ZEEKR Intelligent Technology Q1 2025 Earnings Call Transcript

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May 15, 2025
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Operator

Hello, ladies and gentlemen. Thank you for standing by for Zika Group's First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in listen only mode. Today's conference call is being recorded. I will now turn the call over to your host, Mr.

Operator

Jing Huang, the CFO of Zika Group. Please go ahead.

Jing Yuan
Jing Yuan
CFO at ZEEKR Intelligent Technology

Thank you, operator. Good day, everyone. Welcome to Zika Group's first quarter twenty twenty five earnings conference call. Before we continue, please be reminded that today's discussion will contain forward looking statements made under the Safe Harbor provisions of The U. S.

Jing Yuan
Jing Yuan
CFO at ZEEKR Intelligent Technology

Private Securities Litigation Reform Act of 1995. Forward looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the views expressed today. Further information regarding risks and uncertainties is included in certain company filings with the U. S.

Jing Yuan
Jing Yuan
CFO at ZEEKR Intelligent Technology

Securities and Exchange Commission. The company does not take any obligation to update any forward looking statements except as required under the applicable law. So joining us today from Zika Group Senior Management are Mr. Anzong Hui, Co Founder and CEO and myself, Xin Yuan, the Group's CFO. Our CEO will make his remarks in Chinese followed by an English translation.

Jing Yuan
Jing Yuan
CFO at ZEEKR Intelligent Technology

Before turning the call to me for a review of our financials, I will talk about our financials in English. With that, I will now turn the call over to our CEO, Andy. Please.

Moderator

Hello, everyone. Thank you all for joining Zika Group's first quarter twenty twenty five earnings call. First and foremost, I would like to extend my heartfelt thanks to our users, employees and partners. Over the past four years, your unwavering support and the long term trust have made it possible for us to achieve what once seemed impossible. With the Zika one, we transformed the shooting brake from a niche segment into a mainstream option for our customers, ushering in a new era for this category in China.

Moderator

Meanwhile, the Zika009 took the luxury segment by storm, becoming the top selling model in the over RMB400000 luxury MPV category and pioneering a new market for premium pure electric MPVs. Thanks to your belief in us, Zika has reached nearly 500,000 users worldwide, carving out a third path in the new era of intelligent electric mobility. As of the end of the first quarter, following the strategic integration of Zika and the Lincoln Co brands, Zika Group's global user base surpassed 1,900,000 and is rapidly approaching the 2,000,000 mark. Looking ahead, we will continue to redefine luxuries through exceptional service and elevate the premium automotive segment with cutting edge technologies. Amid the industry's transformation, we remain firmly committed to innovation as we expand our presence in the global premium market.

Moderator

Since February, after we integrate both the Lincoln Co. Brand and the Zika brand into Zika Group. Zika Group has driven progress through a series of strategic initiatives, including joint product R and D, upgrades to our manufacturing systems, enhanced user engagement and stronger coordination across domestic and international channels. These efforts have accelerated the platform based technology sharing and unlocked economies of scale generating a notable improvement in profitability. From January to March, Zika Group delivered 114,000 vehicles, marking a 21% year over year increase and solidifying our position among the leaders in China's premium EV segment.

Moderator

Zika Group's first quarter revenue reached RMB22 billion with vehicle revenue up to RMB19.1 billion. Vehicles gross margin reached an impressive 16.5% with the Zika brand's margin rising to 21.2%. Next, let me outline our three key areas of focus for driving sustained growth, product, technology and channel expansion. Let's begin with our product lineup. In line with our brand strategies that is elevating the Zika brand in the premium segment and expanding the Lincoln Cove brand market reach, we have further enriched our product portfolio and enhanced overall competitiveness.

Moderator

As high end premium and hybrid vehicle emerge as the key growth engines in China's auto market. We are actively adapting to the evolving landscape. The Zika brand continues to make bold strides in the premium space. In April 15, we launched the Zika seven GT, a high-tech shooting brake coupe, further strengthening the Zika's shooting brake family. We produced over 10,000 Zika seven GTs for delivery in the models the first month.

Moderator

The Zika nine Grand Collector's Edition bolstered by the high profile endorsement has quickly become a sought after choice among top tier buyers. Furthermore, the Zika nine X positioned as the new energy era's most luxurious flagship SUV, yes, was the first super electric hybrid model built on a full stack 900 volt high voltage architecture. The entire lineup delivers zero to 100 kilometers per hour acceleration in just three seconds. Its groundbreaking super electric hybrid technology, which we began developing three years ago, seamlessly combines the advantages of a pure electric plug in hybrid and the range extender systems. This enables a driving experience comparable to that of a pure EV without any worry of a range anxiety.

