ECARX Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
June 12, 2023

There are 12 speakers on the call.

Operator

Good morning, everyone, and welcome to our Q1 2023 Earnings Conference Call. With me today are EcorX Chairman, CEO and Co Founder, Ziyu Shen Chief Operating Officer, Peter Serino and Chief Financial Officer, Ramesh Narasimhan. As a

Speaker 1

quick reminder, this call is being recorded. Before we begin the prepared remarks, which will be followed by Q and A, please note that we may refer to both GAAP and non GAAP measures. Today's discussion also contains forward looking statements based on the environment as we currently see it and as such does include risks and uncertainties. Please refer to our filings with the SEC for more information on the specific risk factors that could cause actual results to differ materially. With that, I'd like to hand the call over to Xu.

Speaker 1

Thank you, Adam. Hello, everyone, and welcome. Thank you for joining our quarter 1 earnings call. Before I dive into the financial results for the Q1, I'd first like to recap a few elements of our global strategy and progress. EcorX is ideally positioned to capture share in a large and rapidly evolving market.

Speaker 1

With an estimated TAN of US470 $1,000,000,000 by 2,030, supported by our differentiated ForceDAG technology that simplifies and expedited OEM product development timelines. We see a clear path for accelerating growth over the next 5 years as we expand our reach beyond our currently base of 12 OEMs and 21 vehicle brands. We have a solid strategy in case to achieve double digital revenue growth, adjusted EBITDA, profitability and the strong free cash flow generation, while remaining and depending in our capital allocation. Our focus remains on expanding revenue streams by partnering with global OEMs to meet their involving Yves, increasing average revenue per car through innovation, continuing to invest in R and D and accelerating collaborations with cutting edge partners across the globe. With that, I'd like to give you the highlights of our financial performance during the Q1, which Ramesh will go into in great detail later.

Speaker 1

We saw revenue of over 111,000,000 U. S. Dollar for quarter 1, up 15% compared to the peer year period in a challenging live developments. This growth was largely driven by an increase in new digital coffee sales volume and the favorable sales mix with higher revenues per unit. Our focus on EVs is continuing to pay off and we have great visibility into our revenue pipeline through the remainder of the year.

Speaker 1

As we started to roll out products into vehicle brands including Lotus, Smart, Volvo and Mazda. We achieved gross profit of $31,000,000 which was up more than 50% compared to the prior year period, driven by increased content per car, new product launches and continued focus on sourcing efficiencies. Following our strong performance in 2022, we again saw significantly improved adjusted EBITDA in quarter 1 as we reduce our losses by 48% compared to the prior year period. Importantly, we remain on track to reach adjusted EBITDA profitability by the end of 2024. As we continue to grow, it is important to remember how we got here and what our purpose is.

Speaker 1

ECAREX is a global mobility tech provider working with OEMs to create new vehicle platforms from the Gruong Hub. We are one of the only companies within the industry offering a unique vertically integrated 4 step solutions that including digital copy system, chipset solutions, a core operating system and an integrated software stack. These solutions and technologies, which are purely focused for the automotive industry, aim to combine multiple ECUs into a single computing platform, enabling OEMs to develop new applications, services and revenue streams. We have a clear road map and are focused on further developing a fully integrated solution for a software enabled vehicle of the future. And with our joint venture with ARM, We were the first to launch our 7 nanometer Automotive Grid SoC in China.

Speaker 1

As of April, our solutions have been integrated into around 5,000,000 cars worldwide. We continue to leverage our strong foundations to further advance internationally, seeing mass production and Traixin with mainstream OEMs like Volvo car, Mercedes, Mazda and Porsche. Next, I would like to review some of the progress we made over the 1st 3 months of for the year, which puts us in strong position for the remainder of the year and emphasizes the power of the EcorX strategy and the playbook. In addition to making strong progress building out our team in London. We opened an R and D center on the West Coast of the U.

Speaker 1

S. And Sales and Engineering Center in Germany. We continue to focus on developing our international capabilities to capture growth opportunities in the rapidly growing EV market in North America and Europe. Having showcased our cutting edge technology and exclusive collaborations with partners such as AMD at the start of the year. We also unified our exciting new product, LionUp, which is already scheduled to be in production in the second half year with mobile and the Linkedin Home.

