EHang Reports Third Quarter 2021 Unaudited Financial Results

– Continued with Over 60% High Gross Margin
– EHang 216 Type Certification Progresses Well
– About 2,800 Operational Trial Flights Conducted under 100 Air Mobility Routes Initiative
– Expanded Partnerships Internationally in Building UAM Ecosystem

GUANGZHOU, China, Dec. 02, 2021 (GLOBE NEWSWIRE) — 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 third quarter ended September 30, 2021.

Financial and Operational Highlights for the Third Quarter 2021

Total revenues were RMB13.0 million (US$2.0 million), representing an increase of 6.6% from RMB12.2 million in the second quarter of 2021, as the Company has been strategically transitioning into an operation platform-oriented model.

Gross margin was 61.8%, representing a continued high gross margin level and a decrease of 6.2 percentage points from the second quarter of 2021 mainly due to the changes in revenue mix.

Operating loss was RMB73.3 million (US$11.4 million), compared with RMB74.9 million in the second quarter of 2021.

Adjusted operating loss1 (non-GAAP) was RMB48.9 million (US$7.6 million), compared with RMB49.4 million in the second quarter of 2021.

Net loss was RMB72.3 million (US$11.2 million), compared with RMB74.6 million in the second quarter of 2021.

Adjusted net loss2 (non-GAAP) was RMB47.8 million (US$7.4 million), compared with RMB49.1 million in the second quarter of 2021.
Cash, cash equivalents, restricted cash and short-term investments balances were RMB357.0 million (US$55.4 million) as of September 30, 2021, compared to RMB189.4 million as of December 31, 2020.

Sales and deliveries of the EHang 216 AAVs, were 8 units, compared with 3 units in the second quarter of 2021.

Under the 100 Air Mobility Routes Initiative, about 2,800 operational trial flights of the EHang 216 have been conducted at 7 selected operation spots to date.

The Company believes quarter-on-quarter comparisons, instead of year-over-year comparisons, can present more meaningful comparable information about its financial and operational results for the third quarter ended September 30, 2021, as the Company has been strategically transitioning from a product sales centric model before 2021 into a more operation platform-oriented model beginning in 2021.

Certification Process Updates for the Third Quarter 2021

EHang’s certification work continued to make progress in the third quarter of 2021, as more expert meetings were held between the Civil Aviation Administration of China (“CAAC”) and EHang. EHang’s certification team worked diligently with the CAAC experts towards formulating relevant standards for the EHang 216 type certification. Specifically, EHang made critical contributions of its technological expertise and know-how related to autonomous aerial vehicles, command-and-control system, etc. Currently, the CAAC has basically completed the formulation of airworthiness certification standards for the unmanned aircraft systems.

Meanwhile, EHang has been working on the means of compliance for the EHang 216 and the required tests have been well planned and in the process of being conducted including the FCU environmental test according to RTCA DO-160, the FCU & communication system switching test, the fuselage & critical parts static test, etc.

EHang has also achieved more than 20,000 autonomous trial flights of the EHang 216 AAVs across 11 countries by the end of November 2021, which is unparalleled safe record. EHang’s certification preparation efforts since 2017 and practical operational experience accumulated under various conditions will be instrumental in accelerating the verification of compliance process. Furthermore, EHang and the CAAC have reached a consensus on a guiding principle that operational trial flights can gradually be carried out while advancing the certification process.

100 Air Mobility Routes Initiative Updates for the Third Quarter 2021

Strategically positioned as an urban air mobility (“UAM”) platform operator, EHang continued to implement the 100 Air Mobility Routes Initiative in the third quarter of 2021. With this world leading operational initiative, we believe that we are way ahead of the curve in the global UAM industry in implementing the air mobility operations by utilizing cutting-edge AAV and electric vertical takeoff and landing (“eVTOL”) technologies.

Specifically, EHang has set up a specialized operating team consisting of about 50 members, which will continue to expand. Key members have previous operational experience at world-renowned or regionally leading aviation, airline, mobility or tech companies such as Airbus, Hainan Airlines, Hong Kong Airlines, Hong Kong Express, BMW, CITIC COHC and IBM.

Furthermore, EHang has been developing an air mobility operation system and mechanism covering route planning, flight operations, safety management, regulatory compliance, digital operational platform, sales and marketing, etc.

EHang, together with its partners, have established air mobility trial operations for aerial sightseeing or short-distance air mobility at selected operation spots in cities such as Guangzhou, Hezhou, Shenzhen, Zhaoqing and Sanya in China under the 100 Air Mobility Routes Initiative. Since EHang started to implement the 100 Air Mobility Routes Initiative, 7 operation spots have been developed and about 2,800 operational trial flights of the EHang 216 AAVs have been conducted to date at these operation spots under the relevant compliance framework. With abundant operational experience accumulated and safety records built, the Company expects to turn these operational trial flights into commercial ones after the approval of the EHang 216 Type Certificate is obtained.

