Ecarx Holdings Inc-cl A Aktie

Thank you very much. We kick off the next session with ECARX. It's an absolute pleasure to be here with you today. My name is Jose Asumendi, and I head up the auto team at JPMorgan. I'm based in London.

And I think, yes, ECARX is always a company that I've been following up for the last years. And one of the things that always strikes me is how they have been developing the products, the portfolio, the partnerships, broadening the technology expertise as well as the customer portfolio in the last years. But I want to just go through all those topics now. We will let the gentleman speak about it. And let's make this also interactive, right? We've got about 30 minutes. So feel free to ask any questions if anything comes up to your mind, and I'll kick it off.

Ziyu and Peter, thank you very much for your time. Maybe you can do just a quick introduction, role and how many years you've been at the firm, obviously, on founding the firm, and Peter same for you, and then we'll go to the Q&A.

Okay. So nice to meet you, and good morning, everyone here. So my name is Ziyu Shen. So I'm Founder and CEO of ECARX. So ECARX, I founded in 2017 with Eric Li, owner of Geely, a very famous entrepreneur in China. So ECARX is an automotive intelligent technology provider. That's our position in the market. So we already spent 10 years in the industry. So very quickly start-up in China market and right now scalable in worldwide. In 2022, we successfully listed in NASDAQ Exchange. And also, I built headquarter in London. So all our executive leadership right now in Europe for 5 years. So also, we got successful in Europe market with European OEMs in the past 3 years. Last year, particularly, we announced 2 times with Volkswagen Group for our technology product partnership. Yes. So that's a quick introduction of myself and my company.

Good morning, everyone. My name is Peter Cirino. I'm the Chief Operating Officer of ECARX. Ziyu invited me to join the firm in 2022, about 4 or 5 months before we listed the company. Also based in London, I've been in the automotive industry and various technology firms for more than 25 years and been helping Ziyu to scale the organization, grow with our European customer base and expand the organization and become a true global technology provider.

So with that, we look at many technology companies, and it's always, I think, not easy for investors to understand what are the key products you are producing, how does the platform-based strategy work? And then we can get into how you differentiate versus peers. But if you think about your core IP, so what are the core products you do? Why is ECARX different to peers?

Yes. So ECARX, we are providing full stack, the computing system to the car. So including the hardware, Silicon SoC and middleware and software. That's our very unique know-how. SDV is very long, lon-term discussion. So we are providing one-stop solution to accelerate and simplify OEM R&D on SDV. So that's a very, very important and critical task now.

Yes. And I would just add to that. I mean, Ziyu has built a fantastic organization, I would say, over the last almost 10 years in -- for sure, ECARX is delivering systems into vehicles. We have more than 12 million cars on the road. So we have deep automotive vehicle knowledge, know exactly how to deliver these very complex systems into the automotive environment. In 2018, Ziyu along with Arm China founded a company to focus on automotive silicon. So we have deep expertise on the silicon side.

And then recently, we acquired a company that we had a strategic alignment with that's building Flyme OS operating system and ecosystem in China for both mobile devices and cars. That company has more than 20 years working in that software system. So we brought together in ECARX, this company that has deep technology in silicon, amazing software capability and then this automotive expertise to be able to deliver these systems in the vehicle.

Interesting. And who are your key customers? I mean we don't have the slides today here, but I think it's important to understand who are your key customers, who were your first customers? How did the business develop a little bit to other customers? And then really interested in understanding, when you go to them and you showcase your expertise and what you can do, why would they choose you? Why would they not choose someone else?

Okay. Yes. So as my introduction at the beginning, so we start up from China. So we had very big revenue in China still. So Geely, of course, is our very important and big customer and FAW Group is second. And also, we had some programs with Dongfeng, Chery and most of other Chinese domestic OEMs. So also outside China, so we had Volkswagen. We had 2x announcement last year, I just mentioned. So that's the global program called Global Entry Infotainment program. So we announced that last year.

Also, we are developing this platform for the MQB vehicle platform, will support SOP in the next 3, 4 quarters. Also, we had a program with Renault and Volvo Car, Polestar. Also, we had a program with Mercedes. So we already built a very strong European OEM customer network already. So we still very confident ECARX is an international global Tier 1 player in the industry.

Where do you have your R&D centers, your technology footprint? Where do you have your people across the world?

Okay. So right now, so -- because in the past 10 years, we start from China. We have a still big team in China. We have 800, 900 people R&D in China still, mainly in East China. So also Europe, we already built 200 people in the past 4 years because of Volvo Car program, we successfully [indiscernible] EX30 SOP launch in 2023. That's the car of Europe, very successful. Also, we partnership with Google very closely. We announced the white paper as a Google sponsor last October for Google automotive ecosystem in the car.

