EHang Holdings Limited (“EHang” or the “Company”) (Nasdaq: EH), the world’s leading autonomous aerial vehicle (“AAV”) technology platform company, today announced its unaudited financial results for the first quarter ended March 31, 2023.
China-based eVTOL developer EHang recently shared its first quarter financial results and business milestones with shareholders. EHang Photo
Financial and Operational Highlights for the First Quarter 2023
Total revenues were RMB22.2 million (US$3.2 million), representing a growth of 41.6% compared to RMB15.7 million in the fourth quarter of 2022.
Gross margin was 63.9%, representing a continued high gross margin level with a slight decrease of 2.2 percentage points compared to 66.1% in the fourth quarter of 2022.
Operating loss was RMB75.7 million (US$11.0 million), representing an improvement of 17.8% from RMB92.2 million in the fourth quarter of 2022.
Adjusted operating loss1 (non-GAAP) was RMB34.3 million (US$5.0 million), representing an improvement of 44.1% from RMB61.3 million in the fourth quarter of 2022.
Net loss was RMB87.0 million (US$12.7 million), representing an improvement of 21.0% from RMB110.1 million in the fourth quarter of 2022.
Adjusted net loss2 (non-GAAP) was RMB33.6 million (US$4.9 million), representing an improvement of 43.5% from RMB59.4 million in the fourth quarter of 2022.
Cash, cash equivalents, restricted cash, restricted short-term deposits and short-term investments balances were RMB217.6 million (US$31.7 million) as of March 31, 2023.
Sales and deliveries of EH216 series AAVs3 were 11 units, compared with 6 units in the fourth quarter of 2022.
Business Highlights for the First Quarter 2023 and Recent Developments
EH216-S Type Certification’s Compliance Tests in Final Phase Completed More Than 90%
In the first quarter of 2023, the EH216-S type certification process with the Civil Aviation Administration of China (the “CAAC”) has achieved significant progress in the final phase of Demonstration and Verification of Compliance. As of today, more than 90% of the compliance tests in the final phase have been completed step by step. During the process, EHang conducted a great number of laboratory tests, ground tests and flight tests at multiple professional aeronautical laboratories and test sites across China under the CAAC’s inspections. The completed tests, including but not limited to battery, environmental, material, strength, software, data link, ground control station tests, demonstrated and verified the safety and airworthiness of the EH216-S AAV. The Company is making all efforts to conclude the remaining tests in the final sprint.
Continued Trial Operations of AAVs in China
Under the CAAC’s guidance and the Company’s 100 Air Mobility Route Initiative, EHang, along with its customers and partners, have developed a total of 19 trial operation spots across 17 cities in China during the past two years. As of today, approximate 8,800 safe operational trial flights have been completed by EH216-S AAVs for aerial sightseeing at these spots, which paves the way for commercial operations following the certification.
Deliveries of Six Units of EH216-S to Fengshan for Aerial Sightseeing at Low-Altitude Flying Camp in Guangxi
EHang received a purchase order for six units of EH216-S from the Fengshan Tourism Investment Development Co., a typical local tourism operator which aims to boost its post-pandemic tourism business with new solutions, and delivered them in the first quarter. The customer plans to establish a low-altitude flying camp for aerial sightseeing in Fengshan’s Sanmenhai national 4A-class scenic area, a UNESCO Global Geopark and a famous karst landform tourist resort in Guangxi, China.
Cooperation with Xiyu Tourism to Jointly Develop Aerial Sightseeing in Xinjiang
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In March 2023, EHang signed a cooperation framework agreement with Xiyu Tourism Development Co., Ltd. (300859.SZ) (“Xiyu Tourism”), a leading tourism company in Xinjiang, China listed on the Shenzhen Stock Exchange. Both parties plan to set up a joint venture for developing low-altitude tourism and sightseeing projects with EHang AAVs in the Heavenly Lake of Tianshan, a national 5A-class tourist attraction, and other scenic areas in Xinjiang. The cooperation plans to operate a minimum of 120 units of EH216-S or EHang’s comparable passenger-carrying AAVs within the next five years.
