Thank you all for joining us on today's conference call to discuss the company's financial results for the third quarter of 2025. The earnings release is available on the company's IR website.

Please note the conference call is being recorded, and the audio replay will be posted on the company's IR website. On the call today, we have Mr.

Huazhi Hu, our Founder, Chairman, and Chief Executive Officer; Mr. Zhao Wang, Chief Operating Officer; and Mr.

Conor Yang, Chief Financial Officer. Before we continue, please note that today's discussion will contain forward-looking statements made pursuant to the safe harbor provisions of the U.S.

Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties.

As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding this and other risks and uncertainties is included in the company's public filings with SEC.

The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Also, please note that all numbers presented are in RMB and are for the third quarter of 2025 unless stated otherwise.

With that, let me now turn the call over to our CEO, Mr. Huazhi Hu.

Please go ahead, Mr. Hu.

Hello, everyone, and thank you for joining our call today. In the third quarter of 2025, we continue to advance our business roadmap in a steady and disciplined manner.

We delivered 42 units during this quarter, generating 92.5 million in total revenues. Under our brand-new strategy of operations-driven sales, we proactively optimized our delivery pace and prioritized resources toward supporting existing customers in building regular operations in order to establish sustainable commercial operating capabilities.

As a result, deliveries saw a temporary slowdown while new orders continued to grow strongly, and our order backlog further increased. We believe this strategy will strengthen the foundation for commercial operations and drive EHang's healthier, more sustainable long-term growth.

This quarter, we achieved sustainable progress in product portfolio, product development, industrial deployment, and international expansion, laying a solid foundation for the next phase of growth. First, in terms of product portfolio, we continued to expand our product line this year to cover more diverse application scenarios in the low-altitude economy.

In October, we officially launched the VT-35, our next-generation long-range lift-and-cruise pilotless human-carrying eVTOL. The VT-35 has gone through a long six-year period from finalization to productization, integrating the advantages of eVTOLs while avoiding shortcomings of products with other configurations.

Adopting an advanced tandem wing design, the VT-35 maintains full aerodynamic efficiency and flight stability while minimizing the overall size of the aircraft. Its design range with a full load is at least 200 kilometers.

This is only our conservative data under the strict conditions. It can cover various medium- to long-distance scenarios such as cities, islands, and mountain areas, greatly expanding the application scope of eVTOLs in intercity and regional transportation.

Consistent with our safety-first principle, the VT-35 adopts fully redundant systems and autonomous obstacle avoidance, ensuring further enhancements in safety and reliability. Meanwhile, the VT-35 extensively reuses the mature system architecture of the EH216-S, including its command-and-control system and ground infrastructure such as standardized vertiports and charging platforms.

In the future, this will enable the true realization of intercity door-to-door travel while significantly reducing infrastructure costs and deployment thresholds. We announced the presale price of 6.5 million RMB for the standard version of VT-35 in China.

Supported by China's strong manufacturing capabilities and new quality productive forces, we believe these compelling pricing advantages will make the VT-35 highly competitive in global markets. We have already received purchase orders from customers in Hefei, Zhejiang, and Hainan, and have started delivery and test flights in the third quarter.

On certification and industrial deployment, the Civil Aviation Administration of China formally accepted the VT-35's type certificate application in March this year, and the certification progress is progressing steadily. We are following the proven certification path of the EH216-S and are fully accelerating the testing and certification efforts of the VT-35.

Meanwhile, we further deepen our strategic partnership with the Hefei government to establish the VT-35 product hub in Hefei. The Hefei government will provide comprehensive support totaling 500 million RMB, including purchase orders, to build an integrated layout across R&D, manufacturing, airworthiness certification, sales, and operations.

This partnership meaningfully strengthen our foundation across the entire industry chain. From the product portfolio perspective, the EH216-S focuses on intra-city transportation while the VT-35 addresses intercity and regional transportation, covering major metropolitan clusters such as the Yangtze River Delta, the Pearl River Delta, and the Beijing-Tianjin-Hebei region, extending the radius of the one-hour air travel circle to hundreds of kilometers.

