Q2 2025 ECARX Holdings Inc Earnings Call
Please go ahead.
Good day, and thank you for joining us. Welcome to Eco X's second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode after management gives their prepared remarks. There will be a question-and-answer session. As a reminder, today's conference call is being recorded. I would now like to turn the call over to your host. For today's call, I am the head of Investor Relations at ECX. Please proceed, Renee.
Renee Du: Thank you, operator. Good morning and welcome to ECARX's second quarter 2025 earnings conference call. With me today from ECARX are our Chairman and Chief Executive Officer, Li Yusheng, Chief Operating Officer, Peter Serino, and Chief Financial Officer, Phil Zhou. 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 also applies 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 a discussion 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 the earnings release. With that, I'd like to hand the call over to Zhiyu.
Thank you, operator. Good morning and welcome to the Q2 2025 ECARX Holdings Inc. earnings conference call.
With me today from ECARX are our Chairman and Chief Executive Officer, Solution, Chief Operating Officer Peter Serino, and Chief Financial Officer Phil Joel.
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 routine statements at the bottom of our earnings press release, which also applies 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.
A reconciliation of the non-GAAP financial measures to the GAAP financial measures can also be found at the bottom of the earnings release.
Renee Du: Please go ahead.
Ziyu Shen: Thank you, Renee. Hello, everyone, and thank you for joining us today. During the quarter, we continued to build up the strong momentum achieved throughout 2024 and early 2025. Despite the seasonal headwinds, we made solid progress securing key new projects, expanding partnerships, and strengthening the foundation for future growth. Our results this quarter reflect the distinct execution of our lean operating strategy and reinforce our path towards growth and EBITDA break-even in each of the remaining quarters and the four-year 2025. In Q2, we shipped 532,000 units, bringing the total number of vehicles on the road with ECARX technology to over 9.3 million at the end of June 2025. These achievements testify to the sustained operational excellence and reliability that have become hallmarks of our execution even during these challenging times.
With that, I'd like to hand the call over to you. Please go ahead.
Thank you, Renee. Hello, everyone, and thank you for joining us today.
During the quarter.
We continue to build up the strong momentum achieved throughout 2024 and early 2025.
Despite the seasonal headwinds, we made solid progress, securing key new projects.
Expanding partnerships and strengthening the foundation for future growth.
For results, this quarter reflect the distinct execution of our Ling operating strategy.
And remaining forth our path towards growth and achieve break-even in each of the remaining quarters and for the year 2025.
In order to shift 532,000 units, bringing the total number of vehicles on the road with e-CarX technology to over 9.3 million at the end of June 2025.
Ziyu Shen: As is typical for our industry, Q2 was impacted by seasonality and the timing of certain contracts with revenue reaching US$156 million on the back of strategic investments and pricing initiatives to drive future growth. The distinct execution of our lean operating strategy helped lower operating expenses by 20% to US$57.2 million, with several significant new projects expected to launch in the second half. We remain on track to reach EBITDA break-even and generate close to 20% revenue growth. The breadth of our global partnerships with automakers continues to anchor our position as a core technology provider. By Q2, I'm excited to share our current contract win already secured over US$1 billion of lifetime revenue for overseas revenue. Besides our strong position in the China market, we are very confident in our strong position in the global market as well.
These achievements testify to the sustained operational excellence and reliability that have become hallmarks of our execution, even during these challenging times.
As is typical for our industry, 42 was impacted by seasonality and the timing of certain contracts with revenue, reaching $156 million on the back of strategic investments and a pricing initiative to drive future growth.
The distinct execution of our Ling operating strategy helped lower operating expenses by 20% to $57.2 million, with several significant new projects expected to launch in the second half.
We remain on track to reach EBITDA, break even, and generate close to 20% revenue growth.
The price of our Global Partnerships with our makers continues to anchor. Our position as a core technology provider by call or two is strong. I'm excited to share that our current contract has already secured over $1 billion of lifetime revenue for overseas revenue.
Ziyu Shen: Shipments of Andorra SIRI solutions surged 112% year-over-year to 135,000 units during the quarter, providing ample fuel to sustain growth momentum going forward. Our broad portfolio of solutions, especially the flagship Andorra platform integrated with Flyme Auto, are driving the success of several GE's best-selling models, including the Galaxy brand, which surpassed 1 million accumulated sales milestones this year. This is the fastest an EV brand has ever achieved this. Following our first project award from Volkswagen Group in March 2025, I had the pleasure of accepting Volkswagen Brazil's Technical Development and Innovation Award on behalf of ECARX at their The One Partnership celebration in Brazil earlier this month. This award reflects Volkswagen's confidence in our technological innovation capabilities and the growing impact our innovative solutions are having on the global automotive industry.
Besides all of John's positions in the China market, we are very confident in our strong position in the global market as well.
Shipments of Andorra series solutions surged 112% year-over-year to 135,000 units. During the course, this provided ample fuel to sustain growth momentum going forward. Our broad portfolio of solutions, especially the flagship and Torah 10 integrated with Friday Aloe, are driving the success of several GD best-selling models, including Gap Spread, which supports 1 million accumulated sales milestones. This year, this is the first any brand has ever achieved this.
During our first project award from the Volkswagen Group in March 2015, I had the pleasure of accepting Volkswagen Brazil's Technical Development and Innovation Award on behalf of Eco X. They are the 1-part ship celebration in Brazil earlier this month.
Ziyu Shen: Notably, we also began monetizing our automotive R&D investments across new high-growth sectors with our leading developer of robotic drone molders selecting our LiDAR technology during the quarter. With mass production planned for 2026, this partnership will broaden our horizons beyond the automotive sector, validate the application of our cutting-edge technologies, and help pave the way for future opportunities in the vast robotics market. As part of our global expansion strategy, our new global headquarters in Singapore is set to open in the second half of 2025, where it will accelerate our global IT management, R&D collaboration, and supply chain optimizations, enabling us to better serve automakers across global markets. In summary, despite the impact of seasonality, our results this quarter underscore the strength and momentum we are building through operational discipline and expanding pipeline of projects, growing global presence, diversified applications, and investment in technology and infrastructure.
This award reflects Bargain's confidence in our technological innovation capabilities and the growing impact of our innovative solutions on the global automotive industry.
