EHang Holdings Ltd (EH) Q2 2026 Earnings Call Transcript

Good day, ladies and gentlemen. Thank you for standing by and welcome to the E-Hung Second Quarter 2026 Earnings Conference Call. Please note that management's prepared remarks and the subsequent Q&A session will be primarily conducted in Chinese, and the corresponding simultaneous or consecutive interpretation can be accessed on the English line. As a reminder, all translations are for convenience purposes only. In case of any discrepancy, the management statement in the original language will prevail. To listen to the original marks by management, please join the Chinese line. Additionally, both the Chinese and English lines are open for questions, and today's call is being recorded. Now I will turn the call over to Angie Ehung, Senior Director of Investor Relations. Ms. Ann, please proceed.

Hello, everyone.

Thank you all for joining us on today's conference call to discuss the company's financial results for the second quarter of 2026. The earnings release is available on the company's IR website. Please note the conference call is being recorded, and the audio replay will be posted on the company's IR website. On the call today, we have Mr. Wu Huazhi, our founder, chairman, CEO, Mr. Feng Shui, CTO, Mr. Wang Jia, COO, and Conor Yang, CFO. before we continue please note that today's discussion may contain forward-looking statements made pursuant to the safe harbor provisions of the u.s private securities litigation reform act of 1995. forward-looking statements involving henry risks and uncertainties as such the company's actual results may be materially different from the expectations expressed today further information regarding these and other risks and uncertainties is included in the company's public filings with SEC. The company does not assume any obligation to update any forward-looking statements except as required by law. Also, please note that all numbers presented in RMB are for the second quarter of 2026, unless stated otherwise. With that, I'll turn the call to our CEO, Mr. Weijer. Please go ahead. Good day, everyone. Thank you for joining our Q2 earnings call since q2 ehan has entered a vital strategic transition moving beyond the certification toward operational readiness scenario validation capability development and a global expansion certification is just the entry ticket to commercial operations what really determines whether company can sustain flights and scale commercial operations is not just about having an aircraft or certificate it's about having an end-to-end operational capability replicable solutions a solid product pipeline and ability to deliver standardized solutions to global markets we have been investing in these areas and have made meaningful progress of course all of these rely on a sound regulatory environment that's the foundation that enables qualified capable companies to grow in late june a serious accident involving a piloted lighter sport aircraft in China has led regulators to adopt a more cautious approach to safety oversight. While unrelated to Yehan's pilot list of videos, this has affected our human care and commercial operations approval process in Hefei, and the timeline remains uncertain. To be clear, this is a temporary industry-wide timing issue. It reflects no change in the matter for Yehan's products, nor does it indicate any issue with our technology or safety record. Recent accidents highlight that safety, regulation, and traceability are baselines for low-altitude commercialization. E-HON operates with a pilotless aircraft, pre-set of fixed routes, intelligent fleet dispersion, centralized monitoring. Our goal is to make urban air mobility safer, more transparent, and easier to regulate. Pilotless passenger-carrying aviation fundamentally changes in how we travel. We fully understand the regulator's caution, and we respect that. It is a responsible commitment to the public safety. However, technology innovation and regulation must evolve together. More than a century ago, when automobiles first appeared, people had similar concerns about this new form of transportation. The UK passed the Red Flag Act, which required a person to walk in front of a motor vehicle carrying a red flag to warn pedestrians and limiting vehicle speed. The law was essentially old ruse overregulating new technology. History shows that safety validation, operational rules, and regulatory frameworks for disruptive transportation technologies all take time to mature. History shows technology and regulation eventually align. New forms of transport don't mature overnight. E-HONDRO isn't to sit and wait, but to proactively provide regulators with the real safety data, proven operations, and a reliable technology. The EH216S and its operating system have obtained all key certificates under China's Civil Aviation Regulatory Framework, TCPC, Air Weatherness Certificate, and A Air Operator Certificate. Our entry on the system in Guangzhou and Hawaii are fully operational. Within our internal trial operations, both of us have been operating continuously and safely for around 1.5 years, with a 4.94 out of 5 passenger satisfaction score. The EH2160 series have accumulated nearly 100,000 safety flights. With the demand of product certification safety records in place, we only wait regulatory approval for public ticket sales. Despite this critical transition point, we are confident that commercialization window will eventually open. Amidst