Together, the two models form an intra-city plus intercity product matrix that elevates and expands EHang's low-altitude mobility network. Separately, we also began mass production and commercial deployment of our self-developed next-generation formation drone, the GD4.0, in the third quarter.

With a single-charge flight endurance of up to 45 minutes and modular box launcher design deployment, the lightweight system with high-precision positioning enables long-duration, highly stable flights and significantly enhances visual effects and operational efficiency for aerial light shows. During the 15th National Games held in Guangzhou, we deployed more than 11,000 GD4.0 drones for a night sky performance, making our largest formation record to date.

We are also advancing development on several next-generation models, including the firefighting variant of the EH216 series, the VT series logistics aircraft, and a tiltrotor configuration to support a broader range of commercial applications. Our joint venture with Changan Automobile, EHang Changan, has been formally established, and we will co-design and develop the next-generation product line, further strengthening industrial synergies and accelerating the diversification of our overall portfolio.

In terms of industrial development, we continue to strengthen our manufacturing system and long-term capacity planning. Our strategic cooperation with the Minth Group deepened further this quarter, leveraging this expertise in lightweight structural components and intelligent cabin system to enhance the core competitiveness of EHang's eVTOL products.

Meanwhile, our joint venture with Enpower, Yunfu EHang, has entered trial production for its Phase 2 project at the Yunfu production base. Construction of our facilities in Hefei, Weihai, and Beijing is also progressing as planned, forming a full value chain layout across R&D, manufacturing, airworthiness certification, delivery, and operations.

As these major industrial bases come online, we expect to further strengthen our production capacity, supply chain resilience, and delivery efficiency. Internationally, we continue to advance global deployment in a steady and phased manner, establishing scalable market entry models through demonstration flights and local partnerships.

During the quarter, we achieved notable progress across Asia, the Middle East, and Africa, including ongoing trial operations under Thailand's regulatory sandbox program and completing the Middle East's first intercity pilotless human-carrying eVTOL flight in Qatar, which showcased the efficiency of point-to-point low-altitude transportation. We also carried out consistent demonstration flights and regulatory engagements in Africa and Japan.

These overseas initiatives [unclear] the path of flight verification, scenario application, commercial operation, laying a solid foundation for future large-scale business expansion. On the policy front, China's 15th Five-Year Plan proposal released in October explicitly called for accelerating the development of industrial clusters in strategic low-altitude economy, providing long-term stable and high-certainty policy expectations for the industry.

Ongoing regulatory improvements, airspace reform, infrastructure buildout, and application scenarios collectively create a comprehensive environment that supports the R&D, production, testing, and operations of eVTOLs. As an industry pioneer, EHang will continue to participate in standards development and demonstration programs, leveraging policy momentum to accelerate technology deployment and industrial expansion.

Guided by national policy support, local governments are increasingly supporting the low-altitude economy, providing more practical operational guidance for the industry. For example, in October, Guangdong Province introduced several measures to promote the high-quality development of the low-altitude economy, supporting Guangzhou, Shenzhen, and Zhuhai in pioneering intra-city and intercity low-altitude passenger routes and promoting cross-border drone logistics in the Greater Bay Area.

Similarly, in September, the Hong Kong government also proposed in its latest policy address to formulate a low-altitude action plan and launch an advanced sandbox pilot. The initiatives cover more complex scenarios, including cross-border flight routes and human-carrying eVTOL operations.

We are currently working closely with Hong Kong regulators to advance pilot initiatives. These policy breakthroughs will not only strengthen the industry's long-term outlook, but also provide a clear institutional guidance for our commercial implementation.

We also continue to invest in the broader industrial and research ecosystems. Following the establishment of the Joint Research Institute with Tsinghua University this quarter, we recently signed a strategic cooperation framework agreement with the China Academy of Civil Aviation Science and Technology.

