ECARX Holdings, Inc. Q4 FY2024 earnings call

• 2024 was a remarkable year with significant milestones, including reaching breakeven at EBITDA level in Q4, total shipments of 2 million, and over 8.1 million vehicles on the road with ECARX technology.
• Secured a milestone project win with Volkswagen Group, expanding global customer base. Launched new vehicles like Geely Galaxy EX5 and Hongqi Tiangong 05.
• Cloudpeak hypervisor received ISO 26262 ASIL-D certification. Released AutoGPT in-vehicle AI large language model application.
• Showcased solutions at events like AutoSens China, Saudi Arabia National Quality Conference, and CES, highlighting AutoGPT and various computing platforms.
• Fuyang smart facility production ramping up, with over 60,000 Antora units produced in December 2024.

In the fourth quarter, total revenue was RMB1.9 billion, up 4% year-over-year, with sales of goods revenue at RMB1.5 billion, up 16% year-over-year. Software license revenue was RMB90 million, down 3% year-over-year but up 7% sequentially. Service revenue was RMB326 million, down 31% year-over-year but up 102% sequentially. Gross margin for the quarter was 21.2%. For the full year 2024, total revenue was RMB5.6 billion, up 18% year-over-year, with gross margin of 20.8%. Total shipments reached a record high of 2 million in 2024, up 33% year-over-year, with over 700,000 shipped in the fourth quarter alone. Revenue contribution details: sales of goods, software license, and service each had their respective growth and decline trends.

• Targeting positive EBITDA for full year 2025. The USD 20 million share repurchase program announced in December underscores optimism.
• Shipments of Antora series expected to surpass 1 million in 2025.
• Focus on improving operating expenses and product costs, driving growth by penetrating deeper into Geely and global automaker customer base.

Q: Could you share the company’s global production capacity layout and how you expect to pace the implementation of global orders in the coming years?

A: Peter Cirino mentioned that in China, the Fuyang facility is ramping up, and globally, will use EMS or contract manufacturing partners to expand production capacity while expanding engineering capabilities.

Q: What’s your current plan for ADAS or AD products, which clients are you working with? And where do you see growth opportunities in your collaboration with Geely?

A: Ziyu Shen stated they have Skyline Pro ADAS product, working on AD1000 SoC with FAW, and Skyline Pro is part of Geely’s GD-ADAS roadmap with growth opportunities in ADAS portfolio for next 3 years.

Q: What’s your overall strategic roadmap and development goals for over the next 3 years to 5 years?

A: Ziyu Shen mentioned focusing on breakeven in 2025, diversifying global customer base, and continuing R&D investment for mid to long-term growth.

Q: Can the management share some color or guidance for revenue, gross margin, and also the breakeven point of 2025?

A: Phil Zhou said they aim for breakeven in 2025 with top-line growth, operational efficiency improvement, and cost optimization. Gross margin recovery in Q4 reflects portfolio selling and cost-down activities, with strategy to continue in 2025.

Q: Could you please provide a revenue breakdown by clients for ‘24, and maybe share your outlook for your current mix for the next 5 years to 10 years?

A: Peter Cirino said in 2024, majority revenue still from Geely and Geely ecosystem (near 80%), with 20% from non-Geely. Outlook is to have brand mix of 50% GD and 50% non-GD by 2027-2028.

Q: As the largest smart cockpit supplier for Geely brands, do you expect ECARX to benefit from Geely’s supply chain consolidation and increase the share of Geely brands further? Where was the ceiling of your share at Geely?

A: Peter Cirino mentioned Antora platform is key for Geely, expected to deploy across additional models, with Geely brands continuing to be a significant part of growth.

Q: Can you maybe give us the Geely’s share of your total revenue in 2024?

A: Phil Zhou said nearly 80% of revenue in 2024 came from Geely and Geely ecosystem, 20% from non-Geely.

Q: The second question about Lincoln Co and Zeker, do you expect ECARX to be impacted? And about Galaxy E8 using our Pikes computing platform?

A: Ziyu Shen said no significant impact from Lincoln Co-Zeker, still a strong supplier. Galaxy E8 uses Flyme Auto, with ECARX providing Skyline ADAS system.