Speaker 1

From our product portfolio, we continue our automotive focused testing program with SuperBrid to radiate these all in one force deck solution integrating the digital cockpit, driving and vehicle controls. Peter will elaborate our product line up in a few minutes. We are excited by the opportunities in the large and the growing automotive tech industry and see broad trends that we will further support strong growth for the years decades to come. We believe our cutting edge solutions and the strategic relationship will enable us to continue to capture new market share across geographies. These growth drivers include, 1st, the shift toward OLED Connected Automated EVs second, the rise of software defined vehicle and lastly, moving to a new platform dynamic that supports faster product development.

Speaker 1

Research conducted by McKinsey showed that the TAM of this market is expected to reach almost $500,000,000,000 by 2,030, and we plan to win more than our fair share this month. The rights of the subscriber defined vehicle is why Eric Lee and I found the ecorex. As cars continue to evolve to become more complex digital devices with greater vehicle autonomy and as drivers' expectations of their in car experience increase, The demand for high powered seamlessly connected automotive for our compute platform expands significantly. Anticipating the clear durations the market awards handling EcorX turned its focus to EV models several years ago and is well positioned to take advantage of the growth vertical. With our unique product capabilities, We are best positioned to help OEMs move from a distributed EE architecture to a more centralized one with increased computing power offering a better driver experience and additional benefits to OEMs such as reduced wiring needs, increased development speed, low BOM costs, all leading to requiring fewer suppliers.

Speaker 1

Before handing the call over to Peter, I want to thank all of our employees for their hard work and dedication to EcorX since our lifting in December. We are excited by our results in the 1st 3 months of 2023 and I believe we are well positioned to deliver on our guidance for the remainder of the year given the industry transforming the automotive industry and our own well defined growth strategy. With that, let me pass the call over to Peter Cirillo, our Chief Operating Officer.

Speaker 2

Thank you, Ziyu, and good morning, everyone. One of the key drivers of growth for eCOREx has been our focus on innovation. We continue to invest in research and development and to introduce cutting edge technologies and features in our products, which allows us to stay ahead of the market. We have a significant TAM opportunity ahead of us and our clearly differentiated product line is designed to capture all segments of that growth X. Our Antora series is designed to fulfill the need of powerful SoCs in high volume vehicles in the growing EV market.

Speaker 2

Makalu, one of the most powerful intelligent cockpits available today, designed to push the boundaries of the driver experience with amazing 3 d graphics is powered by AMD and Unreal Engine. And then to power the evolution of autonomy and software defined vehicles and the future of electronic architecture. We have our all in one central compute platform, Superbrain. All these products are supported by Cloud Peak, our multi pillared software system, which is featured in the new Volvo EX30. Now let's switch gears to our product mix.

Speaker 2

All of our products are designed to be automotive grade, which in our view is one of the key differentiators of ecorex compared to other industry players. Our Antora 1000 and 1000 Pro are designed to meet the growing demand for system on a chip in the EV and intelligent vehicle markets. They have a physical safety layer island, which runs independently and needs no virtualization. The Antora 1000 Pro uses SE Link to provide seamless connection for 2 Antora 1000 SoCs, effectively doubling the computing power and also this will provide redundancy for more functions and features. In addition, This additional computing power increases the lifecycle of the vehicle.

Speaker 2

Makalu delivers high speed gaming performance and supports the latest graphics processing interfaces of PC platforms, ideal for gaming, real time 3 d environment rendering and spatial surrounding audio effects. It offers a very sophisticated in vehicle experience. We are seeing real interest from OEMs for this product and mass production rollout is expected to begin in early 2024. Following ecorexmaclo is the Superbrain central compute platform, which combines our SC1000 SoC with an advanced AD chipset. This product brings AI performance to its full potential.

Speaker 2

This is our all in one solution that we view as a super convenient controller that integrates the cockpit, driving and vehicle control with our full stack hardware and software technologies. The Superbrain will lead to improvements in the performance and efficiency of the electronic architecture and drive the evolution from EVs to intelligent mobile devices. Superbrain will also enable OEMs to reduce the wiring harnesses in the vehicle by 5%, cut vehicle engineering costs by 15% and bring a 20% material savings when compared to distributed controllers. Finally, EcorX's CloudPeak architecture is built to fully meet the functional safety and information security requirements of the vehicle. It supports multiple operating systems and the global mobility ecosystem.

