Ecarx Holdings Inc. (ECX) 2025 Q4 法說會逐字稿

Good day and thank you for standing by. Welcome to the Ecarx Q4 and full year 2025 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded.

I'd now like to hand the conference over to your first speaker today, Gillian Tiltman. Please go ahead.

Thank you, operator. Good morning and welcome to Ecarx's fourth quarter full year 2025 earnings conference call. Joining me today from Ecarx are Chairman and 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. Before we start, I would like to refer 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 discussions of certain non-GAAP financial measures. A reconciliation of the non-GAAP to the GAAP financial measures can be found at the bottom of our earnings release.

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

Thank you, Gillian.

Hello, everyone, and thank you for joining us today.

Ecarx is transforming vehicles into seamlessly integrated information, communication, and the transportation devices. To realize this vision of becoming a leading AI technology provider in the automotive industry, we must proactively navigate today's dynamic regulatory and market environment.

Ensuring we remain compliant and maintain growth while pushing the boundaries of automotive intelligence globally. By diversifying both our geographic revenue base and our solution portfolio, we are building e-commerce into a robust, compliant, and most important, a truly global business. The fourth quarter was a critical influential point and marks the start of our next phase of sustainable, profitable goals.

We delivered a net income of $2.8 million adjust EBITDA of $22 million and operating income of $7 million. Marking our second constructive quarter of positive results as revenue hit a historical high of $305 million. Up 13% year-over-year. Your profit was $64 million up 11%. One year-over-year with a gross margin of 21%. These results are a director fraction of the execution of our lean operating strategy, which continues to deliver a resilient recovery in gross margin.

Enhance the R&D efficiency and optimize the operating expenses, despite the several challenges posed by patent policy in the global semiconductor supply chain. We remain firmly on track to sustain this strong and profitable momentum into 2026. Our momentum is being fueled by two distinct engines that are allowing us to unlock growth opportunities from existing and new partnerships.

First, our computing platform continue to drive strong sales growth for best selling models, allowing us to deepen the penetration rate of our solutions across our par vehicle lineups and anchor the stability of our core business. Notably, shipments of our Antora series reached the 1 million unit milestone in 2025. Underscoring the platform's market leadership.

With the concentrate of Antora shipments increasing within our total shipments, our vertical integration capability allow us to capture great value and structurally enhance our long-term profitable growth trajectory.

Secondly, our globalization strategy continues to amplify our unique value proposition as a core technology partner worldwide, demonstrating the global ability and the scalability of our solutions to potential and existing partners. Our deepened partnership with Volkswagen Group in Latin America is a key milestone in this journey. Demonstrating how the Antora platform is setting a global standard for intelligent copies and driving our international expansion.

This agreement utilizes our platform to meet diverse market needs, with the high performance and to 1,000 for online variants that integrates our cloud peak software stack and the Google automotive service and the cost effective and total 500 for entry-level segments.

This highlights how our core technology already proving the popular launch of [GDAXX5] and Volvo X30 can seamlessly scale across diverse brands and international markets. This flexibility showcases how we efficiently address the involving needs of leading automakers on a global scale.

Looking ahead to 2026 and beyond, we are fully prepared for this next phase of growth. Our future strategic priorities as we progress will focus on three key pillars. First, we will continue to drive our globalization strategy and develop broader global strategic partnerships, continuing to leverage our cutting edge, cost-effective solutions.

These existing partnerships are blueprints to demonstrate the [replic cap] capability and scale ability of our physical AI architecture, and it will allow us to further stronger partnerships with significant commercial value and drive an increase in overseas revenues. We are on the path to transforming our business into even more of a truly global technology leader. Well, we have set targets to meaningfully increase our share to total revenue from international markets by the end of the decade.

Second, we will continue to invest in our R&D roadmap and development of next generation computing platforms, intelligent driving solutions like Skyline Pro to drive high performance AI computing power and in-vehicle AI large models by driving the industry transition from feature central to intelligence central experiences.

We will maintain our leadership position and proper our business toward high-value software and AI service, not only for automotive applications, but also adjacent sectors like robotics. Third, we will continue to strengthen our lean operating strategy and strategic execution to sustain profitability.

Our transaction to an automotive AI technology provider allows for great platform modularity, which drives R&D efficiency and sustains profitability. Our target for 2026 is continue to generate a meaningful annual revenue growth and then maintain positive operating income throughout 2026.

