ECARX Holdings, Inc. Price & Performance (ECX)

Further information of 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 Zui, Please go ahead. Thank you, Renee. Hello, everyone, and thank you for joining our fourth quarter and full year earnings call today. 2024 was a remarkable year for ECARX. Marked by significant milestone and progress across our business. We continued to execute on our strategic vision. Further stressing our position as a leading provider of intelligent solutions for automakers on a global scale. [indiscernible] continuing to build towards software defined vehicles, We remain at the forefront with a clear focus on strengthening and expanding our portfolio of cutting edge. Cost effective solutions The global automotive market continued to grow although at a slow pace in an increasingly challenging environment. Global vehicle sales grew by approximately 2% in 2024, to 91,000,000. Including 64,000,000 passenger vehicles. [indiscernible] China continued to outpace the rest of world in '24 with passenger vehicle sales increasing 6% to $28,000,000 This was primarily driven by NEEBs.

Where sales surged to an impressive 13,000,000 up 36% and accounting for over 40% of sales. Chinese investment into advanced high quality and high-tech production is pouring a new economic future. As growth slows and remains uneven globally, it becomes ever more important for companies to stand out from competition and define themselves. We are capitalizing on this growing demand and helping automakers distinguish themselves with our innovative product portfolio. Diverse custom base and strategic global partnerships, is already having an impact, which is clear reflects in our performance last quarter and throughout the year. Revenue during the quarter and the year was up 418%, [indiscernible] With gross margin of 21.220.8%. [indiscernible] North Baylee our opening lose [indiscernible] while our business kept growing with the partial sale of an equity investment. This allow us to hit breakeven at EBITDA level during the quarter. Strengthening our confidence in reaching full year breakeven in 2025. [indiscernible] Total shipments reached record high of 3,000,000 last year, up 33% year over year. With over 700,000 ships during the fourth quarter alone. Up 10% from last quarter the end of twenty twenty four. There were over 8,100,000 vehicles on the road incorporating ECARX s technology.

This strong performance was driven by the vast demand for Geely models [indiscernible] [indiscernible] StarWish, and StarShift seven. The success of these models helped JD exceed its annual sales target last year with momentum carrying into January 2025 where GD sales bonus for the month hit a record high. We secured a new project with Volkswagen Group during the quarter. Expanding our global customer base to 18 automakers across 28 brands. This project win is a milestone for us and our solutions. Which will be deployed in vehicle across EMEA and America's expanding our global reach and demonstrating to a broader audience how our full stack solutions can be seamlessly customized for deployment. Regardless of market, we also won a number of new projects from existing customers as our solutions are expanded to cover even more of their vehicles. We released our AutoGPG in vehicle AI large language model application last quarter and quickly integrated multi LOLMS. Large modelings, [indiscernible] This underscores the unique value proposition we offer to global oil majors with cutting edge technologies supported by our growing ecosystem of strategic partnerships. Before I hand the call over to Peter, I would like to reiterate the optimized and the confidence we have in our future growth prospects.

Having achieved a breakeven during the quarter, we are targeting positive EBITDA for full year 2021. The US20 million dollars share repurchase program we announced in December further underscores these optimism. The growing prominence of software defined vehicles continues to create tremendous opportunities for us as we replicate and scale our solutions globally. Enabling us to drive sustainable growth and value for our shareholders. I will now pass the call over to Peter. Who will go through the operating results of the quarter in more detail. Thank you, Ziyu, and good day to everyone. I'll start with our growing customer base. Where Ziyu mentioned, we secured a milestone project win with the Volkswagen Group during the quarter. This project will deploy our Antora 1,000 computing platform [indiscernible] integrated with Google Automotive Services in multiple vehicles through Volkswagen's global entry infotainment initiative which is set to launch across EMEA and The Americas towards the end of this decade. We also won three new design wins from our existing customers with two deploying our Galena computing platforms and one deploying Makalu. On the product front, we had several exciting new vehicles launched this quarter. [indiscernible] Following the strong launch in China, of the Geely Galaxy E5 last August, and an overseas version known as the Geely Galaxy E X5 [indiscernible] entered start of production during the quarter and began deliveries in early twenty twenty five.