The partnership will focus on six major areas, including flight safety, route management, operational support, regulatory standards, and technology validation, and jointly building a standard system for low-altitude commercial operations. Looking ahead, we will continue to prioritize safety while leveraging our product strength, innovation capabilities, and operational expertise as our core drivers.

We will advance commercial operations in a disciplined manner and further deepen our global footprint. Benefited from an increasingly supportive policy environment, a more complete product portfolio, and our continuously strengthened full-chain capabilities across R&D, manufacturing, airworthiness certification, and operations, we remain confident in our long-term growth outlook.

Meanwhile, we are also very pleased to welcome our new board member, Ms. Haiyan Li, to the company's Board of Directors.

With her extensive global experience in capital markets, asset management, and corporate strategy, her addition will provide significant support for enhancing the company's international perspective, capital market engagement, and strategic decision-making in the future. Her appointment will also strengthen the diversified structure and governance capabilities of our board.

We look forward to working with her to drive the company into its next phase of growth. I will now hand it over to our COO, Zhao Wang, for operational updates this year.

Thank you, Mr. Hu.

In Q3, we continued to execute against our core strategy focused on safety, operational excellence, and commercial deployment. We generated revenues of 92.5 million RMB and delivered 42 units of eVTOL, including 41 units of EH216 series and the first of VT-35.

Deliveries this quarter were mainly in China, totaling 39 units, with overseas customers in Thailand and Malaysia. The quarter-over-quarter and year-over-year declines in revenues and deliveries were mainly due to the delayed payment schedules from certain customers.

While some sales agreements were signed during the third quarter, payments were not completed in time, resulting in a part of the originally planned Q3 deliveries being deferred and, therefore, not recognized as Q3 revenue. As of now, 30 units of those orders have been fully paid for and will be recognized in Q4.

Based on our current delivery progress and order execution, we are maintaining our full-year revenue guidance of 500 million RMB. On operational readiness, we are steadily preparing for the official commercial operations of the EH216-S in China.

Our two certified operators, EHang General Aviation and Hefei Heyi Aviation, continued human-carrying trial operations throughout the third quarter. As of now, in the second half of 2025, a total of 1,147 flight missions have been safely conducted by the two certified operators, including 359 human-carrying flights, all demonstrating stable and reliable performance.

Hefei Heyi Aviation's operation site is now ready for commercial operations and plan to gradually and carefully open to the public through a reservation system starting in December. This will allow more passengers to experience pilotless eVTOL mobility firsthand.

Meanwhile, preparation for point A to B route trial flights at both sites are progressing well. Route planning, vertiport assessment, and airspace surveys have been completed, and multiple rounds of test flights have already been conducted.

Leveraging capabilities of both certified operators, we will continue conducting additional human-carrying flights and operational trials to advance the rollout of point A to B route operations. Furthermore, we continue to support delivered customers with route flights.

These flights have been carried out across a variety of terrains and environments, including Meizhou Island in Fujian, Hanzhong in Shaanxi, Chongqing, Inner Mongolia, and Qinhuangdao in Hebei. Through scenario-specific verification and trial operations, we are gradually establishing an operational guidebook for different applications and accumulating high-quality data and practical experience for future scaled commercial operations.

Flight tests in special environments, such as plateaus, cold regions, and straits, are also progressing steadily, further demonstrating the strong flight performance of the EH216-S. For external operational support, we have begun delivering or offering services of OC certification assistance and outsourced operation services through EHang General Aviation and Hefei Heyi General Aviation.

Several customer projects are already underway. To support future commercial scaling, we are accelerating the development of our key capabilities.

In Q3, we completed the design of all required materials for the EH216-S ground operator training program, including training plans, flight manuals, course outlines, training materials, and assessment systems. The Central and Southern Regional Administration of the CAAC has formally accepted our application, and the first training program is expected to begin shortly.

The training cycle will run through the end of the year and proceed under CAAC supervision. Our goal is to verify the first batch of ground operators early next year.