Also, in East and Southern Asia, we built a joint venture with Proton in 2018, '19. We already had 100 people over there. Also every year, we are shipping like 200,000 units product to Proton, the computer box. Also, we built an R&D center in Vietnam. Eastern Southern Asia totaled 150 people. Yes. So outside China, like 30%. And inside China, 60%, 70% people. Yes.

And where are you based in Europe? Yes, not you personally, but where are your centers in Europe, just to give a bit more flavor in terms of like -- I visited your unit in Stuttgart. You have presence there, obviously. But as you expand the business and helping the car companies, how do you position yourself in each of the regions, just sort of the audience can understand that.

Yes. Because in Europe, that's very important for our customer interface with European OEMs. So that's why I built Gothenburg in Sweden at the beginning, particularly with Volvo Car program. And also I built Stuttgart Office for German OEM, Mercedes and Volkswagen. So of course, I set a corporate function and a global headquarter in London.

Who do you think are your competitors? So if we can also compare a bit and compare ultimately valuation multiples, right? This is an investor conference. And we'll get to it to revenues, multiples. But who do you think are your peers?

Yes. In China market, it's a very tough competition market. So from a competitive point of view, Huawei is the top competitor with us because including Silicon and software system, even sensor. So they have very strong portfolio, competition with us. External China, outside China, we still believe the Korea player is a strong competitor, like [indiscernible] and Samsung, [indiscernible] already owned by [indiscernible] and Samsung, also LG for sure. So we believe Korea player is a strong competitor for us.

Yes. Jose, I would add to that. You look at what we've built inside of ECARX and the capability that we have to deliver. There are very few -- there's a lot of automotive Tier 1s that are trying to deliver these complex systems in cars. I think there are very few that have the capabilities when you look at the deep silicon capabilities that we bring in the company. And we're not -- we certainly have great partners in the silicon space that we work with, but we also have this deep technology inside our organization and our ecosystem, having founded Siengine, the silicon company with Arm. We bring together the consumer electronics capability and speed with Flyme, which is now -- we announced the intention to acquire that business and make it part of the company. And we have very few competitors that have that full technology stack. So I think the reason -- one of the strong reasons why customers choose us and why we've been able to make some progress, especially with Volkswagen, is having that tremendous execution capability to deliver this product at scale on a consistent basis and at a super high-quality level. It's very demanding in the automotive industry.

Interesting. So two follow-ups there. One, in New York, who are your U.S. peers, your key U.S. competitor? You mentioned the Korean -- you mentioned China, and I fully agree. Huawei, it has an incredible product breadth. Korea as well. In the U.S., who are your peers, listed peers, maybe?

Yes. I mean I think we don't -- it's tough to develop -- to look at a company that has the same capabilities that I was trying to explain. But like for sure, when you look at there are places that we're competing against the likes of Qualcomm. Qualcomm is a great partner of ours. We're very close to them. We deliver a large number of systems with Qualcomm tech in them. They have a fantastic product. But with our silicon, there's also times that we see them in the competition landscape. You look at some of the big Tier 1s that are in the same space, maybe an Aptiv or a Visteon, but there's a lot of places where they don't go in the depth of the technology space like we're able to do. They're more -- we see them more as kind of consolidators, non-innovators in the technical space.

My view, actually, from this model, we are Tier 1 for OEM. So that's why I want to say like Aptiv and Visteon, definitely our competitor. But because of the strong vertical integration, we have our in-house SoC. So that's why we can select Qualcomm, Nvidia or in-house or SoC. So we are a partnership in this area. That's my view.

You mentioned reliability plus the customer execution. Notably, as we know, Volkswagen has had a -- not now, but in the past years, has had a few topics in terms of software integration, not just Volkswagen, other car companies have also had this topic, which has created product launch delays, which impact cash flow at P&L. So finding the right partners to integrate software and have the right silicon is key. Is there also an element around cost? Are you more cost competitive than your peers? Is there a reason why they also choose you? And I'm very intrigued because you have orders with Volkswagen or you can comment where do you have the orders with Volkswagen? And two, is there a price element there as well where you win on price. You convince them on quality and technology, but also on price at the same time.

Understood. So usually -- because my background is an engineer. So usually, the cost not only a simple question. Cost always from design. So because you have good design, then you have good cost. So that's what I always tell my team. So for our product, we're quite fully into vertical integration. Also, we want to centralize the feature as much as possible. So that's why our Antora product, our [indiscernible] product right now, I want to introduce here that's quite centralized the feature platform.

For example, we can integrate here like surrounding view camera and also parking system and front-view system and HiFi audio into roadmaps, even a gateway and diagnostic service in the car as well. So comparing other solutions from third-party SoC, they have a lot limited because the SoC quite standard in general. They need to support a lot of different requirements, not vertical integration. So that's why our solution and design quite automotive focused and very centralized. Then we definitely have very good cost efficiency, effective also.