Moreover, we raised nearly $200 million in recent months from partners, including GD and ATW partners, a powerful inducement of our global growth strategy, technology leadership, and a proven ability to capitalize on accelerating demand.

This addition capital will support the build out of our R&D and engineering hub in Germany, and infrastructure across key growth markets in South America and Southern Southern East Asia, providing us with R&D deliver and supply chain -- to fuel our global expansion, with a strong finish to 2025 and accelerating global expansion, a growing suite of innovator. Solutions, and the first two chorus of profit, profitable growth. We are confident in our ability to capture the opportunities ahead as the automotive industry continues its transformation.

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

Thank you to you. Good morning, everyone. In the fourth quarter we made strong progress executing our strategic priorities. As we continue our global expansion, Deep in key partnerships. And execute on our R&D roadmap, our ability to execute on complex global programs. Is becoming a defining competitive advantage.

During the quarter, we continued to intentionally increase shipment volumes to meet accelerating market demand, shipping approximately 910,000 units. This brings the cumulative total number of vehicles equipped with ECAX technologies to approximately 11 million units, up 36% from last year.

And a direct reflection of the increasing recognition our reliable and cutting edge solutions are receiving globally. To date, we proudly serve 18 OEMs across 28 brands worldwide. Our global expansion remains a core focus, and in Q4 we've made significant progress.

Our partnership with Volkswagen Group continues to progress smoothly, both sample development. And delivery continue to consistently meet all targets and exceed expectations, opening the door for deeper collaboration.

We're excited about the opportunities that will come from our growing European pipeline. Our ability to strategically execute these programs demonstrates our world-class engineering delivery and project management capabilities on a global scale.

This expertise provides a solid foundation to capitalize on future large scale revenue opportunities. Across the Maya, the Americas, and the emerging markets. As we execute on these priorities, our global capabilities are gaining greater visibility and exposure.

Helping us build a robust overseas business development pipeline. That is growing substantially. This expansion directly supports the long-term goals you mentioned earlier. With our target to generate 50% of our total revenue from overseas markets by 2030.

Our technology continues to power some of the most exciting and increasingly popular new vehicles in the market. During the quarter, the Pike's computing platform and cloud peak cross-domain software stack powered the next generation AI cockpit experience for the Geely Galaxy M9. Showcasing our core strengths in developing solutions from the ground up that enable the delivery of in-vehicle AI agents at scale.

As this model gains significant traction among customers, global automakers can increasingly see how solutions can drive sales with their differentiated experience. This solution was replicated in the Lincoln Code 07 and 08 EMP, further expanding its global visibility and adoption.

Additionally, the highly sought after Geely EX-5 also launched in the UK during the quarter with the AI enhanced Antora 1,000 and cloud Peak Solutions integrated. Making the start of the large scale deliveries of these solutions in core European markets and another milestone in our global expansion.

Crucially, the Antora platform has obtained key safety and privacy certifications for the European market entry, providing us with the foundation to drive deployments across Europe and engage with automakers in the region.

Our solutions are increasingly being adopted by global automakers across different markets, validating their competitiveness, seamless adaptability, and reliability. They are compatible with [lime Auto] and Google Automotive Services.

And will help accelerate AI-driven intelligent in-vehicle experiences across multiple vehicle segments and markets worldwide. This sustained demand has allowed us to maintain a leading market share with over 11 million units installed as of December 31, 2025.

Innovation remains at the core of our strategy and forms the basis of our full stock technological leadership. At CES last month we demonstrated the strategic versatility of our portfolio showcasing solutions for scalable UI, agentic, and agent to agent AI, high-end computing, intelligent cockpits.

And next generation fusions of cockpits and assisted driving and parking that accelerate. And address evolving needs of the global automakers. A key highlight was a working demo of our cloud Peak software stack running side by side on two different computing platforms powered by the latest generations of SiEngine and Qualcomm chips.

Through seamless integrations with Google Automotive services, these solutions provide automakers with the flexibility to select their optimal hardware foundation while ensuring a consistent experience. Our technological leadership now unifies critical domains into seamless, high value competitive advantage that spans across the entire value chain from hardware such as chips and computing platforms to software, including operating systems and AI services.