We plan to build a team of about 100 professional ground operators to support scaled commercial operations and service delivery, while also training additional ground operators for our customers' own operating teams. Once a certain number of certified ground operators are available in the market, regular operations can be realized in various customer operation scenarios, and the progress for other operating companies to obtain OC will be further advanced.

At the same time, we are making steady progress on developing the EHang trip ticketing system. The internal testing version is now live, allowing our employees to book and experience flights through the online platform, and initial feedback has been very positive.

This will prepare us for upcoming launch of the public online ticket service. Internationally, our global visibility and flight footprint continued to expand.

To date, the EH216 series had cumulatively completed over 80,000 flights globally, further strengthening its international presence and credibility. In Japan, the EH216-S successfully flew near the Osaka Kansai Expo venue and at the foot of Mount Fuji, while the EH216-L completed first cargo logistic route flight in Ishikawa Prefecture.

In Rwanda, in collaboration with China Road and Bridge Corporation, we completed the first human-carrying flight of the EH216-S in Africa, extending our flight footprint to 21 countries. Regarding overseas regulatory certification, we are working with local partners and civil aviation authorities in multiple countries, including Saudi Arabia, the UAE, Thailand, Brazil, and South Africa, to advance the establishment of bilateral airworthiness validation with the CAAC and to support the validation of type certificate application for the EH216-S.

Relevant regulatory frameworks in these markets are accelerating and maturing, laying important groundwork for future commercial eVTOL operations. Meanwhile, we are also actively exploring trial-first pathways to initiate operational trials overseas.

In October, together with Civil Aviation Authority of Thailand and local partners, we officially launched the Thailand Advanced Air Mobility Sandbox project. Through flight validation under the sandbox framework, we were able to obtain special operational approval through an expedited regulatory process.

This initiative represents the world's first regulatory sandbox model for advancing commercial eVTOL operations and is expected to become a benchmark program globally. The EH216-S has now undergone over a month of continuous trial operations within the Bangkok sandbox area, showing strong stability and reliability across all trial flights.

We also conducted a series of on-site emergency response demonstrations for CAAT, covering scenarios such as propeller failure, communication loss, and other contingency situations, to validate the autonomous handling capabilities and safety performance of our pilotless intelligent system. These efforts not only validate the commercial operational model for eVTOLs, but also establish a solid foundation for a replicable regulatory and operational framework.

Looking ahead, we plan to expand the sandbox to Pattaya, Koh Larn, Phuket, and Koh Samui, forming a demonstration network covering tourism, commuting, and intra-island transport. This will also provide a scalable and replicable pathway for commercial pilot projects across other Southeast Asian markets.

In the Middle East, with operational authorization from the Qatar Civil Aviation Authority and the support from the Ministry of Transport, we successfully completed a series of human-carrying flights with the EH216-S in downtown Doha and the region's first pilotless intercity point-to-point eVTOL flights. The flights connected Doha Port and the Katara Cultural Village, reducing a 30-minute car ride to just 8 minutes, clearly demonstrating the EH216-S's application potential in urban air mobility scenarios.

We will continue deepening cooperation with Qatar's Ministry of Transport and advance the pilotless air taxi project in a phased manner. In Central Asia, we signed an MOU in September with [unclear] Group, a major industrial and commercial enterprise in Kazakhstan, outlining a phased procurement plan for 50 units of EH216 series eVTOL.

Together, we will establish the first UAM operation center in Central Asia and plan to build a localized assembly base, further promoting the localized development of the low-altitude economy industrial chain across the region. The partnership has attracted strong attention from Kazakhstan's First Deputy Prime Minister and the governor of Karaganda Region.

We held two meetings with the First Deputy Prime Minister in Beijing and Astana, during which EHang was invited to share China's leading operational experience and regulatory best practices to support Kazakhstan in building a compliant and sustainable low-altitude economy. Beyond our human-carrying business, and in line with this year's strategic priorities, we are also actively expanding our non-passenger business, including emergency firefighting, logistics, urban inspection, and drone light shows.

