ECARX Holdings, Inc. Q3 FY2025 earnings call

• Achieved EBITDA breakeven in Q2 and recorded EBITDA of USD 8.3 million, becoming net profitable for the first time with net profit of USD 0.9 million.
• Revenue grew 11% year-over-year and 41% quarter-over-quarter to USD 219.9 million. Gross profit was USD 47.6 million, up 39% year-over-year, with gross margin at 22%.
• Successful launch of multiple vehicle models incorporating solutions, with Pikes computing platform starting mass production.
• Shipments reached approximately 667,000 units in Q3, up 51% year-over-year and 26% quarter-to-quarter, with Antora series shipments at a record high of 196,000 units.
• Secured multiple global partnerships, including second projects with Chinese and European automakers, and a new project with a leading European automaker adding USD 400 million in lifetime revenue.
• Technological leadership in software-defined vehicle with Cloudpeak and Google Automotive Service integration, cutting gas certification time to 8 months.
• Raised up to USD 150 million in convertible notes, providing liquidity for international expansion and product innovation.

Revenue for the quarter was USD 219.9 million, up 11% year-over-year and 41% quarter-over-quarter. Sales of goods revenue was USD 182 million, an 11% year-over-year increase. Software license revenue decreased to USD 0.9 million, down 92% year-over-year. Service revenue was USD 37 million, up 68% year-over-year. Antora, Venado and the Skyland platforms contributed 56% of total sales of goods revenue, with combined revenue doubling from 2024 quarter 3. The Pikes computing platform accounted for 9% of total sales of goods revenue. Gross profit was USD 47.6 million, up 39% year-over-year, lifting gross margin to 22%.

• Q4 volume expected to reach historical highs with strong momentum maintained.
• 2026 expected to see continued profitability momentum, with overseas business and software collaboration as key growth drivers.
• Targeting 30% of revenue from overseas outside China by 2028 and 50% by 2030.

Q: Congratulations on a very strong 3Q results. My first question is regarding your guidance for 4Q. You have previously guided second half volume to around 1.4 million to 1.5 million units. Is that still the same?

A: This is Phil. In quarter 3, we delivered 670,000 hardware units, a 51% year-over-year growth. We will keep strong momentum in Q4 with volume and revenue reaching historical highs.

Q: Looking ahead into 2026, there are concerns that the overall industry is going to be weaker due to weakening government policy support and some pull forward demand into the fourth quarter. Do you expect a much weaker first quarter next year? Do you have a guidance for us for volume, revenue and profitability for 2026?

A: Yes. Q1 is normally the traditional low season within a year. However, our disciplined execution of product strategy will offset the low seasonality impact. We are on track to realize accelerated growth from overseas business and software collaboration, maintaining profitability momentum in 2026 and beyond.

Q: Regarding the overseas OEM business win that you just brought up. So I think during the last quarter call, you talked about you have 4 overseas project wins that totaled $1 billion in lifetime value and in 3Q, this has jumped to $2.5 billion. Can you maybe give us an update on how many new projects that you have won during the third quarter?

A: This is Peter Cirino. We've opened up a significant number of projects, including another high volume win with a large European automaker this quarter, with a very solid pipeline of software and full solution opportunities with both hardware and software in them.

Q: We are glad to see that we have won multiple orders from Geely Galaxy with sales ramping up quickly. Could you please elaborate on your production capacity planning and corresponding CapEx road map to support this growth?

A: Danlin, thank you for the question. We are continuing to scale our smart factory in the Fuyang, Hangzhou area to support all of our business in China, with capacity at about 1 million units, more than doubled since last year. Globally, we're working with a number of manufacturing partners to expand in South Asia, South America and Europe.

Q: Regarding your product lines based on several platforms. Could you provide updates on your ASP and gross margin levels, respectively, for your number one, your Qualcomm platforms?

A: This is Phil. We launched several computing platforms covering different market segments. The average selling price covers from RMB 2,000 to RMB 4,000. From a hardware margin perspective, we are able to maintain 10% to 15%. The Pikes solution contributed to ASP uplift in Q3, with a 9% improvement sequentially.

Q: As the trend of integrating cockpit large models into vehicles continues to strengthen, could you share the company's strategic layout of R&D progress in this space?

A: Yes, sure. ECARX has a full stack solution to support AI integration into vehicles. We're deploying solutions in China, building out ECARX AutoGPT, and working with global partners on similar developments for the European market and the Americas.

Q: First of all, congratulations on the very strong third quarter results. A couple of questions from me around the gross margins. I understand we've discussed a little bit about the improvement in the gross margins earlier, but I would like to have more elaboration on that front. So firstly, we've seen that hardware margins have improved to 15%, which is up from 10% in the last quarter and also 9% last year. May I understand more information, the driving factors behind this hardware gross margin increase? Is this related to the mass production of the Pikes computing platform and do higher end Qualcomm products typically command higher margins? And following up, last question on this margin, would this margin be sustainable going into the fourth quarter and also next year?

A: To address your question, in Q3, we booked services revenue from many programs, pushing up revenue mix from services and margin. We managed to realize cost down through commercial negotiation and VAV strategy. The momentum will continue into Q4 and next year as we manage hardware portfolio selling, services software selling, and supply chain cost management.

Q: I'd like to understand more about the shipment mix specifically within ADAS. I would like to understand a little bit more how has the Skyland domain controller product sales performed in this quarter and in the recent quarter? And what is our outlook for the future ADAS domain controller shipment growth going forward?

A: Peter W. Cirino: The Skyland product has continued to grow. We're working very aggressively on deploying on our Antora platform as well as a next-generation platform with a fusion solution, expecting to begin shipment in late '26, early '27.

Q: Among your current order intake, what percentage is from overseas and how fast do you expect this number to increase in the next several years? And the second question is do you intend to enter into new business initiatives such as humanoid robot, et cetera? And what is your latest progress on LiDAR product development?

A: This is Ziyu Shen. Overseas revenue: we are targeting 30% revenue from overseas outside China by 2028 and 50% by 2030. Our flash-based LiDAR is going well, with full speed R&D with our first customer OEM for robotics provider, targeting to be ready to the market next quarter 4 2026.

Q: We've seen technology companies, SoC, semiconductor companies become sort of a key negotiating tool for trade talks. Can you just update us on what's changing on that front and how you're positioning the company sort of in this newer geopolitical environment?

A: This is Peter Cirino. We're continuing to drive ECARX to be a global player in the automotive technology marketplace. We've demonstrated the ability to scale technology globally, delivering solutions into the market. We launched a center in Singapore to drive global supply chain efforts, housing capabilities to deliver global solutions to OEMs in Europe and the Americas.