Strategic Partnership with XAIC and Indicative Purchase Order for 20 Units of EH216-S
In March 2023, EHang reached a strategic partnership agreement on urban air mobility (“UAM”) and smart city management with Xi’an Aerospace Investment Technology Innovation Development Holding Group Co., Ltd., a wholly-owned subsidiary of Xi’an Aerospace Investment Co., Ltd. (“XAIC”) which is sponsored by the Xi’an municipal government. Under this partnership, EHang received an indicative purchase order for 20 units of EH216-S, the fulfillment of which is expected to be completed by 2025.
Completion of Japan’s First Passenger-Carrying Autonomous eVTOL Flight Demonstration by EH216-S and Induction into Japan’s Public-Private Committee for Advanced Air Mobility
In February 2023, EH216-S completed Japan’s first passenger-carrying autonomous electric vertical takeoff and landing (“eVTOL”) flight demonstration in Oita, Japan under the approval of the Ministry of Land, Infrastructure, Transport and Tourism of Japan (“MLIT”). In April 2023, EHang was inducted as a member of Japan’s Public-Private Committee for Advanced Air Mobility (“AAM”), a platform jointly established by Japan’s Ministry of Economy, Trade and Industry (“METI”) and MLIT for worldwide industry leaders in the public and private sectors on adopting flying vehicles in Japan.
CEO Remarks
Mr. Huazhi Hu, EHang’s Founder, Chairman and Chief Executive Officer, said, “As anticipated, we witnessed increasing demands for our AAVs upon the post pandemic recovery of the tourism industry in China. In the first quarter, we achieved more customer orders and deliveries, leading to remarkable revenue growth of 42% quarter over quarter and 283% year over year. Meanwhile, we maintained a high quarterly gross margin of 63.9%, a testament to our competitive strengths and first mover advantages in the global UAM and eVTOL industry. Moreover, the US$10 million strategic investment from the Qingdao West Coast New Area was closed in the first quarter, which enhanced our cash position to support our operations and growth.”
“Currently our top priority is to obtain the EH216-S type certificate as soon as possible in the near term. With continued tailwinds from tourism recovery and favorable domestic policies, as well as our leading position in advanced AAVs and related systems, we feel very confident in our vast potential to thrive in the UAM sector and are very optimistic for what’s ahead.”
Financial Results for the First Quarter 2023
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Revenues
Total revenues were RMB22.2million (US$3.2 million), representing a growth of 41.6% quarter on quarter from RMB15.7 million in the fourth quarter of 2022, primarily due to the increase in the sales volume of EH216 series AAV products.
Costs of revenues
Costs of revenues were RMB8.0 million (US$1.2 million), compared with RMB5.3 million in the fourth quarter of 2022, primarily in line with the increase in the sales volume of EH216 series AAV products.
Gross profit and gross margin
Gross profit was RMB14.2 million (US$2.1 million), representing an increase of 36.9% quarter on quarter from RMB10.4 million in the fourth quarter of 2022, primarily due to the increase in the sales volume of EH216 series AAV products.
Gross margin was 63.9%, down 2.2 percentage points from 66.1% in the fourth quarter of 2022. The decrease in gross margin was mainly due to changes in revenue mix.
Operating expenses
Total operating expenses were RMB91.5 million (US$13.3 million), representing a decrease of 12.0% compared with RMB104.0 million in the fourth quarter of 2022.
Sales and marketing expenses were RMB12.4 million (US$1.8 million), compared with RMB15.5 million in the fourth quarter of 2022. The decrease was mainly due to lower share-based compensation expenses for a certain portion of share-based awards vested in the fourth quarter of 2022.
General and administrative expenses were RMB25.0 million (US$3.6 million), compared with RMB51.4 million in the fourth quarter of 2022. The decrease was mainly attributed to additional provisions for several long-aging accounts receivable on certain customers in the fourth quarter of 2022.
