EHang Reports Third Quarter 2023 Unaudited Financial Results

  • Revenues Increased by 248% YoY, 186% QoQ
  • EH216-S Received the World’s First Type Certificate for Unmanned eVTOL from CAAC
  • CAAC Approved EHang Unmanned Aircraft Cloud System for Trial Operations
  • UAM Strategic Partnerships with Shenzhen Bao’an District Government and Hefei Municipal Government
  • Closed US$23 Million PIPE Investment from Strategic Investors
  • Strategic Investment in Inx to Develop Solid-State Lithium Metal Battery Supply Chain for eVTOLs

EHang Holdings Limited (“EHang” or the “Company”) (Nasdaq: EH), the world’s leading Urban Air Mobility (“UAM”) technology platform company, today announced its unaudited financial results for the third quarter ended September 30, 2023.

Financial and Operational Highlights for the Third Quarter 2023

  • Total revenues were RMB28.6 million (US$3.9 million), representing an increase of 247.9% from RMB8.2 million in the third quarter of 2022, and an increase of 186.0% from RMB10.0 million in the second quarter of 2023.
  • Gross margin was 64.6%, representing a consistently high gross margin level with a slight decrease of 1.3 percentage points compared to 65.9% in the third quarter of 2022, but an increase of 4.4 percentage points compared to 60.2% in the second quarter of 2023. The year-over-year decrease was mainly due to changes in revenue mix. The quarter-over-quarter increase was mainly due to higher average selling price of EH216 series products.
  • Operating loss was RMB70.0 million (US$9.6million), representing an improvement of 5.0% from RMB73.7 million in the third quarter of 2022 and an improvement of 7.0% from RMB75.3 million in the second quarter of 2023.
  • Adjusted operating loss1 (non-GAAP) was RMB34.2 million (US$4.7 million), representing an improvement of 35.2% from RMB52.9 million in the third quarter of 2022, and an improvement of 33.3% from RMB51.3 million in the second quarter of 2023.
  • Net loss was RMB67.1 million (US$9.2 million), representing an improvement of 12.3% from RMB76.5 million in the third quarter of 2022, and an improvement of 11.4% from RMB75.7 million in the second quarter of 2023.
  • Adjusted net loss2 (non-GAAP) was RMB31.3 million (US$4.3 million), representing an improvement of 43.1% from RMB55.1 million in the third quarter of 2022, and an improvement of 39.5% from RMB51.8 million in the second quarter of 2023.
  • Cash, cash equivalents, short-term investments and restricted short-term deposits balances were RMB295.6 million (US$40.5 million) as of September 30, 2023.
  • Sales and deliveries of EH216 series products3 were 13 units, a notable increase compared with 4 units in the third quarter of 2022, and 5 units in the second quarter of 2023.

Business Highlights for the Third Quarter 2023 and Recent Developments

  • EH216-S Received the World’s First Type Certificate for Unmanned eVTOL from CAAC

In October 2023, EH216-S, our self-developed passenger-carrying unmanned aerial vehicle (“UAV”) system, obtained the type certificate (“TC”) from the Civil Aviation Administration of China (the “CAAC”). The EH216-S model has successfully demonstrated its full compliance with the safety standards and airworthiness requirements set by the CAAC, thereby qualifying for commercial operations involving passenger-carrying UAVs. As the world’s first TC for unmanned electric vertical take-off and landing aircraft (“eVTOL”), EH216-S TC not only sets a benchmark for the airworthiness certification of innovative eVTOLs in China and overseas, but also serves as an epoch-making milestone for commercial UAM operations.

Under the guidance of the CAAC, EHang is steadily moving forward with EH216-S production in line with its TC. The first batch of the certified EH216-S is scheduled to roll off the production line in the fourth quarter of 2023. The Company is also working on the Production Certification with the CAAC regarding its qualification for mass productions of EH216-S.

  • CAAC Approved EHang Unmanned Aircraft Cloud System for Trial Operations

In August 2023, the CAAC approved the EHang Unmanned Aircraft Cloud System (“UACS”) for trial operations. EHang UACS features functions of management of airspace, UAVs, flight plans and operators, etc., enabling cluster management of multiple aircrafts within the same airspace, and ensuring safer and more reliable operations. EHang UACS provides a significant safeguard for operational safety and management of its UAVs at scale.

