Ecarx Holdings Inc. (ECX) 2024 Q3 法說會逐字稿

Good day and thank you for joining us. Welcome to ECARX third quarter 2024 earnings conference call at this time. (Operator Instructions) As a reminder, today's conference is being recorded.

美好的一天，感謝您加入我們。歡迎此時參加 ECARX 2024 年第三季財報電話會議。（操作員指示）提醒一下，今天的會議正在錄製中。

I would now like to hand the conference over to your host, Rene Du, Head of Investor Relations at ECARX. Please proceed.

現在我想將會議交給東道主、ECARX 投資者關係主管 Rene Du。請繼續。

Thank you operator. Good morning and welcome to ECARX third quarter, 2024 earnings conference call. With me today from ECARX are Chairman and the Chief Executive Officer Ziyu Shen; Chief Operating Officer, Peter Cirino; and Chief Financial Officer, Phil Zhou. Following their prepared remarks, they will all be available to answer your questions during the Q&A session that follows.

謝謝運營商。早上好，歡迎參加 ECARX 2024 年第三季財報電話會議。今天與我同在的有 ECARX 董事長兼執行長沉子宇；營運長彼得·西里諾；和財務長 Phil Zhou。在準備好發言後，他們將在隨後的問答環節回答您的問題。

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.

在我們開始之前，我想請您參閱我們收益新聞稿底部的前瞻性聲明，該聲明也適用於本次電話會議。有關可能導致實際結果出現重大差異的特定風險因素的更多信息，請參閱我們向 SEC 提交的文件。

In addition, this call will include discussions of certain non-GAAP financial measures. A reconciliation of the non-GAAP financial measures to GAAP financial measures can be also found at the bottom of our earnings release.

此外，本次電話會議也將討論某些非公認會計準則財務措施。非 GAAP 財務指標與 GAAP 財務指標的調整表也可以在我們收益報告的底部找到。

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

就這樣。我想把電話轉給子玉。請繼續。

Thank you, Rene. Hello everyone and thank you for joining our third quarter earnings call today. The solid growth momentum we picked up in the first half of the year continued into the third quarter. The global automotive industry is rapidly evolving towards software-defined vehicles which we are uniquely positioned to benefit from. And I think our results this quarter reflect that.

謝謝你，雷內。大家好，感謝您今天參加我們的第三季財報電話會議。我們上半年的強勁成長動能延續到了第三季。全球汽車產業正迅速向軟體定義汽車發展，我們擁有獨特的優勢，可以從中受益。我認為我們本季的業績反映了這一點。

Let me start with a brief market update. Looking at the broader automotive landscape internationally, the sector continues to face a challenging environment globally. Despite the headwinds, the overall trajectory remains positive particularly for electrical vehicles and intelligent car technologies. With the automotive industry still projected to reach approximately 88 million vehicle sales in 2024.

讓我先簡單介紹一下市場最新情況。縱觀國際更廣闊的汽車格局，該產業在全球範圍內繼續面臨充滿挑戰的環境。儘管存在阻力，但整體軌跡仍然樂觀，特別是對於電動車和智慧汽車技術而言。預計到 2024 年，汽車業的汽車銷量仍將達到約 8,800 萬輛。

In contrast, Chinese automotive market has been gradually picking up. Total sales from January to September increased 2.4% from the same period last year. Among which China's export data should have much more positive outlook with overall export volume rising every month this year.

相比之下，中國汽車市場卻在逐步回升。1-9月銷售總額較去年同期成長2.4%。其中，中國的出口數據前景應該會更加樂觀，今年整體出口量逐月上升。

China exported 4.3 million vehicles from January through September, an impressive increase of 27% year over year. Electrical vehicle sales in China during the same period increased 33% year over year, accounting for [39%] of total new car sales. The market continues to yield significant opportunities for us despite headwinds. These underscores our unique positioning to drive growth in China and overseas regardless of market cycle. Our evolving part of our portfolio, diverse customer base, and strategic global partnerships and operations are key factors that enable us to capitalize on these opportunities.

1-9月，中國出口汽車430萬輛，較去年成長27%，令人印象深刻。同期中國電動車銷量年增33%，佔新車銷量的[39%]。儘管面臨阻力，市場仍持續為我們帶來重大機會。這些凸顯了我們無論市場週期如何推動中國和海外成長的獨特定位。我們不斷發展的產品組合、多元化的客戶群以及策略性的全球合作夥伴關係和營運是我們能夠利用這些機會的關鍵因素。

By the end of quarter, there are over 7.3 million vehicles on the road, equipping ECARX Technology with 442,000 vehicles added this quarter alone. This translates into an increase of approximately 31% year over year or 6% sequentially.

截至本季末，道路上行駛的車輛超過 730 萬輛，僅本季就為 ECARX Technology 增加了 442,000 輛車輛。這相當於年增約 31%，比上一季成長 6%。

All global reach across the sector remained stable from last quarter with 17 OEMs across 26 brands. Notably though, the number of project wins from existing customer increased substantially as we deepen our relationship and build up the success of existing mass production projects. Revenue during the quarter increased by 31% year over year to RMB1.4 billion on the back of recent vehicle launch such as Geely Galaxy E5.

該行業的全球影響力與上季相比保持穩定，共有 26 個品牌的 17 家原始設備製造商。但值得注意的是，隨著我們加深關係並建立現有大量生產專案的成功，從現有客戶贏得的專案數量大幅增加。得益於吉利銀河 E5 等近期車款的推出，該季度營收年增 31% 至人民幣 14 億元。

Competition remains fierce with ongoing pricing pressures causing gross margins to decline to approximately 17% during the quarter. Despite the challenging competition and the impact on margin, we remain firmly on track with our top line continuing to outperform the broad market as we scale and build a path towards profitability. We have a very strong track record of our growing our top line with new vehicle launches and have a robust and healthy pipeline with over 40 vehicle models currently in development.

競爭依然激烈，持續的定價壓力導致本季毛利率下降至約 17%。儘管競爭充滿挑戰且對利潤率產生影響，但我們仍堅定不移地走在正軌上，隨著我們擴大規模並建立盈利之路，我們的營收繼續跑贏大盤。我們在透過推出新車來增加收入方面擁有非常出色的記錄，並且擁有強大而健康的產品線，目前正在開發 40 多種車型。

To offset the impact of pricing pressure on our margins, we are working aggressively to optimize our cost structure by taking greater vertical control of our manufacturing and supply chain, optimizing our product portfolio, improving engineering, and operational efficiency.

為了抵​​消定價壓力對我們利潤的影響，我們正在積極優化我們的成本結構，對我們的製造和供應鏈採取更大的垂直控制，優化我們的產品組合，提高工程和營運效率。

At the same time, we are expanding our global footprint to provide us with the flexibility to mitigate geopolitical risks. I'm highly confident in our ability to drive significant growth throughout the year and beyond, our strategy has not changed and we remain on course for success as we focus on sustaining revenue growth momentum, capturing sales volumes, and improving margins.