Speaker 2

It meets national and international standards and is compliant with the EAL4 certification. We work with many OEMs directly serving 21 brands across Asia Pacific and Europe, and we are continuously looking to diversify our customer base and our geographic footprint, as we have done recently with FAW and Mazda. For FAW, we will be supplying our Antora 1000 powered digital cockpit, which is planned for mass production by the end of the year. Lincoln Co. Will be utilizing our Antora 1000 Pro with FlyMe Auto for its new 8 model launching in Q3.

Speaker 2

We recently announced the mass production of a customized intelligent cockpit product for Changan's Mazda CX-fifty model based on our E02 platform. This E02 platform has already been deployed in around 800,000 vehicles across 26 separate vehicles from various OEMs and remains a powerful intelligent cockpit computing platform. Finally, CloudPick, our digital cockpit software stack will be integrated into the new all electric Volvo EX30 SUV in their state of the art infotainment system. We have a flexible business model. In addition to our OEM customers, we also supply 8 Tier 1 automotive suppliers, including Visteon, Norsoft, Baidu and Desai.

Speaker 2

Our focus on developing an automotive tech platform is informed by our deep rooted automotive knowledge and strategic collaborations. We recognized early on that the best way to deliver great computing power and fantastic experience is to collaborate at the R and D development stage. As many of you know, we have agreements and strong relationships with cutting edge companies like AMD, ARM, Epic Games, Volvo and SciEngine, all to define the next generation of in vehicle connectivity and take the digital customer experience to the next level. We remain excited about our wide industry partners and continue to seek collaborations with similarly innovative businesses to improve the cockpit experience and create meaningful differentiation of our product offering. Looking ahead, We continue to build eCOREx into a market leader in the large and growing and rapidly transforming EV market.

Speaker 2

We continue to invest in our people and in R and D to create the innovative and products and services that meet the evolving needs of our customers. Now I will turn the presentation over to Ramesh to review our financial results.

Speaker 3

Thank you, Peter, and good morning to all of you. EcorX Q1 financial results came in strong with our focus on growth and commercial success driving the numbers. We continue to see strong growth throughout the quarter with the revenues up 16% to $111,100,000 compared to the prior year period in a challenging macro environment where vehicle production in China fell 10% year over year in Q1, a testament to the continued strong demand for our products and our focus on the EV market. Our growth was driven by new digital cockpit sales volumes and the portfolio shift from IHU to DHUs. Our business remains robust and we are confident of achieving our full year revenue guidance of $700,000,000 to $720,000,000 The results for Q1 also reflect the seasonality of our industry and was in line with our expectations and is factored into the guidance for the year.

Speaker 3

Compared to the prior year period, sale of goods revenue increased by 19% and while software license revenue was up 140%. Service revenue was around $7,000,000 lower, both driven by contract completions in the period. Gross profit was $30,700,000 up 52% compared to the prior year period. This was mostly a result of an increase in content per car, favorable product mix and a continued focus on sourcing and manufacturing efficiency, along with an increase in margin for software licensing. Adjusted EBITDA was negative 17,400,000 a 48% improvement compared to the prior year period, benefiting from higher margins and lower fixed costs, while maintaining investment in core product development.

Speaker 3

SG and A was 23% of revenue, up from 21% in the prior year as we continue our international expansion, while keeping a tight control on costs. We finished the quarter with a cash of $148,000,000 up 31% compared to the prior quarter, which gives us a solid financial foundation and further strengthens our position in the market. This empowers us to continue to drive innovation, explore new markets and seize strategic partnerships. Although I've presented this slide on previous occasions, it is crucial to emphasize the inherent seasonality within our business. This reminder is especially relevant as we anticipate a similar pattern this year considering the planned launches of new products scheduled for 3rd and 4th quarters.

Speaker 3

As you heard earlier from Ziyu, we have had a pretty full agenda so far this year. And looking forward, we have a number of key milestones to deliver through the balance of the year, including a number of key product launches, seeing Antora 1000 and 1000 Pro on the road in a mass rollout for the first time, while we continue to expand our international footprint and enhance our engineering capabilities. We're also focused on diversifying the business in terms of our customer base and geography. Our first quarter progress on all these metrics gives us confidence in meeting our projections for 2023, and we are reiterating our guidance for revenue to be in the range of $700,000,000 to $720,000,000 a 38% year over year increase at the midpoint. For adjusted EBITDA, we maintain our guidance of achieving breakeven by the end of 2024.