Not the body. We also began monetizing our Automotive R&D investments across new high-growth factors with a leading developer of Robotics Long Motors. Selecting our lighter technology during the course of the mass production plan for 206 needs partnership will broaden our horizon beyond the automotive sector, validate the application of our cutting-edge technologies, and help pave the way for future opportunities in the vast robotics market.
As part of our global expansion strategy, our new global headquarters in Singapore is set to open in the second half of 2015, where it will accelerate our global IP management R&D Corporation. This will also enable us to optimize our supply chain, allowing us to better serve our makers across global markets.
Ziyu Shen: We are well-positioned to drive the industry's transition to software-defined intelligent vehicles and also to hit our break-even target. I will now pass the call over to Peter, who will go through the operating results of the quarter in more details.
And expanding pipeline of projects, growing global presence, diversified applications, and investment in technology and infrastructure. We are well positioned to drive the industry's transition to software-defined intelligent vehicles and also to hit our break-even target.
Peter Serino: Thank you, Zhiyu, and good day, to everyone. As Zhiyu outlined, we carefully navigated typical industry seasonality and ongoing market uncertainties during the quarter and made solid progress executing our strategic priorities. We secured several major new project wins, broadened our partnerships, developed strong and innovative products, and expanded our footprint. In the second quarter, we shipped 532,000 units, bringing the cumulative total of vehicles equipped with our technologies to over 9.3 million as of June 30th. This growing installed base is a direct reflection of the trust we have built with automakers globally and the reliability and scalability of our solutions. We currently serve 18 OEMs across 28 brands globally. This is a testament to our ability to meet the diverse technology and integration requirements of leading automakers across the globe. Our partnership with Geely remains foundational, and this quarter, the momentum continued.
I will now pass the call over to Peter, who will go through the operating results of the quarter in more detail.
Thank you, Zu, and good day to everyone.
You carefully navigated typical industry seasonality and ongoing market uncertainties during the quarter and made solid progress, executing our strategic priorities.
We secured several major new project wins.
Broaden our Partnerships.
Developing strong and innovative products and expanding our footprint.
In the second quarter, we shipped 532,000 units.
Bringing the cumulative total of vehicles equipped with our technologies to over 9.3 million as of June 30.
This growing installed base is a direct reflection of the trust we have built with automakers globally.
And the reliability and scalability of our solutions.
We currently serve 180 EMS and 28 brands globally.
This is a testament to our ability to meet the diverse technology needs.
And integration requirements of leading automakers across the globe.
Our partnership with Julie remains foundational.
Peter Serino: We secured 14 new project wins from Geely alone, each slated to integrate our Andorra family of solutions, further embedding our technology into Geely's best-selling lineup. Notably, our solutions enabled Geely's Galaxy brand to surpass 1 million units in sales, the fastest any EV brand has achieved this milestone to date. Geely's Xinghuan, powered by our Venado platform and Flyme Auto Light, also led Geely's sales in the first half of the year, highlighting both the competitive edge and the value our stack provides automakers. As we deepen our core relationships, we're also diversifying and extending our technological reach. Building on the Venado platform's success in the Geely Xinghuan, we formalized a partnership to provide our Venado platform to a top five Chinese automaker for their next-generation global model. Shipments are expected to begin in 2026.
And this quarter, the momentum continued.
We secured 14 new project wins from Julia alone, each slated to integrate our Anoro family of solutions.
Further embedding our technology into Julie's best-selling lineup.
Notably, our solutions enabled Julie's Galaxy brand to suppress 1 million units in sales, the fastest any VBR has achieved this milestone to date.
Julie, sing Juan.
Powered by our Venado platform and featuring the Auto Light, also known as LED, Julie's sales increased in the first half of the year.
Highlighting both the competitive edge and the value our stack provides automakers.
As we deepen our core relationships, we are also diversifying and extending our technological reach.
Building on the Venado platform's success in July, Shing Wong, we formalized the partnership to provide our Veto platform to a top 5 Chinese automaker for their next-generation global model.
Peter Serino: We are also building a customized intelligent cockpit operating system based on Flyme Auto for a leading premium global automotive brand. This represents a major milestone in our expansion into the premium global intelligent cockpit sector and reflects the growing influence and expanding market share of Flyme Auto. Our technical leadership is now being validated beyond the automotive sector as well, with a leading global developer of robotic lawnmowers integrating our proprietary solid-state 3D LiDAR into their products. With mass production targeted for 2026, this win demonstrates how our deep automotive R&D investments have also positioned us to capitalize on the vast potential of the robotics and AI markets, supporting our strategy of long-term multi-industry applications. Our technology was pivotal in several Geely model launches during the quarter, directly supporting and deepening partnerships and further elevating our brand's market presence and technology leadership.
Shipments are expected to begin in 2026.
We are also building a customized intelligent cockpit operating system based on Flammy Auto for a leading premium global automotive brand. This represents a major milestone in our expansion into the premium global intelligent cockpit sector and reflects the growing influence and expanding market share of Flammy Auto.
Our technical leadership is now being validated beyond the automotive sector as well.
With the leading global development of robotic lawn mowers.
Integrating our proprietary solid-state, 3D LiDAR into their products.
With mass production targeted for 2026.
This win demonstrates how our deep automotive R&D investments have also positioned us to capitalize on the vast potential of the robotics and AI markets.
Supporting our strategy of long-term, multi-industry applications.
Peter Serino: In April, the fourth-generation 2025 BOU-L was launched across China, built on Geely's GEEA 3.0 architecture and equipped with our Andorra 1000 computing platform, CloudPeak cross-domain software stack, and Flyme Auto. The BOU-L delivers a modern SUV experience with advanced AI integration. In May, the flagship Geely Galaxy M9 made its debut in Milan, where it immediately had an outsized impact with its groundbreaking combination of cutting-edge NEV technology, AI features, and luxury. Built on the GEEA EVO native architecture, this is the first vehicle program to integrate our Pyx computing platform based on Qualcomm 8295 with Flyme Auto. In June, the Geely Galaxy A7 debuted with the Andorra 1000 platform and the custom Flyme OS, offering an intuitive user interface with features such as multi-zone voice recognition and seamless voice command capabilities.
