ECARX Holdings (ECX) Q3 2025 earnings call transcript

Good morning and welcome to ECARX third quarter 2025 earnings conference call. With me today from ECARX are our Chairman and Chief Executive Officer, Suyu Shen, Chief Operating Officer, Peter Serino, and Chief Financial Officer, Zil Zhou. So, following their prepared remarks, they will all be available to answer your questions. Before we start, I would like to refer you to our forward-looking statements at the bottom of our earnings press release, which will also apply to this call.

Further information on specific risk factors that could cause actual results to differ materially can be found in our filings with the SEC. In addition, this call will include the discussions of certain non-GAAP financial measures. A reconciliation of the non-GAAP financial measures to the GAAP financial measures can also be found at the bottom of our earnings release.

With that, I'd like to hand the call over to Ziyu. Please go ahead.

Thank you, Renee. Hello, everyone, and thank you for joining us today. Building on the strong momentum from the first half of the year, Quarter 3 delivered several significant milestones that demonstrate the continued progress we are making in laying a sustainable foundation for future growth.

We successfully achieved EBITDA break-even per our guidance in Quarter 2 and recorded EBITDA of US$8.3 million. Even more notably, we became net profitable for the first time, achieving breakeven with net profit of US dollar 0.9 million. Our move to profitability was supported by a recovery in growth margin, enhanced R&D efficiency, and ongoing optimization of operating expenses. These all reflected the strength and effectiveness of our lean operating strategy. Revenue grew by 11% year-over-year and 41% quarter-over-quarter, notching U. S. dollar $290.9 million. Gross profit was U. S. dollar $47.6 million, up 39% year-over-year, lifting gross margin to 22%. This growth was fueled by the successful launch of multiple vehicle models, incorporating our solutions and a recovery in average selling prices, and by strong demand across our portfolio.

Our POTS computing platform, built on the Qualcomm 8295 Snapdragon chipset, is our latest solution to begin mass production and was a key contributor to our strong performance during the quarter as we began scaling up production. With our growing global project pipeline and expanding partnerships, we are on the trajectory to drive this strong momentum into next quarter and the 2026 where we will maintain profitability in quarter four and achieve double digits revenue growth in 25 and beyond. Shipments stressed in quarter three to approximately 667,000 units, up 51% year-over-year and 26% quarter-to-quarter, and the shipments of our Antora series reached a record high of 196,000 units. The increased delivery of Antora series is a key driver of our success in achieving profitability and our future growth.

We expect our vertical integration capabilities will further improve profitability as shipments of Antola family account for a larger percentage of total shipments. By the end of September, approximately 10 million vehicles on the road globally incorporated ECARX technology, a testament to our deliverer at scale, and the trust we have earned from automakers worldwide. The breadth of our global partnerships with our makers continues to amplify the unique value proposition we offer as a core technology provider. More vehicles integrated with our solutions are hitting the road and driving strong sales growth, such as GD's best-selling models, the Xinyuan, Xinyalba, and flagship Galaxy M9. We also continue to unlock new growth opportunities from existing partnerships. Building on the momentum from our initial project win last quarter with one of Chinese top five automakers, we secured a second project.

We will work with a local partner to integrate our solution into a new model. We are expected to launch next year. Additionally, we secured a new project with another Chinese automaker for its upcoming MPV model. Most importantly, we continue to make meaningful breakthroughs globally. Securing a second project recently with a leading European automaker that will add another US$400 million in lifetime revenue to our pipeline. This brings total contract lifetime revenue from global automakers across Europe and America to over US dollar 2.5 billion. This win reflects the growing trust in our solutions and is paving the way for deeper strategic collaboration going forward. Our technological leadership is stopped in software-defined vehicles with the full-stack capabilities of Cloud Peak, and the integration of Google Automotive Service into the Antwerp platform provides significant value to global automakers, allowing them to cut the gas certification time by over 50% to just 8 months.

These wings demonstrate the rapid capability and the scalability of our core technologies across diversified platforms and geographics, allowing us to follow stronger partnerships and drive significant commercial value. This underscores how our flexible software-defined solutions and platform strategies effectively address the evolving needs of leading automakers worldwide. Furthermore, our capabilities to rapidly integrate Google Automotive Service combined with our intelligent manufacturing infrastructure provide us a powerful competitive advantage. These strengths enable us to both accelerate time to market and efficiently scale up on a global level. Our core three results clearly demonstrate the strength and momentum we are building. Through operational discipline, a robust project pipeline, a strength global process, and continued investments in technology and infrastructure, we have delivered on our commitment to achieving EBITDA break-even and becoming profitable.