  • Strategic Partnership with Bao’an District Government of Shenzhen on UAM and Delivery of 5 Units of EH216-S to Local Customer for Operation Preparations

In July 2023, EHang reached a Memorandum of Understanding (“MOU”) with the Bao’an District Government of Shenzhen Municipality on a strategic partnership for UAM operations. Both parties will jointly develop UAM use cases, systems, and routes to build Shenzhen as a national low-altitude economy development demonstration city. A UAM Operation Demonstration Center is being built at the OH Bay in Bao’an District with the plan to launch aerial tourism and sightseeing experience services with EH216-S. In anticipation of flight operations in Bao’an District, EHang delivered five units of EH216-S to a local customer, Boling, in September 2023. Boling has expressed its intent to potentially purchase an additional 95 units of the EH216-S for future use in Shenzhen, as outlined in a signed letter of intent.

  • Strategic Partnership with Hefei Municipal Government with US$100 Million Support Plan

In October 2023, EHang entered into a strategic cooperation agreement with the Hefei Municipal Government for joint development of a low-altitude economy ecosystem in Hefei, China. EHang plans to launch regular UAV operations in Luogang Central Park, Hefei, transforming it into a leading UAM super aerohub. The Hefei Municipal Government intends to extend support to EHang in various forms with a target amount of US$100 million. The support will be provided either through the coordination or facilitation of purchase orders for a minimum of 100 units of EH216 series products, and/or by providing financing support. The specific timing, amount and type of support will be subject to the definitive agreements.

  • EHang European Urban Air Mobility Center Opens in Spain

In November 2023, EHang announced the opening of our first European UAM Center in Spain. Located inside the Lleida–Alguaire International Airport, the center is the first-of-its-kind in Europe for unmanned eVTOL aircraft, setting a benchmark globally for the effective integration of eVTOL operations with airport infrastructure, air traffic management systems, operational procedures, and other information technologies.

  • US$23 Million PIPE Investment from Strategic Investors to Strengthen Liquidity

In July 2023, EHang secured US$23 million of equity investment through a private placement from several strategic investors. The gross proceeds from the placement will be used for working capital and general corporate purposes, enabling acceleration of strategic plans for technology advancement, business development, and commercial operations.

  • Strategic Investment in Inx to Develop Solid-State Lithium Metal Battery Supply Chain for eVTOLs

In September 2023, EHang strategically invested in Shenzhen Inx Technology Co., Ltd. (“Inx”), a solid-state lithium metal battery technology company in China, and plans to cooperate with Inx on the research, development and production of solid-state lithium metal batteries for EHang’s unmanned eVTOL products. Our strategic investment in Inx aligns seamlessly with EHang’s pursuit of greener, low-carbon technologies, and is also part of the Company’s efforts to deploy and enhance our upstream battery supply chain.

CEO Remarks

Mr. Huazhi Hu, EHang’s Founder, Chairman and Chief Executive Officer, commented, “The third quarter reflects our exceptional performance in multiple aspects. A pivotal milestone was the TC for our groundbreaking EH216-S, the first of its kind in the unmanned eVTOL industry around the world. This certification evidences our adherence to CAAC’s stringent safety and airworthiness standards, and enables us to move toward commercial operations with confidence.”

“To support our commercial endeavors, we have forged strategic alliances with key entities such as the Bao’an District Government of Shenzhen and the Hefei Municipal Government. These partnerships are instrumental in establishing innovative projects like the UAM Operation Demonstration Center in Shenzhen and could facilitate potential supports with a target amount of $100 million from the Hefei Municipal Government. These initiatives, combined with certifications and favorable policies, will position us to meet the increasing demands and orders for our trailblazing unmanned eVTOL products. As the first mover in the eVTOL industry, we will continue committing ourselves to delivering safe, autonomous, efficient, and eco-friendly UAM solutions and services.”