uncertainty, Econ isn't sitting still. We're tackling challenges head on and finding new opportunities. Since Q2, we've been pushing hard on three things. First, expanding globally on modern fronts, strengthening domestic readiness while accelerating overseas deployment. In China, we continue to strengthen our end-to-end operations to develop centralized, replicable operating models and solutions. We have completed preparations across full operating cycles, including personal training, maintenance, insurance services, aerospace coordination, and emergency response in Guangzhou and Hefei, accumulating practical operating experience. We initiated point-to-point trial operations to build the experience in advance. Once the regulatory window opens, we will rapidly deploy and help customers operate to standard. Overseas, our footprint extended to 23 countries, adding Mexico and Switzerland since Q2. Thailand is running validating flights via sandbox, and the Civil Aviation Authority of Thailand has established a clear path forward. We're targeting a commercial approval in 2026. We were also selected for Hong Kong's Low-Altitude Economy Regulatory Sandbox X Trial Project with the flight validation underway in a public coming soon. Furthermore, we advanced our global fast-track program. Many countries want to bring in pilot-sea vetoes but lack the regulatory framework on how to build the complete path from safety validation to operational standards to commercial deployment. Drawing on a decade experience, as well as our engagement with the civil aviation authorities in multiple countries, EHON is turning this experience into a standardized market entry framework. This is the basis of our global fast track program. It's not simply about selling an aircraft. EHON is providing a standardized methodology from validation to operational preparation to commercial deployment, helping local regulators and partners move more efficiently. Sri Lanka has become the first country to join our fast track program, and we're also engaging with a multiple other countries regarding framework. This shifts our global strategy from merely selling products to exporting experience, standards, and capabilities. Second, revenue diversification. Keeping passenger transportation as our strategic focus while developing non-passenger carrying business and a broader product portfolio passenger mobility remains our strategic focus while domestic passenger commercialization is still pending regulatory approval we're actively developing logistics firefighting and aerial beauty immediate to build additional revenue streams we're developing and validating logistics and firefighting aircraft based on our passenger grade safety technology these products address real needs such as forest firefighting portal logistics and emergency response. They are moving through testing certification and customer validation with the potential for faster market deployment. Alongside studied progress on the EH216 platform and the VT35 certification and flight test, EHON is building a multi-scenario product matrix rather than relying on a single aircraft. Meanwhile, aerial media revenue surged over 270% a year-over-year in Q2, and now expanding to Europe, Japan, Thailand, and other overseas countries. We're expanding one-off event performances to regular on-site shows for sustainable revenue and replicable business models. Third, improving cost efficiency and focusing on resources on long-term competitiveness. Since Q2, we streamlined the organization, refreshing talent structure, cutting non-essential comebacks, improving efficiency. The outcomes will be visible in the second half. We are focusing resources on things that matter most, core product development, certification capability, operating system, overseas commercialization, and business that can generate revenue, deliveries, and cash flow. Over the past decade, EHANG's core strength has been getting aircraft flying and operations is running, now we're turning that into a standardized, scalable capabilities. Customers value our ability to guide them from zero to commercial operations, not just the aircraft itself. We are validating our developed capabilities in China and scaling them overseas to tracks, reinforcing each other. The demand is real and the path is proofing out. Now we're focused on execution, converting operational capability into orders, deliveries, and cash. Finally, IHON is building a long-term business. We are breaking technology barriers and help shape industry rules. While navigating evolving regulatory frameworks requires careful management, our long-term vision remains unchanged. The end game for low-altitude mobility remains pilotless flight, but regulation and ecosystems take time to mature. Short-term friction and won't alter our direction. When the window opens, IHON will be the first one through with the credentials, capabilities, and readiness. And the moat we're building through standardized operations will only get deeper. The strategic direction of the low-altitude economy will not be disrupted by short-term volatility. For 12 years, IHON has focused on making safe life accessible. We will maintain a pioneers display and execute what needs to be done. Thank you. I would like to invite our CTO Peng Shuai to introduce our latest progress in technology and R&D. Thank you, Mr. Hu and all of everyone. In Q2, our R&D focuses on three aspects. First, we continue to upgrade existing products