Moreover, the raising up to US$150 million in convertible notes last week reflects the strong confidence investors have in our strategy and execution as we enter new phase of growth. The offering involves a zero-coupon amortized installment structure and an initial conversion price set at a 15% premium to the reference share price at insurance. This additional capital will provide empty liquidity to fuel our international expansion, drive forward new product innovation, and explore potential M&A opportunities globally. With this support and the solid foundation led with the profitable quarter three, we are confident this momentum will carry into the fourth quarter. We are now focused on finishing the year's strong and driving growth in 2006 and beyond.

I will now pass the call over to Peter, who goes through the operating results of the quarter in more detail.

Thank you, Ziyu. Good morning, everyone. In Q3, we made strong progress executing our strategic priorities by expanding our global footprint, development, deepening key partnerships, advancing technology leadership, and mass-producing new solutions.

This disciplined execution is strengthening our foundation and positioning us for sustainable growth. During Q3, we shipped approximately 667,000 units, bringing the cumulative number of vehicles equipped with ECARX technologies to approximately 10 million units, A significant milestone highlighting the growing size of our installed base and a direct reflection of the reliability of our solutions. To date, we proudly serve 18 OEMs across 28 brands worldwide.

Our global expansion remains a core focus, and in Q3, we engage extensively with automakers around the world. We are increasingly receiving positive feedback and broader interest in our solutions from both new and existing partners. Following last quarter's first project win with a top five Chinese automaker, we secured a second project for their next model. We will co-develop this with a local partner with an expected launch in early 2026. We also secured a project with another Chinese automaker for its upcoming MPB model. Internationally we also run a second project with a leading European automaker highlighting the growing trust in our intelligent cockpit solutions globally Overall with our deepening focus on global automakers we have a growing pipeline of programs identified in Europe and the Americas representing more than billion in total lifetime revenue spanning almost all major car makers in Europe and the Americas We are excited about the future program wins which will come from this substantial pipeline As a core technology partner, our brand's market presence and ability to redefine in-vehicle user experience were validated by several vehicle launches this quarter.

Following the successful global launch of the Volvo EX30 across more than 100 countries in 2023, Volvo has integrated the Ntour 1000 Pro computing platform and Cloud Peak cross-domain software stack into their XC70 hybrid mid-sized luxury SUV, which launched in August. The Volvo XC70 is the first model to feature Volvo's SMA super hybrid architecture. We collaborate closely with them on every aspect of its design and development, including hardware, system architecture, operating systems, HMI, application ecosystem, functional safety, information security, and quality control. Our Pykes computing platform and Cloud Peak cross-domain software stack are having a significant impact on the market.

The next-generation AI cockpit experience they deliver transforms cockpits from feature-centric to intelligence-centric environments. The Lincoln Code 10 EMP launch early in the quarter was the first model to integrate this advanced solution and set new industry benchmarks for AI-powered intelligent cockpits. Building on this, the platform was rapidly replicated in Lincoln Co. 's 07 and 08 EMP models, further demonstrating its strong scalability and versatility.

The Geely Galaxy M9 global launch further highlights how these integrated solutions are driving sales for our partners, with orders exceeding 40,000 units within 24 hours of pre-sales openings. Together, these pivotal vehicle launches exemplify how our solutions can accelerate time to market for automakers and redefine the intelligent cockpit experience. These platforms are fully compatible with FlyMe Auto and Google Automotive Services ecosystems, highlighting our commitment to driving innovation and adaptability across multiple vehicle segments and markets worldwide. We continued to strengthen our technology leadership in Q3 as we executed on our R&D roadmap.

The Antora 1000 Pro received Automotive SPICE 4.0 Capability Level 3 certification, the highest rating under the standard, a testament to our relentless focus on R&D, quality control, and process maturity. Certifications of this kind are prerequisites for collaborations with leading automakers, and our growing portfolio validates the strength of our global R&D system and establishes a platform for us to support large-scale global mandates, such as the ongoing project with Volkswagen Group, providing solutions for their vehicles around the world. This certification platform will be pivotal in driving the next phase of our global expansion and meeting the increasingly strict compliance requirements of global automakers.