Financial Results for the Third Quarter 2023

Revenues

Total revenues were RMB28.6 million (US$3.9 million), representing an increase of 247.9% from RMB8.2 million in the third quarter of 2022, and an increase of 186.0% from RMB10.0 million in the second quarter of 2023. The year-over-year and quarter-over-quarter increases were primarily due to the increase in the sales volume of EH216 series products.

Costs of revenues

Costs of revenues were RMB10.1 million (US$1.4 million), compared with RMB2.8 million in the third quarter of 2022 and RMB4.0 million in the second quarter of 2023. The year-over-year and quarter-over-quarter increases were primarily in line with the increase in the sales volume of EH216 series products.

Gross profit and gross margin

Gross profit was RMB18.5 million (US$2.5 million), representing an increase of 240.6% from RMB5.4 million in the third quarter of 2022, and an increase of 207.0% from RMB6.0 million in the second quarter of 2023. The year-over-year and quarter-over-quarter increases were primarily due to the increase in the sales volume of EH216 series products.

Gross margin was 64.6%, down 1.3 percentage points from 65.9% in the third quarter of 2022 but up 4.4 percentage points from 60.2% in the second quarter of 2023. The year-over-year decrease was mainly due to changes in revenue mix. The quarter-over-quarter increase was mainly due to higher average selling price of EH216 series products.

Operating expenses

Total operating expenses were RMB89.8 million (US$12.3 million), compared with RMB80.5 million in the third quarter of 2022, and RMB82.0 million in the second quarter of 2023.

  • Sales and marketing expenses were RMB13.7 million (US$1.9 million), compared with RMB12.7 million in the third quarter of 2022, and on par with RMB13.5 million in the second quarter of 2023. The year-over-year increase was mainly attributed to increased marketing and promotional activities to expand brand awareness and higher employee compensation.
  • General and administrative expenses were RMB38.4 million (US$5.2 million), compared with RMB36.5 million in the third quarter of 2022, and RMB31.1 million in the second quarter of 2023. The year-over-year and quarter-over-quarter increases were mainly attributed to higher share-based compensation expenses for new grant of share-based awards, while partially offset by a reduction in professional service fees and provisions for several accounts receivable on certain customers.
  • Research and development expenses were RMB37.7 million (US$5.2 million), compared with RMB31.3 million in the third quarter of 2022, and on par with RMB37.4 million in the second quarter of 2023. The year-over-year and quarter-over-quarter increases were mainly due to the focus on the EH216-S TC and continuous expenditures on the compliance tests in the final demonstration and verification phase of the TC.

Adjusted operating expenses4 (non-GAAP)

Adjusted operating expenses were RMB54.0 million (US$7.4 million), representing a reduction of 9.5% from RMB59.7 million in the third quarter of 2022, and a reduction of 7.0% from RMB58.1 million in the second quarter of 2023. Adjusted sales and marketing expenses, adjusted general and administration expenses, and adjusted research and development expenses were RMB8.9 million (US$1.2 million), RMB16.1 million (US$2.2 million) and RMB29.0 million (US$4.0 million) in the third quarter of 2023, respectively. The changes in adjusted operating expenses were primarily due to the same reasons discussed under the heading “Operating expenses” above.

Operating loss

Operating loss was RMB70.0 million (US$9.6 million), representing an improvement of 5.0% from RMB73.7 million in the third quarter of 2022, and an improvement of 7.0% from RMB75.3 million in the second quarter of 2023.

Adjusted operating loss (non-GAAP)5

Adjusted operating loss was RMB34.2 million (US$4.7 million), representing an improvement of 35.2% from RMB52.9 million in the third quarter of 2022, and an improvement of 33.3% from RMB51.3 million in the second quarter of 2023.

Net loss

Net loss was RMB67.1 million (US$9.2 million), representing an improvement of 12.3% from RMB76.5 million in the third quarter of 2022, and an improvement of 11.4% from RMB75.7 million in the second quarter of 2023.

Adjusted net loss (non-GAAP)6

Adjusted net loss was RMB31.3 million (US$4.3million), representing an improvement of 43.1% from RMB55.1 million in the third quarter of 2022, and improvement of 39.5% from RMB51.8 million in the second quarter of 2023.