This vertical integration allows us to provide automakers with high value, cost effective turnkey solutions that can be rapidly integrated across models and geographies and significantly reduced time to market. Our leadership is supported by a resilient strategic supply chain that acts as a critical competitive barrier.

Along with our Fuyang Intelligent manufacturing facility, our global partnerships with Samsung and Monolithic Power leverage our combined global R&D capabilities to establish an intelligent industrial ecosystem focused on system integration and platform adoption.

Together, they not only secure our supply chain, they accelerate our ability to capitalize on opportunities in the automotive and embodied intelligence sectors. Finally, we continue to aggressively push our global compliance platform to enable our transformation into a truly international business.

We are rapidly operationalizing our Singapore headquarters, which will be coming online soon and will act as our central hub for global IP, R&D, and Treasury activities. Currently we are working to obtain the relevant regulatory certifications in the US to engage with US automakers and further expand our addressable market. These steps will ensure we can serve our partners in any market backed by a delivery system that already is verified by leading automakers around the globe.

With that, I will now turn the call over to Phil, who will review our financial results and provide guidance as we look forward. Both the first quarter and full year 2026.

Thank you, Peter, and hello, everyone. The fourth quarter of 2025 represents a strategic inflection point in our company's evolution. Through discipline, execution, and the focused innovation, we have successfully navigated a complex macroeconomic headwinds to deliver our second consecutive quarter of positive operating income and the EBITDA, a powerful testament to the resilience of our business model and our clear path toward long-term profitability.

Top-line revenue for the fourth quarter reached an all-time high of $305 million representing 13% year-over-year growth and exceeding both our guidance and the market expectations. This resilient growth achieved despite persistent macroeconomic headwinds was primarily driven by strong customer demand for our core computing platforms.

This strong finish to 2025 enable us to achieve the double-digit annual revenue growth target we set for 2025 with a fully revenue reaching $848 million a 10% increase over 2024. Breaking this down further, sales of goods revenue reached $270 million a remarkable 27% year-over-year increase.

The impact of our in-house development strategy is clearly visible. With shipments of our Antola, Monado, and the Pikes series increasing by 62% year-over-year during the quarter. These advanced platforms contributed 74% of the total sales of goods revenue, demonstrating our technological differentiation. In our services business, Revenue reached, $33 million while software license revenue stood at $2 million. Both areas reflect strategic project timing considerations rather than underlying demand challenges.

Now, turning to our profitability metrics. Despite facing a global supply shortage for hardware and the components, particularly in storage and the significant cost pressures, we delivered an impressive margin performance.

Gross profit increased about 11% year-over-year to $64 million. Gross margin was 21% for the quarter. This performance demonstrates our strong operational resilience and the discipline the cost of management. Our lean operating strategy continues to yield significant efficiency gains.

Operating expenses decreased by 19% year-over-year to $57 million for this, for the quarter. For the full year, operating expenses fell 24% to $216 million. Most importantly, we achieved the least efficiencies while simultaneously driving global expansion and hitting critical R&D milestones.

All operational performance speaks to a fundamental transformation. Operating income reached $7 million during the quarter, 155% improvement year-by-year. Adjusted EBITDA was $22 million during the quarter, a significant increase from $10 million in Q4 last year.

Beyond the numbers, these results underscore the tangible outcome of our strategic transformation into a technology-driven globally competitive organization. Turning to the balance sheet, we took several significant steps to fortify our capital position, providing us with the flexibility to execute our global expansion and drive our R&D roadmap.

In recent weeks, we successfully signed a convertible bond financing agreement of up to $150 million with ATW partners and raised the $456 million from our strategic partner, Geely. This is a powerful endorsement of our global growth strategy, technology leadership, and the long-term growth prospects.

Starting this quarter to enhance transparency and to provide better visibility, we are initiating a formal guidance framework that aligns with our financial disclosures with the global nature of our expanding business.

For full year 2026, we're expected to drive total revenue in the range of $1 billion to $1.1 billion representing a year to year increase of 20% to 30%. Furthermore, we are committed to maintaining positive operating income throughout 2026. Underscoring the impact of our le operating strategy.

For the first quarter of 2026, we anticipate seasonal fluctuation typical of our industry. Consistent with the historical patterns, the first quarter represents a softer period for automotive consumption following the fourth quarter peak.

