EZGO ANNOUNCES FINANCIAL RESULTS FOR FISCAL YEAR 2023

Rhea-AI Summary

EZGO Technologies Ltd. (Nasdaq: EZGO) reported its fiscal year 2023 financial results, with revenues at $15.9 million, a decrease of 8.4% from the prior year. Gross profit increased to $1.1 million, with a gross margin of 7.2%. The company's net loss was $7.3 million, and cash and cash equivalents stood at $17.3 million as of September 30, 2023.

Insights

Financial Analyst

The reported decrease in EZGO Technologies Ltd.'s revenues, primarily from e-bicycle sales, reflects a challenging competitive landscape in the e-bicycle market. However, the strategic shift towards diversifying product lines, such as electronic control systems and intelligent robots, indicates a potential for future revenue streams. The growth in battery pack sales, particularly lead-acid batteries, despite a decline in unit prices for lithium battery packs, suggests resilience in their battery segment. The significant increase in cash and cash equivalents from the previous fiscal year demonstrates a stronger liquidity position, which could provide the company with more flexibility to manage operations and invest in growth opportunities.

From an investment perspective, the improvements in gross margin and gross profit, alongside the reduction in net loss, may be viewed positively by the market. However, the continued net loss position warrants caution. Investors would likely monitor the company's ability to continue improving profitability and managing costs, as indicated by the decreases in selling, marketing, general and administrative expenses. The company's financial health, as evidenced by a stronger cash position, could be a mitigating factor against the operational losses reported.

Market Research Analyst

The diversification into electronic control systems and intelligent robots represents a strategic pivot for EZGO Technologies in response to the fierce competition in the e-bicycle market. This move is likely an attempt to capture new market segments and reduce dependency on a single product line. The reported 18% growth in the battery packs segment and the introduction of new business segments could indicate an evolving industry trend towards smart transportation solutions and energy storage systems. The market may respond favorably to this diversification, as it could lead to a more stable revenue base and better positioning in emerging technology markets.

However, the dramatic decrease in e-bicycle sales revenue by over 50% year-over-year is a significant concern. It highlights the need for the company to further innovate and adapt to maintain market share in this segment. The reported increase in gross profit margin, while positive, must be considered in the context of overall declining revenues, which may temper market optimism regarding the company's financial performance.

Supply Chain Analyst

The reduction in manufacturing and purchase costs for e-bicycles, as reported, indicates a potential improvement in supply chain efficiency for EZGO Technologies. The decrease in costs could be due to renegotiated supplier contracts, improved inventory management, or adoption of cost-saving production techniques. The company's ability to manage these costs in a challenging sales environment is noteworthy and may contribute to a more favorable cost structure in the long term.

Despite the decrease in e-bicycle sales, the increase in sales volume for lead-acid battery packs supported by new large orders suggests effective supply chain management to meet the rising demand in this segment. The pivot towards new segments such as electronic control systems and intelligent robots may require a reevaluation of the supply chain to ensure alignment with the new product strategies and market demands. The company's success in managing this transition will be critical to its future profitability and market competitiveness.

CHANGZHOU, China, Jan. 26, 2024 /PRNewswire/ -- EZGO Technologies Ltd. (Nasdaq: EZGO) ("EZGO" or "we", "our", or the "Company"), a leading short-distance transportation solutions provider in China, today announced its audited financial results for the fiscal year ended September 30, 2023 (the "Fiscal Year 2023").

Fiscal Year 2023 Financial Highlights (all results compared to the prior year period unless otherwise noted)

• Revenues were $15.9 million, a decrease of 8.4%, primarily due to the decrease of sales of e-bicycles and partially offset by the increase of sales of electronic control systems and intelligent robots and the increase of sales of battery packs.
• Gross profit was $1.1 million, an increase from $0.2 million. Gross margin was 7.2%, an increase from 1.3%, primarily due to the positive margin of sales of electronic control systems and intelligent robots and sales of e-bicycles.
• Net loss was $7.3 million, compared to net loss of $7.5 million.
• Basic and diluted loss per share attributable to shareholders was $0.15, compared to $0.48.
• As of September 30, 2023, the Company had cash and cash equivalents of $17.3 million, compared to $4.4 million as of September 30, 2022.

Management Commentary

Mr. Jianhui Ye, Chief Executive Officer of EZGO, stated, "This past fiscal year marked a period of strategic adaptation and resilience for EZGO, as we navigated through market fluctuations and intensified competition, especially in the e-bicycle sector. Despite these challenges, our revenue remained robust at $15.9 million. Notably, our fiscal discipline and strategic maneuvers have significantly strengthened our financial foundation, with cash, cash equivalents, and restricted cash soaring to approximately $17.3 million.

