ECARX's Q3 2025 Earnings Call: Contradictions Emerge on Revenue, Margins, Overseas Strategy, and Financial Outlook

Date of Call: November 3, 2025

Financials Results

• Revenue: $220.0M, up 11% YOY and up ~41% QoQ (reported ~USD 219.9M)
• Gross Margin: 22%, reported as ~4% improvement YOY and ~11% improvement sequentially
• Operating Margin: Operating income turned positive at $3.0M (operating breakeven); operating margin percent not disclosed

Guidance:

• Maintain profitability in Q4 2025.
• Expect Q4 volume and revenue to reach historical highs (peak season) and execute to maintain penetration and strong growth.
• Target double-digit revenue growth in 2025 and continued profitability into 2026.
• Overseas revenue targets: ~30% by 2028 and ~50% by 2030; >$2.5B overseas lifetime orders already in pipeline.
• Flash-based LiDAR on track for market readiness by Q4 2026.
• China capacity ~1M units; scaling global manufacturing partnerships to support expansion.

Business Commentary:

* Profitability Milestone:

Sentiment Analysis:

Overall Tone: Positive

• Management emphasized milestones: “we became net profitable for the first time achieving breakeven with net profit of USD 0.9 million,” reported revenue growth of 11% YOY (Q3 ~$220M), EBITDA of ~$8.3M, and highlighted new large overseas wins and a $150M convertible notes raise supporting expansion and confidence.

Q&A:

• Question from Huang Wei (Deutsche Bank AG): You previously guided second half volume to ~1.4M–1.5M units. Is that still the same for Q4?
  Response: Mgmt: Q4 is peak season; expect continued strong momentum — volumes and revenue to reach historical highs and will execute to maintain penetration and strong growth.

• Question from Huang Wei (Deutsche Bank AG): With potential industry weakness in 2026, do you expect a much weaker Q1 next year? Any guidance for 2026 volume, revenue and profitability?
  Response: Mgmt: Q1 is typically low season but product momentum (Antora, Pikes), backlog and global pipeline should mitigate seasonality; expect to maintain profitability in Q4 and extend profitability into 2026, with planning indicating continued pipeline growth.

• Question from Huang Wei (Deutsche Bank AG): You noted overseas lifetime value jumped to $2.5B; how many new overseas projects were won in Q3?
  Response: Mgmt: Secured additional projects this quarter including another high-volume win with a leading European automaker; pipeline expanded substantially (total overseas contracted lifetime revenue now >$2.5B).

• Question from Danlin Ren (China International Capital Corporation Limited): Please elaborate on production capacity planning and CapEx to support Geely Galaxy order ramps.
  Response: Mgmt: Scaling smart factory in Fuyang/Hangzhou; China capacity ~1M units (more than doubled YoY) and ramping further; working with global manufacturing partners in South Asia, South America and Europe to scale internationally.

• Question from Danlin Ren (China International Capital Corporation Limited): ASP and hardware gross margin range for Qualcomm-based platforms?
  Response: Mgmt: ASP range ~RMB 2,000–4,000; hardware margin maintained in the low double digits (~10%–15%); Pikes (Qualcomm 8295) helped ASP rise ~9% sequentially.

• Question from Danlin Ren (China International Capital Corporation Limited): Strategy and R&D progress for integrating large cockpit/LLM models into vehicles?
  Response: Mgmt: Full‑stack approach—DeepSeek integration and ECARX AutoGPT framework deployed (e.g., Geely M9, Lincoln); continuing global partner development and will showcase next-gen AI cockpit solutions at CES.

• Question from Huijun Pang (DBS Bank Ltd.): What drove the hardware gross margin increase to ~15% and is it sustainable into Q4 and next year?
  Response: Mgmt: Margin improvement driven by higher service revenue mix, successful product/portfolio selling (Pikes/Antora), and upstream supply‑chain cost reductions via commercial negotiations; expect momentum to continue into Q4 and beyond.

• Question from Huijun Pang (DBS Bank Ltd.): How has the Skyland ADAS domain controller performed this quarter and outlook for ADAS domain controller shipments?
  Response: Mgmt: Skyland continues to grow across Geely vehicles and other deployments; working on fusion solutions (Antora + next‑gen) with shipments targeted late 2026/early 2027.

