ECARX's Q2 2025 Earnings Call: Contradictions Emerge on Overseas Expansion, Geely Diversification, and ADAS Strategy

The above is the analysis of the conflicting points in this earnings call

Date of Call: August 26, 2025

Financials Results

• Revenue: $156M; YOY change not disclosed
• Gross Margin: 11%, a 12% decrease vs prior-year period

Guidance:

- Full-year 2025 revenue expected to grow close to 20% YOY.- Adjusted EBITDA breakeven targeted in each remaining quarter and for full-year 2025.- Several significant vehicle programs scheduled for SOP in 2H 2025.- 2H 2025 vehicle shipments anticipated at 1.4–1.5 million; full-year 2.5–2.6 million (~30% YOY growth).- New global HQ in Singapore to open in 2H 2025 to support global IP, R&D, and supply chain.

Business Commentary:

Vehicle Shipments and Market Expansion:* - ECARX shipped 532,000 units in Q2 2025, contributing to a total of over 9.3 million vehicles on the road with ECARX technology by the end of June 2025. - The growth in shipments reflects the company's operational excellence and strategic partnerships, particularly with Geely, which accounts for a significant portion of its business.

• Revenue and Pricing Strategy:
• ECARX reported revenue of $156 million for Q2 2025, with a 1% year-over-year increase in sales of goods revenue, driven by a double-digit increase in customer demand.

• The company's pricing strategy, which involved strategic price reductions to accelerate market penetration, partially offset growth from increased demand, impacting overall revenue.

• Operational Efficiency and Cost Management:

• The company achieved a 20% year-over-year reduction in operating expenses to $57.2 million in Q2 2025.

• This was due to the disciplined execution of a lean operating strategy, which included optimizing R&D and operational efficiencies.

• International Business and Partnerships:

• ECARX secured lifetime revenue of over $1 billion from overseas contracts, with 14 active projects and 4 wins with global automakers.
• The company's expansion into global markets, as exemplified by the VW Brazil project, is driven by its robust technology and delivery capabilities.
  

  Sentiment Analysis:

  • Management cited seasonality and pricing actions; gross margin was 11%, a 12% decrease YOY, and gross profit declined 58% YOY. However, they expect full-year revenue to recover strongly and grow close to 20% YOY and remain confident in achieving adjusted EBITDA breakeven in each remaining quarter and for the full year 2025, supported by several SOPs in 2H.

  Q&A:

  • Question from Danlin Ren (CICC): Outlook for non-automotive applications (e.g., LiDAR robotic lawn mower), progress on overseas expansion post-VW win, and update on in-house chip development?
  • Response: Global diversification and SoC roadmap are advancing: >$1B LTV overseas pipeline with 14 active programs (8 automakers) and 4 wins; LiDAR robotics moves to mass production in 2026; Antora/SiEngine in-house platforms and Qualcomm 8295 launches continue.
  • Question from Huang Wei (Deutsche Bank): What is the volume outlook for 2H and full-year 2025?
  • Response: 2H shipments expected at 1.4–1.5 million; full-year 2025 at 2.5–2.6 million vehicles (~30% YOY growth).
  • Question from Huang Wei (Deutsche Bank): How are pricing pressures and content-per-car trends affecting margins?
  • Response: ECARX uses flexible pricing to defend share while offsetting pressure via ~20% cost reductions, higher software mix, and overseas expansion to support margin recovery.
  • Question from Huang Wei (Deutsche Bank): Update on ADCU/fusion platforms and plans to work with Qualcomm Flex SoCs (8775)?
  • Response: 8775 is on the roadmap with opportunities in China and globally; ECARX will launch an Antora fusion platform by 2026 integrating parking and L2 ADAS features.
  • Question from Yifei Lu (UOB Kay Hian): Key growth drivers for 2H and next year, and status of overseas customer expansion?
  • Response: Growth driven by multiple 2H SOPs and new platforms (e.g., Antora 5-in-1, Venado); customer mix is diversifying (~60% China, ~40% global; non-Geely ~15%), with robust overseas pipeline and more RFQs/wins expected.