and invalidate operations for current customers and scenarios. Second, accelerated R&D for new products and new applications. Third, deepened core underlying system capabilities. These three aspects together build a more completed technology foundation for skilled commercial operations. First, upgrading existing products and an operational validation. This quarter, we completed a series of upgrades and validations for EH216S route operations, we established our first point-to-point test route at our Guangzhou headquarters, continuously accumulating trial data. This marks a meaningful step, moving EH216S operations from a single-point takeoff and landing toward regular route-based operations. Our passenger experience, we completed several key updates. We validated the operational capability of our new battery cooling vehicle under test conditions it increases daily disorders per aircraft from about 6 to 12 to 15 a minimum boost for daily capacity with the same fleet infrastructure each aircraft can handle significantly more flights per day which matters a lot for operational efficiency, and unit economics. Additionally, our new independent air conditioning system rapidly reduced cabin temperature by 10 to 15 degrees Celsius, enhancing passenger comfort. Second, new product development and scenario expansion. For the VT35, we completed a truck wind tunneling testing and lightening direct effects and LIE protection testing for key components alongside a multiple flight tests in China to support aerodynamic calibration and airworthiness validation. Meanwhile, we're extending our technology into new applications. For forest firefighting, we're testing Airbus delivery system with our existing product to enable early stage crown fire response. Based on the certified EH216S platform, we're also developing a cargo version. Adapting this mature platform is expected to shorten development and certification timelines. Our prior work on the EH216L will also be integrated into this new configuration, ensuring logistic capability continuity. Third, deepening core systems. On the operational system front, we're bidding differentiated product capabilities for two key customer types. First, low altitude operations control system for operators and aircraft consumers. Second, city level low altitude integrated supervision platform for government agencies. The latter covers aircraft to use applications, plan filing and review, airspace designation, real-time monitoring, information publication. This quarter, we focused on two key areas. First, improving our platform's situational awareness, tiered supervision, and emergency response efficiency. Second, deepening system integration with the Huffey Government Flight Service Center. We've developed a set of framework documents covering aerospace designation, operational standards, and service process, helping the Huffey Flight Service Center build a city-level law to do the supervision system. Think of it as a software plus hardware foundation for future larger scale, high density urban operations. We'll continue holding our product and system development to aviation grade standards, translating technological breakthrough into a tested, validated and deliverable commercial capability to sustain E-HAN's long-term leadership in global altitude of mobility market. Next, I'll turn it over to our CEO for sales and operational updates. Thank you. Thank you, Mr. Phelan, and hello, everyone. I'll discuss our Q2 operational progress and how we are approaching lean operations, product diversification, operations markets, and safety systems. In Q2, we delivered 35 units of EH26S and one VT35. On Aeromedia's site, we completed 22 Aeromedia shows and delivered 520 units of GD4 drones. Beyond these, the numbers ought to be transparent about our current environment. This year, China's low-altitude economy entered a more cautious phase across safety oversight, airworthiness management, and operational regulation. This has been reinforced by the new airworthiness frameworks and civil aviation laws. Recent industry safety incidents have heightened regulation and public attention on low-attitude flight safety, leading to an intensified safety inspections of general aviation and low-attitude economy operators, aircraft, and operational projects. As a result, a slowdown approach delivers acceptance and commercial operations for some projects, and a passenger carrying commercial operations for low-attitude aircraft has also been affected. So we are being more cautious about our operational expectations and resource allocations. Our CFO will address our adjusted full-year revenue guidance shortly. However, we firmly believe that in passenger aviation, safety and compliance must always precede commercial speed. To be clear, only the local timeline for commercialization has shifted, not long-term market demand or eHOM's competitiveness. Going forward, we'll keep the market informed with a clear operational progress updates. Mr. Hu talked about our three strategic priorities, global expansion, revenue diversification, and cost efficiency. On the operational level, our approach covers the following areas. First, improving internal efficiency through lean management and AI integration. During the period of external adjustment, we haven't been waiting passively. We have been proactively streamlining organization and focusing our resources. On R&D, we're concentrating our core talent, improving technology reuse