Yes. I mean, I would add to that, the software-defined vehicle is very common term in the automotive industry, right? It just fundamentally means in the car, there's less computers. Cars of the past have hundreds of electronic control units in it that range from a very complex computer that may be driving the engine, driving the transmission, controlling the body to a simple electronic control unit that's your seat controller or your door controller. As we bring solutions to the market, we're helping the carmakers simplify that network in the car, doing more from a software perspective that brings complexity, but it also brings cost efficiency to the carmaker.

And the other place that we really differentiate ourselves, having been born very successful in the China market, the China market operates at a speed that I would say is unmatched in the rest of the world. And we thrive in that environment. And that speed, of course, infers cost. We simply can do things faster and quicker and maintain the quality, we then can deliver a more cost-effective solution as well.

Got it. Can you speak about -- you touched on the speed of the China market, the product development in the China market. Can you give us a bit of an overview like what has been happening in the Chinese market in the last 2 to maybe 2, 3 years? What are you seeing in terms of product development, software development? And how do you thrive in that environment? How do you improve in that environment? I mean we met in Shanghai, we met at the Beijing Auto Show. And -- so just help us understand a bit better how you're navigating the Chinese market and then you can bring that know-how back into your regions.

okay. So well, that's why I said at the beginning, we started from China. So Chinese speed means really a lot of investment on R&D area. So they want to deploy it very different. So from an OEM perspective, so our Chinese customer, they want to win the market, they always put a lot of effort and investment, very incredible in the R&D area. So that's why innovation in China is crazy. So you have to -- as our company, you have to keep competition, continue to invest very huge R&D, then you can keep the position. So that's very important. So in the past 2, 3 years, we had this plan and we had a success because we take our SoC with software successful and also with good platform volume and revenue, et cetera, et cetera. No problem.

But for the long term, so we need to look at the global market because total 90 million cars every year in the world. Right now, China, probably like 20 million to 30 million cars. Still, we have 50 -- more than 50 million cars in the world. And of course, I think we have the opportunity because we start from China, we had a relationship with them and had synergies with them, we are supporting Chinese domestic brand export to the world because we already had our footprint in worldwide already, strongly supports. So that's comparing Chinese Tier 1, we had significant advantage on this.

Also, meanwhile, like German OEMs and European OEMs, particularly, they are facing Chinese competition in China. Also, they are facing competition from Chinese OEMs in East and Southern Asia, Latin America and Europe as well. So that's why they're really willing to work with us to catch up the competition. So that's why we had a great partnership with Volkswagen, we announced. Also, we had a partnership with Mercedes, Renault and Volvo. So that's why [indiscernible] confidence in this area as well. Then we can provide our R&D life cycle much longer than other Chinese local player or competitor because we have a global market already and a footprint already. That's very important.

Can you give us a bit of an overview of what were the revenues 3, 4 years ago? I had a list of questions I'm skipping completely the script, by the way. And they may have noticed already that we're just going completely off-script here. But what were the revenues 3, 4 years ago? Where do you see the revenues this year? Okay. So -- and what are you excited about in terms of growth about the company? And then we'll touch on cash and then the necessary investment to generate growth, right? But just a bit of perspective on where we are on revenues 3 years ago, where are we heading?

Actually, 3 years ago, 4 years ago, actually at that time, our revenue just like 1/4 of this year. So we got a 4x increase after IPO since 2022. So very strong growth, not only in China, but also outside China market as well. Yes. So also from this year, so we just updated our new guidance. The revenues were up to $1.1 billion, $1.2 billion. Also gross margin, 20% the quarter 2, we already announced yesterday. So we are already 4 quarters adjusted EBITDA level profitable. So we are going very good level from financial and R&D situation, I believe.

And when it comes to investments, how do you think about the investments required to ramp up the business in the next years? Because you mentioned orders with Renault, with Mercedes, with Volkswagen, with Geely and other Chery, I think you mentioned as well. I mean, this is a lot of car companies. What are the requirements? Do you need more people? Can you -- is it people investment? Is it capacity investment? Like what are the requirements for this?

Yes. I think the current investment point of view for next 2, 3 years, we want to consider 2 areas. One area is our global expansion footprint, we will have SOP launch in Latin America next quarter 3, quarter 4. We will have a European launch the year after, also probably India launch in '29, '30, also even Southern Asia, we'll continue investment for like 0.5 million units plan. So that's one area, the global expansion. So we need localization, we need to build the structure. We need the region facilitate some investment like that.

So another area, of course, we need to keep investment for future technology. So because China market is still a very important market, we have to keep future technology investment to catch, even keep our competition position. That's very important. So that's why future technology, including future AI stuff because AI is changing the world now, we have to accept that. So that's why AI silicon and AI software and AI tool, we need to invest for the future, of course.

