When a company's revenue keeps climbing while profits head in the opposite direction, it usually signals a critical turning point in its growth model. Ninebot's 2026 first-half earnings report perfectly illustrates this classic "rising revenue, falling profit" scenario: first-half revenue reached 14.358 billion yuan, up 22.28% year-on-year, but net profit attributable to shareholders was just 1.008 billion yuan, down 18.79%. Deducted non-recurring profit fell even harder at 26.21%, while net operating cash flow was cut in half, dropping 46.14%.

On one side, sales volume and market scale keep expanding; on the other, both profit and cash flow are under mounting pressure. Once known for breaking through with smart differentiation, Ninebot now finds itself wrestling with the old hardware manufacturing dilemma: the bigger the scale, the harder it is to make money. This contradictory earnings report doesn't mean growth has peaked. Rather, multiple factors are squeezing profit margins, and turning things around will require the company to find its own remedy.

Breaking down the financials, the profit decline starts with the massive disruption from exchange rates. In the first half of 2026, Ninebot recorded hefty exchange losses, while the same period last year brought exchange gains. The swing between gains and losses means currency fluctuations alone caused over 600 million yuan in profit volatility, making it the most obvious factor dragging down book profits. As a brand with an extremely high share of overseas revenue, a large portion of Ninebot's sales are settled in US dollars and euros. While overseas expansion continues, the risk exposure to currency swings keeps widening. This external macro variable is beyond the company's control, but it also exposes weaknesses in how overseas revenue is structured and how foreign exchange hedging is managed.

Next is the intensifying price war in the domestic electric two-wheeler market, which is eroding gross margins in the core business. Electric two-wheelers are Ninebot's revenue foundation. The domestic market has already moved past the growth era and entered a brutal fight for existing share. Competitors like Yadea, Aima, and Niu are stuck in constant price wars, flooding the market with low-end products at rock-bottom prices and squeezing industry-wide profits. Ninebot has stayed committed to its smart technology route, but to defend market share, it has to keep launching new products and expanding physical stores, driving up marketing and channel costs. The report shows first-half sales expenses hit 1.189 billion yuan, up 33.12% year-on-year, with heavy spending on brand building and channel development directly inflating operating costs.

At the same time, Ninebot is deliberately increasing R&D investment to build up its second growth curve. First-half R&D expenses reached 751 million yuan, up 43.68% year-on-year, with the R&D team expanding to 2,646 people. The company is pouring resources into service robots, all-terrain vehicles, and premium scooters. High R&D spending is the bedrock of long-term competitiveness, but it eats directly into short-term profits. Add in fluctuating raw material costs, and the company stocking up ahead of peak season has tied up significant working capital, directly causing the sharp drop in operating cash flow. In short, Ninebot is currently trading short-term profits for long-term growth, but the question investors care about is whether this investment will translate into sustainable future profitability.

It's worth noting that the first-half report isn't all bad news. Looking at quarterly data reveals clear signs of recovery: first-quarter net profit attributable to shareholders was 203 million yuan, down a steep 55.4% year-on-year, while second-quarter revenue hit 8.488 billion yuan, up 28.03%, with net profit of 805 million yuan, edging up 2.48%. The second-quarter profit rebound suggests the company has started adjusting its product mix, with a rising share of high-margin businesses. Overseas scooter B2B and B2C operations beat expectations, while high-margin product lines like premium all-terrain vehicles and smart robot mowers are accelerating. The service robotics segment boasts gross margins above 50%, making it the most profitable business across Ninebot's portfolio and the most important weapon for offsetting the two-wheeler price war down the road.

So where exactly is the remedy for Ninebot's revenue-growth-profit-stagnation bind?