同時，我們正在擴大我們的全球足跡，為我們提供減輕地緣政治風險的靈活性。我對我們在全年及以後推動顯著成長的能力充滿信心，我們的策略沒有改變，我們仍然走在成功的道路上，因為我們專注於維持收入成長勢頭、抓住銷售和提高利潤率。

Our flexibility to adapt to a changing market environment ensures that we can seize new opportunities as they arise leaving us very optimistic about the future.

我們適應不斷變化的市場環境的靈活性確保我們能夠抓住新機遇，讓我們對未來非常樂觀。

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

我現在將把電話轉給彼得，他將更詳細地介紹本季的經營業績。

Thank you to Ziyu and good day everyone. Our customer base remained diverse and stable during the quarter as our business continues to scale and gain momentum. We secured two new design wins from existing customers during the quarter, further deepening our relationships with them. Both vehicles are for the China market and we'll deploy a version of our Antora series computing platform and some integrated with Flyme Auto OS. These wins showcase our ability to deliver customized cutting edge technology solutions and reflects the growing value proposition we offer automakers with our unified computing platforms for China and overseas.

謝謝子玉，大家好。隨著我們的業務不斷擴大和成長勢頭，我們的客戶群在本季保持多元化和穩定。本季我們從現有客戶那裡獲得了兩項新設計，進一步加深了我們與他們的關係。這兩款車都是針對中國市場的，我們將部署 Antora 系列運算平台的一個版本，以及一些與 Flyme Auto OS 整合的版本。這些勝利展示了我們提供客製化尖端技術解決方案的能力，並反映了我們透過面向中國和海外的統一運算平台為汽車製造商提供的不斷增長的價值主張。

Our global ecosystem of strategic partnership forms the backbone of our strategy to reshape the global automotive technology value chain. We entered into a formal partnership with MulticoreWare at the end of August. Having initially worked together to optimize our intelligent driving software algorithms used in the Lynk & Co 08 earlier this year, we are strengthening our partnership and expanding the scope of our collaboration to cover all projects to reduce the time to market for mass production of Skyland Pro and provide global OEMs with unique vehicle experiences.

我們的全球策略夥伴生態系統構成了我們重塑全球汽車技術價值鏈策略的支柱。我們在八月底與 MulticoreWare 建立了正式合作夥伴關係。今年早些時候，我們最初合作優化了領克08所使用的智慧駕駛軟體演算法，現在我們正在加強合作關係，並將合作範圍擴大到涵蓋所有項目，以縮短Skyland Pro量產的上市時間為全球主機工廠提供獨特的車輛體驗。

In addition to leveraging our global ecosystem of partnerships to improve our performance of our leading hardware and software stack, we continue to strategically invest in R&D while at the same time, improve R&D efficiency. We are investing in our lower cost R&D centers. We are engaging AI tools to improve efficiency and quality, onboarding new partners with innovative and cutting edge support models, and completing a deep dive of our entire cost structure.

除了利用我們的全球合作夥伴生態系統來提高領先的硬體和軟體堆疊的性能外，我們還繼續對研發進行策略性投資，同時提高研發效率。我們正在投資建造成本較低的研發中心。我們正在利用人工智慧工具來提高效率和質量，透過創新和尖端的支援模式引入新的合作夥伴，並完成對整個成本結構的深入研究。

Our ADCU solutions now feature real world rendering capabilities compatible with mainstream 3D engines such as Unreal and Unity and are expected to be integrated into [Hongqi] and smart models currently in development. We deployed ECARX AutoGPT by adopting Microsoft's Smart Occupancy Monitoring System to track and monitor in vehicle behavior of children to ensure safety. While we continue to work closely with ecosystem partners to explore more in vehicle scenarios under ECARX AutoGPT.

我們的ADCU解決方案現已具備與Unreal、Unity等主流3D引擎相容的真實世界渲染能力，預計將整合到[紅旗]和正在開發的智慧模型中。我們部署了ECARX AutoGPT，採用微軟的智慧佔用監控系統來追蹤和監控兒童在車內的行為，以確保安全。同時我們繼續與生態系統合作夥伴緊密合作，探索ECARX AutoGPT下的更多車輛場景。

We also developed an automotive hypervisor that allows multiple vehicle systems to run on the Makalu platform using AMD chips. Our technology leadership continues to strengthen as a result with our robust intellectual property portfolio now expanding to include 613 registered patents and 656 pending patent applications globally as of September 30.

我們還開發了一款汽車管理程序，允許多個車輛系統在使用 AMD 晶片的 Makalu 平台上運行。截至 9 月 30 日，我們強大的智慧財產權組合現已擴大到包括 613 項註冊專利和 656 項待決專利申請，我們的技術領先地位不斷增強。

On the product side, we had several new exciting vehicles launched this quarter that showcased our technological strengths and demonstrate our remarkable versatility to replicate and scale our solutions across various brands and models. Demand for the Geely Galaxy E5 since its launch in August has been particularly strong with over 12,000 vehicles sold in that month alone.

在產品方面，我們本季推出了幾款令人興奮的新車型，展示了我們的技術優勢，並展示了我們在不同品牌和車型上複製和擴展我們的解決方案的卓越多功能性。自 8 月推出以來，吉利 Galaxy E5 的需求尤其強勁，僅當月就售出超過 12,000 輛汽車。

Notably, the Galaxy E5 is the first vehicle to integrate digital cockpit and parking capabilities into a single board using the Antora 1000 computing platform under Geely's new EE architecture which serves as the foundation for their next generation vehicles.

值得注意的是，Galaxy E5 是第一款使用吉利新 EE 架構下的 Antora 1000 運算平台將數位駕駛艙和停車功能整合到單板中的車輛，該架構是吉利下一代車輛的基礎。

On top of that, the Antora 1000 SPB which integrates digital cockpit, parking, and driving capabilities on the Antora 1000 platform has also been launched and can be replicated and scaled with any AI chip providing a highly cost effective and streamlined solution that aligns seamlessly with evolving EE architectures. This broadens the Antora 1000's appeal as the central computing platform of choice for automakers globally.

除此之外，Antora 1000 SPB 也已推出，它在 Antora 1000 平台上整合了數位座艙、停車和駕駛功能，可以使用任何 AI 晶片進行複製和擴展，提供高度成本效益和簡化的解決方案，與不斷發展的EE 架構。這擴大了 Antora 1000 作為全球汽車製造商首選中央運算平台的吸引力。

Lynk & Co flagship Z10 began mass production during the quarter following its debut in June. This vehicle showcases the strength of the Makalu computing platform powered by AMD Ryzen V2000 processors and our self-developed hypervisors which I mentioned earlier. Our extensive experience in digital cockpit design combined with AMDs advanced computing capabilities has resulted in a vehicle that sets a new benchmark for in-vehicle technology and user experience.