How do you fund that growth? Is it balance sheet? Is it cash? Is it...

Good question. So in balance sheet, we have confidence because our year-to-year growth is very significant, right? So 30% year-to-year growth and a very sustainable 20%, 25% gross margin, that's quite attractive. So we will have enough every year and more budget on R&D. That's for sure, right? Because we can keep our budget, R&D, OpEx at like 7% to 10% for 3 and 5 years and the gross revenue per year to contribute more cash for R&D, OpEx. That's for sure. Also, we are looking for a strategic investor from the market as well.

Yes. So we need a fundraising for strategic, only strategic to support our region or support our technology to working together. Yes. That's my personal plan.

The question will come at some point, but there's a lot of discussion around silicon, hardware, software, China, Europe, U.S. Can you give us a bit like your thinking of how do you think the world is going to come together in the next years? Will you see car companies developing China for China solutions, Europe for Europe, U.S. for U.S.? How do you balance? Also, how do you help car companies in China, in Europe, in the U.S. as well? And what could be the restrictions? And how do you just work in the ecosystem to work with all the car companies? Because ultimately, car companies want to have the most amount of economies of scale. They don't want to have too many solutions in too many countries.

So actually, we have to respect 2 areas. One area is the product still is a priority for the market and the user is most important, right? The right product, the good product always is top priority. So you have to bring right technology for the top product. So that's why I said we want to invest continue R&D area, right? But also, we have to respect another area that's the regional compliance, regulatory and trade policy is still important. So maybe 20 years ago, the globalization made every economy can run very freely. But right now, probably deglobalization is the trend. So you have region policy and also regulatory. We have to respect that. So that's why we need to be very careful of our investment on R&D area to support the different regional requirement. So that's my view.

Yes. And I would just add, I mean, as Ziyu talked about the engineering locations we built up, a lot of that is making sure we're close to our customers. So as we've engaged with, let's say, the Sweden customers, we have a center in Sweden, we're close to them. We can work very, very -- in their environment and developing in their solution. Similarly with our German customers, we have an office in Germany. Our launches next year with Volkswagen will be in South America. So we've opened a team in South America to be close to the Volkswagen team there, so we can deliver the local product. Especially the big piece of the core of our business -- while we're a compute supplier and a software supplier, a big piece of the solutions we provide are digital cockpits. And those are very regional specific. We have to know the region requirements and be able to deliver solutions in region that meet that marketplace. It's important we're close to our customers to do that.

If there are any questions, feel free to raise your hand. Happy to take questions as well. Go for it.

I have a questions. My name is [indiscernible] from Faraday Future Intelligent. Our boss is a famous Chinese businessman. So I have a question for Ziyu Shen. I have two questions for you. So question one is, how did you get the business opportunities with this famous Chinese businessman, [indiscernible].

Okay. So because he convinced me to build a company together because his vision is the semiconductor software is super important. So you need the right talent and team to build that. So that's the main reason. So we build ECARX together.

I mean, you look so young. I mean, how did you know him?

I am not young.

Maybe you can speak about your background in the automotive industry previously as well.

Yes, sure. [Foreign Language]. My hometown is Shanghai. So I graduated from University of Shanghai, [indiscernible] degree and computer science background. So I worked for [indiscernible] after university as my first job. So that's very important project experience for me that I worked for OnStar technology and embedded software engineer in Detroit in 2007 and '08. So we successfully embedded Qualcomm modem in the car and collecting data from a car. So 2010, '11, I went back to Shanghai and I left GM and started my start-up company journey. That's the company called [indiscernible], right now listed in Hong Kong Exchange already. So I was a Co-Founder and General Manager of the company. So we supply all our systems, 3G and 4G system in the car with many, many Chinese domestic OEMs, including Geely. So that's why Eric Li know me and understand what I'm doing and why he convinced me to leave [indiscernible] and build ECARX together.

Got you. So he found you?

Yes, we are a partnership.

So my question two is, so you mentioned about American market. So why go to Latin American market, North American market?

No, both we'll do, no doubt about that because we are in a partnership with Volkswagen Group for worldwide [indiscernible]. And Latin America is a very important market. The first launch will be quarter 3 next year for the MQB platform and then the Europe and India in the future. So last year, we already announced that, including India and the Latin American market, both.

Can I do one more question? So I mean, your partner with Geely. That is the biggest car company in China. You mentioned you need a strategic partner in the future?

Yes. We need a strategic partner always because we are doing the ecosystem buildup, right? So you need a tech vendor, you need an OEM customer, you need a lot of support in different areas. That's for sure.

I mean this strategic partner from the U.S. market or from different...