We are making significant progress using our CloudBee software stack to deliver intelligent cockpit and in-vehicle AI at scale. This innovative software stack integrates AI agents, generative UIs, and an AI operating system. These unique solutions offer drivers an intuitive and adaptive in-vehicle experience. Paired with FlyMe Auto 2, they connect AI models to cross-domain vehicle functions, transforming cockpits from feature-centric to intelligence-centric experience.

This unique value proposition our software stack offers is driving interest and creating opportunities with European automakers. As we continue to advance our R&D roadmap, our IP portfolio is growing as well, with 730 registered patents and 835 patent pending applications worldwide as of September 30th. This expanding IP foundation reflects our commitment to fostering innovation, protecting our technology assets, and maintaining a competitive edge across key technology domains.

In summary, the operational and technological milestones achieved in Q3 highlight the disciplined execution and innovation leadership that underpin our growth trajectory. Through ongoing investments in R&D, expanding market presence, and strategic partnerships, we are well positioned to capitalize on accelerating industry trends. Importantly, as Ziyu mentioned, this quarter marks a significant step forward in our journey towards sustainable profitability. And we are confident this momentum will carry into Q4.

With that, I will now turn the call over to Phil, who will review our financial results.

Thank you, Peter, and hello, everyone. Through disciplined execution of the strategic initiatives, we achieved a remarkable financial progress this quarter, reaching operating income and net profit broke even for the very first time. This milestone marks a major step forward on the path toward long-term profitability. Total revenue for the quarter landed at U. S. dollar $220 million, up 11% year-over-year. Sales of goods revenue for U. S. dollar $182 million and 11% year-over-year increase. The growth was primarily driven by a double-digit increase of customer demand, partially offset by strategic price adjustments aligned with our product portfolio strategy.

Our in-house development strategy continued to generate strong results. Entra, Venado, and the Skyland platforms contributed 56% of total sales of goods revenue, with combined revenue doubling from 2024 quarter three. Meanwhile, our newest computing platform, Pyke, successfully entered mass production and accounted for 9% of total sales of goods running.

Filled by these solutions, quarter-three average selling price improved by 9% compared to the previous quarter. Software license revenue decreased 92% year-per-year to US$0.9 million. This decline resulted from reduced per vehicle software license revenue and lower intellectual property license revenue. In the same period last year, intellectual property license brought in U. S. dollar 5.5 million U. S. dollar revenue. Service revenue reached US$37 million, up 68% year-over-year, mainly driven by higher numbers and value of design and development service contracts, as well as growth in overseas connectivity service revenue. Growth profit was US$48 million, up 39% year-over-year, with a growth margin percentage of 22%, representing a 4% improvement from the previous year period and 11% improvement from the previous quarter.

The strong recovery reflected higher hardware margin from our product transformation and increased service revenue mix. Our commitment to OPEX optimization continues to deliver strong results. Operating expenses decreased by 42% year-over-year to US$44 million, driven by enhanced operational efficiency and a sharper focus on strategic R&D investments. As a result, operating income turned positive at US$3 million and net profit at US$0.9 million. Adjusted EBITDA reached US$8 million, a significant improvement from loss of US$32 million in the same period last year. This was primarily attributable to higher gross profit and a lower level of operating expenses.

Moving on to our balance sheet, as of a quadrant, we had US dollar 50 million cash and the restricted cash. To further enhance our liquidity position, we remain focused on strengthening working capital management and improving profitability.

In summary, our third quarter financial results mark a pivotal turning point for the company, reflecting strong strategy execution, discipline operations, and a firm commitment to sustainable growth. As we move into the fourth quarter, we will continue this strong momentum and maintain solid execution to drive scalable and profitable growth on a consistent basis. That concludes our remarks today.

Mr. Bond, this is Bill. I'm happy to address Thank you, I think that's your question. So your question is regarding our full quarter volume. Okay, so in quarter three, as we just reported, we delivered 670,000 hardware units. 51 is a growth This is a phenomenon And we will keep strong momentum in Q4 for sure And everybody knows that Q4 is the big season And we see both volume and revenue will reach historical highs We will excuse to maintain contraction rate in our key customers and keep a strong growth rate So this is the answer to your question regarding the volume.