Research and development expenses were RMB54.1 million (US$7.9 million), compared with RMB37.1 million in the fourth quarter of 2022. The increase was mainly due to higher share-based compensation expenses for new grant of share-based awards and continued focus on EH216-S type certification and increased expenditures on the conforming aircraft and compliance tests in the final demonstration and verification phase.
Adjusted operating expenses4 (non-GAAP)
Adjusted operating expenses were RMB50.1 million (US$7.3 million), compared with RMB73.2 million in the fourth quarter of 2022. Adjusted sales and marketing expenses, adjusted general and administration expenses, and adjusted research and development expenses were RMB7.5 million (US$1.1 million), RMB15.8 million (US$2.3 million) and RMB26.8 million (US$3.9 million) in the first quarter of 2023, respectively. The decrease in adjusted operating expenses was primarily due to the same reasons under “Operating expenses”.
Operating loss
Operating loss was RMB75.7 million (US$11.0 million), representing an improvement of 17.8% from RMB92.2 million in the fourth quarter of 2022.
Adjusted operating loss (non-GAAP)5
Adjusted operating loss was RMB34.3 million (US$5.0 million), representing an improvement of 44.1% from RMB61.3 million in the fourth quarter of 2022.
Other expenses
Other expenses were RMB11.2 million (US$1.6 million), compared with RMB18.0 million in the fourth quarter of 2022, primarily due to the non-cash expenses of amortization of debt discounts, relating to the interim funding recognized as short-term debt provided by an investor in the private placement entered in December 2022. The Company accounted for a significant portion of the funds as short-term debt and the remaining portion as warrants under additional paid-in capital. The Company has repaid the interim funding of short-term debt in full and concurrently received US$10 million as purchase price of Class A ordinary shares.
Net loss
Net loss was RMB87.0 million (US$12.7 million), representing an improvement of 21.0% from RMB110.1 million in the fourth quarter of 2022.
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Adjusted net loss (non-GAAP)6
Adjusted net loss was RMB33.6 million (US$4.9 million), representing an improvement of 43.5% from RMB59.4 million in the fourth quarter of 2022.
Adjusted net loss attributable to EHang’s ordinary shareholders was RMB33.4 million (US$4.9 million), representing an improvement of 43.7% from RMB59.2 million in the fourth quarter of 2022.
Loss per share and per ADS
Basic and diluted net loss per ordinary share were both RMB0.74 (US$0.11). Adjusted basic and diluted net loss per ordinary share7 (non-GAAP) were both RMB0.28 (US$0.04).
Basic and diluted net loss per ADS were both RMB1.48 (US$0.22). Adjusted basic and diluted net loss per ADS8 (non-GAAP) were both RMB0.56 (US$0.08).
Balance Sheets
Cash, cash equivalents, restricted short-term deposits and short-term investments balances were RMB217.6 million (US$31.7 million) as of March 31, 2023.
Going Concern
The Company’s ability to continue as a going concern is currently largely dependent on when we will obtain the type certificate of our EH216-S in the near term to launch fully commercial sales of our EH216-S AAVs, and our capability to raise additional funds through debt financings or equity offerings. We expect to obtain the type certificate in the near future as we are already in the final phase of Demonstration and Verification of Compliance for the EH216-S type certification and more than 90% of the compliance tests in the final phase have been completed, as of the date of this earnings release.
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Business Outlook
The Company continues to receive increasing inquiries, demands and orders from customers for AAV uses in aerial tourism, urban transportation, emergency rescue, and smart city management, which are driven by its first-mover advantages, the post-epidemic recovery in travel and tourism, policy tailwinds on the UAM sector, and the expected upcoming commercialization. The Company’s EH216-S order pipeline in China has reached more than 100 units and continues growing. Most of these orders are conditional upon the Company’s completion of the type certification and expected to be fulfilled within one to three years following that.
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 uncertainties and situations related to the EH216-S certification process, epidemics, political and economic landscape, etc.
This press release was prepared and distributed by EHang.