We are welcome to everywhere. So we only want to confirm the right partner, right? U.S. market is important. Maybe they say no to Chinese company. I'm fine, but we're willing to work with U.S. partner for U.S. market, that's for sure.

Got you. Do you have a specific number?

What do you mean?

Like how much you need?

You mean fundraising? Okay. That's the bank job.

On the next question, partnerships, like you don't have enough already to do. Your super busy with the [indiscernible] of the business. I've seen you're expanding on robotaxies, you're expanding on LiDAR. Can you talk about those partnerships and just help us a little bit understand those investments as well and how they come together in the ECARX ecosystem because it's becoming more of an ecosystem as well, right?

We would actually provide a computing box and sensor system in the car. So whatever the box computing power can maybe higher, like 1,000 TOPS, 2,000 TOPS AI performance or maybe entry just infotainment. That's fine. But we are providing the computer box. And also sensor system, we announced the LiDAR partnership with in-house LiDAR and manufacturing will be in TPK Thailand manufacturing. So that's quite important for sensor connecting for our computing software.

Also, we believe the sensor system will be very close with the computing system to simplify the connection and simplify the data flow. So that's our view. So that's why we would like to go like sensor and computing together one kit -- develop a kit for OEM even other open platform.

So the SoC, the LiDAR in partnership with another company. You're not manufacturing the LiDAR yourself. You're in partnership with...

We always contract manufacturing. We don't have too much CapEx.

Help us out on what is-- who is May Mobility and what investment do you do there?

Okay. That's another market. So we are very interested in L4 market. We believe passenger car market is still big, but the L4 market, robotaxi is becoming bigger and bigger. Also, every robotaxi based vehicle with computing system and sensor system is huge and high end. So we need in this market to let our technology with very highest competition from technology moat perspective. So that's why we signed a deal with May Mobility, American L4 company based in Ann Arbor in Michigan. So we are developing computing system, hardware and firmware based and also sensor system, also hardware and firmware based to support their architecture, simplify their L4 platform.

And who are the customers of May Mobility?

So May Mobility will purchase the base vehicle and the computing system from us, and they will go their base model for robotaxi running partnership with Uber, Grab, they already had investment from them.

It sounds like we want to talk to you again in 6 months and see how things are developing. A few -- literally a minute and 50 seconds left. Any messages you want to -- if you got any questions, just raise your hand. But any final elements you would like to flag around the investment case? Where can we meet you the next time around? What's the next auto show where you will be showcasing products? Because you're in many auto shows. I mean we can find you in many places. So two questions, 50 questions. Where can we see you the next auto show or the next product demo, just to get people closer.

Okay. Peter?

Yes. I mean we're certainly planning future events. I mean we'll -- for sure, we'll be at CES next year. I think we'll have a big presence there, demonstrate our capabilities. But the company looks for certainly a lot of opportunities to demonstrate our tech. We've been in other services, as you know.

For '26 milestones, like maybe more financial perspective, what's the focus now into the second half of the year, deliver the revenue guidance, ramp-up?

Yes. As Ziyu mentioned earlier, I mean, we just announced very good results, we believe, in our second quarter, $225 million in revenue, up 40-plus percent year-on-year. Gross margin at almost 20%. We doubled it year-on-year. So we think we have good progress in the second quarter. Our full year target is $1 billion to $1.1 billion in revenue. So I think we're well on our way to deliver that and focused on ensuring that we execute the back end of the year plan.

With this, thank you so much, everyone, for joining the session. Thank you very much.

Thank you.

Thank you all.

Good day, and thank you for standing by. Welcome to the ECARX Q2 2026 Earnings Conference Call. [Operator Instructions] 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 road map. That progress has strengthened our confidence going into the second half of 2026.

First, our global expansion was accelerated during the quarter with more new models entering mass production, expanding the visibility and scale of our solutions. Our partnership with Volkswagen Group continues to make good progress. We are now putting the engineering, supply chain and support infrastructure in place across the Latin America region and remain on target for launch in 2027. Second, we continue to invest in our robust product and R&D road map. We expanded in 2 important ways this quarter. In June, we signed a definitive agreement to acquire the entire Flyme software business for approximately $266 million. This brings a highly strategic piece of our full stack ecosystem into the business.

Flyme Auto is already deployed in more than 2 million vehicles and Flyme OS is already a core part of our Cloud Peak middleware used globally. So we are acquiring a mature platform that our own business already depends on. Flyme's momentum continues. It has recently been nominated to provide the software for a leading international luxury brand in China. In May, we entered into a strategic partnership with TPK Holdings to co-develop the ORCA LiDAR platform. As part of the process, ECARX will lead the systems integration capabilities and TPK will provide its manufacturing expertise. We are looking forward to seeing mass production begin in 2028.