across platforms. On the digital side, we're integrating AI tools into R&D, knowledge management, cross-functional workflow to shorten development cycles and boost productivity. Our rule is simple. Cost reduction will never compromise safety, product quality, or quarantine. We won't sacrifice long-term competitiveness for short-term financials, but we're strictly scrutinizing expenses to strengthen cash reserves and ensure sustainable operations. Strengthening our operational foundation for passenger commercialization, our Guangzhou and HOFA sites continue to refine flight operations, ground support, emergency response, and regulatory data integration. Through internal trial operations, we're accumulating real operation data to ensure we're ready to start a safe and stable commercial operations as soon as regulatory approved. We're also building pilot-to-point capabilities in advance, including route planning, vertical coordination, ground support, motor aircraft to dispatch, contingency handling and passenger services, these are full operational capabilities for future low-altitude transport. Take the Air High Lake project. Ground trip across the lake takes an hour. Our plan will reduce the time to about 10 minutes. The Hainan Linggao Cross Sea Low-Altitude Corridor project has also broken ground. This is the first project under our strategic partnership with the China State Construction Engineering Corporation, Six Viewer. The key flight, first key flight station, the Wing Hobbs South Sea is currently under construction. Together, we're building a close loop out to the economy that combines infrastructure and operations. For local governments and partners, E-Hong delivers more than just an EH216S. We'll provide a comprehensive solution, including aircraft, command and control systems, scenario planning, route design, road report infrastructure planning, personal training, maintenance, regulatory coordination, and safety assurance. Third, we're leveraging the mature safety architecture of the EH-216S to accelerate the non-passenger products and its specialized applications. Passenger carrying operations are our core direction, but they're not our only growth plan, our path. We're leveraging the EH-216's mature aviation-grade safety architecture, including its flight control, powertrain, redundancy design, and command and control for logistics, firefighting, air remitting products, building a diversified portfolio, less reliant on passenger commercial approval. 8WheelMedia remains a key revenue driver. In Q2, completed 22 shows and delivered 520 units of GT4 joints. The business is evolving from a one-time event to regular on-site services. Projects like Chongqing Media Group and Xinyin Shanxi are helping us to build experience in continuous operations, content production, fleet management, and on-site support. Regular commercial shares improve equipment utilization customer thickness and revenue predictability overseas we also deployed gd4 drones across japan thailand and europe accelerating international international expansion on firefighting and logistics we're working with the customers on product customization advancing t-30 firefighting drone prototypes and logistic aircraft and trial flagship scenarios in forest firefighting and port logistics so we're accelerating center down overseas commercial center backs deployment to get a replicable international pathway overseas markets are key part of the onset long-term strategy and an important platform for validating adaptability regulatory coordination and business models in Hong Kong we're selected as an early participant in the regulatory center box extra project we've chosen sub-report as our first sandbox site test fly started at this ones with a public demo coming soon an additional flight of validation and is now deployment will follow under regulatory oversight in thailand we have established efficient communication coordination with the caet are targeting commercial operations certificate in 2026 and this work will proceed according to cd review process with the final time last object to the regulator's schedule on this center box experience we launched at the global fast track program a four-stage framework regulatory alignment center box build out validation flights and commercial launch designed to compress the timeline from market entry to commercial operations. Sri Lanka is the first country to formally adopt the program. Over the coming months, it will accept the project deployment in Sri Lanka according to the FastTrack roadmap. FastTrack does not bypass local regulatory processes or lower safety or awareness standards. Instead, it reduces technical documentation, safety data, and our accumulated operational experience to reduce duplication and improve the efficiency of a project variation, regulatory engagement and local operational setup. Beyond Sri Lanka, we are also exploring this program in Central Asia. Through the program, we aim to transform individual overseas projects into a standardized, replicable capability, providing a clear, compliant, and efficient implementation pathway for more countries and regions to introduce pilotless videos. Fifth, we are building operational standards and a safety foundation to convert our first mover advantage into a sustainable competitive mode. Over the years, we have accumulated a nearly 100,000 safe flight records. And these flights spend a diverse geographies, weather conditions, terrain application