Our technology was pivotal in several Glee model launches during the quarter, directly supporting and deepening partnerships and further elevating our brand market presence and technology leadership.
In April.
The fourth generation 2025 Boul was launched across China.
Built on Julie's Gea 3.0 architecture and equipped with our Anura 1000 computing platform.
Cloud Peak cross-domain, software stack, and Flyme Auto.
The B L delivers a modern SUV experience with advanced AI integration.
In May, the flagship G Galaxy M9 made its debut in Milan, where it immediately had an outsized impact with its groundbreaking combination of cutting-edge Neb technology.
AI features and luxury.
Built on the Gea, Evo, native architecture, this is the first vehicle program to integrate our Pikes competing platform. Based on Qualcomm 8295, we're flying the auto.
Peter Serino: Launched earlier this year, the Galaxy 8 and Xingyao 8 PHEV sedans also continue to drive strong demand. Both have our Skyline Pro ADAS solution integrated into Geely's G-PILOT H1 unified intelligent driving system, which provides highway and elevated road NOA functionalities. Additionally, we powered the launch of the Geely Galaxy EX5 across 26 countries, where it became one of the top-selling vehicles in Australia after just three months and the top-selling vehicle in Malaysia. Monthly overseas sales continue to exceed 12,000 units, reflecting the value our stack drives for automakers and the differentiated experience it offers to customers. Our business development activity during the Shanghai Auto Show in Q2 included the meaningful engagements with Dongfeng Nissan, the GAC R&D Center, and Renault, further expanding our pipeline.
Offering an intuitive user interface with features such as multi-zone, voice recognition, and seamless voice command capabilities.
Launched earlier this year, the Galaxy 8 and Shinya 8 P.H.E. sedans also continue to drive strong demand.
Both have our Skyland Pro ADAS solution integrated into Julie's Jeep, Pilot, H1 Unified Intelligent Driving System, which provides highway and elevated road navigation functionalities.
Additionally, we powered the launch of the Julie Galaxy EX5 across 26 countries.
Where it became one of the top-selling vehicles in Australia after just three months.
And the top-selling vehicle in Malaysia.
Monthly overseas sales continue to exceed 12,000 units.
Reflecting the value of our sack drives for automakers and the differentiated experience it offers to customers.
Our business development activity during the Shanghai Auto Show in Q2 included meaningful engagements with Dongfang Nissan.
The GAC R&D Center.
Peter Serino: In the EU market, we now have 14 active projects we're working on with eight different global automakers, and we have four wins to date. Zhiyu had the pleasure of accepting Volkswagen Brazil's Technical Development and Innovation Award on behalf of ECARX at their The One Partnership celebration in Rio de Janeiro, Brazil, earlier this month. This award further underscores the momentum our international business is picking up with project wins from large and global respected brands such as Volkswagen, reflecting the growing confidence in our innovative and mature solutions and the growing impact they are having on the sector. Our global technological thought leadership was also highlighted with the release of a Google Automotive Services Integration white paper showcasing the best practices and proprietary tools we use to cut gas certification time by over 50%.
And Renault is further expanding our pipeline.
In the EU market, we now have 14 active projects that we're working on with 8 different global automakers, and we have 4 wins to date.
I had the pleasure of accepting Volkswagen Brazil's Technical Development Innovation Award on behalf of Yrics at their first part sharing.
This award further underscores the momentum our international business is picking up, with project wins from large and global brands such as Volkswagen, reflecting the growing confidence in our innovative and mature solutions and the growing impact they are having on the sector.
Peter Serino: This solution can be applied to gas on our Qualcomm-based and Andorra computing platforms, validated by recent launches such as the Polestar 4. Our commitment to cutting time to market for our partners continues to strengthen. We showcased technological achievements in generative AI and multimodal interaction at the 2025 World Artificial Intelligence Conference in Shanghai last month. Our AI-driven intelligent cockpit and driving solutions were on display at the event, reinforcing our innovation leadership. Supported by our robust hardware-software integration development capabilities, the Hongqi Tiangong 05 also recently received a major update to our ECARX AutoGPT in-vehicle AI solution. AutoGPT now integrates deep seek and offers a wide array of daily high-frequency services, setting a new benchmark for user experience.
Our global technological thought leadership was also highlighted with the release of a Google Automotive Services integration white paper, showcasing the best practices and proprietary tools we use to cut gas certification time by over 50%.
This solution can be applied to gas on our Qualcomm-based platforms and to our computing platforms.
Validated by recent launches such as the Pulsar 4, our commitment to cutting time to market for our partners continues to strengthen.
We showcased technological achievements in generative AI and multimodal interaction at the 2025 World Artificial Intelligence Conference in Shanghai last month.
Our AI-driven intelligent cockpit and driving solutions were on display at the event, reinforcing our innovation leadership.
Supported by our robust hardware-software integration development capabilities.
The Hungchi Tiangong 05 also recently received a major update to our ECARX Auto GPT in-vehicle AI solution.
Auto GPT now integrates Deep Seek and offers a wide array of daily high-frequency services.
Peter Serino: Our extensive implementation of AI goes beyond our solutions and is also significantly improving our engineering efficiency, driving a 20% reduction in OPEX and directly contributing to our break-even target in each of the remaining quarters and full year 2025. Following the integration of intelligent cockpit driving and parking capabilities into the Andorra 1000 SBB platform and the completion of the road testing on the Galaxy E5 last quarter, we recently completed system software development for a five-in-one Andorra solution. This is a very exciting iteration on Andorra and has already secured its first commercial project win. This solution will enable automakers to accelerate the deployment of next-generation vehicles with enhanced safety and an improved user experience.
Setting a new benchmark for user experience.
Our extensive implementation of AI goes beyond our Solutions and is also significantly improving our engineering efficiency. Driving a 20% reduction in Opex and directly contributing to our break, even Target in each of the remaining quarters and full year 2025.
Following the integration of intelligent cockpit driving and parking capabilities.
Into the Antora 1000 SPB platform and the completion of the road testing on the Galaxy E5 last quarter.
We recently completed system software development for a 5-in-1 solution.
This is a very exciting iteration on Torah.
And has already secured its first commercial project win.