The first remedy: optimize the product structure by lifting the share of high-margin products and reducing dependence on low-priced two-wheelers. The price war in the domestic two-wheeler market won't stop anytime soon, and relying on volume alone will only keep dragging down overall gross margins. Ninebot's biggest differentiation card is its smart technology. The company needs to tilt further toward premium models, strengthen value-added capabilities like software, smart cockpits, and vehicle systems, and upgrade hardware products into integrated software-hardware offerings to boost pricing power. At the same time, it should accelerate scaling up high-margin categories such as robot mowers, overseas premium scooters, and high-displacement all-terrain vehicles. These products face better competitive dynamics and stable overseas demand, which can offset the profit pressure from the domestic two-wheeler business and create a healthier overall earnings structure.

The second remedy: tighten cost controls with precision management, balancing long-term investment against short-term profitability. R&D spending can't be blindly cut, as it's the core moat separating Ninebot from traditional electric vehicle makers, but spending needs to be more targeted. The sharp rise in sales expenses comes partly from channel expansion and partly from marketing campaigns. Going forward, the company needs to improve channel efficiency, phase out underperforming stores, adjust marketing strategies, and lower customer acquisition costs. It should also refine supply chain management to offset raw material cost fluctuations, using scale procurement and smart manufacturing to cut costs, improve turnover efficiency, and strengthen cash flow. On the overseas front, the company needs a more robust foreign exchange hedging mechanism to cushion the profit impact of currency volatility and reduce non-operating items from distorting performance.

The third remedy: tap into software and service value-add, shifting from hardware sales to ongoing operations. Ninebot's revenue is still dominated by hardware sales, a business with natural ceilings that easily falls into price wars. The company's advantage lies in its self-developed smart systems, with millions of smart two-wheelers, robots, and scooters building up a massive user base. Moving forward, it can explore subscription services, OTA upgrades, paid value-added features, and after-sales membership models to create recurring software revenue streams. Software has near-zero marginal cost and far higher gross margins than hardware. Once it reaches scale, it can reshape the profit model and break free from the one-sale-one-profit hardware trap. This is also the most critical transformation direction that sets Ninebot apart from traditional two-wheeler companies.

The fourth remedy: operate overseas markets with a tiered strategy to avoid homogeneous competition. Overseas markets are Ninebot's growth engine, but competition in the global short-distance mobility space is also heating up. The overseas approach can't rely purely on low-priced volume. Markets need to be segmented: developed markets like Europe and the US should focus on high-value products such as premium scooters, robots, and all-terrain vehicles, while emerging markets need localized supply chain setups to lower tariffs and logistics costs. The company should also optimize its overseas channel mix, balancing large B2B clients with retail B2C operations to diversify single-client risk and achieve volume growth without sacrificing margins.

Of course, Ninebot's transformation path comes with challenges that can't be ignored. On one hand, the domestic two-wheeler market's competition for existing share won't ease, and traditional giants are accelerating their smart technology catch-up, steadily narrowing Ninebot's technical edge. On the other hand, while the robotics business boasts high margins, its market size is still small and unlikely to replace two-wheelers as the primary revenue driver in the short term. Whether hefty R&D spending can consistently produce hit products, along with overseas geopolitical policy and trade barrier risks, all hang over Ninebot like unresolved uncertainties.

Getting back to the core question of rising revenue but stagnant profit, this doesn't necessarily mean business deterioration. For Ninebot, the current profit pressure is the unavoidable pain of an expansion and transformation phase. Sustained revenue growth proves the market still values its products, and the second-quarter profit recovery is already a positive signal. Ninebot's dilemma essentially comes down to this: the growth logic of pushing hardware volume has hit an earnings ceiling. The company must complete the transition from a smart hardware manufacturer to a smart mobility and robotics service provider. In the short term, Ninebot needs to stabilize its two-wheeler foundation, optimize product structure, control costs, and repair gross margins and cash flow. In the long term, robotics, premium mobility products, and software services are the keys to unlocking profit growth. The market won't dismiss a company's commitment to investing in the future, but ultimately it will judge that investment by profits. For Ninebot, finding the balance between scale expansion and profitability, and converting its revenue advantages into real earnings growth, is the most important test in the period ahead.