Speaker 3

To summarize, We continue to see strong revenue growth and our new product introductions, including the Antora series, Mikaelu Superbrain Central Computing Platform and Cloud Peak Software have generated excitement among both our existing customers and potential prospects. These innovative offerings have positioned us as a leading player in the leading market. Both these factors signify our ability to stay ahead of industry trends and meet the growing demand for electric vehicles, which are expected to continue and serve as a strong tailwind for the years to come. We continue to strengthen the business by adding engineering capacity and by executing our commitment to diversify our customer base and revenues. Lastly, our financial performance continues to create a clear pathway to achieving adjusted EBITDA profitability by the end of 2024.

Speaker 3

In conclusion, we continue to make significant strides in driving the business forward, while benefiting from the secular adoption of electric vehicles and strong demand for our automotive grade products. With a clear path to profitability, We are well positioned for continued success. With that, we would like to open up for questions.

Speaker 4

Ecorex. We will take our first question. And the question comes from the line of Georgiana Reques from Canaccord Genuity. Please go ahead. Your line is open.

Speaker 5

Hi, good morning and thanks for taking my question. My first one is just you've done an admirable job of navigating the headwinds in EV and Auto Demand globally. Can you just kind of give us a little bit more meat to the bone there and help us and a little bit of what you're seeing in the marketplace and what gives you confidence in the second half ramp that you just articulated?

Speaker 2

Hi, George. Thanks for joining the call today and thanks for the question. You certainly I think one of the strengths we have ecorex is just a fantastic market that we participated. Our segment of the automotive space continues to grow rapidly and we see continuing strength in terms of demand for our products. About a number of years ago, Ziyu, our CEO, had us focused primarily on electric vehicles, and I think that's providing a good tailwind for what we were able to achieve in the Q1 and our continued visibility into balance of the year.

Speaker 2

We've got a number of exciting launches. We talked about the Mazda launch in our earnings call, additional launches with the Lincoln code that we announced and our cloud software we're launching on the Volvo EX30 later this year. So I think with the continued strength in electric vehicles and these launches, we are pretty confident in our continued progress through the balance of the year.

Speaker 5

Thank you. And just as a follow-up, completely different topic more long term in natures. Curious as to whether you can give us any update on Superbrain and particularly the Cyanogen and the partnership there with ARM. Any update, any additional color you can share there would be very much appreciated. And also whether or not you'd be open to other partnerships within the Superbrain ecosystem outside of the SI engine.

Speaker 5

Thank you.

Speaker 2

Yes, certainly. I mean, we definitely see An advantage of ecorex is the technology ecosystem that we work with. So whether that's partnerships that we have with ARM and Cyngene, Vovocars with Halitek on our Cloud Peak software, AMD and unreal in our Mackaloo product. Those partnerships continue to be, I think, a Critical element of our strategy, enabling us to develop products quickly with the best technology and in a cost effective way to bring them to market. As we continue to work with Cyngine, I think one of the significant advantages this year is the launch of the 7 nanometer SoC.

Speaker 2

We'll have that on vehicle in a matter of weeks here and continuing to ramp up fairly aggressively as we go through 'twenty three and 'twenty four. So we're excited to see that product rollout and partnerships will continue to be core to our strategy on a go forward basis, I think both in the cockpit space and in the central compute space. Thanks a lot. Thank

Speaker 4

you. We will take our next question. And the next question comes from the line of KiKang Ding from HSBC. Please go ahead. Your line is open.

Speaker 6

Thanks, team. I've got two questions. First, on the R and D side, we're reading in the results that we stopped the R and D of the ADAS perception. So could you give us a bit more context on it and breakdown The key R and D areas for us. And second, could you also update if any order win, especially from the non GA Daimler Volvo, other than these OEMs, any particular nationality or region we're being focusing on and how do we steer through the geopolitical tension that might get in the way in terms of we breaking into these international OEMs of sourcing system?

Speaker 2

Yes, sure. I'd be happy to address the question. I mean, We continue to invest very heavily in R and D. We've got approximately 70% of our total headcount is engineering focused. As we looked at our internal investments, we felt that our partnership progress was, let's say, at a faster pace, And we chose to focus a lot of our ADAS activities on the partnership side.

Speaker 2

So with our G10 Intelligent Vehicle partnership as well as Zenseact and Luminar that we've got close relationships with. We believe we have a very good offering to continue to grow in the ADAS space. So it was a simple matter of adjusting our approach and making sure we're really utilizing the best activities and that's core to the way that we approach the business. Relative to Volvo, I mentioned the EX30 launch is an exciting launch for us. It's a product that we'll have on vehicle later this year, we integrate the Google Automotive Systems automotive services into that product line, the global launch for ecorex.