Peter Serino: As a result of these efforts, we continue to expand our IP portfolio with 724 registered patents and 825 pending applications globally as of June 30th, underscoring the depth and sustainability of our innovation. Supply chain resilience is critical for global scaling. Our Fuyong plant now operates at 80% utilization, hitting its 1 million unit annual capacity ahead of schedule. We also deepened our partnership with Samsung to accelerate the commercialization of cutting-edge technologies across automotive intelligence, terminal devices, and smart hardware. Together, we will build a sustainable open technology ecosystem, which will also capitalize on opportunities in the rapidly growing robotics and AI application markets. We are also collaborating with Monolithic Power Systems on automotive intelligence, robotics, and AI applications to establish a global supply chain and intelligent ecosystem spanning system integration, platform adoption, and delivery.
This solution will enable all makers to accelerate the deployment of next-generation vehicles with enhanced safety and improved user experience.
As a result of these efforts, we continue to expand our IP portfolio with 724 registered patents and 825 pending applications globally as of June 30th, underscoring the depth and sustainability of our innovation.
Supply chain resilience is critical for global scaling. Our fuel yarn plant now operates at 80% utilization, hitting its 1 million unit annual capacity ahead of schedule.
We also deepened our partnership with Samsung to accelerate the commercialization of cutting-edge technologies.
Devices and smart Hardware.
Together we will build a sustainable open technology ecosystem, which will also capitalize on opportunities in the rapidly growing Robotics and AI application markets.
Peter Serino: These initiatives are being widely appreciated across the industry with our excellence in manufacturing, procurement, and delivery recognized with inclusion in the 2025 China Automotive Supply Chain Top 100 ranking. Foundational to our global expansion is our robust compliant infrastructure. Our new global headquarters in Singapore is expected to become operational in the second half of the year. This will act as a critical hub for our global IP, R&D, supply chain, procurement, and treasury activities and allow us to support automakers across global markets. We also received three ISO certifications for quality management, environmental stewardship, and occupational health and safety last month, prerequisites for collaboration with leading automakers. Together, these achievements enhance our competitive positioning and provide a robust foundation for us to extend our technology stack into AI, robotics, and embodied intelligent applications globally.
We are also collaborating with Monolithic Power Systems on on-road intelligence, robotics, and AI applications to establish a global supply chain and intelligent ecosystem, banning system integration platform adaptation and delivery.
These initiatives are being widely appreciated across the industry, with our excellence in manufacturing, procurement, and delivery. We have been recognized with inclusion in the 2025 China automotive supply chain top 100 ranking.
Foundational to our global expansion is our robust compliant infrastructure.
Our new global headquarters in Singapore is expected to become operational in the second half of the year.
This will act as a critical hub.
For our Global IP R&D supply chain procurement and treasury activities, we aim to support automakers across global markets.
We also received three ISO certifications for Quality Management, Environmental Stewardship, and Occupational Health and Safety last month. These are prerequisites for collaboration with leading automakers.
Peter Serino: In summary, our results this quarter demonstrate the discipline execution, global expansion, and technological leadership at the heart of our growth strategy. Despite external headwinds, we are delivering on the key enablers: innovation, operational scale, global compliance, and ecosystem collaboration that position us to accelerate the industry's transformation to software-defined intelligent mobility. With that, I will now turn the call over to Phil, who will review our financial results.
Together, these achievements enhance our competitive positioning and provide a robust foundation for us to extend our technology stack into AI, robotics, and embodied intelligent applications globally.
In summary, our results this quarter demonstrate the disciplined execution, global expansion, and technological leadership at the heart of our growth strategy.
Despite external headwinds.
We are delivering on the key enablers: innovation, operational scale, global compliance, and ecosystem collaboration that position us to accelerate the industry's transformation to software-defined intelligent mobility.
Phil Zhou: Thank you, Peter, and hello, everyone. While Q2 brought expected seasonal softness and macroeconomic uncertainty, our team's disciplined execution on strategic initiatives partially mitigated the late headwinds. Total revenue for the quarter landed at US$156 million. Sales of goods revenue was US$131 million, a 1% year-over-year increase. The growth was primarily driven by a double-digit increase in customer demand, which was partially offset by strategic price reductions to accelerate market penetration. Our in-house development strategy is gaining significant traction. Our Andorra, Venado, and the Skyline platforms now contribute a remarkable 56% to total sales of goods revenue, more than doubling from 28% in the previous year period. Software license revenue decreased 85% year-over-year to US$1.2 million, primarily from a decline in per-vehicle software license revenue, coupled with lower intellectual property licenses revenue. Intellectual property licenses contributed US$3.9 million revenue in the same period last year.
With that, I will now turn the call over to Phil, who will review our financial results.
Thank you, Peter, and hello everyone. While Q2 brought expected seasonal softness and macroeconomic uncertainty, our team executed on strategic initiatives with discipline, partially mitigating the latest headwinds.
Total revenue for the quarter landed at $156 million.
Sales of goods around me were $131 million, reflecting a 1% year-over-year increase.
The growth was primarily driven by a double-digit increase in customer demand, which was partially offset by strategic price reductions to accelerate market penetration.
Our in-house development strategy is gaining significant traction.
Our Ana and the Skyland platforms now contribute a remarkable 56% to total sales of goods revenue, more than doubling from 28% in the previous year period.
Software licensed revenue at Realme decreased 85% year-over-year to $1.2 million, primarily due to a decline in per vehicle software license revenue coupled with lower intellectual property license revenue.
Phil Zhou: Service revenue came in at US$23 million, down 34% year-over-year, mainly due to lower revenue from non-recurring engineering services contracts for automotive computing platforms compared to the same period last year, which was partially offset by growth in overseas connectivity service revenue. Gross profit for the quarter was US$70 million, a decline of 58% year-over-year, with a gross margin of 11%, a 12% decrease compared with the previous year period. This was chiefly attributable to strategic pricing initiatives to accelerate computing platform market penetration, combined with a lower software license service revenue mix and a higher cost for the completed non-recurring engineering projects in the current quarter. We achieved significant progress in operating expense management, reducing costs by 20% year-over-year to US$57 million, reflecting our strong execution on operational and R&D efficiency improvements.
Intellectual property license is contributed. $3.9 million in revenue in the same period last year.
