• Total Revenue: RMB128.1 million, a 347.8% year-over-year increase and a 25.6% increase from the prior quarter.
• EH216 Series Deliveries: 63 units delivered in Q3 2024, compared to 13 units in Q3 2023 and 49 units in Q2 2024.
• Gross Margin: 61.2%, compared to 64.6% in Q3 2023 and 62.4% in Q2 2024.
• Adjusted Operating Expenses: RMB86.9 million, a 60.9% increase from RMB54 million in Q3 2023.
• Adjusted Operating Income: RMB9 million, compared to an adjusted operating loss of RMB34.2 million in Q3 2023.
• Adjusted Net Income: RMB15.7 million, compared to an adjusted net loss of RMB31.3 million in Q3 2023.
• Cash Balance: RMB1,077.6 million, including cash, cash equivalents, and short-term investments.
• Q4 Revenue Guidance: Expected to be RMB135 million, a year-on-year increase of 138.5%.
• Full-Year 2024 Revenue Guidance: Expected to reach RMB427 million, a year-on-year increase of 263.5%.

• Warning! GuruFocus has detected 3 Warning Signs with EH.

Release Date: November 18, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• EHang Holdings Ltd (NASDAQ:EH) achieved a record high in order deliveries and financial performance in Q3 2024, with 63 units of EH216-S delivered and quarterly revenues reaching RMB128 million.
• The company became the world's first eVTOL company to obtain three airworthiness certificates for pilotless aircraft, showcasing its capabilities for mass production and deliveries.
• EHang Holdings Ltd (NASDAQ:EH) is actively expanding its footprint in overseas markets, conducting demo flights in Brazil, Japan, and Thailand, and securing an experimental flight authorization certificate in Brazil.
• The company has formed strategic partnerships to enhance its R&D capabilities, including a collaboration with Enpower for electric motors and a significant breakthrough in solid-state battery technology with Inx.
• EHang Holdings Ltd (NASDAQ:EH) recorded a 347.8% year-over-year increase in total revenues for Q3 2024, exceeding revenue guidance by 4% and maintaining positive operating cash flow for the fourth consecutive quarter.

Negative Points

• The gross margin for Q3 2024 decreased slightly to 61.2% from 64.6% in Q3 2023, attributed to selling based on last year's contract prices.
• The OC (Operator Certificate) approval process is complex and involves setting up new standards, which may delay the issuance of the first OC beyond the expected timeline.
• Solid-state battery technology is still in the small batch testing phase, with costs currently twice that of existing batteries, posing challenges for mass production and commercialization.
• The technical upgrades to the Yunfu factory in Q4 may cause minimal disruption to production and delivery, although efforts are being made to mitigate the impact.
• Despite strong demand, the current production capacity is limited to the sole production facility in Yunfu, necessitating the construction of new factories to meet growing demand.

Q & A Highlights

Q: Could management share more details on the solid-state battery development with Inx, and when do we expect to mass-produce it? A: Zhao Wang, Chief Operating Officer, explained that the joint battery development with Inx is progressing well, with significant technological breakthroughs. The solid-state battery has increased the EH216-S's flight endurance to 48 minutes, with plans to extend it to 60 minutes next year. Currently, these batteries are in small batch testing, and mass production is expected by the end of 2025.

Q: Can we expect EHang to receive the Operator Certificate (OC) by the end of this year? A: Huazhi Hu, CEO, stated that the OC application process is progressing well, with most of the review work completed. The company is awaiting further feedback from the Civil Aviation Administration of China and aims to meet safety operational requirements soon. If all goes well, the first OC is expected to be issued within this year.

Q: Regarding production, will the additional 1,000 units per year capacity include third-party manufacturers, or is it mainly from the Yunfu factory? A: Huazhi Hu, CEO, mentioned that technical upgrades will begin at the Yunfu factory in Q4, and new factories in Guangzhou, Hefei, and Guangxi are planned. These may involve joint ventures to leverage partners' experience for better production and delivery.

Q: What is the company's strategy for cost reduction and maintaining gross margins? A: Huazhi Hu, CEO, noted that while repeat orders based on last year's contract prices slightly affected gross margins, they remain over 60%. As production scales up, cost reductions are expected due to economies of scale, balancing potential cost increases from performance enhancements.

Q: Could you provide more insights about the progress of VTC certification in overseas markets? A: Huazhi Hu, CEO, explained that EHang is advancing overseas certification through bilateral airworthiness channels and pilot programs. In Brazil, the EH216-S received an experimental flight permit, and in Thailand, a sandbox pilot model is being explored to begin commercial operations next year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.