The EX5 will be the first vehicle overseas to deploy the Antora 1,000 competing platform demonstrating our technological strength and ability to deliver this solution for both the PRC We cumulatively shipped approximately 500,000 Antorus Series units by the end of last year with shipments expected to surpass 1,000,000 in 2025. [indiscernible] This provides automakers with a cost effective way to integrate digital cockpit and driving capabilities which will be deployed as Geely's mainstream and level solution on future models. The Hang Chi Tiangong five started production late last year and was launched in January 2025 deploying the first intelligent cockpit jointly developed under our strategic partnership with FAW.

We [indiscernible] Powered by the Antora 1,000 Pro, and integrated with a customized Hongqi FAW OS built on top [indiscernible] [indiscernible] and AutoGBT [indiscernible] new industry benchmarks with an immersive and AI driven intelligent cockpit experience. [indiscernible] A similar solution will be deployed on another Hong Chi model [indiscernible] is expected to launch in the first quarter of twenty twenty five. [indiscernible] We are also working on an ADAS solution for five hunky vehicles with startup production scheduled for the third quarter further deepening our relationship. [indiscernible] We continue to drive innovation in other areas as well, ensuring that our automaker partners have access to cutting edge solutions. Our CloudPeak hypervisor a core component of the CloudPeak software stack, received ISO 26,262, ASEL D certification in January. And the highest level of certification and the reflection of our focus on functional safety throughout the product lifecycle. CloudPeak was integrated into the Mackaloo computing platform and deployed on the Link and Co Z10 Starbuff which was launched in November of last year. This customized eSports version of the Z10 allow users to play AAA games on the go, Momentum for the Skyline Pro ADAS solution is building as automakers are increasingly seeking cost effective solutions that they can rapidly bring to market.

Skyland Pro has been integrated into Geely's Geely's unified intelligent driving system powering the recently launched Galaxy E8 all electric sedan. The solution can be easily replicated and scaled across various brands and models, offering users a unique driving experience with advanced features such as automatic parking, assistance and highway NOA. The Skyland Pro already powers vehicles including the Lincoln Co. Zero eight, and Lincoln Co seven launched in 2023. [indiscernible] The eight model received a high CN cap rating remains in strong demand. With the battleground for automakers to differentiate themselves, now expanding to ADAS, and end vehicle intelligence Intelligent Driving Solutions will be crucial to drive the long term sustainable development of our business and the global automotive industry. With a clear roadmap for future ADAS solutions, we are already capitalizing this opportunity. And will continue to drive innovation going forward. Our robust intellectual property portfolio keeps growing. With six ninety two registered patents [indiscernible] and seven twenty three patent pending applications globally, as of 12/31/2024. To demonstrate our robust portfolio of technologies, we attended numerous industry events during the quarter. In November, we showcased the Skyland Pro 8S solution at AutoSense China We demonstrating how it can empower automakers with high performance, cost effective intelligent driving solutions.

That same month, we also represented the automotive sector at the Saudi Arabia National Quality Conference where we received the SASO award for contributions to Generative AI quality assurance. Reflecting the impact that AutoGPT is having on the industry. [indiscernible] We carried this momentum into 2025 at CES in January where one of the dominant themes was AI. Interest in automotive applications of AI was extremely high this year making AutoGPT a real point of interest. Over four days at CES, our management team in more than 50 meetings including 17 with automakers from across the world. We also showcased the power and versatility of our solutions at our booth including the Galena, Antora and MacLOO platforms. Solutions that all have been validated and deployed in vehicles currently in production. Along with our ADAS technologies. A key point of our messaging conversations was the power of AutoGPT. Specifically its core auto agent auto flow, auto scene and auto equal capabilities built on top of several of the world's leading LLMs to enhance the in vehicle experience. Automakers and ecosystem partners were captivated by the auto agents' adaptability to unique driver preferences [indiscernible] AutoCene's monitoring of in vehicle behavior, [indiscernible] auto flows interaction with mobile apps, [indiscernible] and AutoEco's seamless connectivity with in vehicle applications across devices.