And lastly, we signed a share exchange agreement with Qualcomm Ventures last month. Qualcomm has been a strategic partner of ours for many years. We have collaborated deeply across multiple generations of solutions, including Zenith, which will be built on the upcoming Snapdragon Elite automotive platform. This agreement reflects another major milestone in our relationship to jointly develop highly specialized and integrated solutions. The progress we made during the quarter all points in the same direction. Our financial results are delivering even in difficult markets. We own more of our technology stack than we did before, allowing us to capture higher value opportunities. And we entered the second half of the year with continued confidence in our strategic and financial direction.

I will now pass the call over to Peter Cirino to discuss our operational progress in more detail.

Thank you, Ziyu. Good morning, everyone. At our earnings in May, we described Q1 as being a historically subdued quarter for both seasonal and quarter-specific reasons, and we guided to increasing momentum from Q2 onwards, both in terms of vehicle launches and shipment volumes. This has played out in Q2 as we expected. We achieved the launch and volume rebound we guided to in the first quarter, underscoring our strategy for our global commercial build-out through executing complex global programs across diverse vehicle lineups and markets.

Shipments in the second quarter were approximately 550,000 units, an increase of 51% quarter-on-quarter that directly contributed to strong top line growth. Against same quarter last year, volumes were 2% lower. While year-on-year shipments were marginally down, overall revenue and revenue quality was significantly increased. Sales of goods revenue increased both quarter-on-quarter and year-over-year as shipments of our high-end solutions continue to grow and demand accelerates. Shipments of our high-end Antora solutions, in particular, increased 92% quarter-over-quarter and 52% year-over-year. Furthermore, shipments of our high-end performance AI-driven computing platform pikes increased 43% quarter-over-quarter and over 2,000% year-over-year.

Antora and Pikes now make up 42% of shipments. These are the direct results of the decision we took during Q2 last year to begin phasing out our lower-margin legacy platform business and concentrate on high-end fully ECARX architected solutions. That decision moderated our unit volumes for a period, but is now improving the quality of what we sell. The second quarter is also where our 2026 model launches began landing at scale. And every launch pulls hardware volume and associated engineering revenue with it.

Software revenue decreased from the same quarter last year by 42% due to lower sales volume, whereas Services revenues increased substantially from the same quarter last year by 21%, driven by new model launches. Services revenue comprised of reoccurring software fees, but the bulk of it today tracks the timing of design and development contracts and the vehicle launch cycles they support, so it can be lumpy by nature. We are pleased to see this improvement as we guided to expect 3 months ago. As launches accelerate, we anticipate software and services revenue will accelerate with them.

To provide some context here, revenue in any given quarter is a function of 3 things. Those are vehicle model launch timing, shipments driven by end market demand and component pricing. We manage the first through operational discipline, the second through geographical and customer diversification and the third through pricing adjustments to structurally support top line revenue and protect profitability. But this business will show quarter-to-quarter variability, and we encourage you to look at the trailing 4 quarters rather than any single one.

Turning to our customer base and growth strategy. During the quarter, we began mass production for 9 new models across 4 brands, of which the majority are using our next-generation Pikes or Antora series solutions. Of these new models, 4 are designated for markets outside of China, including Europe, Southeast Asia and South America. We are pleased to see this type of growth that further reinforces our strategy on transforming into a global company. We now have 12 million vehicles with our technology on the road.

As Ziyu mentioned, our partnership with Volkswagen Group continues to drive forward during the quarter as we continue to build out engineering, supply chain and support infrastructure in the first region to support its expected launch in 2027. The program integrates our high-end Antora 1000 with Cloud Peak and Google Built-In for premium segment vehicles, alongside our cost-effective Antora 500 for entry-level segments. I want to again highlight the flexibility and scalability of the unique value proposition we are offering here, one portfolio of solutions that covers the full price ladder.

Ziyu has already covered the strategic rationale of the pending Flyme acquisition. Flyme consists of 2 distinct but related pieces of software. The first is Flyme Auto, which is the application layer, which we use for the interface for products sold in China. In international markets, we use Google Built-In for this layer. The second piece is Flyme OS, which is the Android platform that we embed into our Cloud Peak middleware. This is the core of our software stack both in China and internationally.

Let me turn to what this acquisition will change operationally in both of these markets. The first is road map control. A competitive advantage of ECARX is our ability to tightly integrate our product solutions across layers from silicon to sensors to software. Owning Flyme allows for deeper hardware and software integration and greater customization. That shortens the integration time lines for automakers, provides them with standardized, flexible solutions for diverse vehicle lineup and accelerates time to market. More importantly, this will also create a competitive moat, strengthening our ability to execute complex vehicle programs at scale.