領克旗艦Z10自6月首次亮相後，本季開始量產。這輛車展示了由 AMD Ryzen V2000 處理器和我之前提到的我們自主開發的虛擬機器管理程式提供支援的 Makalu 運算平台的實力。我們在數位座艙設計方面的豐富經驗與 AMD 的先進運算能力相結合，打造出了一款為車載技術和用戶體驗樹立了新基準的車輛。

The smart #5 officially launched on October 27, following its global debut in August also comes integrated with the Makalu computing platform. I'm happy to see our Antora and Makalu series widely adopted across various vehicle models ranging from entry level to premium. This demonstrates our strong competitiveness in the market and ease with which our solutions can be scaled and replicated.

smart #5 繼 8 月全球首發後，於 10 月 27 日正式推出，還整合了 Makalu 運算平台。我很高興看到我們的 Antora 和 Makalu 系列廣泛應用於從入門級到高階的各種車型。這表明我們在市場上具有強大的競爭力，並且我們的解決方案可以輕鬆擴展和複製。

The Lynk & Co 02, know as Z20 in China debuted in Milan on October 11, and has since launched officially in Europe. Integrated with our Galena computing platform, we are committed to support the state-of-the-art model as we explore market opportunities globally for this tailor made solution.

Lynk & Co 02，在中國被稱為Z20，於10月11日在米蘭首次亮相，隨後在歐洲正式上市。與我們的 Galena 運算平台整合後，我們致力於在全球範圍內探索這項客製化解決方案的市場機會時支援最先進的模型。

Lastly, our Pikes computing platform officially launched this quarter utilizing Qualcomm Snapdragon 8295 SoC. This solution will first be integrated into a new Geely model plan for the start of production in 2025. We are making solid progress in establishing ourselves as a partner for automakers as they transition to software defined vehicles by delivering solutions that are scalable and cost efficient.

最後，我們的 Pikes 運算平台於本季正式推出，採用 Qualcomm Snapdragon 8295 SoC。該解決方案將首先整合到吉利新車型中，並計劃於 2025 年投產。隨著汽車製造商向軟體定義汽車轉型，我們透過提供可擴展且具成本效益的解決方案，在成為汽車製造商的合作夥伴方面取得了紮實的進展。

Our expertise in commercializing and deploying these integrated vehicle solutions on a global scale, not only optimizes costs but also speeds up market entry for manufacturers around the world. We attended the third Global Digital Trade Expo in Hangzhou at the end of September where we showcased the Makalu and Antora platforms and signed an agreement to further expand our Fuyong smart facility.

我們在全球範圍內商業化和部署這些整合式車輛解決方案的專業知識不僅優化了成本，而且還加快了世界各地製造商的市場進入速度。9月底，我們參加了在杭州舉行的第三屆全球數位貿易博覽會，展示了Makalu和Antora平台，並簽署了進一步擴建福永智慧設施的協議。

Fuyong represents a critical step in our strategy to integrate manufacturing and supply chain processes. This facility is opening at the highest industry standards, deploying the latest in connectivity, advanced analytics, automation, and advanced manufacturing technology. Production capacity has quickly ramped up since production started in April with about 30,000 Antora 1,000 units produced and shipped for the Galaxy E5 in August and September.

福永是我們整合製造和供應鏈流程策略的關鍵一步。該設施按照最高行業標準開放，部署最新的連接、高級分析、自動化和先進製造技術。自 4 月投產以來，產能迅速提升，8 月和 9 月為 Galaxy E5 生產並出貨了約 3 萬台 Antora 1,000 台。

In 2023, we were deeply engaged in the supply chain management but all our end product manufacturing was completed through partners and joint ventures. Now by the end of 2024, we have taken control of our manufacturing and we should end the year with about 15% to 20% under our own control. By the end of 2025 we expect that metric to be over 50% with a long term target in the range of 70% or more.

2023年，我們深入參與供應鏈管理，但所有最終產品的製造都是透過合作夥伴和合資企業完成的。現在到 2024 年底，我們已經控制了我們的製造，到年底我們應該可以控制大約 15% 到 20% 的製造。到 2025 年底，我們預計該指標將超過 50%，長期目標為 70% 或更高。

By improving our control over costs, product quality and operations, we will be able to further enhance our competitive position in the market. I am pleased with the progress we have made and remain highly optimistic that we will continue to see tremendous growth going forward as our investments, technological innovation, diversification of customer base, and global expansion begin to generate significant returns.

透過提高對成本、產品品質和營運的控制，我們將能夠進一步增強我們在市場上的競爭地位。我對我們的進展感到高興，並保持高度樂觀，認為隨著我們的投資、技術創新、客戶群多元化和全球擴張開始產生顯著回報，我們將繼續看到巨大的成長。

I will now turn the call over to Phil who will go through our financial results.

我現在將把電話轉給菲爾，他將審查我們的財務表現。

Thank you, Peter and hello everyone. Our strong performance in the first half of the year continued into the third quarter as our business continues to grow. Total revenue for the quarter was RMB1.4 billion, an increase of 31% year over year. Revenue from the sales of computing hardware was RMB1.2 billion, up 61% year over year mainly driven by continued global demand for the Volvo EX30 and the Polestar 4 as well as an increase in sales volume for the Antora series and the Makalu platform digital cockpits and autonomous driving controlling unit, which contributed approximately 23% and 11% respectively to total revenue.

謝謝你，彼得，大家好。隨著業務持續成長，我們上半年的強勁表現延續到第三季。該季度總收入為人民幣14億元，較去年同期成長31%。運算硬體銷售收入為人民幣12億元，較去年成長61%，主要得益於全球對沃爾沃EX30和Polestar 4的持續需求以及Antora系列和Makalu平台數位銷售的成長駕駛艙和自動駕駛控制單元分別佔總收入約23%和11%。

Software license revenue came in at RMB84 million, down 39% year over year due to a decrease in the sales of navigation and operating software compared to the previous year. Compared to the last quarter, software license revenue grew by RMB28 million or 49% with the ramping up of Flyme Auto sales volume and the intellectual property revenue growth.

軟體授權收入為人民幣8,400萬元，年減39%，主要是因為導航和操作軟體銷售額年減。隨著Flyme汽車銷售的提升以及智慧財產權收入的成長，軟體授權收入較上季成長2,800萬元，成長49%。

Services revenue decreased 26% year over year to RMB161 million mostly as a result of timing differences in completing nonrecurring engineering revenue contracts. All year-to-date service revenue grew approximately 10% year over year. Gross profit was RMB248 million, a decrease of 25% year-over-year which translates into a gross margin of 17%.

服務收入較去年同期下降26%至人民幣1.61億元，主要是因為完成非經常性工程收入合約的時間差異所致。年初至今所有服務收入年增約 10%。毛利為人民幣2.48億元，年減25%，毛利率為17%。

Margins on hardware products continue to be under pressure as we adopt a penetration pricing strategy to drive revenue and volume growth to gain market share and achieve economies of scale and the cost reductions against the backdrop of an industry-wide price war in automotive sector and ongoing transformation of customers EE architecture.