Speaker 2

So as that vehicle ramps up, it will be in almost all of world markets. So we continue to advance on a global stage and we believe it's a great reference product that enabled us to continue to make progress in the international marketplace.

Speaker 3

And if I can just add on the R and D, we continue to invest very heavily to ensure that we stay ahead of the tech curve. And if you look at our spending, 60% to 70% of our OpEx is primarily focused on R and D and we'll continue to invest in R and D going forward as well. In terms of your second question, in terms of diversifying our revenue, we are continuously focused on that. We have established our international offices. We also have established engineering centers in both U.

Speaker 3

S. And in Germany, where we are establishing sales and engineering service centers, again to be very close to potential customers where we're continuously having some very exciting discussions about future opportunities. While we cannot mention any names today, it is something that as a business we are very, very closely following up and implementing.

Speaker 7

Got it. Thanks, Dean.

Speaker 2

Thank you.

Speaker 4

Thank you. We will take our next question. The next question comes from the line of Ying Sze from CICC. Please go ahead. Your line is open.

Speaker 8

Hello. Thanks for connecting and great congratulations to the results for our quarter 1. So actually I have four questions. So I'll just begin 1 by 1. The first one is actually, we have noticed that the quarter one revenue actually took 14% of the forecast revenue for 2023.

Speaker 8

So could you help us do a breakdown of R and D quarterly revenue for the this year revenue forecast? Yes, that's the first question.

Speaker 3

Sorry, I didn't really understand the question. Peter, do you want a breakdown of Q1 revenue? Juan.

Speaker 8

I actually want a breakdown on the quarterly revenue for this year, like The Q2, Q3, Q4, because we have noticed that the revenue actually took a larger percentage if we go under the road reaching the end of the year, usually like 40% from the last year. Sure.

Speaker 3

I mean, so

Speaker 8

I'll give us a guidance on the percentage. Yes, please.

Speaker 3

Yes, sure. I mean, I think it's one of the key things that we addressed in our full year earnings. In terms of the seasonality, we always find the Q1 to be the smallest in terms of the seasonality and Q4 could be the strongest. And we are not seeing anything different this year, which is consistent with what we have said in the past. And we have said in the past that Q1 was approximately about 16% to 17%, Q2 in the range of about 20%, Q3 similar to that and then Q4 about 40%.

Speaker 3

So that's what we are anticipating in 2023 as well in that range compared to the overall full year revenue. Of course, you got to overlay the fact that as we mentioned earlier, we have got Q3, Q4 new product launches that will accelerate on top of the seasonality, so you have to take that into consideration as well. But typically, this is the seasonality that we see in the market.

Speaker 8

Okay. Thank you. Thanks for the question. So my second question is like, So for Antares 1000 Pro, as we have seen that it is launched in Ming KanCol 8 in quarter 3. So my question is that could you just help us do a forecast on the revenue that can be generated from this product in quarter 3 this

Speaker 2

year. Certainly, we anticipate that We're confident that product will launch. We're working very closely with Luca Co to make sure that it launches successfully in vehicle and then our supply chain is lined up. We expect it to be ramped this year. We've got additional launches in Antora 1000 Pro across multiple brands next year.

Speaker 2

We don't disclose specific revenue by cryopon, but it really contributes to the ramp up you've seen in the latter half of the year to be quiet. Right.

Speaker 8

Okay. Thank you for the answer. Okay, that's fine. So the third question I want to ask is that How would you expect your service revenue and gross margin trends in maybe the coming year or the next 2 or 3 quarters?

Speaker 3

I mean, look, the service revenue is very seasonal. I mean, when I say, it's not based on calendarization, but it depends on contract lesion, and we that will be in line with contracts that we have got in place. But as I said, overall, We are still very much focused on and confident on delivering the $700,000,000 to 720,000,000 and we've taken into account the contracts or the service revenue that will come into place this year within that. But it is very clearly driven by a specific contracts that we've got in place.

Speaker 8

Let me know what's the relative size of the contract. Is that Coizar Kia Koni.

Speaker 3

Well, it varies. It depends on the level of customization that we do for different OEMs. We obviously don't go into details of what level of customization because that will be revealing some confidential information, what they expect in future products. But yes, the level of contracts is driven by what customer experience the OEM is wanting in its products and its product position.

