Thank you, operator. Hello, everyone.

Welcome to today's conference call to discuss Niu Technologies' results for the second quarter 2026. The earnings press release, corporate presentation, and financial spreadsheets has been posted on our Investor Relations website.

This call is being webcast from company's IR site as well, and a replay of the call will be available soon. Please note, today's discussion will contain forward-looking statements made under the safe harbor provision of the US Private Securities Litigation Reform Act of 1995.

Forward-looking statements involves risks, uncertainties, assumptions, and other factors. The company's actual results may be materially different from those expressed today.

Further information regarding the risk factors is included in company's public filings with the Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statement, except as required by law.

Our earnings press release and this call include discussion of certain non-GAAP financial measures, and the press release contains a definition of non-GAAP financial measures and the reconciliation of GAAP to non-GAAP financial results. On the call with me today are our CEO, Dr.

Yan Li, and CFO, Ms. Fion Zhou.

Now let me turn the call over to CEO Yan. Thank you, Crystal.

Hello, everyone. Thank you for joining our second quarter 2026 results call.

In the second quarter of 2026, we continue to execute our core mandate of high-quality, resilient growth while navigating a profound structural adjustment in the domestic two-wheeler market and accelerating the strategic realignment of our international business. For Q2 2026, we achieved a total sales volume of 434,000 units, representing a robust year-over-year increase of 24%.

This expansion was propelled by the China sales reaching 400,000 units, up 26% year-over-year, and overseas shipments scaled to 32,000 units, up 3.6% year-over-year, signaling a steady operational recovery in the international business. Total revenue for the quarter reached RMB1.44 billion, representing a year-over-year growth of 14.7%.

Gross margin stood at 16%. This primary trajectory was driven by three main factors: first, the active promotional sales clearance and inventory write-off of our international micromobility business; second, the structural product mix shift towards the higher-volume electric motorcycles in China, which carries relatively lower margins compared to our historical premium e-bicycle segment; and third, ongoing cost pressure from elevated raw material prices.

Crucially, those collective headwinds were partially offset by our ongoing components platformization and commercial cost reduction initiatives. Now I would like to provide more details on our performances and strategic executions across both China and international market.

First, let's talk about China market. In Q2 2026, the China sales volume grew 26% year-over-year to 400,000 units.

This strong volume growth was achieved against a challenging regulatory and macroeconomic backdrop. Now with the full enforcement of new national standards for electric bicycles coupled with broader consumer demand decline in the top-tier cities, the domestic two-wheeler market is undergoing a significant structural transformation.

Specifically, the premium e-bicycle segment, historically our strongest category, experienced a meaningful industry-wide contraction, with a first-half decline estimated between 25% to 30%. Concurrently, consumer demand has decisively expanded towards electric motorcycles, especially in lower-tier cities where the motorcycles are not banned, a category with lower average selling prices and margins than the premium e-bicycles.

We proactively reallocated our R&D and product resources in advance, aggressively pivoting towards the high-growth electric motorcycle segment. The structural momentum of electric motorcycle business is now directly offsetting the pressure in the premium e-bicycles, establishing a strong foundation for our next growth phase.

Now first, talk about the product portfolios. During the second quarter, our execution focused on decisive structural reengineering of our product portfolios.

In terms of electric motorcycles, the electric motorcycle category contributed approximately 60% of our China sales volume in Q2, serving as the primary growth engine of our domestic business. We continue to strategically concentrate resources here, building our comprehensive product matrix across key consumer user cases.

First, following the strong reception of Windstorm series, we expand aggressively with the N Fengchi series, a high-performance model purpose-built for delivery professionals and high-frequency cargo use, delivering 0 to 50 km/h acceleration in just 5.4 seconds and top speed of 70 km/h, and support for mainstream battery swapping. Priced at an accessible RMB3,399, it achieved a record-breaking online preorder of 32,000 units on its very first day.

In April, we also launched the NX Marathon series to directly eliminate range anxiety and the charging constraint. Equipped with a high-capacity 72V 50Ah battery, it delivers a verified full-throttle range of 146 kilometers.