在汽車行業全行業價格戰和持續的背景下，我們採用滲透定價策略來推動收入和銷售增長，以獲取市場份額並實現規模經濟和成本降低，因此硬體產品的利潤率繼續面臨壓力。的轉型。

As I discussed in the previous earnings call, we expect this pressure on our hardware margins to remain over the medium term. To offset this impact, we will continue to focus on driving sales of our unique product portfolio, deepening cost reductions, and improving operational efficiencies.

正如我在之前的財報電話會議中所討論的那樣，我們預計硬體利潤率的這種壓力將在中期內持續存在。為了抵​​消這種影響，我們將繼續專注於推動我們獨特產品組合的銷售、深化成本削減和提高營運效率。

OpEx during the quarter decreased 2% year over year. This was primarily driven by improved global operational efficiencies and a lower share based compensation expense during the quarter which were partially offset by continued investment into R&D core product roadmap and the future technologies.

本季營運支出較去年同期下降 2%。這主要是由於本季度全球營運效率的提高和基於股份的薪酬費用的降低，這部分被對研發核心產品路線圖和未來技術的持續投資所抵消。

Loss per share was RMB0.97 compared to the previous quarter, RMB0.84. Adjusted EBITA loss was RMB233 million, up from a loss of RMB181 million during the same period last year, primarily attributable to (1) a decrease in gross margin as a trade-off for the growth in motive computing platform business and increase the market share. And (2), lower foreign currency change gain partially offset by lower operating expenses and an increase in fair value of financial assets compared to the previous year.

每股虧損為 0.97 元，上一季為 0.84 元。調整後EBITA虧損為人民幣2.33億元，高於去年同期虧損1.81億元，主要由於(1)毛利率下降，以換取動力計算平台業務成長和市場份額增加。(2) 與前一年相比，外幣變動收益的減少被營業費用的減少和金融資產公允價值的增加部分抵銷。

Moving on to our balance sheet. As of the end of the third quarter, we had RMB688 million of cash and restricted cash, which gives us ample resources to fund our core product roadmap, key initiatives, and the global business expansion, while we continue to improve our working capital and profitability. Overall, we maintain the robust growth despite intense market competition.

繼續我們的資產負債表。截至第三季末，我們擁有人民幣6.88億元的現金和限制性現金，這為我們提供了充足的資源來為我們的核心產品路線圖、關鍵舉措和全球業務擴張提供資金，同時我們繼續提高營運資本和獲利能力。整體而言，儘管市場競爭激烈，我們仍保持強勁成長。

We will continue to focus on expanding our customer base, deepening our penetration of both Geely and the non-Geely ecosystem to gain market share, driving economies of scale and the cost optimization. We will also continue to optimize our operating expense and carefully control the new investments to improve our margin performance and the sustainability of our business in the long run.

我們將繼續專注於擴大客戶群，深化對吉利和非吉利生態系統的滲透，以獲取市場份額，推動規模經濟和成本優化。我們還將繼續優化營運費用並謹慎控制新投資，以提高我們的利潤率表現和業務的長期可持續性。

That concludes our prepared remarks today, I would now like to hand the call back to the operator to begin the Q&A section.

我們今天準備好的發言就到此結束，我現在想將電話轉交給接線員以開始問答部分。

(Operator Instructions)

（操作員說明）

Wei Huang, Deutsche Bank.

黃偉，德意志銀行。

Hello? Can you hear me?

你好？你聽得到我嗎？

Yes, we can hear you.

是的，我們能聽到你的聲音。

Hi, thanks for taking my question. So my first question is regarding the sale of goods margin. We've seen a decline Q-over-Q and year-over-year to around 9% in the third quarter. Can we talk about factors contributing to that? And how should we think about it in the fourth quarter and into next year?

您好，感謝您提出我的問題。所以我的第一個問題是關於商品銷售保證金的。我們看到第三季環比和年減至 9% 左右。我們能談談造成這種情況的因素嗎？我們該如何看待第四季和明年的情況？

Okay, sure. This is Phil. I'm happy to address your question regarding the margin performance in the third quarter. Yes, there's a fierce market competition which drove the hardware solution margin deterioration in the quarter which is from last quarter 14% to current quarter, 8.9%. Actually we chose to drive the volume increase and maintain a share of wallet stability in our key accounts, our customer base. And we also want to have an opportunity to further work on the supply chain and the cost optimization. As I mentioned, it's all about the economy of scale.

好吧，當然。這是菲爾.我很高興回答您有關第三季利潤表現的問題。是的，激烈的市場競爭導致本季硬體解決方案利潤率惡化，從上季度的 14% 下降到本季的 8.9%。實際上，我們選擇推動交易量的增加，並在我們的關鍵客戶和客戶群中保持一定程度的錢包穩定性。我們也希望有機會進一步致力於供應鏈和成本優化。正如我所提到的，這一切都與規模經濟有關。

The other reason is the product mix also impacts the current quarter's margin performance. Normally, 50% of our profit came from services and the software. Their margin performance is pretty stable ranging from 57% to 60%. Due to the software selling ramp ups and the service booking seasonality issue, the mix from services and the software changed from 30% to 17% in this quarter. And all these are the key factors that impact overall margin performance.

另一個原因是產品組合也會影響本季的利潤率表現。通常，我們50%的利潤來自服務和軟體。他們的利潤率表現非常穩定，範圍在 57% 到 60% 之間。由於軟體銷售增加和服務預訂季節性問題，本季服務和軟體的比例從 30% 變為 17%。所有這些都是影響整體利潤表現的關鍵因素。

However, in moving into Q4, we will see that -- we will rebalance the portfolio of sales on services and software and we will -- we are able to restore our margin performance through that. And meanwhile, we are able to further drive our cost optimization and which can help uplift the hardware margin performance as well. So that is the answer for your question on the margin performance in Q3.

然而，進入第四季度，我們將看到——我們將重新平衡服務和軟體的銷售組合，我們將——我們能夠透過這一點恢復我們的利潤率表現。同時，我們能夠進一步推動成本優化，這也有助於提高硬體利潤表現。這就是您關於第三季利潤表現問題的答案。

Thank you. That is very clear. And the other question I had was we've seen Geely the Galaxy brand launch two vehicles, the Galaxy E5 and the Star Wish sedans. And we know the company has disclosed that the E5 uses the Antora platform and the Flyme Auto system. Can we talk about the Star Wish sedan, does ECARX also supply the hardware for that model as well?

謝謝。這是非常清楚的。我的另一個問題是，我們看到吉利銀河品牌推出了兩款車，銀河E5和星願轎車。我們知道該公司已經透露E5採用了Antora平台和Flyme Auto系統。我們可以談談星願轎車嗎，ECARX 也為該車型提供硬體嗎？

Yeah, this is Peter. I'll grab that question. I mean, does the Galaxy E5 uses our Antora 1000 platform?

