EHang Reports Third Quarter 2022 Unaudited Financial Results

– EH216-S Type Certification in Final Phase

– Continued High Quarterly Gross Margin of 65.9%

– Partnership with Swire Group’s HAECO for Advanced Air Mobility

– Continued Flight Demonstrations in Asia and Europe

GUANGZHOU, China, Dec. 02, 2022 (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, 2022.

Financial and Operational Highlights for the Third Quarter 2022

• Total revenues were RMB8.2 million (US$1.2 million), compared with RMB14.6 million in the second quarter of 2022.

• Gross margin was 65.9%, representing a continued high gross margin level with a slight decrease of 1.2 percentage points from 67.1% in the second quarter of 2022.

• Operating loss was RMB73.7 million (US$10.4 million), compared with RMB74.3 million in the second quarter of 2022.

• Adjusted operating loss¹ (non-GAAP) was RMB52.9 million (US$7.4 million), compared with RMB51.2 million in the second quarter of 2022.

• Net loss was RMB76.5 million (US$10.8 million), compared with RMB73.9 million in the second quarter of 2022.

• Adjusted net loss² (non-GAAP) was RMB55.1 million (US$7.7 million), compared with RMB50.8 million in the second quarter of 2022.

• Cash, cash equivalents, restricted cash and short-term investments balances were RMB208.8 million (US$29.4 million) as of September 30, 2022.

• Sales and deliveries of EH216 AAVs were 4 units, compared with 8 units in the second quarter of 2022.

Business Highlights for the Third Quarter 2022 and Recent Updates

The EH216-S Unmanned Aircraft System (“UAS”) Type Certification (“TC”) process with the Civil Aviation Administration of China (“CAAC”) has progressed into the final phase of Demonstration and Verification of Compliance, after passing through the phases of Concept Design, Requirements Definition, and Compliance Planning.

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With all of the certification plans have been officially approved by CAAC, all specified review subjects have been confirmed, including performance and flight, structural strength, design and configuration, ground control station, airborne human-computer interaction, continued airworthiness, etc.

The final phase is specifically to conduct verification reviews through laboratory tests, ground tests and inspections, flight tests, data analysis, in accordance with the approved certification plans. Over the past few years, EH216 AAVs have completed more than 30,000 trial flights, including passenger-carrying trial flights and tests in extreme environments involving high altitudes, typhoons, deserts and heavy fog. The accumulated data, experience and safe records have been compiled to support the demonstration and verification of compliance, and an appropriate number of test flights are being conducted to further supplement and accelerate the completion of the final phase.

In September and November 2022, EHang was invited by the International Civil Aviation Organization (“ICAO”) and CAAC to participate in the ICAO 41^st Assembly, 2022 Innovation Fair, and RPAS Symposia Unmanned Aviation 2022 at ICAO’s headquarter in Montréal, Canada, sharing the exploration and practice on the EH216-S type certification project and innovative results with global aviation authorities. In particular, CAAC introduced the Special Conditions for EH216-S as China’s first airworthiness standard for human-carrying unmanned aircraft system at the ICAO 41^st Assembly, for other countries’ reference in formulating related regulations, which received positive feedback from aviation authorities from other new regions, such as Latin America and Africa.

Since the launch of EHang’s 100 Air Mobility Routes Initiative in 2021 to date, EHang has carried out operational trial flights with EH216 AAVs at 15 operation spots in China, where more than 6,800 operational trial flights have been completed in practical scenarios mainly for aerial sightseeing. EHang’s self-developed AAV operational system has been put into trial use for these operation spots and is expected to facilitate AAV operation management efficiency and prepare the operating team for post-certification commercial operations.

In October 2022, EHang signed a memorandum of understanding regarding the partnership with Hong Kong Aircraft Engineering Company Limited (“HAECO”), a world leading aircraft engineering and maintenance company and a subsidiary of Swire Group. The two parties plan to cooperate in multiple areas such as manufacturing and assembly, continued airworthiness, digital platforms, aircraft maintenance, and talent training. The focus of this partnership is to co-develop systems and solutions that meet the needs of continued airworthiness and after-sales maintenance services in preparation for the EH216 commercial operations.

• EH216 Flight Demonstrations in 4 Japanese Cities to Mark 1,000-Day Countdown of Expo 2025 Osaka, Kansai

In July 2022, EH216 AAV successfully completed a demo flight tour across 4 cities in Japan and expanded its footprint for the first time into the Kansai, Kyushu and Shikoku regions after its demo flights in the cities of Okayama and Fukushima last year. Notably, EH216 made an extraordinary appearance on the ceremonial day marking the 1,000-day countdown to the opening of the Expo 2025 Osaka, Kansai. These unmanned EH216 demo flights in Japan included over-the-sea flights as well as point-to-point flights, both believed to be respective firsts for an electric vertical take-off and landing (“eVTOL”) vehicle in Japan.