scenarios, and operating environments, providing a critical data foundation for continuous improvement in aircraft performance, operational procedures, and command and control systems. We're working with the airworthiness and operational experts to advance air operator certification standards. First, the goal is to turn our accumulated flight experience and internal operational capabilities into standardized, verifiable, reputable operational benchmarks and industry can use. At the same time, we're building comprehensive after sales support network covering delivery, personal training, spare parts, maintenance, data support, and an emergency response. We need to have the organization systems and service capability in place to support scaled operations before commercial scale up actually begins. While this may not immediately reflect in short-term revenue, establishing these scalable service capabilities now ensures we can rapidly capture market demand once the commercial window opens. We'll continue translating investments into efficiency, building quality products, and closing the loop on operations by enforcing lean management, diversifying revenue, and establishing robust safety standards. we will build a sustainable competitive advantage and earn investor trust with verifiable results. Thank you. Next, I'll pass the floor to our CFO for financial updates. Hello, everyone. I am Connor, CFO of IHAN. Before I go into details, please note that all numbers presented are in RMB unless otherwise stated. A detailed analysis is available in our earnings press release on the IRR website. Next, let me walk you through the key financial data for Q2. In Q2, revenues were 77.9 million down from 113.3 million in Q2 2025, but up significantly by 203 from 25.7 million in Q1, 2026. The sequential increase was mainly determined by higher sales volume of the EH216 series and with additional contribution from VT35 aircraft, the year-over-year decline was due to lower sales volume of the EH216 series compared to the same period last year. Gross margin in Q2 was a 61.2% compared with a 61.5% in Q2 2025 and 62.5 in Q1 2026. Overall, cross margin remains stable. Our stable margin profile reflects the competitiveness of our products as well as our continuous strength in manufacturing efficiency and supply chain management despite changes in quarterly revenue and product mix. Turning to operating expenses, adjusted operating expenses defined as the total operating expenses excluding share-based compensation were 112.7 million in Q2, representing a 16.9% increase year-over-year and a 11.5% increase quarter-over-quarter. The increase in operating expenses primarily reflects the combined effect of our face-to-strategic business investments and the transition in costs associated with organizational optimization during a period. We continue to make targeted investments in commercialization, expansion, global expansion, and R&D to reinforce our long-term competitiveness. It's worth noting that Q2 expenses haven't yet fully reflected the outcomes of our organizational optimization and Quebec's control measures, as these initiatives were mostly rolled out during the quarter. We expect the outcomes to gradually show in the coming quarters. Going forward, while protecting our core R&D airworthiness, operating, and global expansion capabilities will continue to improve resource efficiency and reduce non-essential spending and maintain strict cash discipline. As we continue to invest in our future growth, our Q2 profitability was affected by both revenue scale and operating expenses. Adjusted operating loss in Q2 was 62 million compared to 77.1 million in Q1 2026. Adjusted net loss was 58.5 million compared to 75.6 million in Q1 on 2026. As of June 30, 2026, our combined cash and cash equivalents, short-term and treasury investments totaled 929.4 million RMB. This healthy cash position provides strong support for our continued commercialization efforts, corporate life development, global expansion, and day-to-day operations. Turning to our full-year guidance, Given that the regulatory policies and supporting mechanisms for low-altitude of human care and commercial operations are still evolving, there remains uncertainty around the timing of domestic commercial operations. Accordingly, the company has decided to withdraw its previously issued a 2026 annual revenue guidance of 600 million RMB. The company will not provide a replacement of full-year revenue guidance at this time As the regulatory environment and business visibility become clear, we'll provide an updated outlook to the market when appropriate. In the meantime, the company will continue to provide a transparent and timely updates on key operating milestones. This includes preparation for an approval process of domestic commercial operations process in international markets, product development orders and deliveries for non-passenger-carrying in business, such as logistics, firefighting and aerial media, as well as continuing improvements in operating efficiency in our touch position. Going forward, we'll stay focused on driving commercialization and core tech development. We'll continue to improve operating efficiency and resource allocation. We'll believe these efforts will strengthen our foundation for long-term growth and create sustainable value for our shareholders. Thank you all.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Tim Hizyao with Morgan Stanley. Please go ahead.