Subs around, you came in at $23 million. Now, 34% year-over-year, mainly due to lower revenue from non-recurring engineering services contracts for automotive computing platforms compared to the same period last year.
which was partially offset by growth in overseas connectivity service revenue.
Growth profit for the quarter was 70 million US dollar a decline of 58% year-over-year. With a growth margin of 11% a 12% decrease compared with the period year period.
This was a cheaply attributable to strategic pricing initiatives to accelerate Computing. Platform Market penetration combined with the lower software licensed service around the mix and a higher cost for the completed and non-recurring Engineering projects in the current quarter.
Phil Zhou: Adjusted EBITDA loss landed at US$30 million, a slight decline compared to the loss of US$29 million in the same period last year. This was primarily attributable to decreased gross profit, partially offset by a lower level of operating expenses and equity investment losses, alongside higher hourly income. Moving on to our balance sheet, as of the end of the quarter, we had US$99 million cash and restricted cash, which provides ample liquidity to fund global expansion and next-generation technology development. We continue to strengthen working capital and profitability alongside these strategic investments. In summary, our second quarter financial results faced temporary market headwinds. They demonstrate the effectiveness of our product strategy, cost discipline, and operational execution.
We achieved significant progress in operating expense management, reducing costs by 20% year-over-year to $57 million, reflecting our strong execution on operational and R&D efficiency improvements.
A slight decline compared to the loss of $29 million in the same period last year.
This was primarily a treat, beautiful to decrease the gross profit, partially offset by a lower level of operating expenses and equity investment losses, alongside the higher other income.
Moving on to our balance sheet as of the end of the quarter, we had $99 million in cash and restricted cash. This provides ample liquidity to fund global expansion and the Next Generation technology development.
We continue to strengthen working capital and profitability alongside these strategic investments.
Phil Zhou: With several significant vehicle programs scheduled for SOP in the second half, we expect to see full-year revenue recover strongly and grow by close to 20% year-over-year, driven by volume growth and improved product mix. With our scale growing, significant pipeline, and disciplined operating expense controls, we remained confident in achieving adjusted EBITDA break-even in each of the remaining quarters and full year 2025, a significantly improved full-year financial performance. We have full confidence in our ability to deliver on these targets through our focused execution and operational excellence. That concludes our remarks today. I would now like to hand the call back to the operator to begin the Q&A section.
In summary, our second quarter financial results faced temporary market headwinds. They demonstrate the effectiveness of our product strategy because of the discipline and operational execution.
With several significant vehicle programs scheduled for SOP in the second half, we expect to see full year revenue recover strongly and grow by close to 20% year-over-year, driven by volume growth and improved product mix with our scale. Growing significant pipeline and the disciplined operating expense controls will remain confident in achieving adjusted EBITDA break even in each of the remaining quarters and the full year 2025.
A significantly improved four-year financial performance.
We have full confidence in our ability to deliver on these targets through our focused execution and operational excellence.
That concludes our remarks. Today, I would now like to hand the call back to the operator to begin the Q&A section.
Operator: Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Please stand by while we compile the Q&A roster. Thank you. We will now go to our first question. One moment, please. And your first question today comes from the line of Danlin Ren from CICC. Please go ahead.
Thank you.
To ask a question, you will need to press *1 and 1 on your telephone and wait for your name to be announced.
To enjoy your question. Please press star 1 and 1. Again, please stand by while we compile the Q&A roster.
Thank you. We will now go to our first question.
1 moment, please.
And your first question today comes from the line of Danny Ren from CIC. Please go ahead.
Danlin Ren: Hello. Can you hear me?
Peter Serino: Yes, hello, Danlin. We can hear you well.
Um, hello, can you hear me?
Danlin Ren: Oh, okay. Good evening, everyone. This is Danlin Ren from CICC Auto Team. Thanks for the presentation and congrats on your results and all improvements in the first half. Now, I have like three follow-up questions for you. My first question is about your non-automotive business layout because we found that, you secured a design win for robotic lawn mowers in the LiDAR domain before, right? do you, how do you expect the development of non-automotive applications in the future? And my second question is about, is about your progress in overseas expansion because since we secured the VW design win, what advancements have been made in acquiring international clients or establishing overseas R&D or production facilities? And my last question, is, could you please update on the progress of your in-house chip development? That's all my questions. Thank you.
Yes, hello D. We can hear you well. Okay.
Okay? Uh, good evening everyone. Uh, this is Stanley Ren from CC Auto team. Thanks for the presentation and congrats on your results and all improvements in the food have. Um, now now, I have like 3 follow up questions for you. My first question is about your non-automotive business layout because we found that uh you secured a design win for robotic law, more in the lighter.
Doming before, right? I do. Uh, how do you expect the development of non-automotive applications in the future?
And my second question is about uh, is about your progress in overseas expansion because things, uh, we secure the VW design when what advancements have been made in aquarium International clients or establishing overseas R&D or production facilities.
Peter Serino: Okay. Hey, Danlin, thank you for the question. This is Peter Serino. Let me try to address some answers here. I'll take them one by one. With the non-automotive business, we secured this win, in the past quarter to bring our LiDAR, forward on the robotics solution. So we're we're quite excited about that. You know, fundamentally, at the technology level, you know, I think that the the capabilities that we're bringing into vehicles, can be similar leveraged in the industrial space, especially as automation increases there. So whether it's SOCs, sensors, and software, we think as they get applied to a wider range of smart devices, that there is potential to further expand our business in that space. LiDAR was a technology that we've been developing, for some time, and it was, in a point that it could be quickly developed, for that application.
And my last question is, could you please provide an update on the progress of your in-house chip development? That's all my questions. Thank you.
Hey, Daniel, thank you for the question. This is Peter, Serena, let me try to address some answers says, I'll take them 1 by 1, um, with the non Automotive business, we secured this win, uh, in the past quarter to bring our lidar, uh, forward on the robotic solution. So we're we're quite excited about that, you know, fundamentally at the technology level, you know, I think that the, the capabilities that we're bringing into vehicles, uh, can be similar leveraged in the industrial space, especially as automation increases there. So whether it's s SOC sensors and software, uh, we think if they get applied to a wider range of Smart devices that there is potential to further, expand our business in that,
Space.