For emergency response applications, we have developed an integrated system. It links small drones deployed from automated drone ports with our command-and-control system and specialized firefighting UAVs.

This solution enables cities to build a comprehensive, rapid-response emergency framework. Several municipalities, including Fangshan District in Beijing, have already expressed strong interest, and project planning and demonstration drills are underway.

EHang was among the first enterprises to conduct drone light shows. This year, our newly developed GD4.0 drone also demonstrated strong performance and high scalability.

It successfully completed an 8,000-drone performance for CCTV's China Science and Technology Innovation Gala and over 11,000 drones for the National Games, and has already achieved formations of up to 14,000 drones. Currently, test flights for a 20,000-drone show are in progress, which would surpass the current Guinness World Record.

In addition, the GD4.0 is multifunctional. With minor modifications, it can be used for urban inspection and as a key component in building 3D digital twin models and smart city management systems.

The strong overall performance of the GD4.0 positions our aerial media business to shift its focus from primarily providing show performance service to becoming hardware solution supplier through direct sales of formation drones. To date, the GD4.0 has secured firm orders for 3,000 units and customer purchase intentions exceeding 10,000 units.

Selling formation drones not only enables us to quickly recover R&D investments and generate product-level margins, but also helps us cultivate the drone formation show market and capture greater market share. In addition, it brings reoccurring revenue opportunities from aircraft maintenance and consumables.

This drives a more diversified and resilient revenue structure for the business. Looking ahead, we'll continue to strengthen our overall competitiveness through our diversified product portfolio, modified low-altitude solutions and solid safety record, improving commercial operation capabilities, and our growing global partnership network.

These capabilities collectively reinforce the foundation for the company's long-term and sustainable growth. Now, I'll turn it over to our Chief Financial Officer, Conor, to walk us through the financial results.

Hello, everyone. Before I go into the details, please note that all numbers presented are in RMB unless otherwise stated.

A detailed analysis is available in our earnings press release on the IR site. Now, I will present some key financial data.

Total revenues were 92.5 million RMB in Q3 2025. These year-over-year and sequential decreases are primarily driven by decreased sales volume of EH216 series products.

This was primarily due to the company's strategic focus being adjusted to the various operational preparations before the launch of operations, as well as assisting customers in the establishment of operation certificate systems and capabilities, which thus affected the short-term delivery. Gross profit was 56.2 million RMB in Q3, showing both year-over-year and sequential decline caused by decreased revenues in the quarter.

The gross margin in Q3 was 60.8%, slightly lower than 61.2% in Q3 2024 and 62.6% in Q2 2025. Despite a slight decline, our gross profit margin remains at a relatively high level, which reflects our competitive advantages in the eVTOL sector.

Turning to expenses. Total operating expenses in Q3 were 151 million RMB, which remained basically flat year-over-year and decreased quarter-on-quarter.

The quarter-on-quarter decrease was primarily due to significant decreases in sales and marketing expenses. The adjusted operating expenses for the third quarter, which excluded share-based compensation expenses, were 89.1 million RMB, representing a slight year-on-year increase of 2.6% and a quarter-on-quarter decrease of 8%.

This quarter-on-quarter decrease was mainly due to the company's continuous efforts to enhance operational efficiency, which has led to a reduction in various operating expenses. Adjusted net loss was 20.3 million RMB, compared with adjusted net income of 15.7 million RMB in the second quarter of 2024 and 9.4 million RMB in the second quarter of 2025.

The adjusted net loss was mainly caused by decreased revenue generated in the quarter. In Q3, the company raised $10 million through its at-the-market offering program.

The proceeds will mainly be used for the company's research and development of next-generation technologies and products, team and production expansion, establishment of new headquarters, commercial operations, working capital, and general corporate purposes. The company continues to have strong capital reserves.