Adjusted net loss attributable to EHang’s ordinary shareholders was RMB31.3 million (US$4.3million), representing an improvement of 42.8% from RMB54.7 million in the third quarter of 2022, and an improvement of 39.4% from RMB51.6 million in the second quarter of 2023.

Loss per share and per ADS

Basic and diluted net loss per ordinary share were both RMB0.54 (US$0.07). Adjusted basic and diluted net loss per ordinary share7 (non-GAAP) were both RMB0.25 (US$0.03).

Basic and diluted net loss per ADS were both RMB1.08 (US$0.14). Adjusted basic and diluted net loss per ADS8 (non-GAAP) were both RMB0.50 (US$0.06).

Balance Sheets

  • Cash, cash equivalents, short-term investments and restricted short-term deposits balances were RMB295.6 million (US$40.5 million) as of September 30, 2023. In July 2023, the Company completed and closed the private investment of US$23 million from long-term strategic investors to support the needs of working capital and general corporate purposes, enabling acceleration of strategic plans for technological advancement, business development, and post-certification commercial operations.

Liquidity

The Company has been incurring losses from operations since inception. For the nine months ended September 30, 2023, the Company had net loss of RMB229.9 million (US$31.5 million). As of December 31, 2022 and September 30, 2023, accumulated deficit amounted to RMB1,450.4 million and RMB1,682.2 million (US$230.6 million), respectively.

The Company’s liquidity and operation depend on its ability to enhance its operating cash flows and financial position by commencing scalable commercial sales of EH216-S, and raising additional funds through debt financings or equity offerings. In July 2023, the Company received US$23 million of equity investment through private placement from several strategic investors. The gross proceeds from the placement have strengthened the Company’s liquidity status. In addition, up to the date of this earnings release, the Company has unused credit facilities of RMB61.0 million (US$8.4 million). Therefore, we believe that our current cash and cash equivalents and our anticipated cash flows from operations will be sufficient to meet our anticipated working capital requirements and material cash requirements for at least the next 12 months. However, we may need additional cash resources in the future if we experience changes in business conditions or other developments, or if we pursue opportunities for investment, acquisition, capital expenditure or similar actions.

Business Outlook

For the fourth quarter of 2023, the Company expects the total revenues to be approximately RMB56 million, representing an increase of 257% year over year and an increase of 96% quarter over quarter.

For the fiscal year of 2023, the Company expects total revenues to be approximately RMB118 million, up 166% from 2022.

The above outlook is based on information available as of the date of this press release and reflects the Company’s current and preliminary expectations regarding its business situation and market conditions. The outlook is subject to changes, especially given uncertainties and situations related to certification, geopolitics, economic landscape, etc.

Conference Call

EHang’s management team will host an earnings conference call at 8:00 AM on Wednesday, November 22, 2023, U.S. Eastern Time (9:00 PM on Wednesday, November 22, 2023, Beijing/Hong Kong Time).

To join the conference call via telephone, participants must use the following link to complete an online registration process. Upon registering, each participant will receive email instructions to access the conference call, including dial-in information and a PIN number allowing access to the conference call.

Participant Online Registration:
https://register.vevent.com/register/BIa55748e1f2f14620aa4cc19b6fc33d8e

A live and archived webcast of the conference call will be available on the Company’s investors relations website at http://ir.ehang.com/.

About EHang

EHang (Nasdaq: EH) is the world’s leading urban air mobility (“UAM”) technology platform company. Our mission is to enable safe, autonomous, and eco-friendly air mobility accessible to everyone. EHang provides customers in various industries with unmanned aerial vehicle (“UAV”) systems and solutions: air mobility (including passenger transportation and logistics), smart city management, and aerial media solutions. EHang has obtained the world’s first type certificate for unmanned eVTOL from the Civil Aviation Administration of China in 2023. As the forerunner of cutting-edge UAV technologies and commercial solutions in the global UAM industry, EHang continues to explore the boundaries of the sky to make flying technologies benefit our life in smart cities. For more information, please visit www.ehang.com.

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