是的，這是彼得。我會抓住這個問題。我的意思是，Galaxy E5 使用我們的 Antora 1000 平台嗎？

Along with the Flyme Auto software, as you mentioned, and the Star Wish's platform uses our Venado platform. So that's our E02 platform where we have a -- that's a very robust product that we've had in the market. We have more than 1 million units lifetime on that program. So they both use solutions from ECARX.

正如您所提到的，除了 Flyme Auto 軟體之外，Star Wish 的平台也使用了我們的 Venado 平台。這就是我們的 E02 平台，我們在市場上擁有非常強大的產品。該計劃的使用壽命已超過 100 萬台。所以他們都使用 ECARX 的解決方案。

Thank you. That is very clear. And maybe a last one for me after the Lynk & Co. Z10 and the smart #5, can you maybe give us some outlook on what other vehicle models for the Makalu platform be used on?

謝謝。這是非常清楚的。也許是繼 Lynk & Co. Z10 和 smart #5 之後我的最後一款車型，您能否給我們一些關於 Makalu 平台可用於哪些其他車型的展望？

Yeah, I'll grab that one as well. I mean, the Makalu platform is really a benchmark, lighthouse project for us. It's deep strategic cooperation with AMD. We're the first automaker to adopt the V2000 platform, which is AMD's newest automotive platform. And we've built up -- even as we discussed in our prepared remarks, a unique hypervisor that extends our software capabilities and really drives a very tight software hardware linkage to have fantastic performance.

是的，我也去搶那個。我的意思是，Makalu 平台對我們來說確實是一個基準、燈塔專案。是與AMD的深度策略合作。我們是第一家採用 V2000 平台的汽車製造商，這是 AMD 最新的汽車平台。正如我們在準備好的發言中所討論的那樣，我們已經建立了一個獨特的虛擬機管理程序，它擴展了我們的軟體功能，並真正驅動了非常緊密的軟體硬體鏈接，以實現出色的性能。

We've got great user feedback from the vehicles. The Z10 has been in production smart is in a ramp up phase right now. And we will continue to promote that to both the future vehicles for smart for Lynk & Co. as well as others in the market.

我們從車輛中得到了很好的用戶回饋。Z10 已投入生產，目前正處於加速階段。我們將繼續向領克汽車以及市場上其他汽車的未來智慧汽車推廣這一點。

Understood. Thank you very much. That's all for me.

明白了。非常感謝。這就是我的全部。

Dai Shen, SPDI.

戴申，SPDI。

(Spoken in foreign language) This is Tony from SPD International. I've got two questions here. The first question is also going back to the gross margin. Do we have an outlook for the gross margin for next year? For 2025, do we have a direction here? Do we expect the gross margin to improve from the gross margin from third quarter, especially for the hardware products?

（用外語發言）我是 SPD International 的托尼。我這裡有兩個問題。第一個問題還是回到毛利率。我們對明年的毛利率有展望嗎？2025年，我們有方向嗎？我們預期毛利率較第三季的毛利率是否會有所改善，尤其是硬體產品？

And for the gross margin specifically, I've seen that our inhouse manufacturing is improving especially for 2025. Is this a plus for the gross margin for next year? This is my first question.

具體來說，就毛利率而言，我發現我們的內部製造正在改善，尤其是到 2025 年。這對明年的毛利率有好處嗎？這是我的第一個問題。

Hey, thank you. Thank you, Shen Dai. This is a very good question and I'm happy to address this one. We observed that the market competition starting from September 2023 and we keep seeing aggressive pricing pressure from our customers. But again, as I just mentioned, we also would like to drive the volume uplift and maintain our install base in our customers. This is very critical because we want to drive the economy of scale. And only with that, we are able to further negotiate the cost optimization from a supply chain perspective.

嘿，謝謝你。謝謝你，沉岱。這是一個非常好的問題，我很高興回答這個問題。我們觀察到，從 2023 年 9 月開始，市場競爭激烈，我們不斷看到客戶的激進定價壓力。但正如我剛才提到的，我們也希望推動銷售提升並維持我們在客戶中的安裝基礎。這非常關鍵，因為我們想要推動規模經濟。只有這樣，我們才能從供應鏈的角度進一步協商成本最佳化。

And yes, you mentioned that, for sure, we will try our best to keep our overall gross margin performance over 20%-ish. That is our goal as well because half of our profitability came from the services and the software and the layer margin performance is pretty stable. And as long as we can keep the reasonable sales mix from the two products, then we should be able to keep the overall margin performance at a reasonable level.

是的，您提到，我們肯定會盡力將整體毛利率維持在 20% 以上。這也是我們的目標，因為我們一半的獲利能力來自服務和軟體，而且層利潤率表現相當穩定。只要我們能夠保持兩種產品的合理銷售組合，那麼我們應該能夠將整體利潤表現保持在合理的水平。

However, I agree with you that the pricing pressure especially on the hardware solution is right now a challenge, but we do have our plan to recover that first. We will keep innovating. We keep investing our R&D and we will keep innovating and we always can bring our best of great solutions for our customers. And within the time window, we are able to charge a price premium as well. So we are pioneering in this hardware solution in the market sector.

然而，我同意你的觀點，即價格壓力，尤其是硬體解決方案的價格壓力，現在是一個挑戰，但我們確實有計劃首先恢復這一點。我們將不斷創新。我們不斷投資研發，不斷創新，始終能為客戶帶來最好的解決方案。在時間窗口內，我們也可以收取溢價。因此，我們在該硬體解決方案領域處於市場領先地位。

And we will also drive the [lean] operation as well. In terms of the loss of operation, the total profitability with our focus on SG&A optimization and which is also a highlight in the quarter like SG&A, OpEx actually declined 19% a year, a-year over-year. And this also reflects our ability to control the expense as well. So in general, I would comment that we will try our best to keep our, our gross margin performance above 20%-ish. But that depends on our execution on services and software sales, at the same time, how to bring the higher margin hardware solution to the market to delight our customers, and meanwhile control our operating expense tightly. And with the scale of our business, we are able to achieve the breakeven very soon. So that is our -- that concludes my answer to your margin questions.

我們也將推動[精益]營運。就營運損失而言，我們專注於 SG&A 優化的總獲利能力，這也是本季度的亮點，與 SG&A 一樣，營運支出實際上比去年同期下降了 19%。這也體現了我們控制費用的能力。因此，總的來說，我想說的是，我們將盡力將毛利率保持在 20% 以上。但這取決於我們在服務和軟體銷售上的執行力，同時，如何將更高利潤的硬體解決方案推向市場，讓我們的客戶滿意，同時嚴格控制我們的營運費用。隨著我們業務規模的擴大，我們很快就能實現收支平衡。這就是我對您的保證金問題的回答。

That's very clear. A quick follow up on the inhouse manufacturing and is it positive to gross margin?