In Q2 alone, the NX Marathon contributed 11% of our total domestic sales volume. Now building on this momentum, we further expand the lineup in July with the NX100 and NX70, extending our price point coverage and solidifying our leadership in the family commuting segment.

Now in terms of e-bicycle segment, we maintain a long-term commitment to a market while systematically strengthen our product matrix under the new national standard. First, we enhance our entry-level offerings, led by the Y series, to effectively broaden the consumer access.

Second, we're actively in the process of reintroducing key models in the RMB5,000 to RMB7,000 price range, reestablishing our technological leadership in the premium e-bicycle space. Now while maintaining a prudent discipline during the current market condition, we're fully prepared to capitalize on market recovery when demand returns, leveraging our complete and diversified compliance portfolio.

Now second, let me talk about R&D and technology. The technology and continuous innovation remains core to Niu's long-term strategy.

Following our March vision announcement to redefine mobility and enter the era of AI-powered two-wheel electric vehicles, we moved decisively in Q2 alongside leading technology partners to convert hardcore AI capabilities into tangible mass-market user experience. Core features, including the new AIOS, screen navigations, integrated triple-cam recorder system, AI pets, and AI voice interaction, are now fully integrated across multiple mass production models.

Our user data confirmed those features have been frequently used. For example, in term of our screen navigations, it reached approximately 190,000 monthly active users.

Now adding to this technology momentum, our new OS officially received prestigious International C-Idea awards for interface and user experience design. This marks the first time two-wheeler operating system has received this international recognition, serving as a powerful global validation of our design and technological leadership.

Now let me talk about the brand and marketing. On the brand front, we continue to execute our strategy of brand-driven growth, deliberately expanding Niu's position from a niche top-tier urban geek brand towards a broader mass-premium market.

We're driving a full-funnel brand awareness and mainstream consumer acquisition through a multi-touchpoint approaches. First, supported by our global celebrity ambassador, large-scale brand campaigns, influencer content, and user engagement programs, we're actively shifting brand perception from single brand recognition to a deeper consumer understanding and engagement.

Second, we sustain a targeted brand visibility investment across 37 key cities, occupying high-traffic touchpoint, including outdoor digital screens, major transit hubs, cinemas, and the central commercial district, generating over 5.9 billion total impressions. Last, we successfully launched a targeted offline community events, such as Earth Day campaign that generated 250,000 exposures, and also Shanghai outdoor exhibitions, which generated 3.25 million impressions.

Now on the retail channel side, in light of broader market uncertainties, we focus on same-store sales increase and prioritize operational health and profitability of retail ecosystem. In terms of network footprint, by end of Q2, our store network stood at 4,570 stores nationwide, with lower-tier cities account for 36% our total footprint.

Now by concentrating our resources on empowering existing retailers, the same-store sales surged by 24% year-over-year, driving a consecutive operational efficiency gains across our store network. We focus on online channels.

The online channel delivered standout performance. In Q2, online sales grow by 50% year-over-year and accounts for 64% our total domestic retail sales.

Besides the traditional Tmall and JD.com, we also open on Douyin powered by 9 official flagship accounts and 1,600 dealer-operated accounts. We executed 57,000 livestreams and produced 90,000 short-form video clips in Q2 and generating over 720 million impressions.

Now let me talk about the international business. In Q2 2026, the overseas sales reached 32,485 units, representing a 3.6% year-over-year growth.

This demonstrate our international business has steadily exit its structural adjustment phase to reenter the growth trajectory. Now first, talk about the international electric motorcycle business.

Our overseas electric motorcycle business maintained a powerful momentum, delivered a 4,800 units in Q2, a substantial year-over-year increase of 50%. This performance directly validate the efficacy of our direct-to-retailer strategy.

In term of networks, our dealer network successfully expanded from 307 stores at beginning of year to 417 active locations by end of Q2. In term of product mix, following the successful introduction of our high-performance models, such as NX500, NX300, FX300, the 125cc+ category has rapidly climbed to accounts for approximately 50% our total European sales volume.