Moderator

By strategically tapping into both luxury and hybrid segments, the Zika 9X captured widespread attention from global media outlets, industry peers and consumers at its Shanghai auto shows debut. Meanwhile, the Lincoln Cove brand continued to solidify its presence in the premium segments while broadening both the powertrain lineup and the customer base. Following the strategic integration, we launched the Lincoln Cove 900 in April, a smart six seater flagship SUV powered by E and P hybrid technology. The delivery volume of the Link Enco 900 has surpassed that of the models with highly publicized pre orders in the market. This model has secured far over 30,000 pre orders to date and the order data shows strong demand for the high spec two point zero turbo ultra model, 80% of our customers choose that variant and particularly among the users upgrading or replacing their existing models.

Moderator

Notably, over 30% of the orders are from former Mercedes Benz, BMW and Audi drivers, highlighting the Lincoln Co nine hundred's solid performance both in terms of the sales volume and the premium market appeal. And I understand that many investors are very interested about our future product offering. Looking ahead, Lincoln Co. Will launch its first EMP mid to large sedan in the second half of this year, while Zika Group will roll out the Zika 9X and another large luxury SUV 8X in the third and the fourth quarter respectively, both equipped with the cutting edge super electric hybrid technology. This compelling lineup of competitive, highly differentiated models promises to ingest fresh momentum into our business and fuel the group's sustainable steady growth.

Moderator

Secondly, on technology. In response to the Taizhou declaration and to accelerate its implementation, we are systematically advancing the integration and the sharing of our key platforms technologies across the Zika and the Lincoln Co brands, including the vehicle architecture, electrical and electronic architecture, powertrain systems, intelligent driving assistance and smart copy technologies. We aim to build a strong technological moat through the coordinated efforts across both brands. In the area of intelligence driving, Geely has unified its approach across brands and officially launched its standard intelligent driving assistance solution that is G Pilot. Future, the Zika Group models will feature the G Pilot H7 and H9 systems.

Moderator

Among them, the Zika 9X will be equipped with the G Pilot H9 system and offer the Level three ready intelligent driving assistance capabilities. It is expected to enter the mass production and the delivery by the end of this year. Meanwhile, the newly launched the Lincoln Co 900 incorporates the advanced G Pilot H5 and H7 systems. It's also the first production model to feature NVIDIA's driver AGX SOAR platform and comes equipped with the Geely Advanced Evasion System or GAES, a continuous automatic invasive steering technology originally abused by the Zika brand. In the second half of this year, Lincoln Co's upcoming EMP mid to large sedan will also be equipped with NVIDIA's solar chip SoC and adopt the G Pipes H7 platform.

Moderator

To simply put, we will find a very good synergy in the area of ADAS for both Zika and the Lincoln Co brands. In the smart corporate realm, Zhihe and the Linkin Co with the shared domain controllers and the electrical and electronic architecture. Each brand will maintain its distinct user experiences at application level. Zika vehicles will continue to use Zika AIOS, whilst the Lincoln Cove will use Flyme Auto. So to simply put, the two brands would share a lot in common, but still have different applications.

Moderator

In EV battery technology, Zika Group's self developed golden battery has ushered in a new era of ultrafast charging for lithium ion phosphate batteries, becoming the first LFP battery to surpass all mass produced lithium batteries in charging speeds. It is now one of the fastest fastest charging batteries in production globally. Moving forward, the original Golden Battery will be unified under the ShieldGolden Battery and will incorporate advanced in house cell technologies developed by the Geely Holding Group. This upgraded battery platform will further enhance the growth of both Zika and Lincoln Co. Brands in 2025 and beyond.

Moderator

Building on this foundation, we are pushing the boundaries of charging technologies even further. Zika Group has officially launched the V4 ultrafast megawatt charger, which boasts a world leading peak single GaN output of 1.3 megawatts. The first station is already been built up and running in the city of Hangzhou, delivering a total power output of over 1,400 kilowatts sufficient to support simultaneous ultrafast charging for three eight hundred volt models across the Zika and the Lincoln Co brands. In fact, our customers are giving very positive feedback about their experiences overcharging at the station and we will soon expand this technology across the nation. Certainly, the global channel development.