Creating a comprehensive range of AI enhanced solutions. Our presentation at CES helped us set the agenda for the year to come. With a focus on expanding our global business, by empowering automakers with cost and power efficient high quality solutions. I'd like to end with a quick update on our FUIONE smart facility and our strategy to integrate manufacturing and supply chain processes. Production continues to ramp up with more than 60,000 NTOR units produced in December alone and further capacity expansions planned throughout this year. In conclusion, 2024 was a remarkable year for us and I remain highly optimistic that this will continue into 2025. Especially as we lean into technological innovation, and continue to diversify our customer base globally. I will now turn the call over to Phil, who will go through our financial results.

Thank you, Peter, and hello, everyone. We closed out the year with a strong growth momentum despite the intense market competition. Hitting breakeven at the EBITDA level during the fourth quarter. Total revenue for the quarter was RMB1.9 billion, an increase of 4% year over year. And 36% sequentially. [indiscernible] Sales of goods revenue was RMB1.5 billion, up 16% year over year driven by robust demand for our computing platforms. Especially the Antola series and Makalu, accounted for approximately 29% of sales of goods revenue. Software license revenue came in at RMB19 million, a decrease of 3% year over year and an increase of 7% sequentially. The year over year decrease was due to a decrease in the volume of legacy project software sales while the sequential increase was driven by the ramp up of eClag's operating system in line with the increase in shipments of the Antologu platform. Service revenue was RMB326 million a decrease of 31% year over year and a sub substantial increase of 102% sequentially. Primarily impacted by engineering planning schedules and the timing of a booking design and development contracts revenue. Gross profit for the quarter was RMB411 million, down 4% year over year. Resulting in a gross margin of 21.2% Total cost of RANU increased 6% year over year during the quarter.

Mainly driven by an increase in sales volumes for digital carpets. [indiscernible] The decrease in gross margin was primarily the result of our pricing strategy to deepen penetration and drive computing hardware growth. As well as a shift in the overall revenue mix compared to prior quarters. [indiscernible] As the industry wide pricing pressure for automakers have deepened, we expect margins on hardware products to remain challenging over the mid to term. To address these challenge, we will focus on optimizing product costs through economics of scale our supply chain and the manufacturing strategy, and improving overall operational efficiency. [indiscernible] Furthermore, will continue to strive a careful balance between top line growth profitability and the capital investment. Operating expenses during the quarter decreased 32% year over year, primarily driven by the continuous expansion of our global operations and R and D efficiency improvements as well as synergies created by the reallocation and integration of R and D resources. Adjusted EBITDA gain were 70,000,000 during the quarter, a significant improvement compared to a loss of RMB200 $36,000,000 during the same period last year. Primarily attributable to the decrease in total operating expenses. As well as games from the partial sales of an equity investment.

Loss per share was RMB0.11 compared to the same period last year RMB0.1. $8.09. We closed out the year with a robust performance with a full year total revenue of RMB5.6 billion, up 18% year over year Gross profit of RMB1.2 billion, down 9% year over year and the gross margins of 20.8%. [indiscernible] efficiency by consolidating and reallocating resources and prioritizing investments in our international business and R and D expansion. Full year operating expenses decreased 7% year over year with end adjusted EBITDA loss of $592,000,000 an improvement of hundred and $90,000,000 from last year. Moving on to our balance sheet. As of the end of the year, we had RMB367 million of cash and the restricted cash. [indiscernible] As we continue to optimize working capital and enhance profitability, we are proactively exploring options for our capital raise, including equity, or debt financing to support our strategic objectives. [indiscernible] As part of this effort, we recently filed an F3 registration statement allowing us to rapidly capitalize on favorable market conditions as late arise. Looking forward, we will further improve operating expenses and the product costs. With a particular focus on procurement, supply chain, manufacturing strategy and efficiency. We will continue to drive growth and expand the addressable market for our solutions by penetrating deeper into the Geely and the Geely ecosystems and growing our global of maker customer base further.