This premium mix optimization structurally lift the gross margin profiles, enabling our European team to achieve a key milestone of local profitability. Now in the emerging market like Asia Pacific and other areas, we make steady progress through a asset-light profitability-first approach.

We have make a first approach in, for example, Algeria, with sales cross over 1,000 units, and Thailand, with sales over 1,000 units. Now we will maintain this disciplined asset-light expansion models, first validate the product market fit and local profitability, then selectively scale into additional high-potential markets.

Now in our micromobility business internationally, Q2 marked a successful completion of DTC channel transition, bringing the terminal sales velocity firmly back to an on-growth path. While the wholesale shipment reached 27,000 units, the end-user retail activation, which truly measures the organic consumer demand, exceeded 36,000 units, represent a 21% year-over-year growth in Q2.

This activation trend accelerated month-over-month. For example, it grow at 21% in May and also 37% in June, proving our inventory clearance initiative are working effectively.

Our promotional strategy for legacy models yielded a highly positive results in term of channel clearing. As anticipated, those inventory clearance programs created a short-term compression on micromobility gross margin, but we view this as a necessary, prudent, and deliberate investment to restore a long-term operational path.

Now look ahead, the second quarter in 2026 served as a pivotal period for deliberate operational adjustment. In China, our momentum was anchored by the rapid acceleration of our electric motorcycle category, which successfully offset market-wide regulatory and macroeconomic headwinds in the electric bicycle segments.

Now moving into Q3, we will continue lean aggressively into the electric motorcycle growth momentum. We're expanding to new consumer segments by launching a female-focused product lines while systematically deepen our market penetration with our Windstorm and Marathon product families.

At the same time, while the broader market-wide recovery in electric bicycle depends on macro conditions and consumer sentiment, we're taking proactive internal steps to structurally improve our revenue and ASP in the e-bike segment today. In Q3, we're reintroducing a refreshed lineup of mid-to-high-end compliant e-bicycles, targeting the RMB5,000 to RMB7,000 price range.

By upgrading our product mix with premium features and advancing the integration of new AIOS and AI-assisted riding features, we aim to lift our ASP and defend our margin profile while broader markets stabilizes. On the channel front, we will continue to amplify our online traffic generation across social commerce platform, driving public domain traffic directly into our retail store network to support a sellout across all categories.

Now in the international market, our core electric motorcycle business will maintain steady structural growth under our direct-to-retailer strategy, leveraging the higher 125cc+ model penetration to lift the regional margins. Concurrently, our micromobility segment remained firmly on track, with our distribution transition largely complete.

The active promotion clearance in Q3 will bring the overseas inventory back towards a healthy, normal baseline by the end of the year. In summary, 2026 was important year for structural transformation for Niu.

By capturing the volume growth in electric motorcycle, reestablishing our premium edge in e-bicycle, and advancing our AI ecosystem, and normalizing our overseas inventory, we're building a more resilient operation base. We remain disciplined, realistic about the market condition, and focused entirely on execution.

Now I'll turn over to our CFO, Fion Zhou, to talk about the financials.

Thank you, Yan, and hello, everyone. Please note that our press release contains all the figures and comparisons you need, and we have also uploaded Excel-format figures to our IR website for your easy reference.

As I review our financial results, I'm referring to the second quarter figures unless I say otherwise, and all monetary figures are in RMB if not specified. As Yan just mentioned, our total sales volume for the second quarter was over 434,000 units, up 24% compared to the same period of last year.

402,000 units was sold in China, while the remaining 32,000 was sold overseas. Nearly 60% of our sales in China came from the top five best sellers.

The total revenue for the second quarter amounted to 1.44 billion, an increase of 185 million, or 15%, compared to the same period of last year. China revenue was 1.32 billion, accounting for 92% of total revenue.

Of this, the scooter revenue was 1.21 billion, a year-over-year increase of 15%, and this growth was primarily driven by the higher sales volume, but partially offset by the decrease of revenue per e-scooters. China scooters' ASP was RMB3,010, down 9% year-over-year, and this decline in ASP was primarily attributable to a shift in the product mix with a higher proportion of the electronic motorcycles.