• Question from Nora Min (UBS Investment Bank): What percentage of current order intake is from overseas and how fast will this increase? Any plans for humanoid robots; update on LiDAR?
  Response: Mgmt: Target overseas revenue of ~30% by 2028 and ~50% by 2030; already have >$2.5B overseas lifetime orders in pipeline. Flash‑based LiDAR R&D progressing well with market readiness targeted Q4 2026; no substantive update on humanoid robots.

• Question from Derek Soderberg (Cantor Fitzgerald & Co.): How are you positioning the company amid SoC/geopolitical trade dynamics?
  Response: Mgmt: Positioning ECARX as a global automotive technology provider—scaling mature products globally, establishing supply‑chain and engineering centers (e.g., Singapore), and leveraging South Asia capabilities to serve Europe and the Americas.

Contradiction Point 1

Revenue and Volume Guidance

It involves changes in financial forecasts, specifically regarding volume and revenue guidance, which are critical indicators for investors.

Has your Q4 guidance remained unchanged, with second-half volume at 1.4 to 1.5 million units? - [Huang Wei](Deutsche Bank AG, Research Division)

2025Q3: We are maintaining our guidance for Q4. In Q3, we delivered 670,000 hardware units, marking a 51% year-over-year growth. We expect strong momentum to continue into Q4, with both volume and revenue reaching historical highs. - [Phil Zhou](CFO)

Can you provide volume guidance for the second half and discuss first-half pricing pressures? - Huang Wei (Deutsche Bank AG, Research Division)

2025Q2: ECARX expects to deliver 1.4-1.5 million vehicles in the second half, reaching nearly 2.5-2.6 million vehicles by the end of the year, reflecting a 30% year-over-year growth. - [Jing Zhou](CFO)

Contradiction Point 2

Gross Margin Expectations

It involves changes in financial forecasts, specifically regarding gross margin expectations, which are critical indicators for investors.

What factors contributed to the hardware gross margin increase to 15%, and is this margin sustainable? - [Elizabelle Pang](DBS Bank Ltd., Research Division)

2025Q3: Our gross margin improvement is due to successful portfolio selling, increased revenue mix from services, and effective cost management with our upstream supply chain. This momentum is expected to continue into Q4 and next year. - [Phil Zhou](CFO)

What are the key growth drivers for the second half and next year, and how is overseas expansion progressing? - Yifei Lu (UOB Kay Hian Research Pte Ltd)

2025Q2: Gross margins for Q3 are expected around 75%, with full-year guidance in the mid-70s. - [Jing Zhou](CFO)

Contradiction Point 3

Overseas Revenue and Market Expansion Strategy

It highlights the differing expectations and timelines for ECARX's overseas market penetration, which is a key growth strategy for the company.

What percentage of current order intake is from overseas? At what rate will this percentage grow over the next few years? - [Nora Min](UBS Investment Bank, Research Division)

2025Q3: Our target is for 30% of our revenue to come from overseas by 2028 and 50% by 2030. - [Ziyu Shen](CEO)

What is the long-term outlook for non-automotive LiDAR applications? What progress has been made in international client acquisition and overseas R&D/production expansion since the VW design win? What progress has been made in in-house chip development? - [Danlin Ren](China International Capital Corporation Limited, Research Division)

2025Q2: We are expanding globally, working with manufacturing partners in South Asia, South America, and Europe to support our global supply chain needs. - [Peter W. Cirino](COO)

Contradiction Point 4

Gross Margin and Financial Expectations

It involves changes in financial forecasts, specifically regarding gross margin expectations, which are critical indicators for investors.

Is your Q4 guidance unchanged from previous guidance, with second-half volume of approximately 1.4 to 1.5 million units? - [Huang Wei](Deutsche Bank AG, Research Division)

2025Q3: Our gross margin improvement is due to successful portfolio selling, increased revenue mix from services, and effective cost management with our upstream supply chain. This momentum is expected to continue into Q4 and next year. - [Phil Zhou](CFO)

Can management provide guidance on revenue, gross margin, and the 2025 breakeven point? How do you assess the opportunities for ECARX, the PAM opportunity, and customer demand for cockpit and driving solutions? - [Tony Shen](SPDB International)

2024Q4: The company aims to maintain gross margins above 20% through a balanced software and services approach and effective cost management. Breakeven targets are supported by growth in installation rates, operational efficiency, and cost optimization. - [Phil Zhou](CFO)