ECARX Holdings Inc. Class A Ordinary shares 2026 Q2 Earnings Call
Review the key takeaways and the transcript of this earnings call.
- ECARX reported Q2 2026 revenue increased 45% year over year and 71% quarter over quarter, driven by higher value products and new model launches.
- Gross margin improved to 19.8% from 10.8% a year ago, despite challenging Chinese automotive market conditions and higher global memory costs.
- Shipments in Q2 were approximately 550,000 units, up 51% quarter over quarter but 2% lower year over year, with high-end products making up 42% of shipments.
- Software revenue declined 42% year over year due to lower sales volume, while service revenue increased 21% year over year, driven by new model launches.
- ECARX achieved its fourth consecutive quarter of positive adjusted EBITDA, though Q2 adjusted EBITDA was $0.5 million, down from $4 million in Q1 due to a one-time item in the prior quarter.
- The company began mass production for nine new models across four brands, including four models for markets outside China such as Europe, Southeast Asia, and South America.
- ECARX now has 12 million vehicles on the road with its technology.
- The company signed a definitive agreement to acquire Flyme Auto software business for approximately $266 million, enhancing its software stack and ecosystem.
- ECARX entered a strategic partnership with TPK Holding to co-develop the Orca LiDAR platform, targeting mass production in 2028.
- A shared exchange agreement was signed with Qualcomm Ventures to jointly develop integrated solutions, including the Snapdragon Elite automotive platform.
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Transcript
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Good day, and thank you for standing by. Welcome to the ECARX Q2 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mark Hankinson. Please go ahead. Thank you, operator.
Good morning, and welcome to ECARX's second quarter 2026 earnings conference call. With me today from ECARX are our founder and Chief Executive Officer, Ziyu Shen, Chief Operating Officer Peter Cirino, and Chief Financial Officer Dylan Jeng. 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 apply 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 financial measures to the GAAP financial measures can be found at the bottom of our earnings press release.
With that, I'd like to hand the call over to our founder and CEO, Ziyu Shen. Ziyu, please go ahead. Thank you, Mark.
Hello, everyone, and thank you for joining us today. Last quarter, we outlined our vision to push the boundaries of automotive intelligence globally and how we are transforming into a truly global business, uniquely positioned to capitalize on the surging demand for higher-value software and physical AI. At our earnings in May, we said we expected a significant rebound in the market from Q2, both in terms of vehicle launches and shipments. The second quarter delivered exactly as expected. We delivered a strong financial result, and we continue to build momentum and make strong progress on our strategic objectives. The second quarter continued to be defined by disciplined execution and accelerating global momentum. Our top-line revenue increased 45% year-over-year and up 71% from Q1. We reduced our operating expenses year-on-year despite the increased revenue.
We grew gross margin to 19.8%, up from 10.8% this time last year. Most notably, we delivered our fourth consecutive quarter of positive adjusted EBITDA. I want to be clear about the market in which we achieved this. Demand in Chinese automotive has remained challenging through the first half of this year, and global memory costs continue to be a significant factor. The growth in our revenue and profitability in this environment clearly demonstrates that the lean operating strategy we built through 2025 is doing exactly what we designed it to do. Throughout the quarter, we executed on our core priorities for the year with focus, accelerating our global strategy and investing in our R&D roadmap. That progress has strengthened our confidence going into the second half of 2026.
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