Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ECARX Holdings Inc (ECX, Financial) reported a 31% year-over-year increase in revenue for the third quarter, reaching RMB1.4 billion.
- The company added 442,000 vehicles equipped with ECARX technology this quarter, marking a 31% year-over-year increase.
- ECARX secured two new design wins from existing customers, showcasing their ability to deliver customized technology solutions.
- The company is expanding its global footprint, including a new office in Stuttgart to enhance customer engagement with German OEMs.
- ECARX's Antora 1000 platform has been successfully integrated into new vehicle models, demonstrating strong market competitiveness and scalability.
Negative Points
- Gross margins declined to approximately 17% due to ongoing pricing pressures and fierce market competition.
- Software license revenue decreased by 39% year-over-year, primarily due to a drop in sales of navigation and operating software.
- The company reported a loss per share of RMB0.97, up from RMB0.84 in the previous quarter.
- Adjusted EBITDA loss increased to RMB233 million, attributed to decreased gross margins and lower foreign currency exchange gains.
- ECARX faces challenges in maintaining hardware gross margins due to aggressive pricing strategies in the competitive automotive market.
Q & A Highlights
Q: Can you explain the factors contributing to the decline in sale of goods margin and how should we think about it moving forward?
A: Zhou Phil, CFO, explained that fierce market competition led to margin deterioration, with a decline from 14% to 8.9%. The product mix also impacted margins, with a decrease in services and software sales. Moving into Q4, they plan to rebalance the sales portfolio and optimize costs to restore margin performance.
Q: Does ECARX supply hardware for the Geely Star Wish sedan, similar to the Galaxy E5?
A: Peter Cirino, COO, confirmed that the Galaxy E5 uses the Antora 1000 platform and Flyme Auto software, while the Star Wish sedan uses the Venado platform, both supplied by ECARX.
Q: What is the outlook for the Makalu platform and its future vehicle models?
A: Peter Cirino, COO, stated that the Makalu platform is a strategic cooperation with AMD, featuring the V2000 platform. It has received positive feedback and will be promoted for future vehicles for smart, Lynk & Co., and other market opportunities.
Q: What is the expected gross margin outlook for 2025, especially for hardware products?
A: Zhou Phil, CFO, mentioned that they aim to maintain an overall gross margin above 20% by balancing sales of services and software with hardware solutions. They plan to innovate and optimize costs to counteract pricing pressures.
Q: Can you provide an update on ECARX's overseas expansion and expected revenue from international customers?
A: Peter Cirino, COO, highlighted their expansion efforts, including establishing an office in Stuttgart. They are engaged in RFQ processes with European OEMs, expecting some revenue by 2025 and SOPs by 2027.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