Peter Serino: And we're very optimistic about the the potential in the future, in the robotics space. your second question was about our, our growth on a a global level. So as you know, ECARX has been, you know, building our capabilities, throughout Europe, and, and, other other markets, other international markets for many years now, starting with our efforts with Volvo Car in Sweden as early as 2021. So earlier this year, we were super excited to be able to announce the Volkswagen program as our next milestone, in that space. As we mentioned in our prepared remarks, we have a a broad set of pipeline, and portfolio that we're pursuing that has more than a billion dollars' worth of lifetime revenue on programs we've already won.
Um, lidar was a technology that we've been developing uh, for some time. And it was uh in a point that it would could be quickly developed uh, for the application. And we're very optimistic about the the potential in the future uh, in the robotic space.
Peter Serino: in total, we've got about 14 active programs with eight different car makers and, and four wins today, obviously VW being the one that we won. And then you can look at the announcements that we made this quarter as, you know, continued significant milestones in that space. Zhiyu mentioned the award that we won from the Volkswagen team in Brazil. We were quite honored to be, recognized with that award. I think that's a demonstration of the company's technology robustness and program delivery capability that, you know, soon after, winning the GEI program, we're recognized on, our innovation capabilities. and then the the Google white paper that we announced, you know, continues to demonstrate our ability for high-quality, you know, extremely fast software development in the automotive space.
Has been, you know, building our capabilities, uh, throughout Europe, uh, and uh, other other markets, other International markets for many years now, um, starting with our efforts with, you know, Volvo car in Sweden as early as 2021. So, earlier, this year, we were super excited to be able to announce the Volkswagen program as our next Milestone. Uh, in that space. As we mentioned in our prepared remarks, uh, we have a, a broad set of pipeline, uh, and portfolio that pursuing this uh, has more than a billion dollars worth of Lifetime revenue on programs. We've already won. Uh, in total, we've got about 14 active programs with 8, different car, makers, and uh and 4 wins today. I will say, BW being the 1 that we won and then you can look at the announcements that we made this quarter as uh you know, continued significant milestones in that space. Uh,
Z you mentioned the award that we won up from the Volkswagen team in Brazil. We were quite honored to be uh, recognized with that award. I think that's a demonstration of the company's technology robustness and program delivery capability that, uh, you know, soon after winning the gei program or recognized on the, our Innovation capabilities. Uh, and then the the Google white paper that we announced. You know, continues to demonstrate our
Peter Serino: So we've, I think we continue to progress on that on the global business, and we'll we'll anticipate seeing additional activities, as the year goes on. we also mentioned, the software program, in China with a leading, a leading global luxury OEM, that I think is another another key milestone that we'll build on with that organization as well. And then relative to our, our internal capabilities on SOCs, you know, we've we announced many times the continued growth of our Andorra platform, which is built on that capability. And we continue to find applications and opportunities to to grow the Andorra platform, both in, building additional market share as that product, grows quite substantially across a number of different OEMs, and then also growing the capabilities of that platform, as we continue to, you know, develop software-defined vehicle applications.
Ability for high quality, you know, extremely fast software development in the automotive space. So we've, uh, I think we continue to progress on that on the global business, and we will anticipate seeing additional activities, uh, as the year goes on. We also mentioned, uh, the software program.
Uh, in China with a leading. Uh, a leading global luxury OEM uh, that I think is another another key Milestone that we'll build on with that organization, as well as well.
And then, relative to our internal capabilities on SOCs.
Um, you know, we've announced many times the continued growth of our Andour platform, which is built on that capability. We continue to find applications and opportunities to grow the entire platform, both in uh,
Peter Serino: In addition to that, we're continuing, in, in this quarter or in this in this year, we'll be launching the Qualcomm 8295 product into the market, and we continue to have a broad set of products, both on, Qualcomm and other industry solutions as well as our own, own, development solution with CyEngine. So I hope that helps with your questions.
Building additional market share as that product, uh, grows quite substantially across a number of different oems. And then also growing the capabilities of that platform, uh, as we continue to, you know, develop software defined vehicle applications. In addition to that, we're continuing uh in in uh in this quarter or in this, in this year will be launching the Qualcomm 8295 product into the market and we continue to have a broad set of
Products include both Qualcomm and other industry solutions as well as our own development solution with science.
Danlin Ren: Okay. Thank you, Peter. that's all my questions. Very clear. Thank you.
So hope that helps you a question.
Operator: Thank you. As a reminder, if you wish to ask a question, please press star one and one on your telephone keypad. We will now go to the next question. And your next question today comes from the line of Wei Hong from Deutsche Bank. Please go ahead.
Thank you, Peter. Um, that's all my questions. Very clear. Thank you.
Thank you.
As a reminder, if you wish to ask a question, please press *1 and 1 on your telephone keypad.
It will now go to the next question.
And your next question today comes from the line of Wei Hong from Doo To Bank. Please go ahead.
Wei Hong: Hi. This is Wei from Geely. Can you hear me?
Peter Serino: Yes, Wei. We hear you very clearly.
Hi, this is Way from DB. Can you hear me?
Wei Hong: Oh, thank you. Thanks for taking my question. So my first question is, in the first half, we saw roughly 1.2 new million vehicles equipped with cloud solutions. Can you give us a volume guidance for the second half of the year?
Yes, way. We hear you very clearly.
Huh. Uh, thank you. Thanks for taking my question. So, my first question is: in the first half, we saw roughly 1.2 million vehicles equipped with solutions.
Phil Zhou: Hey, Wei. This is Phil speaking. Thank you for your question. So let me address your question. Yeah, you know, ECARS, we keep making traction in volume and the market share growing. And in the second half, in the first half, we already achieved the 20% EBITDA growth in terms of the volume. And the momentum will continue. So, as Peter just mentioned in his, session, we have so many, programs for the SOP in the second half of the year in 2025. So I'd love to see the volume in the second half, in the second half, will continue to grow. it's like, you know, 1.4 to 1.5 million vehicles. that is, pretty, under our, confidence level. And in terms of the full year, we are able to deliver nearly 2.5 to 2.6 million, vehicles. That is about, also about a 30% EBITDA growth.
Uh, can you give us a volume guidance for the second half of the year?
