ECARX (ECX) Q2 FY26 earnings call: guidance and Q&A

Given strong Q2 hardware gross margin despite rising memory prices, what is the outlook for H2, especially as existing memory stock depletes?

Management explained Q2 strength was due to existing stock, higher-value product mix, and cost management. They confirmed memory price hikes will likely pressure margins more in Q3/Q4 as existing stock depletes, but emphasized strong supply chain partnerships and pass-through to customers, aiming to maintain gross margin.

“Yes, it is. And we're very working closely our supply chain teams and also working very closely with the marketplace. So we'll continue to manage that going forward. We do anticipate. Yes. So this is Ziyu speaking, sorry, I jump in here. So I will say so our supply chain team had a great job. So we built a very strong strategic partnership with NXT and also Samsung. So we are RFR partnered with them. So from a memory supply point of view, we are very leading and we had a very strong inventory and future pipeline. Also, principally, I want to say confidently that most of -- I think most of increase actually pass over to the customer. So no impact on our gross margin, that's for sure.”

asked by Huang Wei · answered by Unknown Executive

What was the percentage of high-end products (Antora/Pikes) in Q1 for a quarter-over-quarter comparison, given it was 42% in Q2?

Management did not have the exact Q1 percentage readily available but highlighted strong traction and continued rollout of Antora (up 52% YoY) and Pikes (up over 2,000% YoY). They expect continued growth in these platforms due to superior user experience and technology leadership.

“I mean, we see very good traction on these 2 product lines, and they continue to roll out across multiple customers for us in China and in the global market. And I think there are 2 strong lighthouse project programs for the organization. So as I mentioned in my comments, Antora saw a 52% increase year-on-year. And I think on a year-on-year basis and on a quarter-on-quarter basis, I do suspect we'll continue to see increases in that platform.”

asked by Huang Wei · answered by Ziyu Shen

What is the ASP outlook for Q3 and Q4, considering it reached ~$360 in Q2 due to the higher mix of Antora/Pikes, and new model launches?

Management did not provide a specific number but confirmed an upward trend in ASPs. They explained that the shift to newer, higher-performance platforms, which enable more functions and software-defined vehicles, ultimately reduces automakers' overall architecture costs while allowing for additional features, leading to continued ASP increases.

“I mean -- so I don't think we'll announce a specific number on that, but that's a trend that you should see from us, I think, and you see from most of the industry who is investing in new platforms and delivering these are high-end user experience. You'll see that a the industry trend, which we'll feel as a tailwind. So as our older products roll off and these newer higher performance products roll on, the customer experience is actually a net decrease in their vehicle architecture cost because more functions go onto these platforms, more of the vehicle becomes software-defined. It actually enables the automaker to deploy additional features inside the vehicle environment but with a higher performance put in the car, and higher performance software, we definitely -- we should continue to see, I would say, an increase in ASP.”

asked by Huang Wei · answered by Dylan Jeng

Why did gross margin for software and service businesses decline sequentially in Q2, with software near breakeven?

Management clarified that software revenue is a very small, lumpy number ($1M-$2M/quarter) and its quarterly movements should not be over-focused on. They also noted that much of what might be considered software is captured in the services line item, and margin movements are general business dynamics tied to new product launches.

“The software line item in our financials is one that gets a lot of attention because it moves up and down by a big percentage every quarter, but it's a very, very small number. And the way that we think about that is that's generally around, say, $1 million to $2 million a quarter, except when there's a significant event in the quarter. But we encourage people not to focus too much on the movement within software. I think it's important to understand as well that a lot of what people might think of as software comes into our services line item as well. I think the movements around margin loans are just general business dynamics as the quarters move over. It's principally driven by new product launches and being specified on platform.”

asked by Huang Wei · answered by Unknown Executive