters, maintaining the annual revenue guidance of RMB 900 million for 2025 [36][39] - The company is committed to safety and is implementing enhanced standards to ensure safe and compliant flight operations as it transitions to commercial operations [19][20] Other Important Information - The company has over 700 issued and pending patent assets worldwide, with nearly half of its team dedicated to R&D, positioning it as a global leader in autonomous flight systems [12] - The company is actively expanding its business into logistics and emergency rescue applications, with specialized UAVs already developed for these use cases [25][26] Q&A Session Summary Question: Outlook on significant growth in sales and deliveries - Management noted that Q1 performance declined due to seasonal impacts and deferred orders, but improvements in Q2 delivery volumes and sales are expected, with large orders converting into contracts [38] Question: Timeline for EH216 owners to obtain OC certificates - Management indicated that the issuance of OCs clarifies regulatory standards, which should reduce application timelines for future operators [41] Question: Competition and staying competitive - Management highlighted that urban air mobility and intercity air transport serve different markets, with the EH216S offering a compact footprint and lower costs compared to competitors [45][46] Question: Updates on production capacity and SG&A expenses - Management confirmed that the Yunfu facility's production capacity will increase to 1,000 units by the end of the year, and they will maintain stringent control on SG&A expense growth [81][83]

Financial Data and Key Metrics Changes - Total revenues for Q1 2025 were RMB 26.1 million, a decrease compared to Q1 2024 and Q4 2024, primarily driven by decreased sales volume of EH216 series products [31][32] - Gross profit was RMB 16.3 million in Q1, with a gross margin improvement to 62.4% compared to 61.9% in Q1 2024 and 60.7% in Q4 2024, indicating strong marketing competitiveness and pricing power [32][33] - Adjusted net loss was RMB 31.1 million in Q1, reflecting a decline in deliveries, but the company expects financial performance to improve as deliveries recover [34][35] Business Line Data and Key Metrics Changes - In Q1 2025, the company delivered 11 units of the EH216S, with low delivery volume attributed to seasonal slowdown, internal budgeting processes, and customers delaying orders until after the OC was granted [14][15] - The company is expanding its Yunfu production base, which has doubled in size and will support an annual production capacity of up to 1,000 units once fully operational [15][16] Market Data and Key Metrics Changes - Following the issuance of operating certificates (OC), consumer inquiries and order volumes have significantly increased, with expectations for a strong rebound in Q2 [17][18] - Major orders from provinces such as Jilin, Jiangxi, Guizhou, Hainan, Anhui, and Guangdong are moving forward and will begin converting into deliveries starting in Q2 [18][39] Company Strategy and Development Direction - The company aims to evolve from manufacturing autonomous aerial vehicles into a comprehensive urban air mobility platform operator, focusing on safety and a phased approach to commercialization [6][7] - The company is actively building partnerships and expanding into logistics and emergency rescue applications, with ongoing projects in various regions [24][25][26] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth momentum, maintaining the full-year revenue guidance of RMB 900 million for 2025 despite Q1 performance decline [35][39] - The company is focused on continuous innovation and maintaining technological leadership, with significant investments in R&D and a strong pipeline of new products [12][13][33] Other Important Information - The company holds over 700 issued and pending patent assets worldwide, with nearly half of its team dedicated to R&D [12] - The company has established strategic partnerships to develop next-generation manufacturing bases and enhance its operational capabilities [22][23] Q&A Session Summary Question: Outlook on significant growth in sales and deliveries - Management noted that Q1 performance declined due to seasonal impacts and customer budget finalization, but improvements in Q2 delivery volumes and sales are expected [37][38] Question: Timeline for EH216 owners to obtain OC certificates - Management indicated that the issuance of OC clarifies regulatory standards, which should reduce application timelines for future operators [40][41] Question: Competition and product differentiation - Management emphasized that urban air mobility and intercity transport serve different markets, with the EH216S offering a compact footprint and lower costs compared to competitors [43][44][45] Question: Delivery growth expectations - Management confirmed strong sales growth in Q2 and expects significant revenue increases in the second half of the year as deliveries ramp up [73][75] Question: Production capacity updates - Management provided updates on the expansion of the Yunfu facility, which is expected to reach an annual production capacity of 1,000 units by the end of the year [80][81] Question: Perception of NDRC's recent statements - Management reiterated the importance of safety and a phased approach to operations, aligning with NDRC's guidance on developing the low altitude economy [85][86]