For product offerings, we will continuously invest in R and D to capitalize on mid- to long term growth opportunities. Additionally, we will accelerate the build out of two closed loop systems, one for China and the other for global markets. Each spanning the entire process from R and D to delivery. In summary, we will focus on the unique value proposition we offer to automakers, further diversify our global customer base [indiscernible] proactively mitigate the impact of an increasingly challenging geopolitical environment and improve our cost structure to ensure the long term sustainability of our business model and the financial performance. That concludes our prepared remarks today. I would now like to hand the call back to the operator to begin the Q and A session.

Thank you. Our first question comes from the line of Dan Lin Wren from CIC CICC. Please go ahead. Your line is open. [indiscernible] evening, everyone. This is Gannigan from CICC Auto team. Congratulations on your strong results last year. And I have three quick questions to check with you. The first one is, could you share the company's global production capacity layout and how you expect to pace the implementation of global orders in the coming years? The second one is, what's your current plan for ADAS [indiscernible] Which clients are you working with? And where do you see growth of opportunities in your collaboration with Geely? The last one is what's your overall strategic roadmap and development goals for over the next three to five years? That's all my questions.

Hi, Devin. This is Peter. I'll take your first question. Just talk a little bit about our manufacturing strategy 2024 was a big milestone year for us in terms of manufacturing because we've ramped up our capabilities in China quite extensively. We if you remember, we took the control of a joint venture we had established quite early in ECARX Access Life. And also opened our new Freon facility where today very close to that site. We're holding a big supplier day. So the Puyong facility continues to ramp up very aggressively to serve our needs in China. And will continue to be our premier site we're investing heavily in in technology there to have a leading manufacturing facility in the China region. Globally, as we expand as we mentioned earlier in our remarks, we had a big milestone win with Volkswagen. And as we continue to expand with opportunities in South America, India and in Europe. Would expect that we would probably use some EMS or contract manufacturing partners that will help us expand our production capacity we're continuing to expand engineering services or engineering capabilities to serve the global OEMs. So I think we'll use very similar strategy that we utilized in China as we continue our growth over the last seven years that we have started with some partnership relationships and then we'll continue to expand as it makes sense as we grow our business.

Okay.

So yes, okay. So this is Steve speaking.

So I would take the second question, so about ADAS. We have already made Skyline Pro [indiscernible] [indiscernible] Last year.

Yes, I think two years ago, yes. [indiscernible] and also can support highway NLP function. Also, we are following the urban feature as well. And this product already be a part of the GDADAS roadmap they just announced. Although we are keep working [indiscernible] Although we just announced 81,000 SoC with 5G. Company together. That is a very high performance AI computing [indiscernible] So very similar to FE 1,000 from Antolla platform, we [indiscernible] [indiscernible] computer units for very high performance venture on this platform. We are starting investments on development and we have made production next two years. [indiscernible] Also, I think we are investing the ADAS this [indiscernible] to stress our portfolio and to turn to earn more growth next three years. That's all our expectations here.

Okay. Thank you. It's quite clear. Thank you. We'll now move on to our next question. Our next question comes from the line of Dai Shen from S. P. SPDBI. Please go ahead. Your line is open.

DM management, this is Tony.

From SDBB International. First of all, congratulations on the EBITDA breakeven in the first quarter of twenty twenty four. This is perfect. And so I've got two questions here. The first question is about the guidance or the outlook of 2025. Can the management sales share some color or guidance for revenue gross margin and also the breakeven point of 2025? This is my first question. And the second question may be also related to the the ADAS penetration rate increasing significantly. Especially powered by BYD in the February. How do we see the opportunities for ECARX for eKaiX TAM opportunity and the customer demand and for both the cockpit and the driving solutions. These are my two questions. Thank you.

Hello. Hi. So this is Xu speaking, okay. Thank you for questions. The first question I think the monster is very clear. I think we infunuate we are very, very focused on breakeven. That's very main priority for us. So of course, we still will have growth of revenue that will be the second priority for under breakeven. So that breakeven is a top priority for us. Because we believe the health of cash flow and the finance and balance sheet the most important the company, the global journey. Because we already win the global OEM, we have to go very finance balance sheet to support our global expansion. So that's what breakeven is my main priority for the company. To answer your first question. Okay?