Speaker 8

Okay, right. Thank you for the answer. And for the gross margin trends, could you please elaborate on it?

Speaker 3

Yes. I mean, we We got gross margin of 28% this year overall. We are expecting that trend to continue through this year. Of course, in the second half, we have new products coming through. But overall, I think for the year, we are expecting gross margin to be in that range.

Speaker 8

Sorry, I didn't get your last sentence. So it's around $0.25 for the

Speaker 3

whole year. Yes, overall, we are expecting the gross margin to be in this range.

Speaker 8

Okay, right. Thank you so much. And my last question is regarding the percentage of revenue generated from non gv OEMs. So could you help us do a brief like elaboration on like the progress of Ecorex getting the contracts from non GD OEMs and what are the revenues generated from these contracts, please?

Speaker 5

So, yes, so this is Jie speaking. Thank you for the question.

Speaker 1

So I think in quarter 1, yes, in quarter 1, we have already announced the FAW Group this year. That's very significant milestone for us. We already got very confirmed confirmation from FAW Group for Antora series product collaboration. And also 2 weeks ago, also we announced Chang'an Master SOP launch. That's also very important milestone for us for EZ-two platform.

Speaker 1

We're already in production long years. I think that is current, so we already disclosed the non geely OEM partnership in this. Of course, the team is trying working very hard and still and we also have very strong confidence to distribute our technology to more and more Chinese domestic OEM and the global OEM together. Bye now.

Speaker 8

Hi,

Speaker 1

could you hear me? Yes, we can hear you.

Speaker 8

Great, thanks. So my previous question is like, could you help us do a rough estimation regarding The revenue actually the portion of revenue that generates from non TV OEMs maybe by the end of this year. Is it possible to do this kind of estimation by this time? Thank you.

Speaker 3

Yes. As we've said in the past, we will continue to drive based the diversification to improve as we launch new products in Volvo and as as you mentioned, FAW early next year. I think we take a longer term view in terms of power swing our customer revenue rather than taking a 12 month view because as you very well know with automotive contracts in place, it takes about 24 months and sometimes even 36 months to implement. So what is really important is that we take a longer term view in terms of diversification objectives rather than looking at it year by year. So I think it is something that When we make announcements on new contracts, you will get to see more and more of customer base that where we have opportunity to diversify.

Speaker 8

Yes. Thank you for the answering. Totally understand. Yes, that's all my questions. Thank you so much for the answer.

Speaker 3

Thank you.

Speaker 4

Thank you. We will take our next question. Your next question comes from the line of Derek Soderbergh from Cantor Fitzgerald. Please go ahead. Your line is open.

Speaker 9

Yes. Hey, guys. Thanks for taking my questions. Wanted to ask and maybe this question is for Peter. If you could speak a bit more about the Makalu platform, there's a lot of power in the solution.

Speaker 9

Curious if you can talk about what portion of the market is sort of for this level of computing power and how you expect the Makalu ramp to play out? And then if you could just talk about the interest level and feedback around Makalu as well, they'll be great.

Speaker 2

Hey, Derek. Good to hear from you. Thanks for the question. We mentioned that we're working pretty aggressively on getting Makalu out in the market. We've already announced that that product will be launched late this year, early next year as it ramps up.

Speaker 2

In that launch, we will also use a lot of 3 d environments and we think that will bring a great experience to the vehicle. Additionally, on top of that launch, We've also announced that Smart will be adopting that globally about the Macquarie product globally for their brands. I think we're quite excited around both solutions as being fantastic user experiences that those OEMs will be able to bring to customer base. We're continuing to work with a number of different OEMs to broaden the adoption of MapBlue and I think that we do get some excitement around that product, especially with 3 d capabilities. And I think we'll continue to talk about some exciting adoption of that product as we go through next year.

Speaker 9

Got it. That's helpful. And then Ramesh, you guys have a pretty clear product roadmap that you spoke about during your Investor Day and you guys are continuing to invest in R and D and You've got these product launches coming. Can you talk about your cash position and how you feel about where that is for the year, just as it relates to funding further growth. Thanks.

Speaker 3

Sure. Hi, Derek. Good to talk to you again. Yes, we started the year with $112,000,000 in terms of cash. During the quarter, our cash balance to be improved and we ended up at $148,000,000 I think we have a very strong cash balance right now and we are comfortable that the business has got sufficient cash to support continuing investment in R and D going forward.