In response to the fierce competition in the e-bicycle market, we honed our operations and elevated the intrinsic value of our e-bicycle offerings. Simultaneously, we ventured into new revenue streams by tapping into underexplored sectors like lead-acid battery packs, electronic control systems, and intelligent robots. This strategic diversification paid off, with our lithium battery packs and lead-acid battery packs segment witnessing an impressive 18% growth in revenue. Our steps into the realms of electronic control systems and intelligent robots also proved fruitful, contributing around $2.3 million in revenue and reinforcing the competitiveness of our bespoke, value-added solutions.

These above initiatives, coupled with our continued commitment to e-bicycles, significantly bolstered our total gross profit to 7.2%, casting optimism on our path forward. As we look ahead, EZGO remains committed to navigating the landscape of opportunity within these industries. Our aim is not only to refine our revenue structure but also to consistently deliver profitable products and create sustainable values to our shareholders."

Fiscal Year 2023 Financial Review

Net revenues

The following table identifies the disaggregation of our revenue from continuing operations and reportable segments for the fiscal years ended September 30, 2021, 2022 and 2023, respectively:

 

		Years Ended September 30,
	Segment	2021				2022				2023
Sales of batteries and battery       packs	Battery cells and packs segment	$	4,288,366			$	6,990,215			$	8,245,966
Sales of e-bicycles	E-bicycle sales segment		18,232,537				9,405,103				4,276,147
Sales of electronic control      system and intelligent robots	Electronic control system and intelligent robot sales segment										2,344,373
Others			901,103				993,899				1,054,173
Net Revenue		$	23,422,006			$	17,389,217			$	15,920,659

 

Net revenues from continuing operations for the fiscal year ended September 30, 2023 (the "Fiscal Year 2023") was $15.9 million, a decrease of 8.4% from $17.4 million for the fiscal year ended September 30, 2022 (the "Fiscal Year 2022"). The decrease in revenue from Fiscal Year 2022 to Fiscal Year 2023 was mainly due to the decrease of sales of e-bicycles and partially offset by the increase of sales of electronic control systems and intelligent robots and the increase of sales of battery packs.

The revenue from sales of e-bicycles was $4.3 million for Fiscal Year 2023, a decrease of 54.5% from $9.4 million for Fiscal Year 2022 due to the decreased sales volume of the e-bicycles under the fierce competition of the e-bicycle industry.

The revenue from sales of lithium battery packs and lead-acid battery packs was $8.2 million for Fiscal Year 2023, an increased of 18% from $7.0 million for Fiscal Year 2022, due to the development of the lead-acid battery market in Sichuan and the increased sales volume of the lead-acid battery packs supported by several new large orders. Overall, the Company's sales volume of lithium battery packs increased 5% in fiscal 2023 compared with fiscal 2022, but the unit price of lithium battery packs decreased 14% in fiscal 2023 compared with Fiscal Year 2022. The revenue generated from the sales of the lead-acid battery packs was $3.7 million for Fiscal Year 2023. The Company didn't have revenue from the sales of the lead-acid battery packs for Fiscal Year 2022.

The revenue from sales of electronic control systems and intelligent robots was $2.3 million for Fiscal Year 2023. The Company didn't have revenue from the sales of electronic control systems or intelligent robots for Fiscal Year 2022. The Company developed new business segment, electronic control system and intelligent robot sales segment, during Fiscal Year 2023.

Cost of revenues

Cost of revenues was $14.8 million for Fiscal Year 2023, a decrease of 14% from $17.2 million for Fiscal Year 2022, which was primarily due to the decrease of manufacturing and purchase cost of e-bicycles for sales of e-bicycles, which is in line with the decrease of revenues.

Gross profit

Gross profit was $1.1 million for Fiscal Year 2023, an increase from $0.2 million for Fiscal Year 2022.

Gross profit margin was 7.2% for Fiscal Year 2023, an increase from 1% for Fiscal Year 2022, primarily due to the positive margin of sales of electronic control systems and intelligent robots and sales of e-bicycles.