這非常清楚。對內部製造的快速跟進以及它對毛利率是否有利？

Yes, for sure. So, right now we adopt OEM manufacturing model and the good thing is that we keep receiving orders from our customers and for sure. Well, we would like to achieve the scale as well. So as long as we keep optimizing the CapEx investment, the expense happening in a supply chain sides and manufacturing sides, we should be able to control our manufacturing cost within a reasonable level, which is also very competitive in the market. So I can tell you that, that is also on our radar.

是的，當然。所以，現在我們採用 OEM 製造模式，好處是我們不斷收到客戶的訂單，這是肯定的。嗯，我們也希望達到這樣的規模。所以只要我們不斷優化CapEx投資，供應鏈端和製造端發生的費用，我們應該能夠將我們的製造成本控制在合理的水平，這在市場上也是非常有競爭力的。所以我可以告訴你，這也在我們的關注範圍內。

Okay. It's very clear. And my second question is about the overseas business. Can we have an update on our overseas expansion and also on the overseas customers? Do we expect any revenue or profit from overseas customers for 2025?

好的。非常清楚。我的第二個問題是關於海外業務的。我們可以了解一下我們的海外擴張以及海外客戶的最新情況嗎？我們預計 2025 年海外客戶會有收入或利潤嗎？

Yeah, I'll grab that. This is Peter. So I mean, the company has been driving down this global expansion road for a number of years now, I mean, as you remember in early this year, we established our office in Stuttgart to help expand our customer intimacy with the German OEMs. And presently, we're engaged in a number of RFQ processes with new customers there. So we're quite excited about the progress. The European OEM business, I would say moves on a very rigorous structured timeline.

是的，我會抓住它。這是彼得。所以我的意思是，該公司多年來一直在沿著這條全球擴張道路前進，我的意思是，正如你所記得的，今年年初，我們在斯圖加特設立了辦事處，以幫助擴大我們的客戶與德國原始設備製造商的親密關係。目前，我們正在與那裡的新客戶進行一些詢價流程。所以我們對進展感到非常興奮。我想說，歐洲 OEM 業務的發展遵循非常嚴格的結構化時間表。

So we might see some NRE service revenue towards the end of '25, likely in '26. And the SoPs we're looking at are probably in the '27 horizon. And that's just let's call it a standard development cycle that the European OEMs follow, but we definitely see a lot of strong customer intimacy, customer engagement, and as I said, a number of very tangible programs that we're working through the RFQ processes with. So we're very excited about the progress we're making there.

因此，我們可能會在 25 年底（甚至可能是 26 年）看到一些 NRE 服務收入。我們正在研究的 SoP 可能是在 27 年的水平。我們可以將其稱為歐洲 OEM 遵循的標準開發週期，但我們確實看到了很多強大的客戶親密度、客戶參與度，正如我所說，我們正在透過詢價流程實施許多非常切實的計劃和。因此，我們對在那裡取得的進展感到非常興奮。

Okay. Thank you very much. Thank you, Peter. It's clear. That's all my question.

好的。非常感謝。謝謝你，彼得。天氣晴朗。這就是我的全部問題。

Jiaqi Zhang, CICC.

張嘉琪，中金公司。

Hi. My name is Jiaqi Zhang from CICC Auto. So I have three questions for this quarter. The first one is regarding to the Geely group. We have seen Geely group has performed a very strong quarter and also for the October, Geely has delivered the single most number of deliveries in a single quarter. And my question is regarding what is the percentage of revenue actually currently contributed by Geely? And what is the ECARX expectation for the percentage of revenue contributed by Geely in the year 2025 and maybe the years coming?

你好。我是中金汽車的張嘉琪。所以我對本季有三個問題。第一個是關於吉利集團的。我們看到吉利集團的季度表現非常強勁，在 10 月份，吉利也創下了單季交付最多的成績。我的問題是，吉利目前實際貢獻的收入比例是多少？ECARX 對 2025 年甚至未來幾年吉利貢獻的收入百分比的預期是多少？

Sure, thank you, Jiaqi. This is Phil. So, regarding the business mix from Geely and Geely ecosystem and non Geely business. So in 2024, the expectation is still [90%] of our business still came from Geely and Geely ecosystem including Geely affiliation as like Volvo, Polestar, smart and Lotus. And yes, we still have lots of opportunities to further improve our non-Geely business mix. And in 2025, we foresee that the mix will keep improving including new business from FAW and we also foersee more business from our international OEMs as well, which is also a highlight of our non-Geely business expansion, especially from a global OEM perspective.

當然，謝謝你，嘉琪。這是菲爾.那麼，關於吉利和吉利生態系統以及非吉利業務的業務組合。因此，到 2024 年，我們的預期仍然是 [90%] 的業務仍然來自吉利和吉利生態系統，包括沃爾沃、Polestar、smart 和 Lotus 等吉利附屬公司。是的，我們仍然有很多機會進一步改善我們的非吉利業務組合。到2025年，我們預計這一組合將不斷改善，包括來自一汽的新業務，我們也預計來自國際整車廠的更多業務，這也是我們非吉利業務擴張的一個亮點，特別是從全球整車廠的角度來看。

And when moving into '25 and '26, our goal will not change. We will keep focusing on our non-Geely business expansion. So our goal is like by end of 2026 and 2027, nearly 40% of our business will be from non-Geely.

當進入'25和'26時，我們的目標不會改變。我們將繼續專注於非吉利業務的擴張。所以我們的目標是到 2026 年底和 2027 年底，我們有近 40% 的業務將來自非吉利。

Well, thank you so much. Just one quick follow up. So could you give us a more color on the projects doing with FAW? Because previously, you mentioned that we are going to expand into a wider spectrum of models. So how is the progress on this? Thank you.

嗯，非常感謝。只需一個快速跟進。能為我們介紹一下與一汽集團合作的專案嗎？因為之前您提到我們將擴展到更廣泛的模型範圍。那麼這方面的進展如何呢？謝謝。

Yeah, sure. I can address the question and maybe Peter can chime in additional information. So everything is on track, Jiaqi. We are delivering two flagship vehicle programs from FAW Hongqi vehicle project and the contract has been signed, had been signed and the team is working diligently to make a traction and then we are on track to deliver our program and the SoP expected by end of the quarter, early Q1 of next year.

是的，當然。我可以解決這個問題，也許彼得可以提供更多資訊。所以一切都步入正軌了，嘉琪。我們正在交付一汽紅旗車輛項目的兩個旗艦車輛項目，合約已經簽署，已經簽署，團隊正在努力工作，以取得牽引力，然後我們預計在年底交付我們的項目和 SoP。

And yes, we foresee more FAW Hongqi vehicle programs coming in and which also can significantly contribute to your non-Geely business to our portfolio.