Speaker 3

Of course, like any business, If there is a if we feel there is a need to raise further funding, then at that time, we will evaluate what options we have and make the decision going forward, but currently we are very, very confident with the cash balances that we have got.

Speaker 9

Got it. Thanks, guys.

Speaker 2

Thanks, sir.

Speaker 4

Thank you. We will take the next question. Your next question comes from the line of Shelly Wang from Morgan Stanley. Please go ahead. Your line is open.

Speaker 7

Thanks for taking my question. I have two questions from my side. One is a follow-up on the customer expansion. So when we supply to the non GD brand, may I know what's our like the competitive advantage comparing to our like our peers?

Speaker 2

Yes, sure. I'll take a shot at that. We think That eCOREx brings a number of advantages to the market. If we look at our capabilities, first, we're between eCOREx and the strong partnerships and joint ventures that we have. We've got the ability to deliver product from silicon to cloud services in a fully integrated stack that enables us to understand the system and bring the best platforms into the market.

Speaker 2

Being a pure play automotive company, we've got experience in launching many vehicles and ensuring that our product line X is very focused on the automotive industry and delivering advantages to the automotive OEMs based on the knowledge, the system design, the system knowledge that we bring to play. With our relationship with the Geely brand. We very much are there helping to craft The vehicle roadmap on day 1 when vehicles are born. This enables us to bring our technology into vehicles very quickly. And as we talk to future customers, we're often talking about products that are on the road and successfully delivering great experiences to customers and to the the OEMs and that rather than talking about engineering prototypes and activities like that.

Speaker 2

And then lastly, we've got a very strong technology partnership ecosystem that we see ourselves at the center of and kind of the architect of that system and bringing technologies like we've talked about here with AMD, our joint venture with ARM, our joint venture with Halitect, where we're bringing the Google Automotive software into the vehicle and the Google AdMob services. And we see just to name a few, and we see this technology ecosystem is critical to the way that we're able to develop our systems and bring a fantastic experience into the vehicle.

Speaker 3

And if I can just add a couple of points. We see ourselves as leading in the leading market. And what that means is we are on top of the tech driving a lot of innovation. Solutions, so that's a critical competitive advantage that we've got. And we've also said that we are we believe we are unique in terms of the vertical integration.

Speaker 3

What that means is that we are very, very cost competitive when it comes to delivering advanced products, which I also believe is a very critical advantage that we have in the market.

Speaker 7

X. Got it. Very clear. And my second question is about the de spec concern. So We are seeing like the carmakers in China aggressively cutting retail prices this year.

Speaker 7

So from like our side, Do we see like the carmakers pass the cost pressure to us, like asking for the 5 car or use like the fewer intelligent cockpit features? And what's our strategy if OEM comes to us for more price cuts.

Speaker 3

Yes, I think it's very eCarEx offers versus traditional automotive components. Where We are seen as a value add differentiator from an automaker perspective. So it's not a traditional pricing negotiation. It is what problem are we trying to solve for the OEM and what value add we bring to the table in terms of the digital customer experience. So I think it's more question of what we can deliver rather than more about a pricing pressure.

Speaker 3

We're not the traditional OEM customer who makes a bracket and we want it Cheaper by another $0.10 That's not the kind of conversations we have. So it's really about enhancing the product value for the OEM and the customer experience ultimately.

Speaker 7

Got it. Thank you very much.

Speaker 2

Thank you. Thank you.

Speaker 4

Thank you. We will take our next question. And your next question comes from the line of Zoe Lee from Jefferies. Please go ahead. Your line is open.

Speaker 10

Hi, good morning and thanks for taking my questions. I have two questions. My first Question is on the industry front. How do you evaluate the impact on the value chain if Tesla rolls out SSD in China? And my second question is with regard to your next generation product, Antora 1000 Pro, as the integration of digital cockpit and ADAS functions on 1 chip seems becomes the new norm.

Speaker 10

I'm wondering, could you please compel your product with Qualcomm's recently released ride Flex SoC in terms of the functionality as well as the pricing. Thank you.