Hi, this is Tim from Morgan Stanley. Thanks for taking my questions. I have two questions about commercialization. The first question, as we just discussed, I think the company target to get a commercial operation permit in Thailand this year, so I just want to get more details, when do you think that would happen, like in third quarter, in fourth quarter, and if it happens, how How many units of 216 do you think we're going to ship this year based on the contract? So that's my first question. My second question is about the commercialization in China. For those, I think the management just mentioned we are not going to provide update guidance and attributable to the uncertainty to the incidents that took place in June. But as we remember, the incident was caused by human factors, and if there's any potential barrier, as we discussed with the management, I think previously, management believed that would favor EHUN, because EHUN's Jira products are designed to follow the schedule route and would fly autonomously and can be under system control. So just wondering what really changed management's view on the impact and to the OC's schedule, just what happened over the past few months. Yeah, those are my two questions.

Thank you. 如果我们在泰国的商业化成功落地,那这将根据现有的合同带来多少EH216的销售呢? 与其今年能有多少出货量? 那我的第二个问题同样是关于中国国内的商业化进程。 So, that's what we gave us to the future of the guidance. We mentioned that since the 6th of this case, the case caused some of the not-确定性. This case is clearly caused by people. But in one company, we have no driving system has a complete path of traffic, a complete path of traffic, a system control. 其实对我们来说可能相对来说影响会比较小一点 那我想评估一下管理层是基于哪一些因素评估对于OC取证的真正落地会带来实际的影响的背后的原因是什么 我来回答第一题 我们在泰国同步部署载人跟非载人业务