是的，我們預計會有更多一汽紅旗汽車計畫加入，這也可以為我們投資組合中的非吉利業務做出重大貢獻。

Oh, well, so this is Ziyu speaking. So I would like to add more information here about Hongqi FAW program. So right now we have two models under development right now and we will make them SoP the end of this year and beginning of next year. So, and actually not only the full vehicle model that will be the platform because that will be very similar, what we are deploying in Geely already that Antora plus Flyme Auto platform. So that will be very unique competition platform for all FAW Hongqi future vehicle models. Yeah, so that's the -- I would like to add here.

哦，好吧，這是子玉在說話。所以我想在這裡補充更多關於紅旗一汽計畫的資訊。目前我們正在開發兩個模型，我們將在今年年底和明年初將它們製作為 SoP。因此，實際上不僅是整車車型將成為該平台，因為這將非常相似，我們已經在吉利部署了 Antora plus Flyme Auto 平台。因此，對於一汽紅旗未來所有車型來說，這將是一個非常獨特的競爭平台。是的，這就是我想在這裡補充的。

Well, thank you so much. That's very clear. My second question is regarding to the progress in ADAS. So we have seen from the news that the AD1000 chip has taped out, so big congratulations on that. So from the management perspective, how can we evaluate the breakeven point for the chip, like how many deliveries that we can lead to a breakeven? And is there any new contractual design-wins that can be shared or is there any technology breakthrough regarding the chip that can be shared? Thank you.

嗯，非常感謝。這非常清楚。我的第二個問題是關於 ADAS 的進展。所以我們從新聞看到AD1000晶片已經流片，非常祝賀。那麼從管理的角度來看，我們如何評估晶片的損益平衡點，例如我們可以交付多少數量才能達到損益平衡？是否有任何新的合約設計成果可以分享，或者晶片方面是否有任何技術突破可以共享？謝謝。

Okay. Well, so AD1000, that's very successfully, we tape out with the TSMC. And also I would like to share more information to you because right now all performance record already achieved regarding the design point of view. And from investment point of view from ECARX will start a computing system R&D with this SoC. But for SoC investment 100 percentage in SiEngine which is separate company from ECARX. We are shareholder but a separate company. So that ECARX will invest the AD1000 computing platform next two years and three years to accelerate our ADAS portfolio. Yeah, so that's our plan.

好的。那麼AD1000，非常成功，我們與台積電一起流片。我還想與您分享更多信息，因為目前從設計角度來看，所有性能記錄都已達到。而從投資的角度來看，ECARX將會以這款SoC開始計算系統的研發。但對於 SoC，SiEngine 的投資 100%，SiEngine 是獨立於 ECARX 的公司。我們是股東，但卻是一家獨立的公司。因此，ECARX 將在未來兩年和三年內投資 AD1000 運算平台，以加速我們的 ADAS 產品組合。是的，這就是我們的計劃。

And this AD this SoC is very competitive, the 7 nanometer and with a 512 TOPs AI capacity. And also as you know, we already had 7 nanometer experience already shipped SE 1000 over 0.5 million in the market. So that's why we're quite confident AD1000 will be faster and quicker to go to the market in production soon.

而這款AD這款SoC非常具有競爭力，採用7奈米製程並具備512 TOPs AI能力。而且如您所知，我們已經擁有 7 奈米經驗，SE 1000 已在市場上發貨超過 50 萬個。因此，我們非常有信心 AD1000 會越來越快地投入生產。

Thank you so much. That's very promising. I just one quick follow up. So are we going to develop the algorithm softwares by JICA ourselves or are we going to collaborate with the external partners?

太感謝了。這是非常有希望的。我只是快速跟進一下。那麼演算法軟體是由JICA自己開發還是與外部合作夥伴合作？

Yeah, to develop AD1000 platform will be the open platform. Of course, we'll finish our platform and integration and engineering. But of course, the open platform can support some customer like OEM inhouse software or also we can support a third party software on top. Very similar position like a NVIDIA platform in the market.

是的，開發AD1000平台將是開放式平台。當然，我們將完成我們的平台、整合和工程。但當然，開放平台可以支援某些客戶，例如 OEM 內部軟體，或者我們也可以支援第三方軟體。市場上的地位與 NVIDIA 平台非常相似。

Thank you, Ziyu. That's very clear. And my last question is regarding to the -- so what are the costs and expenses actually associated with developing new platforms? Because we see there are quite a number of new platforms that's currently on the development and the research -- R&D expenses actually going up. So I'm quite curious like what are the costs and expenses associated with developing a new platform? And what's the point of breaking even regarding to each of these platforms? Thank you.

謝謝你，子宇。這非常清楚。我的最後一個問題是關於——那麼與開發新平台實際相關的成本和費用是多少？因為我們看到目前有相當多的新平台正在開發和研究中——研發費用實際上正在增​​加。所以我很好奇開發新平台的成本和費用是多少？對這些平台來說，損益平衡的意義何在？謝謝。

Yeah, I think, you're asking a very good question here. So I think the most important for the company that every year we are having 30% growth of revenue, that's very important. Also, we are keeping more than 20% gross margin for three years.

是的，我認為你在這裡問了一個很好的問題。所以我認為對公司來說最重要的是我們每年的收入成長 30%，這非常重要。此外，我們連續三年維持20%以上的毛利率。

So that's why we are expanding -- we are expanding R&D investment actually year by year. We can keep the same percentage, but we can get more total amounts because our value growth. So that's the logic.

這就是我們擴張的原因——我們實際上正在逐年擴大研發投資。我們可以保持相同的百分比，但我們可以獲得更多的總額，因為我們的價值成長。這就是邏輯。

So that's why we are doing very carefully like 10% R&D investment, maybe future will drop to like 9% or 8% but the total amount will be much bigger because our revenue growing faster. And SG&A we will going to be like 7% or maybe below 7% these kind of things, because we are trying to book it as fast as -- as early as possible. So that's why we want to balancing these kind of percentage for R&D and SG&A.

所以這就是為什麼我們非常謹慎地進行研發投資，例如10%，也許未來會下降到9%或8%，但總量會更大，因為我們的收入成長更快。對於SG&A，我們將採用7% 或低於7% 的比例，因為我們正在努力盡快預訂。這就是為什麼我們要平衡研發和銷售管理費用的百分比。

That makes sense?

這樣有道理嗎？

All right, thank you. Just one very quick follow up. We currently, we have Qualcomm chip, SiEngine chip and AMD chip. So which one of these actually contributed the most gross margin and probably why? Thank you.

好的，謝謝。只是一個非常快速的跟進。我們目前有高通晶片、SiEngine晶片和AMD晶片。那麼，其中哪一項實際上貢獻了最大的毛利率，原因可能是什麼？謝謝。

I think from revenue perspective, so because this will -- gross margin perspective that will be very different segment. So SiEngine chip will be entry platform and a very strong cost competitive for China market and for worldwide market as well. I can further information, we have one global OEM opportunity bidding that we are using SiEngine chip right now. That's quite advantage for us because cost competitive comparing the global chipset.