Especially, EHang is establishing a sample regular air mobility operation model for aerial sightseeing at the vertiport of one of its partners, HELI-EASTERN, in the oceanfront Maluan Hill area (“MLH base”) in Shenzhen, China since amid November. With a daily frequency of 6 operational trial flights per EHang 216 AAV initially, EHang looks to further expand operation frequencies as market demands increase. The Company expects that over 30,000 flight seats can be provided on an annual basis at the MLH base once operations ramp up. The above-mentioned sample operation model, after being established, is expected to be replicated and implemented in other operation spots under the 100 Air Mobility Routes Initiative.

Along with the above, EHang has been developing a digital operational platform covering online booking, scheduling, payment, vehicle monitoring, route management, ATM (air traffic management) synchronizing and integration, etc. to digitize the operational processes.

Business Highlights for the Third Quarter 2021 and Recent Developments

EHang 216F Participated in Urban Fire Rescue Drills upon Completion of Technical Examination

In July, EHang completed a comprehensive 10-month technical examination on the EHang 216F, the firefighting model, and 52 different types of tests by the China National Fire-Fighting Equipment Quality Supervision Testing Center, which is under the Ministry of Emergency Management of China. Afterwards, the EHang 216F AAVs participated in multiple urban fire rescue drills organized by local emergency and/or fire departments in cities such as Guangzhou, Qingdao, Hezhou, Qingyuan in China. These have laid a solid foundation for the commercialization of the EHang 216F AAVs.

Partnership with HELI-EASTERN to Initiate UAM Operations in Shenzhen, China

As a milestone of the 100 Air Mobility Routes Initiative, in September, EHang established a partnership with Shenzhen East General Aviation (“HELI-EASTERN”), a leading general aviation carrier and helicopter service provider in the Guangdong-Hong Kong-Macao Greater Bay Area (“GBA”), China. Both parties are jointly implementing UAM operations in the designated integrated airspace for helicopters and AAVs in Shenzhen, China.

Partnership with Shenzhen Expressway to Jointly Develop Smart City Transportation Network

In October, EHang and Shenzhen Expressway, listed on Shanghai and Hong Kong stock exchanges, announced the deployment and a live demonstration of the first AAV command-and-control platform for expressway network management, emergency rescue and safe operations in Shenzhen, China. Moreover, both parties will explore the innovative integration of AAV air mobility and expressway networks for smart city transportation, as another important partnership for the 100 Air Mobility Routes Initiative in GBA.

Partnership with Globalvia to Co-Develop UAM in Iberian Peninsula and Latin America

In July, EHang entered into a partnership with Globalvia, a world leader in the management of transport infrastructure concessions, which operates 27 highways and railways projects servicing over 250 million users a year across seven countries. Both parties will promote, develop and implement UAM operations of AAVs through advancing flight tests and demonstrations, training and maintenance, regulatory certification and business development in Iberian Peninsula and Latin America regions.

EHang 216 and Falcon AAVs Trial Flights for Airport Transport and Parcel Delivery in Estonia

In September, the EHang 216 and Falcon AAVs performed Beyond Visual Line of Sight (“BVLOS”) trial flights for airport transport and parcel delivery in Estonia under the European Union’s GOF 2.0 Integrated Urban Airspace Validation project.

Cooperation with Spanish National Police in Emergency and Security Missions

In October, EHang reached a cooperation with the Spanish National Police to explore potential use cases for AAVs in emergency and security missions, such as firefighting, accessing contaminated areas with nuclear, radiological, bacteriological or chemical risks, landing in confined areas, transporting supplies, and other police services that may require agile mobility.

EHang 216 Debut Autonomous Flight Demo in Indonesia
In November, the EHang 216 completed a debut autonomous flight demonstration for aerial sightseeing in the world-famous tourism spot – Bali, Indonesia, with a Special Certificate of Airworthiness issued by the Directorate General of Civil Aviation of the Republic of Indonesia.

CEO Remarks

Mr. Huazhi Hu, EHang’s Founder, Chairman and Chief Executive Officer, commented, “We continued to achieve a high gross margin of 61.8% in the third quarter through our leading capabilities to develop and deliver reliable AAV products and solutions to our customers in the emerging UAM and eVTOL aircraft industry. In addition to providing AAV products and solutions, we have kept moving forward steadily with our UAM platform operator strategy by enhancing our certification, manufacturing and operational processes and laid a solid foundation for the execution of the 100 Air Mobility Routes Initiative. Our partnerships with like HELI-EASTERN and Shenzhen Expressway are important, not only offering us a quick access to plentiful infrastructure resources for our AAV operations, but also bringing innovative and feasible UAM applications that can be integrated to smart city transportation networks. We will continue to strengthen our industry leadership as we expect ourselves to be from the first of commercial AAV deliveries to the first of commercial AAV operations for urban air mobility in the future.”