Yeah, you know that Q1 is a traditional, normally a traditional low season within a year because the industry has a pattern. However, our discipline is execution of our product strategy, like the record growth of our families and the newly launched platform hikes will carry on and will offset the low seasonality impact. In quarter 3 and even quarter 4, we will keep building enough backlogs as much as possible, and we will get ready for early delivery in Q1 to mitigate the so-called low seasonality. And we also in 2026 financial planning season, and according to our latest outlook protection, our customers pipeline, we will also further cover the growth in 2026. So what we need to do is just maintain our discipline, maintain our shares in those customers and focus on the execution.

Then we should be able to deliver relatively okay outlook in 1026.21. And meanwhile, as Peter just mentioned, we are expanding our global progress aggressively, and we have lots of pipeline at our hands, and we also expand our partnership with the global players. And now we are on track to realize we are several from those overseas businesses as well. And software is one of the key. Software collaboration with global customers, global OEMs is also one of the key pro subscribers. So we will maintain the profitability momentum, not only in Q4 this year, but such kind of pattern will repeat in 26 and beyond.

Yeah, Mr. Holdings, this is Peter Serino. Maybe I'll take that question. So thank you very much. I think, you know, as we reflect on our business, I think our fundamental belief as we look to, you know, grow ECARX into the European and the global marketplace was that we would be able to provide, you know, advanced technology solutions in the China market and then be in a unique position to scale those globally and work with all the other companies. European OEMs and bring that same industry-leading technology into the global marketplace.

And I think we definitely see that fundamental belief coming to reality now. We've opened up a significant number of projects, as we mentioned, given the size of our pipeline with a number of different carmakers globally. You know, many of these car makers in their high-volume segments are starting to feel a lot of pressure as Chinese OEMs come to their domestic market, and they're seeking new solutions that are industry-leading and very cost-competitive. And I think ECARX is in a fantastic position to deliver those great solutions to those customers. So we mentioned another high-volume win with a large European automaker that we secured this quarter. We have a very solid pipeline of both software and hardware or software and solution, full solution opportunities with both hardware and software in them.

So, I think our pipeline is definitely grown substantially and we'll be able to demonstrate, I think, significant wins as we go through 2026.

Hi, Dan, and thank you for the question. We are continuing to scale our smart factory in the Fu Yan-Hungzhou area to support all of our business in China. We've established that facility and continue to ramp it up as we've progressed throughout this year, and we expect that to continue to ramp next year. So our capacity is at about a million units, which has more than doubled since last year, and we'll continue to grow our China facility for our China business. Globally, we're working with a number of manufacturing partners to expand in South Asia, in South America, and in Europe to continue to support our supply chain needs in the global market.

And we expect to continue to scale those businesses as our global business expands as well.

Thank you, Danling. This is Will. I'm happy to address your question regarding the ASP. We launched several computing platforms covering from entry level to high end market segments and the different solutions addressing different market segment demands. And we also manage the product mix selling according to customer demand. So basically, the average selling price covers from 2,000 RMB to even 4,000 RMB. That is 2,000 to 4,000. So that's the range. And from hardware margin perspective, we are able to maintain something like a double digit, 10 to 15%. That is our execution level. I'd like to offer you more information. We always like launching new platforms to the market to support customer demand. For example, in Quad3 we successfully launched our Pykes solution, which is Qualcomm 895, and that is to support Galaxy M9 and the Linkover 10, and that also contributed to our ASP update in Quad3.

And that is a 9% improvement sequentially, as I mentioned earlier. And at least the momentum will continue. And we have full confidence in our hardware margin maintenance. Thanks.

Yes, sure, gentlemen. Thank you for the question. So, for sure, ECARX has a full-stack solution to support, you know, AI integration into vehicles. You know, we're continuing to deploy solutions in China for China, such as DeepSeek or DeepSeek integration to support an AI experience inside the vehicle. You know, additionally, we are building out our ECARX AutoGBT as a framework.

to provide end-to-end solutions for LLMs inside of vehicles, and that's been launched in the Geely M9 and other vehicles this quarter, like the Lincoln Co. vehicles I mentioned earlier. Additionally, we're continuing to work with our global partners on similar developments for the European market in the Americas. And at CES this year, we're quite excited to present our next generation solution with AI integrated into the vehicle cockpit domain as well.

