ECARX Holdings (ECX) Q2 2025 Earnings Call August 26, 2025 08:00 AM ET Company ParticipantsRene Du - Head - IRZiyu Shen - CEO, Chairman & DirectorPeter Cirino - COOPhil Zhou - CFOConference Call ParticipantsDan Lin Ren - Equity Research AnalystWei Huang - Research AnalystBella Lu - AnalystOperatorGood day, and thank you for joining us. Welcome to E CarX's Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After management gives their prepare ...

Financial Data and Key Metrics Changes - Total revenue for Q2 was $156 million, with sales of goods revenue at $131 million, reflecting a 1% year-over-year increase driven by double-digit customer demand despite strategic price reductions [24][25] - Gross profit for the quarter was $70 million, a decline of 58% year-over-year, resulting in a gross margin of 11%, down 12% compared to the previous year [25] - Operating expenses were reduced by 20% year-over-year to $57 million, contributing to a slight decline in adjusted EBITDA loss to $30 million from $29 million in the same period last year [26][27] Business Line Data and Key Metrics Changes - The Antora, Vanado, and Skyland platforms contributed 56% to total sales of goods revenue, more than doubling from 28% in the prior year [24] - Service revenue decreased by 34% year-over-year to $23 million, primarily due to lower revenue from non-recurring engineering services [25] Market Data and Key Metrics Changes - Shipments of the Antora series solution surged 112% year-over-year to 135,000 units during the quarter, supporting growth momentum [6] - The company serves 18 OEMs across 28 brands globally, with a significant presence in both the Chinese and international markets [10][17] Company Strategy and Development Direction - The company is focused on achieving EBITDA breakeven in each of the remaining quarters of 2025, with a target of close to 20% revenue growth for the full year [5][27] - A new global headquarters in Singapore is set to open in 2025 to enhance global IP management, R&D collaboration, and supply chain optimizations [9][21] - The company is diversifying its customer base, with Geely accounting for 40-50% of total business and ongoing efforts to expand into international markets [58] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of seasonal headwinds and macroeconomic uncertainties but emphasized solid progress in securing new projects and partnerships [4][24] - The company remains confident in achieving adjusted EBITDA breakeven and expects full-year revenue to recover strongly, driven by volume growth and improved product mix [27] Other Important Information - The company has secured over $1 billion in lifetime revenue from overseas contracts and has 14 active projects with eight different carmakers [6][38] - The company received three ISO certifications for quality management, environmental stewardship, and occupational health and safety, which are prerequisites for collaboration with leading automakers [21] Q&A Session Summary Question: Update on non-automotive business layout and future development - Management expressed optimism about the potential for non-automotive applications, particularly in robotics, leveraging LiDAR technology [33][36] Question: Progress in overseas expansion and international clients - Management highlighted ongoing efforts in Europe and other markets, with 14 active programs and recognition from Volkswagen for innovation capabilities [38][39] Question: Update on in-house chip development - Management confirmed continued growth of the Antora platform and plans to launch Qualcomm A295 products, indicating a robust roadmap for SoC development [40] Question: Volume guidance for the second half of the year - Management projected shipment volumes of 1.4 to 1.5 million vehicles in the second half, aiming for a total of 2.5 to 2.6 million vehicles for the year, reflecting a 30% year-over-year growth [45] Question: Pricing pressures and content per car improvements - Management acknowledged pricing pressures but noted improvements in content per car due to strategic pricing and cost optimization efforts [46][48] Question: Update on ADCU business and collaboration with Qualcomm - Management confirmed plans to work with Qualcomm's SoCs, including the 8,775, and highlighted the development of a Fusion platform for enhanced vehicle features [51][53]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 reached RMB 1.2 billion, a 30% increase year over year [20] - Sales of goods revenue was RMB 879 million, up 16% year over year [20] - Gross profit for the quarter was RMB 243 million, up 19% year over year, resulting in a gross margin of 19.8% [21][22] - Adjusted EBITDA loss improved significantly compared to a loss of RMB 224 million during the same period last year [22] Business Line Data and Key Metrics Changes - In-house developed platforms contributed approximately 39% to total sales of goods revenue, reinforcing the in-house development strategy [20] - Software license revenue surged 148% year over year, driven by increased demand and a one-time software license contract [21] - Service revenue increased by 49% year over year, primarily due to design and development contracts and growth in overseas cloud services [21] Market Data and Key Metrics Changes - Global vehicle sales fell 5.6% year over year, while the China market grew 12.9% year over year [6] - Shipments surged to 684,000 units, a 35.8% increase year over year [7] - The company serves 18 OEMs across 28 brands globally, indicating a growing scale and trust from global automakers [10] Company Strategy and Development Direction - The company aims to capitalize on the growing demand from global automakers for unique driving experiences and intelligent solutions [6] - A significant milestone was achieved with the successful integration of intelligent driving and parking capabilities into the Antora platform [16] - Plans to establish a global supply chain center and international engineering center in Singapore to enhance global operations [18][54] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in capturing opportunities as the automotive industry transforms towards software-defined intelligent vehicles [19] - The company remains focused on expanding its customer base and improving operational efficiency to enhance financial performance [23] - Management highlighted a robust pipeline of new projects and ongoing global expansion [9][19] Other Important Information - The company hosted an Investor Day in Hong Kong, showcasing its positive outlook for 2025 and ongoing technological innovations [8] - The company has expanded its intellectual property portfolio to 705 registered patents and 778 pending applications as of March 31, 2025 [17] Q&A Session Summary Question: Update on Skyline's recent orders and profitability - Management reported good orders for Skyline in Q1, with fair market gross margins and confidence in maintaining goals for the product line [28][30] Question: Additional pressure for annual cost down - Management indicated that they are competitive in the China market and have achieved yearly cost reductions from OEM customers [30] Question: Involvement in the Cheney Hong Han H3 program - Management confirmed close partnership with GD and mentioned ongoing developments in the ADAS roadmap [32] Question: New business announcements within automakers - Management highlighted the partnership with Volkswagen Group and ongoing strong performance from GD's product lines [36] Question: Impact of US tariffs on supply - Management acknowledged significant challenges from US tariffs but emphasized their contract manufacturing model mitigates these impacts [41][72] Question: Outlook for partnerships with international OEMs - Management noted strong interest from global automakers and ongoing discussions, particularly following the Shanghai Auto Show [50] Question: Establishment of supply chain and engineering center in Singapore - Management elaborated on the strategic importance of the Singapore center for global supply chain activities and IP management [53][54] Question: Integration of driving and cabin features - Management confirmed the Antora platform's capabilities for integrating smart cabin and ADAS features, with ongoing customer interest [60][62] Question: Sustainable demand for Geely Galaxy - Management expressed optimism about sustained demand for Geely Galaxy models, supported by strong market performance [59]