In the載人運營方面, the company has now been able to confirm the plane of the plane. We can now take a test of the plane. This means that our EVITOR is in the state of the plane. It can be used for the plane.

Let me take your first question. We are deploying both passenger carrying and non-passenger carrying operations in Thailand in parallel. On the passenger carrying side, We have further clarified the approval pathway for flight qualifications with the Taiwan Civilization Authority. And we expected to obtain an experimental flight permit in Q3. And we also expected to secure a formal commercial operation certificate by the end of the year. By then, we'll start. So by that milestone, it represents that our E-Vito will be officially registered within the Thailand Civil Aviation Authority, though we may not be able to directly sell tickets to the public, but that is indeed a milestone that we are hoping to achieve within the year.

Thank you very much.

So we are striving to secure the operational certificate in Thailand by the end of the year. And we are working with the local civilization regulator to plan 10 routes that will cover Bangkok, Phuket, Sumay Island, and Bhatia. Official deliveries of our EH216 models will start sometime next year. According to the plans, each location will require at least five units of EH216S. So we are going to see a significant increase in our video deliveries in next year. On the non-passenger side, the company has shipped over 1,000 GT4 formation drones by sea to the Thai market, and we plan to launch regular drone light show operations in Bangkok and Patia.

Let's go to the second question.

The incident, regarding the impact of the June flight incident, the incident you mentioned, a manned light sport aircraft incident accident in China at the end of June was indeed primarily caused by human factors. The subsequent regulatory tightening has been noticeable, particularly around manned aircraft and their pilots. We continue to hold our original view.

Our unmanned, pre-programmed, fixed route, fleet-oriented, coordinated operating model has inherent safety advantage, and stricter safety regulation is not positive for us in the long run. 那么关于OC这一块 这次事故 从监管部门的角度来看 监管的实际反应超出了我们最初的一个预期 这起事故促使监管部门对整个地供行业采取了更加审慎的态度 尽管与我们无人驾驶里面没有直接的关联 但是受到行业整体审慎监管导刑的影响 国内载人商业化命运的审批进度有所言后

regarding the change in our outlook on the OC operator certificate timeline however the regulatory response has been far more far reaching than we initially anticipated. This incident has prompted the regulators to adopt a more cautious stance toward the entire low-altitude industry. Although it is not directly related to our unmanned evitos, the overall cautious regulatory environment has indeed slowed the approval timeline for domestic carrying commercial operations. Specifically, the commercial operation approval process for the Hofei project has been delayed, and the timing of regulatory clearance remains uncertain. So our assessment is that the actual regulatory tightening at the enforcement level, and this is not a rejection of our technology pathway, but rather a periodic temporary impact on the approval cadence across the industry we respect and understand the regulators strong commitment to public safety and they hope at the same time we hope that the reg you know the regulators would provide a reasonable policies while ensuring safety and uh for us we're going to focus on executing what can be done from our side in the meantime we are proactively pursuing our global or overseas initiatives so that we can move the industry forward just to just a quick add we are working with the local civil aviation authorities to clarify validation pathways and shorten the time from validation to market access through our overseas fast-track program.

Your next question comes from Wei Wu with Jeffries. Please go ahead.

Hi, thanks. I'm from Jeffries. Two questions, please. The first one is given the full-year guidance on the revenue has been withdrawn, and I understand it could be difficult to quantify, but do you mind give us a little bit color on the kind of like the second half run rates versus the 2Q kind of numbers? It would be great if you kind of split it out between Evito and the non-passenger segments. And my second question will be coming towards the accounting adjustment that we've mentioned in the 1Q call. So, do you might give us some sense on the numbers being delivered in this second queue, and any more to be delivered down the line?

Can you repeat the second question? I didn't quite... Okay, got it. I have two questions. My first question is we need to take care of the entire year. From this point I can understand this is a bit difficult for me. But if I can take care of the management in terms of the second year of the run rate, to do a comparison is it going to be higher or is it going to be higher? If I can, if I can, 然后我这边的第二个问题是关于我们一季度提到的这个会计调整,那我们想问一下这个第二季度实际交付了多少,然后还有多少带交付,这个调整能不能帮忙具体再讲一讲。 I will be back to the first question.

It is true that today's situation has no longer been confirmed. So the company decided to update the 2020 year's total revenue. The company has not yet to be in the full-time revenue of the non-profit sector. But from the already experienced the sales report, the second year's travel rate is 92%, the full-time revenue rate is 8%. The full-time revenue rate is the full-time revenue rate.

Um, given the uncertainties, the company has decided not to update its full year 2026 revenue guidance at this time, and nor do we, nor will we provide any specific quantitative expectations on the revenue mix between passenger carrying and non-passenger business. However, based on the actual operating data that has already been achieved, air mobility revenue accounted for around 92% of our Q2 revenue, while non-passenger business, primarily TD4 formation drone performance, accounted for approximately 8%. Non-passenger revenue expected to to trend upward, both in percentage as a share of the total revenue, as well as the absolute amount in the second half of the year, driven mainly by increased deliveries of formation drones, as well as a small number of other model deliveries, such as firefighting series. Passenger business revenue will continue to dominate, largely depending on the pace of commercial operation launches on passenger routes in Guangzhou and Hefei, as well as the overseas market expansion. The company will continue to advance both passenger commercial operations and non-passenger use case expansion in parallel, with a specific revenue mix evolving dynamically as each business line progresses.