During this quarter, these models were primarily sold within a narrow retail price range of RMB4,500 to RMB7,000, including the models such as FX and X Windstorm versions, and this kind of shift towards models within this price range resulted in a lower ASP compared with the same period of last year. Overseas revenue was 116 million, representing 8% of the total revenue.

Scooter revenue, including electronic motorcycle, mopeds, kick-scooters, and e-bikes, amounted to 106 million, slightly increased from 103 million in the same period of last year, and this increase was driven by the higher sales volume. The ASP of overseas scooters was RMB3,270.

Revenue from accessories, spare parts, and services was 124 million, a 29% increase compared to the same period of last year, mainly driven by the growth in Niu app services and higher sales of accessory and spare parts in China market. The gross profit for this quarter was 230 million, declined from 252 million during the same period of last year.

The gross margin was 16%, 4.1 ppt lower than the same period of last year, of which 2.5 ppt decrease driven by the change in the product mix and the higher cost in China market, and the rest 1.6 ppt decrease due to the lower margin on overseas kick-scooters. In China market, as mentioned previously, the electronic motorcycles accounted for a greater share of the domestic sales, and these models carry lower gross margins compared with the e-bicycle models.

Meanwhile, higher product costs across the upstream supply chain put additional pressure on the domestic gross margin. Internationally, the inventory clearance of the kick-scooters resulted in a lower margin, which also contributed to the overall gross margin decline.

The operating expenses for the second quarter were 341 million, increased by 76 million, or 29%, compared to the same period of last year. The OpEx ratio was 24%, up from 21% in the same period of last year, but down from 29% in the last quarter.

Selling and marketing expenses rose by 36 million year-over-year to 239 million, primarily driven by the increase of RMB21.9 million in intensified marketing plan in the domestic market starting from the beginning of this year, including the e-commerce advertisement and branding, the RMB12.2 million in depreciation and amortization expenses related to the new store expansion. Selling and marketing expenses accounted for 17% of revenue, up from 16% in the same period of last year, but down from 20% in last quarter.

R&D expenses increased by 8 million year-over-year to 52 million, primarily due to an increase in design, testing cost, as well as the staff cost. R&D expenses represented 3.6% of revenue, compared to 3.5% in the same period of last year, and 4.5% in last quarter.

G&A expenses increased by 31 million year-over-year to RMB51 million, primarily due to the foreign exchange losses related to the remeasurement of the foreign currency-dominated assets, mainly the accounts receivable. At the overall earnings level, the impact of these foreign exchange losses were partially offset by the interest income.

G&A expenses represented 3.5% of revenue, compared with 1.5% in the same period of last year, but down from 4.7% in the previous quarter. Excluding the impact of foreign exchange losses, G&A expenses were RMB32 million, compared with RMB44 million in the same period of last year.

In the second quarter, we had a net loss of 102 million, with the net loss margin of 7.1% under the GAAP accounting, compared to a net income of 5.9 million, with a net income margin of 0.5%, for the same period of last year. The non-GAAP net loss was 98 million, with the non-GAAP net loss margin of 6.8%.

Turning to our balance sheet and cash flow, we ended the quarter with RMB1.7 billion, increased 36 million compared to the end of last year in cash, restricted cash, term deposit, and short-term investments. Our operating cash inflow amounted to 392 million.

The CapEx for the second quarter amounted to 53 million, reflecting an increase of 21 million compared to the same period of last year, and this can be primarily attributed to an increase in the opening of new stores and molds cost in China. Now let's turn to guidance.

We expect the third quarter revenue to be in the range of RMB1.86 billion to 2.03 billion, an increase of 10% to 20% year-over-year. Please be aware that this outlook is based on the information available as of the date and reflects the company's current and preliminary expectation, which is subject to change due to uncertainties related to various factors.

With that, we're now open the call for any questions that you may have for us. Operator, please go ahead.

Thank you, operator, and thank you all for participating in today's call and for your support. We appreciate your interest and look forward to reporting to you again next quarter on our progress.

Thank you.