As of September 30, 2025, our cash and cash equivalents, restricted short-term deposits, and short-term investment totaled 1.13 billion RMB. This solid foundation gives us the flexibility to support future R&D investments, expand our production capacities, and grow our commercial operations.

With steady delivery progress for orders in hand in the fourth quarter, we currently remain confident in achieving our full-year 2025 revenue guidance of approximately 500 million RMB. Looking ahead, as commercial operations begin to scale and international sandbox projects advance, with establishment of scalable operating system and the continued expansion of our global footprint, EHang is rapidly building a robust foundation for sustained long-term growth.

We'll continue to pursue healthy, sustainable

Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced.

If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question.

Your first question comes from Tim Hsiao with Morgan Stanley. Please go ahead.

Hi. I am Joey from Morgan Stanley.

I would like the management to share more color on the sandbox initiative. Could you share more from the capital markets perspective in terms of the exact or rough timeline that we are currently looking at, particularly on specific crucial stages like OC application, transition from trial operations to official commercial operations?

I've heard that you are currently expanding this sandbox initiative to four regions, and so collectively, what kind of scale are we looking at from this perspective? Additional separate question is that you are planning to replicate the sandbox initiative to other Southeast Asian countries.

I was wondering could management share any progress on that front? Are there any engagements that we are having with various countries in that region because we know that eVTOL is a good fit for many of these island countries?

Could management share more color on that? Thank you.

Thank you for your question. Let me answer this question.

Actually, in mid-October, the regulators from Thailand, the Civil Aviation Authority from Thailand has actually approved that we conducted AAM sandbox initiative in Bangkok. This is a from point A to point B sandbox initiative.

The goal for us is to officially commence eVTOL commercial operations in the next three months. Currently, we are still conducting daily tests, and we are submitting these test data to the Civil Aviation Authority in Thailand.

Actually, just for Monday, the Director General of Thailand's Civil Aviation Authority just took a ride of our eVTOL flying across the city center of Bangkok. This marks the very first of its kind for a Director General of Civil Aviation regulator to ride on eVTOL.

Actually, there is an important industry conference called ICAO that's going to be held in Q4 in 2026. Given this important meeting, the goal for the Director General of the Thailand Civil Aviation regulator is to officially launch commercial operation of eVTOLs before the conference took place.

Actually, we just released an interview which is posted on YouTube and X other social media platforms. It's available out there.

It's an interview between the founder of Aerial C company, which is our Thailand operator. In the interview, they officially proposed that they are going to have a 20 sandbox initiatives by the end of 2026.

By then, it's going to be commercial operations where it's going to generate revenue. Judging by this goal, we are looking at a delivery of 100 EH216 units in 2026.

Looking at the overall market, given the islands and also the transportation requirements or needs out there, we are looking at a potential over 1,000 units of EH216 to be delivered to this market. Of course, we understand that there has been some misunderstanding from some industry analysts recently on our commercialization path.

However, I want to assure you that with the preparations we have put in place over the years, we are preparing, and we are going to see a breakthrough in EHang's commercial operations, both domestic and overseas. With the engagements with other regulators in the Southeast Asian countries, I'm going to tell you that they are progressing well.

We are maintaining close communication with them. We are currently engaging the authorities in Cambodia, Malaysia, and Singapore.

Just to give you an information, the Director General of the Singapore's Civil Aviation also visited and saw the 216-S demo flight. I personally offered the explanation.

It's a new industry, and with new, say, demo projects that we are going to enter into commercial operation in Thailand. It's going to set up a good role model for the rest of the countries, surrounding countries in Southeast Asia.

Hopefully, that answers your question.

Hi management, thank you for taking my question. I was wondering why we're expanding into unmanned product portfolios, for instance, firefighting drones or eVTOLs, as well as the formation performance drones.

What's their contribution to our revenue and also profit? Could management share more on that?

This is Zhao Wang. Let me take your question.

Actually, the low-altitude economy encompasses or consists of both manned business and unmanned business. They are both critical components of this economy.