However, it's important to contextualize [thisality] with our free outlook. Our full-year old pipeline remains robust and aligns with our growth targets. We have implemented a proactive cost management strategies in place to mitigate margin pressure. The underlying demand drivers for our core automotive technologies continued to strengthen.

Most importantly, despite the typical first quarter seasonality, we maintain full confidence in our ability to navigate at least near-term dynamics and achieve our fully revenue and profitability targets. In closing, our fourth quarter of 2025 performance represents more than just a strong financial results. It demonstrates the successful execution of our strategic transformation.

Our progress is a testament to our team's tireless focus on operational excellence and the technological innovation. By consistently meeting each milestone, they have been critical in building the sustainable foundation that makes our long-term growth trajectory possible.

With that said, I would like to take the opportunity now to thank the investment community and my team as I will conclude my time at Ecarx with this release. I'm confident that the company will continue to climb to ever higher heights, and I look forward to following its progress as I venture to new opportunities.

That concludes our remarks today.

I would now like to hand the call back to the operator to begin a Q&A session.

Thank you. (Operator Instructions) Wei Huang, Deutsche Bank.

Hello, thank you for taking my question and congratulations on the strong set of results. My first question is regarding your 2026 guidance. Can you give us a bit more color on your ASP and margin outlook for the year? It seems like in January so far all the demand has been impacted by the weakening of the government's supportive policies. What is your outlook for the rest of the year?

Thank you.

Hey, Mr. Huang. -- I'm happy to address your question. So, yes, for the guidance for the full year, 2026, we expect to drive the total revenue in a range of $1 billion to $1.1 billion, and the list is, representing a year over year increase of, 20% to 30%, under, the macroeconomic heading you just mentioned.

And yes, in Q1, it's true that the automotive market is impacted by policy, as you mentioned just now and the end user demand shrinking. Yes, some reports, show that, estimation of 20% decrease or even [uhb] of auto wholesale in Q1, year by year, and, part of the reason is also triggered by, electronic component, cost inflation, especially in, memory site.

But Ecarx, we have a pretty good momentum. We deliver a very strong Q4, 2025, and, fully. And we will move our common momentum into 2026, and we have all kinds of actions in place to mitigate the potential challenges and risks. And Q1 is the low season, but we have a full confidence to deliver a solid, full year 2026.

Thank you. A bit of a follow-up on that question. You also mentioned the rising memory costs and which is expected to further increase going to 2026. Can you come in a bit on the impact on our margins for the year?

Yeah, sure. And as you can read from our financial reports, 2025 where we deliver a pretty good margin performance, especially in Q4, we are able to maintain or even improve our hardware gross margin, consistent and that is, due to our strong execution in cost optimization, VAV strategy execution. And, we're moving to 2026 along with the, industry-wide cost inflation.

We still need to execute pretty well in terms of the cost management and we will collaborate closely with our customer, on the industry-wide cost inflation as well. And on the pricing strategy, we will also drive a very reasonable pricing tactics to, offset, to mitigate the challenge as well. In terms of the total gross margin, outlook for 2026, I would say, a range, about 15% to 18%. And, that is, calculated, number after our, internal guidance.

Thank you. That is very clear. And my last question is, can you provide us another update on your latest progress with foreign [OEM] and this, older ones?

Thank you.

Yeah, Peter.

Hi, this is Peter Cirina. Let me address that question. So, as as you mentioned in his comments, Ecarx is positioning ourselves as a global physical AI provider to the auto technology provider to the automotive industry. So, early in 2025, we announced our, first major global win with a European OEM, with VW to, support business in Latin America.

In the fourth quarter, we extended our partnership with the Volkswagen Group and announced another win to take the Antara platform across additional vehicle lines in Volkswagen and Latin America, including our collaboration with Google. Currently as we look across the market in Europe, we've got really a broad level of significant opportunities. T

hat are emerging from our engagement with with our European partners and we certainly hope that as we move into next year this pipeline will pay us very well and we'll see, additional wins that we hopefully can discuss and will contribute to our revenue profile in the future. So I would say our global expansion is going quite well and we have these two very significant and tangible wins with the Volkswagen Group.

Thank you. There are more questions and congratulations again on the great set of results.

Thank you. And that does conclude today's conference call. Thank you all for participating, and you may now disconnect. Speakers, please stand by.