The second is a revenue stream that is not tied to hardware volume. Flyme generates revenues today from software licensing, from custom development work and from intelligent cockpit system delivery. Adding a licensable software asset will allow us to move up the automotive value chain and capture greater margin. The third is interoperability. Flyme OS, which is embedded in Cloud Peak, already spans vehicles, smartphones and wearable smart devices, which means the car connects seamlessly to these devices, which drivers already carry.

What differentiates Flyme OS from current products is its speed and close integration with the rest of the stack, delivering a superior user experience. This fully integrated cross-domain ecosystem equips automakers with solutions they can deploy, whether that is Flyme Auto in China or Google Built-In outside of China across the lineup to differentiate their vehicles in an intensely competitive market. We will operate Flyme as an independent software division, which will preserve R&D continuity and ensure a seamless transition for existing customers. Existing operators of Flyme OS will continue to receive updates and user data remains in each operator's ownership.

The second addition to our portfolio is our partnership with TPK to co-develop the ORCA LiDAR platform, making our formal entry into the LiDAR sector. Under that agreement, we will lead system integration, sensor fusion and global commercialization, drawing upon our relationships with international automakers and robotaxi operators. TPK will contribute optical design, engineering and high-volume precision manufacturing. Mass production is scheduled for 2028 at TPK's facility in Thailand, and we're excited about the additional options this will allow us to provide automakers as we continue to drive further hardware and software integration.

Before I pass the call to Dylan, I want to leave you with one final thought. What these partnerships and solutions provide are critical to our broader strategy. When a global automaker asks us for a solution, we can answer with our own silicon heritage, our own computing platform and soon our own operating system and our own expanding sensor technology. Very few companies in the industry can offer this sort of closely integrated stack comprising silicon to software to sensors.

With that, I will turn the call over to Dylan.

Thank you, Peter, and hi, everyone. The second quarter performance is a clear demonstration of the operating leverage we have been building into this business. Revenue rebounded strongly as launches and volumes recovered after a historically weak Q1. Our cost structure continued to improve, and we delivered our fourth consecutive quarter of a positive adjusted EBITDA. We achieved this while managing a memory cost environment that has moved sharply against our industry.

Starting with the top line. Total revenue was driven by 4 factors: growing demand outside of China, higher-value products, new model launches and the DDR memory price adjustment flowing through our pricing. Sales of goods revenue was $196 million, increasing 73% sequentially and 50% year-over-year. Software revenue was $0.7 million or a 42% decrease year-over-year due to lower sales volume. Service revenue was $28 million or a 21% increase year-over-year, driven by the new model launches in the quarter. The Chinese auto market remains challenging. However, as we guided in the first quarter, market conditions improved overall in the second quarter, particularly momentum related to the first quarter. Shipment volumes were up 51% quarter-to-quarter.

I want to spend a moment on ASPs because arithmetic this quarter points directly at it. While volume was slightly lower year-over-year, revenue was up 45%. This was driven by 2 main factors. The first is the quality of the revenue with our high-end products increasingly accounting for a larger share of our shipments. Our Antora and Pikes solution both increased in volume year-over-year, resulting in combined 71% gains in unit shipments. This is the deliberate mix shift we began executing last year, and it is working as intended.

The second is the memory cost. Higher global memory costs have structurally supported our top line revenue as those costs passed through into our pricing. Gross profit was $44.5 million with gross margin expanding to 19.8%, a significant improvement on the same quarter last year where margin was at 10.8%. And looking forward, our margin profile will continue to be influenced by global memory cost. While higher memory costs to drive higher revenue, we continue to expect that gross margin and the operating profitability may be negatively impacted by memory cost dynamics in the coming quarters. Our response to manage this impact is the one we have executed consistently. That means managing our supply chain, controlling our cost structure, maintaining pricing discipline and concentrating R&D on the higher impact solutions.

Our new operating strategy continued to deliver substantial efficiency gains. Operating expenses actually declined 11% year-over-year, set that against the 45% revenue growth, and you have the cleanest single measure of how this business has been transformed over the past 12 months. A contributor to efficiency is the internal deployment of AI across our organization. This is changing the cost curve of the software development for us, with over 90% of our developers now use cloud code and other solutions in their workflow. This becomes structurally more valuable as our software footprint expands with the addition of Flyme.

On a sequential basis, we realized improvements across almost every key metric, revenue up, cost down, profitability increased. The only exception is the adjusted EBITDA, which remained positive but was down from $4 million last quarter to $0.5 million in Q2 and improved annually by $30.2 million. To explain in more detail, last quarter's adjusted EBITDA of $4 million included that $14 million of partial monetization of our shareholdings in SiEngine, which was a onetime item. And there was no similar onetime item this quarter. We are very pleased to have delivered our fourth consecutive quarters of positive EBITDA, which is a testament both to the recovery in the market that we guided to at Q1 and our robust cost discipline.