With EHang's decade R&D investments, we first set out to pick manned operation as our goal because this is the most challenging sector because it involves flying men from the ground up to the sky, poses a significant challenges. Over the years, we have accumulated a lot of technologies and patents.

With our capabilities covering various travel distance, various size of the eVTOLs, we are able to tackle all of these problems. Actually, for our 216, it's actually a series products.

We have the 216-S, which is for manned transportation, and we have 216-L, which is dedicated for logistics, 216-F, dedicated for firefighting, and 216-LF, dedicated for forest fire extinguishing. Additionally, we just launched a VT-35 in October.

It also has a model dedicated for logistics services and with other application scenarios available. What we are trying to do is to maximize the technology that we have.

We are going to introduce more models. We are going to expand our product portfolio so as to increase the revenue.

That's our strategy and how we are going about it in the low-altitude economy. Maybe in the past analysts are not following our unmanned products very closely.

In order to achieve sustainable, healthy development, we need to extend our product portfolio so as to gain more market share. The reason why everyone is focused on the manned eVTOLs, that's because it's the most challenging part, and that's the one that we're choosing to focus on first.

Hopefully, that's the first bit. As our manned eVTOL is gradually entering commercial operation, we have been expanding the teams, recruit more personnel, and try to extend our unmanned business.

What we're trying to do is to build a comprehensive product portfolio which can generate positive cash flow for the company. As we mentioned at the end of last year and as well as earlier this year, what we're trying to do is to adjust the product mix and trying to have a more diversified portfolio.

Nevertheless, they all fall under the low-altitude economy umbrella, they are all going to be the major business for our company.

Going forward, you're going to see a much more diversified product mix, which all going to contribute to the company's bottom line. Thank you.

Thanks.

Hi management, thank you for taking my question. I got two questions.

One is on our VT-35. Following the October announcement, we noticed that there is a one-unit delivery of the VT-35 in Q3.

I was wondering what the plan is for the airworthiness application as well as type certificate application. The second question, perhaps I joined the call a little bit late, I'm not sure whether you have touched on that or not, we noticed that the gross profit margin for Q3 declined slightly.

I was wondering whether the gross profit margin will stabilize at around 60% and what's the cause of the decline for Q3 in gross profit margin. Thank you.

This is Zhao Wang. I'll take your first question.

Actually, you're right. We debuted the VT-35 model on October the 13th.

Actually, we submitted the TC application as early as March this year, and the airworthiness application or review progress is progressing steadily. Maybe you have noticed that we released the VT-35 route flight demo at the October press conference.

It actually has successfully completed multiple key tests, including the wind tunnel tests, ground load tests, multi-rotor test flights, and many other tests. Additionally, the design of VT-35 incorporates both the multi-propeller as well as fixed wing.

We have accumulated rich experience in our EH216-S airworthiness review process, and we're going to leverage those learnings. Together with the R&D team as well as the airworthiness application team that we have, it's going to accelerate the AC process.

We're pretty confident in that.

This is Conor. On the gross profit margin, yes, you're right.

It declined slightly. The causes behind that, for one, there is repeat purchases from some of our existing major customers.

That's a good thing. Also, we have made sales to some of the distributors where we offered some discounts.

These two are the causes of the decline in the gross profit margin. With regard to the VT-35, we delivered one unit this quarter.

However, you should know that this model is still in the trial production phase and not being mass produced. That's why the unit cost of this model is relatively high.

We have secured orders for VT-35. Hopefully, that's going to bring down the unit cost of the VT-35.

Over the long term, we are going to expect our gross margin to remain stable at around 60%. You're going to see the gross profit margin fluctuate slightly as we introduce more products to enrich our product mix, for instance, the unmanned business such as the drone formation performance, firefighting, and logistic aircraft, and etc.

As that increases, it's going to fluctuate the gross profit margin. Over the long run, 60% of gross profit margin.

Thank you.