Moderator

Domestically, we would continue to strengthen our store network and expand into more lower tier markets. Zika would leverage LingHengCo's channel resources to aggressively expand into lower tier markets. Sharing after sales service infrastructure, improving accessibility for users and significantly boosting the Zika brand's overall channel coverage. Internationally, we are accelerating our global expansion to drive continued sales growth. Beyond Europe, we plan to establish a unified sales company in the global markets with a single team focused on developing international markets for the both brands.

Moderator

Currently, the Lincoln Co eight EMP and Zika 7X are being shipped overseas. On May 16, the ZK7X would commence deliveries in Europe. As of the April, we have entered over 60 major international markets with a global retail footprint of over 1,200 stores, over 150 of which are located in the overseas markets spanning Asia, Europe, Oceania, The Latin America and Africa. And I believe that the Lincoln Co eight and Zika 7X would have a very good market performance in the global market because they are in the large segments and they are we already received positive feedback from the customers. In conclusion, we believe that only those who embraces the change can move forward, only those who innovate can grow stronger and only those who reform and innovate would ultimately exceed.

Moderator

Since the first quarter, we've been implementing internal management reforms to unlock greater efficiency, enabling both innovation and breakthroughs. Going forward, we remain committed to our clear long term approach by aligning with the trends of the new energy era and focusing on the global premium markets. We will drive success amid the ongoing transformation of the global automotive industry. With that, I would hand over the call to our CFO, Mr. Yuan Jin.

Moderator

Thanks everyone.

Jing Yuan
Jing Yuan
CFO at ZEEKR Intelligent Technology

Thank you, Andy. I will now go over our key financial results for the fourth quarter of this year. Given the time constraint, I will focus on the highlights here and would ask you to refer to our earnings press release and six ks announcement for further details. We are pleased to report a robust financial performance for the fourth quarter, our first full quarter since completing the strategic integration of Zhiqa and Link and Co. Our strategic initiatives delivered both improved profitability and sustained growth across all key metrics.

Jing Yuan
Jing Yuan
CFO at ZEEKR Intelligent Technology

We have reached strong revenue growth and record margins. Our total vehicle deliveries reached 114,011 units in fourth quarter twenty twenty five for a year over year growth of 21.4%. Meanwhile, enhanced product competitiveness and stronger brand synergies drove a 16.1% year over year increase in vehicle sales revenue as well. We also achieved another record high quarterly vehicle margin through disciplined supply chain management and scale advantages. Our overall vehicle margin rose to 16.5%, up 3.4 percentage points year over year and beating the guidance of 15% set by management at the beginning of this year.

Jing Yuan
Jing Yuan
CFO at ZEEKR Intelligent Technology

The ZZER brand led the way with an all time high margin of 21.2, while Linganto's margin reached 11.4%, reflecting our ongoing focus on cost optimization and the premium product mix enhancements. Gross margin was 19.1% for the fourth quarter compared with 16.3% for the fourth quarter last year and 18% for the fourth quarter of twenty twenty four. We have achieved improving operating efficiency and significant loss reduction. We leverage platform based R and D and optimize the resource allocation to improve operational efficiency while expanding our vehicle lineup. R and D expenses were RMB2.9 billion for the fourth quarter of twenty twenty five, representing an increase of 25% year over year by the decrease of 25.6% quarter over quarter, exceeding our savings targets of 20% set at the beginning of this year.

Jing Yuan
Jing Yuan
CFO at ZEEKR Intelligent Technology

SG and A expenses were RMB2.65 billion for the first quarter of twenty twenty five, representing a decrease of 9.2% year over year and a decrease of 35.8% quarter over quarter. Together, higher revenue and improved spend efficiency narrowed down our net loss by 60% year over year to RMB763 million for the first quarter of twenty twenty five, a major step towards sustainable profitability. So before we move to the Q and A session, I would like to address that in order to ensure compliance with disclosure regulations and to prevent inappropriate or misinterpreted remarks from affecting the pending privatization transaction, the company will not comment on matters related to the privatization offer we received. A special committee composed of independent directors have been established to evaluate the offer and all communications with the offer will be conducted by this committee. The company will make announcements at appropriate time in accordance with legal disclosure requirements.

Jing Yuan
Jing Yuan
CFO at ZEEKR Intelligent Technology

For updates on privatization offer, please refer to the company's official disclosures. So that concludes my prepared remarks. Thank you, everyone. Let's move on to Q and A. Operator, could you read the Q and A instructions?

Jing Yuan
Jing Yuan
CFO at ZEEKR Intelligent Technology

Thank you.

Operator

We will now begin the question and answer session. The first question comes from Tina Ho with Goldman Sachs. Please go ahead.

