ECARX Holdings Inc. Q1 FY2024 earnings call

• Strong growth momentum with revenue up 21% y-o-y. Vehicles incorporating ECARX technology on the road rose 6.2% q-o-q and 31.2% y-o-y across 26 brands from 17 OEM customers.
• Global customer base growth, including new partnerships with FAW Group and a European automaker in mass production. Partnership with Microsoft for joint product development.
• Unveiled multiple automotive intelligent solutions at Tech Day: 3 intelligent cockpit platforms, 2 central computing platforms, ADAS features for Skyland Pro platform, and 2 LiDARs.
• Expanding manufacturing facilities, acquired Hubei Dongjun and opened a new facility in China, aiming for greater supply chain control and cost reduction.

Total revenue for the quarter was RMB 928 million, an increase of 21% year-over-year. Computing hardware goods revenue was RMB 757 million, up 27% year-over-year. Software license revenue was RMB 75 million, down 26% year-over-year. Service revenue increased 39% year-over-year to RMB 96 million. Gross profit was RMB 205 million, a decrease of 2% year-over-year, with a gross margin of 22%, a decrease of 5% year-over-year and 1% sequentially.

• Confident in high double-digit growth year-over-year based on customer nominations, pipeline, and new technology.
• Focus on lean OpEx control and cost optimization to drive towards breakeven, with goal to improve financial performance through reduced operating expenses and maintained top-line growth.

• Margin pressure on hardware products due to intensifying market competition over the medium term. Supply chain risks related to manufacturing and component costs.

Q: What is the pipeline of the new business of driving domain control and midterm goal?

A: The ADCU pipeline is strong with the Skyland Pro product rolling out features, successes on Lynk & Co models, and additional opportunities expected. Midterm goal is to expand product line and leverage synergies in hardware, silicon, and software for autonomous driving and cockpit domains.

Q: Commentary on in-house manufacturing and transition?

A: Expanding in-house manufacturing with 2 facilities in China, expecting them to produce a significant portion of sales in the next couple of years. Evaluating strategic investments and considering manufacturing outside China with details to be announced in coming quarters.

Q: Guidance for second quarter and second half?

A: Confident in high double-digit growth year-over-year based on customer nominations, pipeline, and new technology. Focus on lean OpEx control and cost optimization to drive towards breakeven.