Hey way, later, this is before speaking. Um, thank you for your question. So let me address your your question. Yeah, you know, ecast we keep, um, making Traction in volume and the market share growing and in the second, in the first half, we are already achieved. The 20% of your growth in Supply volume and the low momentum will continue. So, uh, uh, as Peter just mentioned in his uh, session, we have so many programs to be so key in the second half of the year.
Of your growth.
Wei Hong: Oh, so that is very clear. my second question is regarding, pricing. We talked a bit about the pressure in pricing in the first half for the, for for some calculations in the second quarter, the content per car actually improved quarter over quarter. can you maybe talk a bit about that? Is it any impact from the government's anti-evolution policies against solar competition in the auto space? Thank you.
Uh, conditions that are very clear. Uh, my second question is regarding pricing. You talked a bit about the pressure and pricing in the first half for the.
So, for some calculations in the second quarter, the content per car actually improved quarter over quarter. Can we talk a bit about that? Is it due to the impact from government policies and the evolution of those policies?
Phil Zhou: Yeah, sure. Thank you. So, yeah, we appreciate the government's, you know, confirmation on the so-called anti-evolution moves. but we also observe that the entire industry has realized the challenge, caused by the evolution. And we expect this pattern will continue in the near term. So, I mean, in the industry, pricing, cost, and productivity actions will, mitigate, the impact and give us some room in terms of the margin and recovery. So, you know, our pricing strategy is very clear. We always provide flexibility, in terms of the, volume and the market share acquisition. We always would like to maintain the share, stabilize the business, and boost up the volume, which, drive our revenue growth. And, to support the profitability, improving, we are now taking several actions. Number one, we will keep driving our, you know, cost optimization activity.
Against other competition in outer space. Thank you.
Yes, sure, thank you. So, uh, yeah, we, uh, appreciate the government's, you know, uh, confirmation of the so-called anti-evolution moves.
Uh, but we also observe that the entire industry has realized the challenge caused by the evolution. And we expect at least a pattern will continue in the near term.
So uh, I mean, in the industry pricing cost and productivity actions will mitigate uh the impact and give us some room intense, supplement margin and recovery. So, uh, you know, our pricing strategy is very clear. We always provide flexibility, uh, in terms of them are volume and the market share acquisition. We always would like to maintain the share stabilized, the business and the boost up the volume which uh, strive our realm will growth.
Phil Zhou: So, through our relentless efforts in recent quarters, we we already achieved the, you know, a cost reduction about 20%. And then that is really helpful for us to mitigate, the the so-called pricing erosion due to the fierce price competition, the market competition. And the second thing is, you know, we really need to manage a good portfolio of solution selling. So the software is really key, all right, and which is a very good enablement to our OEM customers, including our global OEM customers. So, for example, we already won a nomination of one famous OEM regarding the Flyme Auto Corporation. And I do believe that those corporations can bring us an incremental software business. And such kind of a recurring business will continue to improve our gross margin. Okay? So, yeah.
And uh to support uh the profitability uh improving. Uh we are we now are taking self. Actions number 1 we will keep driving our you know cost optimization activity. So through our relented efforts in recent quarters, we we already achieved the, you know, a cost reduction reduction about 20% and that is really helpful for us to mitigate uh, the so-called pricing erosion due to the fierce price, the market competition.
Phil Zhou: And the other thing is, you know, we are expanding our footprint into the global business aggressively. And by building the operations over there and by, you know, continuously enhancing operating efficiency and productivity improvement, we certainly can drive the margin recovery and profitable growth from all those sectors.
And the second thing is, you know, we really need to manage a good portfolio of solution selling, so the software is really key, all right? And which is a very good enablement to our OEM customers, including global OEM customers. So, for example, you already have one nomination, which will continue to improve our gross margin. Okay. So, uh, yeah, and the other thing is, you know, we are expanding our footprint into the global business aggressively.
And by building the operations over there and uh by you know, uh continuously enhancing um operating efficiency and uh and the productivity Improvement, we certainly can drive the margin recurring and a profitable growth from all sectors.
Wei Hong: Thank you. That is very clear. And my last question is regarding the ADCU business. Can you maybe update us on your store-based computing platform? And will you also maybe work with Qualcomm's Flex SOCs like 8775? Thank you.
Peter Serino: Maybe I can take that question, Wei. Thank you. You know, I think when we look across our ECARX SOC platform or for the ADCUs, we definitely have the 8775 on our roadmap. So we're exploring a few different opportunities with that platform, both, you know, in the China market and in the global market. I think we see that trend of fusion certainly happening within the marketplace. We're also, as we mentioned, you know, actively on our Andorra platform and on our Andorra 1000 SBP platform, also launching a somewhat of a fusion platform in 2026 that will include parking and some level two ADAS safety features on the vehicle. So we definitely see that, you know, that fusion technology will come into the automotive space. And we believe with our capabilities that we will, we've already prototyped and will shortly launch on our Andorra platform.
Uh, thank you. It's very clear. My last question is regarding the ADCU business. Could you repeat first on your store-based computing platform, and will you automatically work with Qualcomm's Flex associate, like 8775? Thank you.
Give me maybe. Uh, I can take that question away. Thank you. You know, I think when we look across our.
Um, ECX, uh, SOC platform or for, for the ADC use, and we definitely have the 8775, uh, on our road map. So we're exploring a few different opportunities, uh, with that platform both, uh, both, you know, in the China Market in the, in the global market. I think we, we see that trend of, uh, Fusion certainly happening within the marketplace. Um, we're also, uh, as we mentioned, you know, actively on our end tour platform in our Entourage, 1000 spp platform. Also launching, uh, a somewhat of a fusion platform in 2026 that will include parking. Uh, and some
Level 2, uh, 8's safety features on the vehicle. So we definitely see that, you know, that fusion, um,
Peter Serino: We're in an extremely good position as the Qualcomm SOCs and other, you know, additional SOCs enter the marketplace.Thank
Technology will come into the automotive space and we believe with our uh capabilities that we will. We Will We were already prototyped and we'll shortly launch on our entire platform. We're in a you know, extremely good position as the the Qualcomm soc's and other more as and other um you know, additional soc's enter the marketplace.
Operator: you. Very clear and thoughtful of me.