Tina Hou
Tina Hou
Analyst at Goldman Sachs

Hi. Thanks management for taking my questions. So I have two questions. The first one is regarding the first four months sales volume, wondering if it's in line with management expectation. And then also do we have an updated sales volume target for 2025 full year and what would be the main models that's driving us to that full year target?

Tina Hou
Tina Hou
Analyst at Goldman Sachs

And then the second question is, I would just like to see if management has any comments regarding Judy Auto's provisional offering. We've also noticed that the share price of Zika is already above the offering price. So just wondering what kind of comments, if any, management has on it? Anything that you can share?

Moderator

So thank you so much for your questions from the by the Goldman Sachs analyst colleague. And we acknowledge that our sales performance in April is not that satisfying and some might find some might and but we would say that the sales performance is actually in line with our management's expectation. And we can say that we stay committed to the sales targets of 320,000 vehicles of Zika brand this year and 390,000 vehicles for the Lingtang co brand this year. So we stay committed to the 710,000 vehicles of sales volume for the Zika Group this year. So we did not have any new products launched in the first quarter and that has some influence on our sales performance in the first quarter.

Moderator

And also, we did not change our sales business policies in the first quarter and that also plays a stress on our sales performance in the first quarter as well. But I think since April, we launched the new Zika seven GT as well as the Lincoln Core 900. We would have a positive sales performance in May. And I believe in the rest of this year, with the launch of Zika 9X and Zika 8X and the Lincoln Coast mid to large sized sedan, These new products will contribute to the healthy positive sales performance in the remaining of this year. And you might have learned from the media reports that we recently made some change in the of the organization among the Zika Group's marketing and sales units.

Moderator

And we are also actively expanding our network approach. So in addition to the Zika House, we already have we also introduced Zika's agent mode for us to quickly enter into more lower tier markets. So we have been working on this for over three months, and I think we can see positive results from this move in the Q3 and Q4 this year. To answer your second question, I also would like to say that it's not that it's a difficult question and as a matter of fact, I'm not the Board member of JD Auto one hundred seventy five in Hong Kong. And I also learned the move from the public filing.

Moderator

So to ensure the compliance with the disclosure regulations and to prevent inappropriate remarks from affecting the pending privatization transaction, So the company would not comment on the matters related to the privatization offer here. And of course, our company take the privatization offer very seriously. So a special committee composed of independent directors has been established to evaluate the offer and all communications with the offer will be conducted by this committee. The company will make announcements at appropriate times in accordance with the legal disclosure requirements. For updates on the privatization offer, please refer to the company's official disclosures.

Moderator

But during the period of time, if there is any need from our investors, our company's management will give our full support possible. So after the filing the publish of the filing by the 75 and also today at the conference meeting, I also had a conversation with JLEOTO-one hundred seventy five Board members. So if any Zika investors want to further have a conversation, we would give support and make the lines. If our investors would like to have a conversation with our special committee members, our independent directors, we can also make the content for you. Thank you so much for your understanding.

Operator

And your next question comes from Tim Hsieh with Morgan Stanley. Please go ahead.

Tim Hsiao
Tim Hsiao
Analyst at Morgan Stanley

So my question is about the product, because of U. First large hybrid SSD 9X has received great feedbacks as GPU that Shanghai Auto Show. How should we think about the volume contribution and the margin of this models into second half? In the meantime, it would be great to get some feedbacks or some additional color about the another new models I. E.

Tim Hsiao
Tim Hsiao
Analyst at Morgan Stanley

The 8x in fourth quarter? Thank you.

Moderator

So before answering your questions, I would like to add two points in the to respond to Tina's question. So first of all, after we launched the seven GT on the May 15, we already achieved 10,000 delivery. So that shows that this model wins the customers recognition well. And the last month in April, we also launched the nine Grand Collectors Edition and also we received orders far exceeded our previous expectation. For the Lincoln Co nine hundred, we also received a very high number of orders intake.

Moderator

So our factories are working overtime to ensure timely deliveries to our customers. So based on these very positive market performance of these three models we launched recently, we have confidence that we can achieve our sales target this

Moderator

year.

Moderator

So to respond to your question on the Zika 9X and the Zika 8X, I think these two models have a very unique and good positioning. And both models are positioned at luxury segments and they would both be equipped with a super electric hybrid powertrain. So there's a big potential for the both models. And after the debut of Zika nine X at Shanghai Motor Show, we have received very high attention from the global media outlets and the industry and our customers. And the Zika 9X as well as the Zika 8X have very strong performances.

