ECARX(ECX) - 2025 Q2 - Earnings Call Transcript

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 [25][27] - Gross profit declined to $70 million, a 58% decrease year-over-year, resulting in a gross margin of 11%, down 12% from the previous year [26][27] - Operating expenses were reduced by 20% year-over-year to $57 million, contributing to a slight decline in adjusted EBITDA loss to $30 million compared to $29 million in the same period last year [27][28] Business Line Data and Key Metrics Changes - The Antora, VANELO, and Skyland platforms contributed 56% to total sales of goods revenue, more than doubling from 28% in the prior year [26] - Software license revenue decreased by 85% year-over-year to $1.2 million, primarily due to a decline in per vehicle software license revenue [26] - Service revenue was $23 million, down 34% year-over-year, mainly due to lower revenue from non-recurring engineering services contracts [26] Market Data and Key Metrics Changes - Shipments of the Antora series solution surged 112% year-over-year to 135,000 units during the quarter, indicating strong market demand [7] - The company serves 18 OEMs across 28 brands globally, with significant contributions from Geely, which accounted for nearly 40% to 50% of total business [12][58] - In the EU market, the company has 14 active projects with eight different global automakers and has secured four wins to date [18] Company Strategy and Development Direction - The company aims to achieve EBITDA breakeven in each of the remaining quarters of 2025, supported by operational discipline and a growing pipeline of projects [5][28] - A new global headquarters in Singapore is set to open in 2025, enhancing global IP management, R&D collaboration, and supply chain optimizations [10][23] - The company is diversifying its technological reach beyond automotive, with partnerships in robotics and AI applications, indicating a strategic shift towards multi-industry applications [9][14] Management Comments on Operating Environment and Future Outlook - Management acknowledged seasonal headwinds but emphasized solid progress in securing new projects and expanding partnerships [5][10] - The company expects full-year revenue to recover strongly and grow by close to 20% year-over-year, driven by volume growth and improved product mix [28] - Management expressed confidence in achieving adjusted EBITDA breakeven in each of the remaining quarters of 2025, despite external challenges [28][29] Other Important Information - The company received three ISO certifications for quality management, environmental stewardship, and occupational health and safety, which are prerequisites for collaboration with leading automakers [23] - The Fujian plant operates at 80% utilization, achieving its 1,000,000 unit annual capacity ahead of schedule, which is critical for global scaling [21] Q&A Session Summary Question: Non-automotive business layout and future development - Management expressed optimism about the potential for non-automotive applications, particularly in robotics, leveraging LiDAR technology [34][35] Question: Progress in overseas expansion - The company has secured multiple international clients, including Volkswagen, and is actively pursuing additional opportunities in global markets [36][37] Question: Update on in-house chip development - Management confirmed ongoing development of the Antora platform and plans to launch the Qualcomm A295 product, indicating a robust roadmap for internal capabilities [38][40] Question: Volume guidance for the second half of the year - The company anticipates shipping between 1,400,000 to 1,500,000 vehicles in the second half, aiming for a total of 2,500,000 to 2,600,000 vehicles for the year, reflecting a 30% year-over-year growth [44][45] Question: Pricing strategy and market competition - Management acknowledged pricing pressures but emphasized ongoing cost optimization efforts and a focus on maintaining market share to support revenue growth [46][48] Question: Update on ADCU business and collaboration with Qualcomm - The company is exploring opportunities with Qualcomm's SoCs and plans to launch a Fusion platform in 2026, indicating a strategic focus on advanced automotive technologies [52][53] Question: Growth drivers for the second half and next year - Management highlighted the importance of diversifying the customer base and expanding partnerships, with a healthy mix of business from both domestic and international OEMs [56][60]