And second question about [indiscernible] And also digit copy opportunity even yes, we already know BYD announcement So we believe that ADAS growth is very significant China market. And most of OEM is following their journey BYD is doing. So that's why I think it's a good opportunity. I just answered the question to CIC before that. We invest the Skyline and Skyline pool already. Also, we are fast moving with the five gs chipset SoC 81,000. Also, we will go a media platform as well. For soy. So that's why I think ADAS portfolio will be very important be part of the ECARX X, that's three years growth. So that's why we believe ADAS feature and ADAS software development be very key for the company. We will continue to invest in this area.

Okay, perfect. That is very clear. May I have a quick follow-up? Can we have any color on the gross margin maybe for 2025, especially how do you see the price trend related to gross margin fee? Okay. This is my last question. Thank you.

Hey, Sundellis, this is Bill. I'm happy to address question. So regarding the margin, performance, as I can see that in Q4, last year, we just recovered our gross margin performance back to 20% and above. And that reflects our ability to manage the portfolio selling So in Q4, we sold our balance software and services At the same time, we also drove a very effective cost down activities. So that's why in the end, we are able to recover the margin back to 20%. So coming when moving into 10% to 25%, this strategy will continue. For sure, we foresee the headwinds ahead. Regarding the pricing erosion, pricing pressure, but at the same time, the company is ready to drive upstream supply chain management. We will keep optimizing cost and as well as the scale, the economics of scale. So at the same time, right, back to you, let me add some meter to your first question regarding our breakeven, right? Our breakeven the path to breakeven in '25 is good on the data driven strategy. Right? And with measurable progress. We focus on multi financial dimensions as well, right? First of all, we go for sure we will accelerate the top line growth with the volume scaling. [indiscernible] installation rate and the continuing rate keep increasing.

Last year, we shipped in total nearly 500,000 units. In our customers. At the same time, right, we foresee such kind of a mix shift keep climbing. Was definitely contributed to our revenue growth as well as our margin performance. Second, we will drive the operational efficiency improvement as well. So we already systematically reduced our OpEx versus revenue ratio.

From 20% to 53% to 34% in '24 And in 2025, we foresee the percentage will further optimize the chip. 100% plus and which is really helpful. For our breakeven achievement. And yes, as I mentioned earlier, the impact is cost structure optimization definitely will help us to achieve that. Goal as well. So hopefully, I can address your question and by adding more meat with the [indiscernible] Okay, perfect. Thank you, Sohu. Thank you, Phil. Thank you, management.

Thank you.

We'll now move on to our next question Our next question comes from the line of Jenny Wang from UBS. Please go ahead. Your line is open.

Hi.

This is Jenny Wang from UBS. Auto Team. Congratulations on booking the EBITDA on the Saks for taking my questions. I have two questions. First, could you please provide a revenue breakdown by clients for $10.24 and maybe share us your outlook for your current mix for the next five to ten years? And second the second question is that as the largest smart cost supplier, for CV brand, do you expect ECARX to benefit from Geely's supply chain consolidation and increase the share at JD brands further. We [indiscernible] as a ceiling of your share at Geely Okay. Jenny, maybe I'll take your questions. I think as we look across our customer base, as Ziyu has highlighted many times, continuing to diversify our revenue from additional customers is very critical for our strategic path forward. And we are very selective as we do that. In 2020, 2024 at the end of the year, we launched the two Home Chi models, but that will happen I think between December and January. And then as we go through 2025, we'll see additional launches with with Hong Chi and with FAW as we continue to expand our relationship and deepening our partnership with them.

Additionally, we'll certainly see some expansion of our products that will Hong Chi as well. Beyond the digital copy, which is where we've started that relationship. We're continuing to focus in China on selective expansion as we see customers that align with our winning strategy We're very excited to engage with them and develop similar relationships that we have with our existing customers. From a global perspective, as we mentioned, the activity with Volkswagen is certainly a very important milestone for the company. That product will launch as we mentioned a few years from now, which is the normal development cycle. In the international market. And we're already engaged on already a number of mature RFQs that we would expect to be able to continue to gain traction in the global market and capitalize on the capabilities that we've built up Our largest vehicle in the global market that we launched was the EX30. And we're continuing to expand our relationship with with Volvo Cars.