Speaker 2

I'll take the first one. Relative to ADAS, we have got a tremendous amount of activity across all markets with in the ADAS space. EcorX, I think, is quite excited with the developments that We're bringing to market specifically with our GECA joint venture. We're working very closely with that system and we anticipate that we'll continue to make some great announcements in the future with how we bring that product forward. Additionally, we've got a number of partnerships that we continue to have in place with Volvo and ZEMSIAC and Luminar and We're quite we feel quite confident in the way we're approaching the ADAS market and the developments that will take place there and the place that ecorex will play in that future.

Speaker 2

And then relative to the Qualcomm product line, I think when we look at the SoC roadmap for ecorex, especially when you look at the the Antora 1000 product and its direct competitor, the Qualcomm 8,155. There are a number of use cases where we see a significant advantage in the way that we've designed that system and brought DDR5 memory into the vehicle and optimized the interfaces that there are use cases where we see up to a 30% performance enhancement versus the direct product line. And I think we will we continue to believe we've got a strong roadmap in working with Cyngen to bring great SoCs that are both cost competitive and future competitive into the market.

Speaker 7

Got it. That's very helpful.

Speaker 4

Thank you. We will take our next question. Your next question comes from the line of Sohi D'Silva from Roth Capital. Please go ahead. Your line is open.

Speaker 11

Hi, I see you, Peter, Ramesh. Thanks for taking the questions. So on the Superbrains central compute platform, I think you talked about some potential BOM savings, perhaps some wiring and so forth. Can you elaborate there and maybe how that compares to the competitors in terms of the advantage there?

Speaker 2

Yes, Suji. Hey, great. Thanks for the question. Thanks for joining us today. I think central compute has got the potential to unlock A lot of potential in the vehicle around savings from a BOM perspective, from a vehicle infrastructure perspective, and we're quite excited about the SuperBank product.

Speaker 2

We're still we still have that product in development. So Not yet on vehicle, but we anticipate that will come in the near term here. And then we'll anticipate we will have an official launch date, I would say, in the next 6 to 12 months. So we're excited about the developments with that product and the potential that it can bring to the vehicle. I think we've quoted that we see significant savings from electronic infrastructure perspective in the vehicle, both from consolidating additional ECUs together and creating savings from that perspective as well as the wiring savings that we've quoted in vehicle that we would anticipate coming from that application as well.

Speaker 8

Okay,

Speaker 11

great. Thanks, Peter. And then also, I was just curious on the in your attempt to diversify geographically, you placed your U. S. Office, I believe, in California.

Speaker 11

I'm just curious on The thinking behind that location, is it closer to tech resources versus the where the car companies are? Just curious on that thinking. Thanks.

Speaker 2

Sure. I mean, we're continuing to expand our footprint to serve customers effectively. So we mentioned today our engineering and sales center that will be ramping up in Germany and with hiring well on the way there. Our activities in California tend to be focused today on SoC IP development and we believe that's a fantastic place for talent and driving effective capabilities in that space, but we also see it as an opportunity to build from as we continue to approach That's the customers in North America and hope that it serves as a launching pad for those activities.

Speaker 11

Okay. Makes sense. Thanks, guys.

Speaker 2

Yes, thank you.

Speaker 4

There seems to be no further questions. So, we'd like to hand back for closing remarks.

Speaker 3

Yes. If I can thank you very much. I just wanted to thank everyone for joining the call today. As we've mentioned, as a management team, we are very excited about Ecorrigs' growth story and we're very confident on delivering the key milestones that we went through today. And once again, thank you for very insightful questions and appreciate that.

Speaker 3

Thanks, everyone.

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Key Takeaways

  • EcorX delivered $111M in Q1 revenue, up 15% year-over-year, driven by digital cockpit sales and higher content per car, and reiterated full-year guidance of $700–720M.
  • Gross profit rose over 50% to $31M on favorable product mix and sourcing efficiencies, while adjusted EBITDA loss narrowed 48%, aiming for profitability by end of 2024.
  • The company’s vertically integrated solution—including Antora SoCs, the Makalu intelligent cockpit, Superbrain central compute platform and CloudPeak software—now powers about 5 million vehicles across 12 OEMs and 21 brands.
  • Expansion into North America and Europe accelerated with new R&D and sales centers in the U.S. and Germany, plus strategic partnerships with AMD, ARM, Epic Games and OEMs like Volvo, Lincoln and Mazda.
  • EcorX targets the rapidly growing automotive computing TAM—projected at $470 billion by 2030—by focusing on software-defined vehicles and centralized architectures for EVs.
AI Generated. May Contain Errors.
Earnings Conference Call
ECARX Q1 2023
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