EHang Holdings Limited (NASDAQ:EH) Q2 2020 Earnings Conference Call - Final Transcript
Aug 25, 2020 • 08:00 am ET
Richard Jian Liu
We maintained a high gross margin of 57.6%, a slight 0.9 percentage point lower than that of Q2 last year. The slight margin fluctuation is mainly due to change in revenue mix.
Adjusted operating expenses, excluding share-based compensation, increased by 41.9% to RMB35.4 million. As a percentage of total revenues, it was 99.2% as compared to 113.8% in Q2 2019. The increases were mainly due to higher R&D expenses related to the continuously strengthened product development efforts and additional G&A expenses related to public company operations and provisions in light of COVID-19 evolvement.
As revenue continue to grow, there is operating leverage that supports our path towards operating profitability. Our adjusted operating loss in Q2 slightly decreased by 6% to RMB11.1 million, and adjusted operating margin improved by 22.8 percentage points from negative 54% to negative 31.2%. The comparison of adjusted net loss is in line with that of adjusted operating loss.
Looking at our balance sheet and cash flow, we ended the quarter with roughly RMB258 million in cash, cash equivalent and short-term investments. Overall, the financial results in Q2 was solid, with significant revenue growth and stable high gross margin despite the COVID-19 pandemic.
Now let's turn to the outlook. We maintain our forecast of at least 200% growth in annual revenues in 2020 based on the current momentums in economic recovery and the expectation of no further major interruptions impacted by the COVID-19 pandemic. The Company is confident in its long-term growth outlook, given the growing number of practical uses for AAVs in the global UAM market, especially in China.
With that, we'll conclude our prepared remarks for today. Let's now open the call for questions. Operator, please go ahead.