我認為從收入的角度來看，因為這將是一個非常不同的細分市場。因此SiEngine晶片對於中國市場和全球市場來說將是入門平台並且具有非常強大的成本競爭力。我可以進一步了解，我們有一個全球 OEM 機會招標，我們現在正在使用 SiEngine 晶片。這對我們來說是相當有利的，因為與全球晶片組相比，我們的成本具有競爭力。

But for Qualcomm, AMD, NVIDIA for future, that's for global roadmap and for high-end segment. Yeah, probably like gross margin are bigger like NVIDIA and AMD, even Qualcomm, but for gross margin percentage should be similar.

但對於未來的高通、AMD、NVIDIA 來說，這是針對全球路線圖和高階市場的。是的，可能像 NVIDIA 和 AMD 甚至高通這樣的毛利率更大，但毛利率百分比應該相似。

Right. I totally understood. Thank you so much for answering my questions. Thank you. That's the end of my question. Thank you.

正確的。我完全明白了。非常感謝您回答我的問題。謝謝。我的問題到此結束。謝謝。

Derek Soderberg, Cantor Fitzgerald.

德里克·索德伯格，康托·菲茨杰拉德。

Yeah. Hey guys, thanks for taking the questions. So Phil, you guys talked about new wins. I guess on the hardware gross margins, just specifically referring to new wins here. These are with existing customers and I'm curious are hardware gross margins improving with existing customers as you guys are sort of becoming more integrated into their vehicle platforms. Again, specifically asking on the hardware gross margins.

是的。嘿夥計們，感謝您提出問題。菲爾，你們談論了新的勝利。我想是關於硬體毛利率，這裡專門指的是新的勝利。這些是針對現有客戶的，我很好奇現有客戶的硬體毛利率是否會隨著你們越來越融入他們的車輛平台而提高。再次特別詢問硬體毛利率。

Yeah, Derek. Thank you, Derek. Again, yeah, hardware gross margin, we did see the challenges and this is all about the competition because the China market is the competition is fierce. At the same time as I mentioned, we are expanding our footprint into the globe. We want to serve the top customers in global OEMs. So that's why we can balance the margin especially the hardware margin performance from different customer base a different customer segment.

是的，德里克。謝謝你，德里克。再說一遍，是的，硬體毛利率，我們確實看到了挑戰，這一切都與競爭有關，因為中國市場的競爭非常激烈。同時，正如我所提到的，我們正在將我們的足跡擴展到全球。我們希望為全球原始設備製造商的頂級客戶提供服務。這就是為什麼我們可以平衡不同客戶群和不同客戶群的利潤，特別是硬體利潤表現。

But in China, the competition will be always there. And we also chose to -- again, we will also want to choose the game to play right to win as small as -- the volume as small as possible, which is also a foundation for us on the supply chain management as well. And yes, we also expand offering into OEMs FAW Hongqi and which can also help improve our hardware margin performance.

但在中國，競爭永遠存在。我們也選擇——同樣，我們也希望選擇能夠贏得盡可能小的遊戲——數量盡可能小，這也是我們供應鏈管理的基礎。是的，我們還將產品擴展到原始設備製造商一汽紅旗，這也有助於提高我們的硬體利潤表現。

So it's all about the portfolio play from a different customer base, from a different product, like hardware service, and software.

因此，這完全取決於不同客戶群、不同產品（如硬體服務和軟體）的投資組合。

Got it. And then on the software side, a pretty good margin there, you guys have made some good partnerships. What are the biggest growth opportunities looking ahead for that business? Can you talk about ways to maybe expand that over the medium term? Thanks.

知道了。然後在軟體方面，利潤相當可觀，你們已經建立了一些良好的合作關係。該業務未來最大的成長機會是什麼？您能談談在中期內擴大此範圍的方法嗎？謝謝。

Yeah. So look right now, the core software business in China is all about like operating system Flyme Auto and ECARX inhouse development software product. And we basically, along with the customers demand, we also promote those software product aggressively and for the last generation product they are end of life. And that's why there's a transition. As you can see that from the software revenue year perspective, there's a slight decline over there. But in the longer term, we foresee that our software from Flyme Auto and the Cloudpeak will climb up for sure. And will replace the traditional old generation software and the growth will be there. And as you can see that from a quarter-on-quarter perspective the software revenue from Flyme Auto and Cloudpeak is outstanding, right? So that momentum will continue.

是的。所以現在來看，中國的核心軟體業務都是像作業系統Flyme Auto和ECARX自主開發的軟體產品。基本上，隨著客戶的需求，我們也積極推廣這些軟體產品，而對於上一代產品，它們的生命週期已經結束。這就是為什麼會有一個轉變。正如您所看到的，從軟體收入年度的角度來看，那裡略有下降。但從長遠來看，我們預期 Flyme Auto 和 Cloudpeak 的軟體肯定會攀升。並將取代傳統的老一代軟體，成長將會在那裡。而且大家可以看到，從環比來看，Flyme Auto 和 Cloudpeak 的軟體收入非常出色，對吧？因此，這種勢頭將繼續下去。

Got it. Really appreciate it. Thanks.

知道了。真的很感激。謝謝。

(Operator Instructions) I'm showing no other question in the queue. I would now like to turn the call back over to Phil for closing remarks.

（操作員說明）我在隊列中沒有顯示其他問題。我現在想將電話轉回給菲爾，讓他發表結束語。

Okay. Thank you. Thank you all for attending today's earnings call. So we are on right track to deliver our commitment to the customers, the growth momentum will definitely continue through the solid execution on pipeline conversion and the new business acquisition both from non-GeeIy and the global expansion perspective.

好的。謝謝。感謝大家參加今天的財報電話會議。因此，我們正在正確的道路上履行對客戶的承諾，透過從非吉利和全球擴張的角度堅定地執行管道轉換和新業務收購，成長勢頭肯定會持續下去。

ECARX always focus -- takes a long term focused strategy. We will keep investing into R&D, keep innovating, and bringing the best solutions to the market and delighting our customers. We will take multi initiatives to optimize the cost structure, drive lean operations, and improve our profitability.

ECARX 始終專注－採取長期策略。我們將持續投入研發，不斷創新，為市場帶來最好的解決方案，讓客戶滿意。我們將多措並舉優化成本結構，推動精實運營，提高獲利能力。

Our global business extension will carry on and we will keep diversifying our customer base. And we are on the right track to deliver our profitability improvement and achieve our breakeven point sooner in a very short term. And this concludes the remarks for today's earning call from the management side.

我們的全球業務擴展將持續下去，我們將繼續使我們的客戶群多元化。我們正走在正確的道路上，能夠在很短的時間內提高盈利能力並更快地實現盈虧平衡點。管理層今天的財報電話會議的發言到此結束。

Thank you, ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

謝謝女士們、先生們，今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。