Selling and marketing expenses

Selling and marketing expenses was $0.6 million for Fiscal Year 2023, a decrease of approximately 38.5% from $1.0 million for Fiscal Year 2022, primarily due to the decrease in salaries for sales and marketing personnel, service expenses, and storage fees. Salaries for sales and marketing personnel was $0.3 million for Fiscal Year 2023, a decrease by 45% from $0.5 million for Fiscal Year 2022, mainly due to the downsize of the sales team. Service expenses was $19,529 for Fiscal Year 2023, a decreased of 71% from $67,234 for Fiscal Year 2022. As the Company continued to lean on the existing customer base for the expansion of battery business, the Company's expenses in promotion and marketing decreased. The Company didn't have storage fees for Fiscal Year 2023, a decrease from $34,438 for Fiscal Year 2022, mainly due to the decrease of e-cycles sales. 

General and administrative expenses

General and administrative expenses was $4.7 million for Fiscal Year 2023, a decrease of 3.6% from $4.8 million for Fiscal Year 2022. The decrease was primarily attributable to 1) the decrease of the bad debt expense on accounts receivable of $0.6 million, or 55%, mainly due to the decrease in the balance of accounts receivable as a result of the transfer of 100% of the equity interests of Tianjin Dilang; 2) the decrease of depreciation and amortization of $0.3 million, or 46%, mainly due to the disposal of land use right and buildings of Tianjin Jiahao. The decrease was partially offset by the increase of share-based compensation expense of $0.8 million.

Research and development expenses

Research and development expenses was $0.7 million for Fiscal Year 2023, a decreased of 22.0% from $0.8 million for Fiscal Year 2022. The decrease was primarily attributable to decreased expenses in research and development activities for new e-bicycles models of $610,389 which was offset by an increase in research and development activities for electronic control systems of $613,274.

Income tax expense/benefit

EZGO incurred an income tax benefit of $62,447 for Fiscal Year 2023. This was a result of increased deferred tax assets of $647,147 for Fiscal Year 2023, due to the increase in net loss and the increase in reserve for inventories.

Net loss

Net loss was $7.3 million for Fiscal Year 2023, compared to $7.5 million for Fiscal Year 2022.

Financial Condition

As of September 30, 2023, the Company had cash and cash equivalents of $17.3 million, compared to $4.4 million as of September 30, 2022.

For additional information, please see EZGO's Annual Report on Form 20-F for the fiscal year ended September 30, 2023, which was filed with the U.S. Securities and Exchange Commission on January 26, 2024.

About EZGO Technologies Ltd.

Leveraging an Internet of Things (IoT) product and service platform and two e-bicycle brands, "EZGO" and "Cenbird," EZGO has established a business model centered on the design, manufacturing and sale of two-and three-wheeled electric vehicles, intelligent robots, , complemented by electric vehicle accessories including batteries, charging piles and electronic control system. For additional information, please visit EZGO's website at www.ezgotech.com.cn. Investors can visit the "Investor Relations" section of EZGO's website at www.ezgotech.com.cn/Investor.

Exchange Rate

This announcement contains translations of certain Chinese Renminbi ("RMB") amounts into U.S. dollars ("US$") at specified rates solely for the convenience of the readers. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB7.2960 to US$1.00, the exchange rate in effect as of September 30, 2023, the middle price of RMB exchange rate announced by the People's Bank of China. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. When the Company uses words such as "may," "will," "intend," "should," "believe," "expect," "anticipate," "project," "estimate," or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause the actual results to differ materially from the Company's expectations discussed in the forward-looking statements. These statements are subject to uncertainties and risks including, but not limited to, the following: the Company's goals and strategies; the Company's future business development; product and service demand and acceptance; changes in technology; economic conditions; the growth of the short-distance transportation solutions market in China and the other international markets the Company plans to serve; reputation and brand; the impact of competition and pricing; government regulations; fluctuations in general economic and business conditions in China and the international markets the Company plans to serve and assumptions underlying or related to any of the foregoing and other risks contained in reports filed by the Company with the Securities and Exchange Commission (the "SEC"), including the Company's most recently filed Annual Report on Form 20-F and its subsequent filings. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company's filings with the SEC, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

Investor Relations Contact

Ascent Investor Relations LLC
Tina Xiao
President
Phone: +1 646-932-7242
Email: investors@ascent-ir.com

 

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SOURCE EZGO Technologies Ltd.

FAQ

What were EZGO's fiscal year 2023 revenues?

EZGO's fiscal year 2023 revenues were $15.9 million, an 8.4% decrease from the prior year.

What was the gross profit for EZGO in fiscal year 2023?

EZGO's gross profit for fiscal year 2023 was $1.1 million, with a gross margin of 7.2%.

What was EZGO's net loss in fiscal year 2023?

EZGO's net loss for fiscal year 2023 was $7.3 million.

What were EZGO's cash and cash equivalents as of September 30, 2023?

EZGO had cash and cash equivalents of $17.3 million as of September 30, 2023.