Moderator

Zika 9X would be worth the first nine hundred volt power equipped with 900 volt technologies vehicle model and it would support the fastest charging speed and along with the pure EV driving range and the fastest acceleration. And this is a very unique SUV model in its segments. And powered by the super electric hybrid technology, it combines the good advantage of a pure EV powertrain, the plug in hybrid powertrain and the range extender powertrain. I think this technology will be very leading in the new energy vehicles sector. And Zika 9X would be the leader in the application of smart active chassis technologies as well as the Level three capable assisted driving technologies.

Moderator

So it would become the benchmark in the full size luxury SUV. The length of Zika 9X is between 5.2 meters to 5.3 meters, whilst the length of Zika 8X will be around will be over five meters. So they share a lot of technologies in common, but in different sizes, so they can target different segments. According to our calculations, the Zika 9X and Zika 8X would have quite impressive margin performance and they were of higher vehicle margin of the current level of the current vehicles. So from our perspective, in the large vehicles segment, the EV sales growth was not as high as before, whilst the SuperAirsha hybrid would have a very good potential, not just in the Chinese market, but also in the global overseas market, including like Europe, the GCC countries as well as the Southeast Asia markets.

Moderator

So we are in parallel developing our domestic the products for our domestic markets as well as for the international markets aiming to timely deliver them to the global customers.

Jing Yuan
Jing Yuan
CFO at ZEEKR Intelligent Technology

Thank you. Victor, one last question. Think we're about to close the time. Thank you.

Operator

And the next question comes from Ming Soon Li with Bank of America. Please go ahead.

Ming-Hsun Lee
Ming-Hsun Lee
Analyst at Bank of America

Zika has developed a super hybrid technology and compared to the current PHEV cars or EIV cars in the market, what is the major advantage for this new technology? And based on your expectation, how much extra volume sales you expect after you provide the super hybrid version of your new models? And in the future, will you also consider to provide the hybrid version for your existing models or it will be mainly for the models in the future?

Moderator

So first of all, Lincoln Co 900 is using the EMP powertrain system, which share a lot of technology in common with Geely's powertrain system. And when it comes to the mechanical architecture, Zika 900 use SPA EVO architecture and upgrades of the previous SPA architecture. And when it comes to the Zika, when we develop the large size or mid to large size products, we would use SuperHybrid technology, which is different from the E and P to differentiate the two brands. So I would like I have already introduced our super electric hybrid technologies, but I want to make add some point here. First of all, on the power of our super electric hybrid technologies, no matter when the battery is fully charged or the battery is running out of the electricity, our superhero hybrid technology can both provide the very good driving performance like any other super any other top end luxury products.

Moderator

So that's beating the performance of existing PHEV or ERED products in the market. Secondly, on the fuel efficiency, no matter the wheels are derived by the e motor or the directly from the gasoline engine or no matter the vehicle is driving at high speed or low speed, we can always have a very good fuel efficiency. Thirdly, on the charging, so our super electric hybrid power products will be equipped with battery pack of one variant with over 50 kilowatt hour and another variant around 80 kilowatt hour. And our powertrain would be equipped with a 900 volt ultrafast charging technology. So we can support ultrafast charging, providing the best charging experiences to our customers.

Moderator

And another very important competitive factor of our SuperHelper hybrid technology is about the maintenance, the services. And so customers of our super edge hybrid products, they don't need to go into the maintenance as frequently as the other vehicles and the cost for maintenance services will be much lower than our peers' products. And we would share more details and information about our SuperHybrid technologies as a product and technology launch event later. But what I can say here is that we hope that our SuperHybrid technology will be the new benchmark and our internal target was made when we registered the project is to contribute 150,000 vehicles to 200,000 vehicles per year for this product this powertrain product in the future. Thank you.

Operator

This concludes our question and answer session. I would like to turn the conference back over to Mr. Yun Jin for any closing remarks.

Jing Yuan
Jing Yuan
CFO at ZEEKR Intelligent Technology

Thank you all for joining today's call. And as Mr. Dan mentioned earlier, the management here is more than happy to facilitate any of your concerns or discussions with either the management directors or our parent company Xero with

Jing Yuan
Jing Yuan
CFO at ZEEKR Intelligent Technology

Sun Fi. So if you

Jing Yuan
Jing Yuan
CFO at ZEEKR Intelligent Technology

have any other questions, please feel free to contact us or the Zizhou Group IR team. Have a great day. Thank you and bye bye.

Moderator

Thank you.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Executives
    • Jing Yuan
      Jing Yuan
      CFO
Analysts
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