In October 2022, EH216 AAV successfully completed flight demonstrations in Spain under the European Union (“EU”)’s Air Mobility Urban – Large Experimental Demonstration (“AMU-LED”) project, one of Europe’s largest Urban Air Mobility (“UAM”) demonstration projects. These flight demonstrations verified and validated the UAM Concepts of Operations (“ConOps”) in the furtherance of the AMU-LED project objectives.

In November 2022, EHang participated in the SBAS (EGNOS) Adoption in Multicopter VTOL Aircraft (“SAMVA”) project. Under an initiative of the European Union Agency for the Space Programme (“EUSPA”), the SAMVA project is for deploying European Geostationary Navigation Overlay Service (“EGNOS”) on eVTOL aircraft operations, such as EH216 AAVs, to enhance advanced air mobility services and U-Space airspace integration across the continent.

CEO Remarks

Mr. Huazhi Hu, EHang’s Founder, Chairman and Chief Executive Officer, said, “While the unfavorable market impact of the COVID-19 resurgence in China added pressure to our third-quarter results, we made meaningful progress in type certification and other areas that will fuel our long-term growth. Specifically, the EH216-S Type Certification process has entered into the final phase of Demonstration and Verification of Compliance after all the certification plans were officially approved by CAAC. This reflects the diligent work from our team and tremendous support from the aviation authorities and the aviation industry. As we have almost completed the most arduous points in the process, we remain fully confident to complete the world’s first airworthiness certification for the human-carrying unmanned aircraft system. We will continue our efforts to expedite what remains to make it happen as soon as possible.”

“We also entered into a partnership with HAECO for advanced air mobility that addresses the needs of continued airworthiness and after-sales maintenance services in preparation for the EH216 commercial operations. Meanwhile, we continued with more flight demonstrations across Asia and Europe to lay solid foundation for our overseas market development. We remain focused on executing our comprehensive growth strategies. These concentrated efforts, combined with our leading AAV technologies and intelligent command and control systems, empower us to be well-positioned to capture growth when the market recovers from the pandemic resurgence and after obtaining the type certificate.”

Financial Results for the Third Quarter 2022

Revenues

Total revenues were RMB8.2 million (US$1.2 million), compared with RMB14.6 million in the second quarter of 2022.

Costs of revenues

Costs of revenues were RMB2.8 million (US$0.4 million), compared with RMB4.8 million in the second quarter of 2022.

Gross profit

Gross profit was RMB5.4 million (US$0.8 million), compared with RMB9.8 million in the second quarter of 2022.

Gross margin was 65.9%, down 1.2 percentage points from 67.1% in the second quarter of 2022. The decrease in gross margin was mainly due to changes in revenue mix.

Operating expenses

Total operating expenses were RMB80.5 million (US$11.3 million), compared with RMB86.5 million in the second quarter of 2022.

• Sales and marketing expenses were RMB12.7 million (US$1.8 million), compared with RMB12.2 million in the second quarter of 2022.

• General and administrative expenses were RMB36.5 million (US$5.1 million), compared with RMB39.6 million in the second quarter of 2022. The decreases were mainly attributed to higher professional service fees primarily due to the filing of our annual report and some other legal matters as well as share-based compensation expenses in the second quarter, partially offset by the additional provisions for accounts receivable in consideration of the impact of the continuous COVID-19 epidemic and control measures in China.

• Research and development expenses were RMB31.3 million (US$4.4 million), compared with RMB34.7 million in the second quarter of 2022. The decrease was mainly attributed to the different development processes of new AAV models and the ongoing EH216-S certification process.

Adjusted operating expenses³ (non-GAAP)

Adjusted operating expenses were RMB59.7 million (US$8.4 million), representing an improvement of 5.9% from RMB63.4 million in the second quarter of 2022. Adjusted sales and marketing expenses, adjusted general and administration expenses, and adjusted research and development expenses were RMB7.9 million (US$1.1 million), RMB28.8 million (US$4.0 million) and RMB23.0 million (US$3.3 million) in the third quarter of 2022, respectively. The decrease in adjusted operating expenses was primarily due to the same reasons discussed under the heading “Operating expenses” above.

Operating loss

Operating loss was RMB73.7 million (US$10.4 million), compared with RMB74.3 million in the second quarter of 2022.

Adjusted operating loss (non-GAAP)⁴

Adjusted operating loss was RMB52.9 million (US$7.4 million), compared with RMB51.2 million in the second quarter of 2022.

Net loss

Net loss was RMB76.5 million (US$10.8 million), compared with RMB73.9 million in the second quarter of 2022.

Adjusted net loss (non-GAAP)⁵

Adjusted net loss was RMB55.1 million (US$7.7 million), compared with RMB50.8 million in the second quarter of…