To address your question regarding the margin performance in quarter three, yes, you're right. In the quarter, we executed a pretty successful in terms of the number one portfolio selling. In quarter three, we booked services revenue from many programs, which further push up our revenue mix from services and our margin as well. And that is number one strategy we implemented. The second thing is that we are able to manage our upstream supply chain cost pretty well. In a quarter, we managed to realize a decent cost down or cost optimization through commercial negotiation and the VAV strategy as well. And that is also beneficial for our growth margin improvement in hardware. And moving forward into Q4 and even in next year, I think the momentum will continue.

And the strategy is working, and we will further manage the hardware of all the selling, as well as the services of their selling, as well as the supply chain customer management.

Thank you.

Yes, go ahead.

Yeah, Elizabeth, I was just going to say, you know, certainly the Skyland product has continued to grow. I think we're on a handful of vehicles in the GE platform and continue to deploy to a few others as well. We also see a significant trend around fusion inside of the vehicle domain. So we're working very aggressively on deploying on our Antora platform as well as a next-generation platform as well, a fusage solution that we'll bring to vehicles which utilizes the capabilities that we've built with Skyland and around ADAS, as well as our cockpit solutions to provide a very cost-effective advanced solution in vehicle to a number of different projects as we go forward. So I think we'll see that continue to develop as we go into next year and hopefully begin shipment in late 26, early 27.

Thank you, Ziyu. Hi, Nona. This is Ziyu speaking. Thanks for the questions. The first one, overseas revenue, we are strongly moving forward right now. So we are targeting 2020, we have 30% revenue of the company from overseas, outside China. And 2030, we have 50% revenue of the company from overseas, outside China. That we already had very solid pipeline. Also, we announced within the last two quarters, we already had accumulate 2.5 billion US dollar total overseas revenue order. We already had. So we are still running forward next quarter. We will keep updated to the market. That's the answer for your first question. The second one, our LiDAR, flash-based LiDAR, is very going well. We are full-speed R&D with our first customer OEM for robotics provider in the market.

So we believe we'll be ready to the market next quarter for 2026. That's what we are targeting now. So everything is going well. We're confident on that. Yeah, that's the second answer to you, Lorna.

Yeah, Derek, this is Peter. Good to hear from you. Thanks for your question. And, you know, as we look at our business as it continues to scale and grow, you know, we're continuing, as we've talked about in many of these calls, to drive ECARX to be a global player in the marketplace, you know, in the automotive technology marketplace. We certainly see, you know, we've demonstrated with our products that we've launched on Volvo vehicles, the wins we've had with Volkswagen that we got to announce the additional wins and potential programs in our pipeline, that we have a clear ability to scale the technology globally, deliver very solid, mature, robust solutions into the market, both on high-volume vehicles as well as high-technology applications.

And I think we'll be continuing to grow the company in that direction. We announced earlier this year that we're launching a center in Singapore that will drive a lot of our global supply chain efforts. We'll house both in Singapore and throughout South Asia, house a lot of our capabilities to deliver global solutions from those locations into OEMs in the European market and in the Americas. And I think we'll continue then to develop into a framework where we have a fantastic solution in China for China and high technology solutions that we're able to deliver to the global automakers in Europe and the Americas.

So I think you'll see us continue to develop down that track.

Xia Shen Shen OK. Thanks, operator. Thanks, everyone, for joining today's earnings call. So we very appreciate that. Today is a very important milestone for the company and for the team. So these earnings, our results are very successful. We achieved the first time the broke-even and profitable in EBITDA level, at a free cash flow level in the company history. So we are so part of the team because most of the tech company automotive, so they haven't started broke-even and profitable.

But ECARX is going well. The revenue is bigger and bigger and stronger. So also, we are starting to be profitable and going forward with a very health financing situation. Also, we are full-speed globalization. We have big volume and strong lifecycle, not only from China, but also for overseas in the future. Also, we already had a big win for the global OEMs. Also, we will full-speed with other global OEMs soon. We believe and confidence our advantage will be very obvious and significant in the market. So thanks again, and thank you, everybody. Thanks.