Financial Results for the Third Quarter 2021

Revenues

Total revenues were RMB13.0 million (US$2.0 million), representing an increase of 6.6% from RMB12.2 million in the second quarter of 2021.

Costs of revenues

Costs of revenues were RMB5.0 million (US$0.8 million), compared with RMB3.9 million in the second quarter of 2021, primarily due to the change in the sales volume of AAV products and solutions.

Gross profit

Gross profit was RMB8.0 million (US$1.2 million), compared with RMB8.3 million in the second quarter of 2021.

Gross margin was 61.8%, compared with 68.0% in the second quarter of 2021. The decrease in gross margin was mainly due to changes in revenue mix as a higher margin command and control system was delivered in the second quarter of 2021.

Operating expenses

Total operating expenses were RMB86.3 million (US$13.4 million), compared with RMB85.3 million in the second quarter of 2021. Operating expense as a percentage of total revenues was 665.5%, compared with 701.6% in the second quarter of 2021.

Sales and marketing expenses were RMB10.7 million (US$1.7 million), down 0.2% from RMB10.8 million in the second quarter of 2021.

General and administrative expenses were RMB36.9 million (US$5.7 million), down 13.9% from RMB42.8 million in the second quarter of 2021. The decrease was mainly due to the one-time additional expenses related to extension of annual report filing in the second quarter of 2021 and partially offset by the prudent provisions of accounts receivable related to the COVID-19 impacts.
Research and development expenses were RMB38.7 million (US$6.0 million), up 21.8% from RMB31.8 million in the second quarter of 2021. The increase was mainly due to an increase in expenditure for developing new AAV models, including both passenger-grade and non-passenger-grade AAV models such as VT-30 and other products in pipeline and related operating systems with enhanced functionalities.

Adjusted operating expenses3 (non-GAAP)

Adjusted operating expenses were RMB61.8 million (US$9.6 million), representing an increase of 3.3% from RMB59.9 million in the second quarter of 2021. Adjusted operating expenses as a percentage of total revenues was 476.9%, compared with 492.0% in the second quarter of 2021. Adjusted sales and marketing expenses, adjusted general and administration expenses and adjusted research and development expenses were RMB6.1 million (US$0.9 million), RMB25.1 million (US$3.9 million) and RMB30.6 million (US$4.8 million) in the third quarter of 2021, respectively. The increase in adjusted operating expenses was primarily due to the reasons discussed under the heading “Operating expenses” above.

Operating loss

Operating loss was RMB73.3 million (US$11.4 million), compared with RMB74.9 million in the second quarter of 2021.

Adjusted operating loss (non-GAAP)4

Adjusted operating loss was RMB48.9 million (US$7.6 million), compared with RMB49.4 million in the second quarter of 2021.

Net loss

Net loss was RMB72.3 million (US$11.2 million), compared with RMB74.6 million in the second quarter of 2021.

Adjusted net loss (non-GAAP)5

Adjusted net loss was RMB47.8 million (US$7.4 million), compared with RMB49.1 million in the second quarter of 2021.

Adjusted net loss attributable to EHang’s ordinary shareholders was RMB47.5 million (US$7.4 million), compared with RMB48.9 million in the second quarter of 2021.

Loss per share and per ADS

Basic and diluted net loss per ordinary share were both RMB0.65 (US$0.10). Adjusted basic and diluted net loss per ordinary share6 (non-GAAP) were both RMB0.43 (US$0.07).

Basic and diluted net loss per ADS were both RMB1.30 (US$0.20). Adjusted basic and diluted net loss per ADS7 (non-GAAP) were both RMB0.86 (US$0.14).

Balance Sheets

The cash, cash equivalents, restricted cash and short-term investments balances were RMB357.0 million (US$55.4 million) as of September 30, 2021, compared to RMB189.4 million as of December 31, 2020.

Business Outlook

The Company adjusted the annual revenue forecast for 2021 to be between RMB50 million and RMB60 million mainly due to the following reasons: (1) the Company has been strategically transitioning from a product sales centric model into a more operation platform-oriented model and the ramp-up of operational revenues is subject to the certifications of the EHang 216 AAV; and (2) the potential orders of the EHang 216F are expected to take longer sales cycle due to the procurement procedures of relevant government entities which are typical customers for the product.

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 change, especially considering uncertainties and situations related to how the COVID-19 pandemic further develops.

Conference Call

EHang’s management team will host an earnings conference call at 8:00 AM on Thursday, December 2, 2021, U.S. Eastern Time (9:00 PM on December 2, 2021, Beijing/Hong Kong Time).

Please register in advance for the conference using the link provided below and dial in 10 minutes before the conference is scheduled to begin. Conference access information will be provided upon registration.

A replay of the conference call may be accessed by phone at the following numbers until December 10, 2021. To access the replay, please reference the conference ID 6108427.

Phone Number
International +61 2 8199 0299
United States +1 855 452 5696
+1 646 254 3697
Hong Kong +852 800963117
Mainland China +86 4006322162
+86 8008700205