And then lastly, you talked about Geely. I mean, we've definitely seen growth with with the Geely brands. The Antora platform is a key element of Geely's current architecture. We'll continue to deploy across additional models as we go through the next few design cycles Ziyu, I believe, had mentioned earlier around the growth of the Antora shipments expected in 2025 and beyond. So we expect that product continues to gain good share throughout the market and deliver a very fantastic user experience. To the consumers of the vehicle. So we're quite excited about the deep partnership that we have built with the Geely brands and we expect to continue to build off that both in developing hero products like our Antora series as well as deepening our relationship with them.

Yes. And regarding the Raman mix, from different customer types, And as Peter mentioned, in 2025, we will massively [indiscernible] [indiscernible] At the same time, starting from '26, [indiscernible] And when moving to the '27, twenty eight timeframe, the post vacant business, we will start to do the domestic supply as well. So let's the end, by 2027, 2028 timeframe, [indiscernible] [indiscernible] We are on the right trajectory to achieve that.

Thank you so much.

Okay. Thanks, Jenny.

Thank you. We'll now move on to our next question. Our next question comes from the line of Wei Huang from Deutsche Bank. Please go ahead. Your line is open.

Hi. Thanks for taking my question.

Question is on the very strong set of results. I have three quick questions.

The first one is, can you maybe give us the Geely share of your total revenue in 2024? The second is the Lincoln co brand is a significant customer for ECARX. Do we see any impact on our business with them given their merger into Zicker? And the third is the JD recently announced the Galaxy E8 with the Qualcomm 8,295 chip. Is this using our Pyx computing platform? Thank you.

Thank you. So the first question is regarding the Geely revenue contribution to 2024 performance, right?

Yes.

Okay. So in 2024, I'd say that majority of revenues will come from Geely, but we significantly shift our focus to non Geely expansion. So far, nearly 80% of the revenue still came from Geely. And the GD related to the ecosystem business. And 20% is from non Gilead. Business. So that is the general answer, general summary about our revenue performance. Yes, that's in 2024. And also you are regarding information from public, we just launched the FAW vehicle And also in 2025, we will have the significant revenue from FAW. With strength and then GD revenue. Also, we just win the Volkswagen Global Fuel 02/2007. So that's why we have super confidence in coming three years where we strongly strengthen NGT revenue. The company. Okay. So the first question is okay.

Yes, that is very clear. Thank you.

Okay. So the second question about the Zinc Co and the bigger [indiscernible] So I think we do have too much impact on that because we are still very strong PO1 supplier for the in core the current demand portfolio. Actually, everybody know as you know, [indiscernible] [indiscernible] [indiscernible] Software together. In linking core ECARX. Also, we are keep working with them very closely. And also every user are very, very, very enjoy The U. S. Guidance from PlayAuto in the system. So that's why I think in near future, in the coming years, we're still very important to partner with the Ingold brand. There's no doubt about that, I think. And also you mentioned [indiscernible] Right? So Glax E8, I think, will is still using brand new oral. We are a software partner with GD. For the brand new oral adoption. But these hardware, 8,295 is not from us. That's from others prior. But in GLASS also we provided guidelines ADAS system. Directly to E8. And also we provided a full feature for including highway and LTE feature on the VACVI eight. Yes.

Understood. That is very clear. That's all from me. Thank you.

Thank you.

Thank you. There are no further questions at this time. So I'll hand the call back to COO, Peter for closing remarks.

Okay. Well, first of all, I just wanted to thank all the members who joined the call. We appreciate the questions. [indiscernible] really had a milestone quarter in a great and of the year of 2024. Achieving positive EBITDA was a big effort that the organization was extremely focused on. As you mentioned, we're continuing to focus on repeating those results throughout full year 2025. We had a robust launch pipeline that we discussed as we continue to deepen our relationship with new customers such as FAW. And our announcement for Volvo ECARX or excuse me, for Volkswagen, was a big impact for the organization that we're excited to deepen our global relationships with key customers. So you everyone for the call today. And appreciate everyone's engagement.

Thank you for participating. You may now disconnect. Speakers, please stand by.