Renee Du: Thank you. As a reminder, if you would like to ask a question, please press star one and one on your telephone keypad. We will now take the next question. And your next question comes from the line of Yifei Liu from UOB. Please go ahead.
Thank you. Very clear. That's all from me.
Thank you.
As a reminder, if you would like to ask a question, please press *1 and 1 on your telephone keypad.
We will now take the next question.
Ziyu Shen: Hello, management. I'm Bella from UOB Kaihen. I would like to ask about the growth driver for the second half and the next year. For example, the progress of new products, new business, and new orders intake. And my second question is about the customer cooperation and the expansion of overseas customers. That's my question.
From the line of evil from UOB. Please go ahead.
Uh, hello management. Um, this is DIA. I would like to ask about the growth driver for the second half and the next year. For example, the progress of new products, new business, and new orders intake. My second question is about customer cooperation and the expansion of overseas customers. Um, those are not all my questions.
Peter Serino: Okay. Thank you, Yifei. This is Phil speaking. So let me address your second question first. And, Peter, probably you can also jump in to address customer expansion, especially from an overseas expansion perspective. So let me emphasize that we keep optimizing our business portfolio proactively. And one of our strategies is to drive a diversified customer base. So in the second quarter, we already achieved that, you know, the mixed business portfolio in a relatively healthy way. For example, the Geely Auto business occupied nearly 40% to 50% of our total business. And the Geely Ecosystem brands occupy nearly 30% to 40%. And the rest of the business came from non-Geely business, which is about 15%. All right.
Okay. Uh, thank you. Uh, this is for speaking. So, let me address your second question first, and Peter, you can probably also jump in to address, you know, customer expansion, especially from an overseas expansion perspective.
Peter Serino: And in terms of the customer structure, China versus overseas, now in the second quarter, our business already has been optimized to 60% business came from China OEMs, and the rest of 40% came from global OEMs. Of course, those global OEMs include Volvo, Polestar, Smart, Proton, those Geely Ecosystem. And meanwhile, we are adding new names, new global OEMs into our portfolio for sure. Volkswagen is obviously the one. We won the nomination in the Q1 2025. And we foresee more revenue, more business from international brands will be in our portfolio. OK.
So, uh, let me, uh, uh, uh, uh, emphasize that, uh, we keep optimizing our business portfolio proactively. One of our strategies is to drive a diversified customer base. So we are, uh, in the second quarter, we already achieved that, you know, the business makes the business portfolio, uh, in a relatively healthy way. For example, the Julie Otto business occupied nearly 40% to 50% of our total business, and the G ecosystem brands occupy nearly 30% to 40%, and the rest of the business came from the Nani business, which is about 15%, right? And in terms of...
Of, uh, the um, customer structure, uh, China versus overseas now, uh, in the second, uh, in, in the second quarter, our businesses are already, uh, has been optimized to 60% in business, came from Channel EMS.
Phil Zhou: Yeah, I would just, Phil, I think that's a great summary. I would just add to that. You know, our global activity is very robust at this stage. We're seeing, you know, activities across, as I mentioned, eight different car makers in the global marketplace and many RFQ and RFI processes that we see having the potential to close later this year and can even start to generate revenue in late 2026. So we're very excited about the potential we continue to build in the global marketplace. And I think that we'll continue to see, I would say, more exciting announcements as the year goes on, as we're able to share more of that with the investor community. So I think the customer diversification is continuing to be very much on track and broadening, even picking up momentum.
And the rest of 40% came from Global EMS. Of course, those global EMS includes Volvo postar smart, uh, proton. Those, you know, uh, GD. Ecosystem and the meanwhile, we are adding new names new, uh, Global EMS into our portfolio, for sure. Volkswagen. That is the, uh, uh, the 1. We uh, we want the nomination, uh, in the uh, in the, in the q1 1085 and we foresee uh more uh Revenue more business. From the international Brands will be in our portfolio, Okay?
Yeah, I would just so I think that's a great. Uh, summary. I would just add to that, you know, our Global activity is, is very robust at this stage. Um, we're seeing, you know, activities across. As I mentioned 8, 8, different car makers, uh, in the global Marketplace and uh, many, uh, RFQ and our RFI processes, uh, that we see having the potential to, uh, close, you know, later this year and can even start to generate Revenue in uh, in late 2026. So we're we're very excited about the the potential we continue to build in in the in the global Marketplace.
And you know I think that will will continue to see. I would say more exciting announcements as the year goes on as as we're able to share more of that with the with the investor community. So I think the, you know, customer diver diversification is uh,
You know, he's continuing to be very much on track and and and broadening and even picking up momentum.
Ziyu Shen: Thank you very much. Very clear.
Renee Du: Thank you. Once again, if you would like to ask a question, please press star one and one on your telephone keypad. That is star one and one to ask a question. There are currently no further questions. I will hand the call back to Phil for closing remarks.
Thank you very much. It's very clear.
Thank you.
Once again, if you would like to ask a question, please press star 1 and 1 on your telephone keypad— that is star 1 and 1 to ask a question.
Peter Serino: OK. Thank you, everyone, for your attention to our earnings call. Look, we continue to build upon the strong momentum achieved in the past several quarters. And this momentum will continue for sure. And while our financial performance was impacted by typical seasonal trends, we continue to make significant progress across our business, you know, securing key wins, broadening our partnerships, and strengthening our foundation for the future. So with the solid business foundation, disciplined execution, as well as new business acquisitions, we will realize just the EBITDA breakeven in each quarter of the remaining year. And that concludes our earnings call today. Thank you.
There are currently no further questions. I will hand the call back to Phil for closing remarks.
Okay. Uh, thank you, everyone, for your attention to our earnings score. Uh, look, we continue to build upon the strong momentum achieved in parts of the South quarters, and at least momentum, we will continue for sure.
And while our financial performance was impacted by typical seasonal, chance we continue to make a significant progress across our business, you know, securing uh key wins. Broadening our Partnerships and strengthening our foundation for the future. So with the solid business Foundation discipline execution, as well as new business Acquisitions, we will realize
Renee Du: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
Adjust the EBA break even in uh, each quarter of the remaining year and uh, that is uh, that concludes our earnings call today. Thank you.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.