So, the second question I'll answer.

In the 2016 year, the company confirmed In the second quarter, the company recognized revenue for a portion of the EH216 series aircraft that had been previously delivered. And going forward, we will recognize revenue as the contracts meet the certain criteria according to applicable accounting policies and that the company will disclose them to the market in a timely fashion.

Thank you.

Thank you. Your next question comes from Laura Lee with Deutsche Bank. Please go ahead.

Hey, thank you for taking my question. So two follow-ups on the topics that you mentioned before. So firstly, on the regulation side, I think you mentioned a certain level of cautiousness, but just trying to see, like, for this current regulatory sentiment, what kind of safety evidence or mild zones will likely be needed for this approval page to normalize? And my second question around the diversification about your revenue stream, so could you update us on the progress across the non-passenger businesses, like the logistics or firefighting trains, like which area looks more promising in the near term, or any contract program you're pursuing? Yeah, that's my two questions.

There are two questions. if I的非到任业务的进展

短期内哪个领域 前景对可观 该业务 何时能够开始创造可观的营收 以上两个问题 谢谢

这两个问题我来回答 第一个有关监管态度 当前的监管态度 首先是充分保证 安全的审查与抵准 那么这一块 但绝对不是停止 因为停止

比如说物流 消防等业务

Now, let me take your questions. First, the review and approvals are conducted with a strong emphasis on ensuring safety. So there are still ongoing reviews. IT DOESN'T MEAN THAT THE REVIEW AND APPROVALS HAVE COMPLETELY COME TO A GROUND HALT BECAUSE YOU KNOW THE LOW ALTITUDE ECONOMY REPRESENT A WORLDWIDE TREND AND WITH REGARD TO OPERATIONS we are still advancing our operation capabilities. And the operational model will still need to be reviewed and approved. And for approval to become normalized, our operational model needs to be passed regulatory review and enter regulatory operations.

So if we're going to do a system of a system, we need to be able to move into a system of a system. We need to move into a system of a system and become a field of a system. We need to be able to support other people's system. So, at the same time, we've already helped the customers to utilize the system of the system.

I think to see the full scale back to normal review and approval condition, we need to see that the trial operations that we have in Hervé are moving into routine operations. And then we will establish this routine operation, this site, as a role model for other operators, even an industry benchmark. So currently, we are helping our customers putting together related documents and et cetera. As regulatory clearance clears its way, and the industry goes back to its normal cadence of review and approval, and then our customers will be able to expedite their approval process and move into routine operations.

There is real demand.

Well, there is clear and genuine demand across all of these areas, and E-HON has a deep tech reserve, and we are reusing some of our technologies from the human carrying products onto the non-human carrying products. And to give you some examples, there are some short-range emergency logistics and long-range logistics, and etc. And those are some of the critical use cases where we can use our products. And looking into the second half of the year, we're also going to ship firefighting products. And there's quite a very, quite promising prospects for our, for the orders of these products. And this is exactly where our strategy is. This year, we're going to continue to focus on diversifying use cases, particularly in terms of the revenue mix. As you already see, non-passenger business has already reached 80% of the total revenue, and we expected this to further expand and the share to continue to grow as our business progresses.

Thank you all. Given the time is limited, let me turn the call back to Ms. Ann for closing remarks. and we will be able to connect with the company. In the future, we will also be able to connect with the investors'会议 with the people who are in a further way. Thank you very much for your attention. We hope that next time we will see you again.

Thank you.

Thank you once again for joining us today. If you have any further questions, you can reach out to us through the email on our IR website. Additionally, we are going to host some offline sessions where we are going to have more in-depth communications with you. And we look forward to seeing you in our next earnings call. Thank you once again. Bye.