Our confidence going into the second half of the year rests on 3 things. The first is the launch cadence Peter described it, which leaned heavily towards the second half of this year. And the second is the order backlog underpinning those programs. The third is the historical seasonality of our business, where the second half was consistently carried the largest shares of annual revenue. With that confidence in mind, we are reaffirming our full year 2026 revenue guidance of $1 billion to $1.1 billion.

In summary, the second quarter delivered the rebounds that we guided to in April. Our cost structure continues to improve, and we have added materially to the strategic assets of this business to drive growth. We remain focused on the disciplined execution and creating long-term value for our shareholders.

With that, I will hand back to Ziyu for his closing remarks.

Thank you, Dylan. As you've heard today, we have made meaningful progress across our strategic priorities for 2026. This positions us for growth in the near and long term. In the first half of the year, we entered into an agreement to expand our capabilities with the addition of the Flyme business portfolio. We extended our global reach with the Volkswagen commercial build-out, and we delivered a strong financial result on both top line and gross profit against a challenging backdrop.

And I'd now like to open the call for questions. Operator, please open the line.

[Operator Instructions] We will now take our first question from the line of Wei Huang from Deutsche Bank.

So first, I would like to ask a bit about our gross margin. You have guided in 1Q that -- and in this quarter that our memory prices are going to be pressuring on gross margin this year. But 2Q hardware gross margin was quite strong, actually at 15%, even though memory prices also increased quite a bit this quarter as well. What is the outlook for the second half of the year?

Yes. Thanks. We have reiterated our comments about the margins at sets of earnings. And obviously, the higher memory cost to support structurally the higher revenue as the balance is memory cost with our customers. However, this sort of a pass-through does come at the understandably lower margin. And we do the right things, and it doesn't really indicate any negative about this business.

And in terms of the Q2, you're right about this was a strong performance, and that was really driven by a few things. And first, with any cost increase in components and some of the -- which that we already have in stock. And there are timing discrepancy between the purchase and purchasing and the passing through. And also the selling higher value products than we did last year. So Pikes and Antora is up significantly, which support both revenues and revenue quality. And very importantly, we also did a great job on managing costs in the business, and we reduced our operating costs year-over-year despite growing revenue by 45%. So I think with all the elements and the reasons that really helped during the second quarter.

Just a follow-up on that. So can I assume that our memory purchase inventory to be depleted and I guess the memory price hike is going to hit us more in the third quarter and fourth quarter?

Wei, I'm sorry. The question wasn't very clear. Would you mind repeating it, please?

Yes, no problem. You stated that one of the factors that led to the strong hardware gross margin this quarter was the memory that we had in stock. So I assume as this gets depleted, our memory is going to be -- our margin is going to be more under pressure in the third quarter and fourth quarter.

Yes, it is. And we are very working closely our supply chain teams and also working very closely with the marketplace. So we'll continue to manage that going forward, which we do anticipate.

Yes. So this is Ziyu speaking, sorry. I'll jump in here. So I will say our supply chain team had a great job. So we built a very strong strategic partnership with [ XT ] and also Samsung. So we are our partner 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 the increase actually pass over to the customer. So no impact on our gross margin, that's for sure. But we will strongly maintain our good supply chain operation to sustainably support our customers. That's our very strong advantage in market. That's all clear?

Understood. Yes, very clear. And then the second question is on our high-end and current Pikes, you mentioned it increased quite a bit sequentially as well. Did you have a number for what percent of our volume was in the first quarter? Because you said 2Q was 42%. I want to do a comparison [ Q-o-Q ] basis.

Yes. I don't know if we have that number at hand. We can come back to you on that. I think we did talk about it at the Q1s, but let us confirm. I don't think we have that number at hand.

Wei, maybe I'll just make some comments. 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. Pikes was just launched last year. So we saw over a 2,000% growth year-on-year. And again, I'm very confident it will continue to grow. We're offering a great user experience to our customers on those 2 platforms. And I think they are solid performers for us in the market and show exceptional technology leadership.

Well noted. And I assume our improved product mix is also one of the reasons our ASP has increased to roughly around [ USD 360 ] in the second quarter. Do you have an idea on what's a reasonable level to assume for the third quarter and fourth quarter, assuming with the new product launches and those models upgrading to these new platforms, how much higher can this go?

Wei, I'm sorry, the question again was quite muffled. Would you mind repeating it?

Yes, no problem. I wanted to ask about our ASP outlook for 3Q and 4Q since it reached around [ USD 360 ] in the second quarter due to, I assume, a higher shipments of Antora and Pikes. And during the new model launches and the old models upgrading their chips to the newer platform, how much higher can this ASP go?

Yes. So Wei, 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 the high-end user experience, you'll see that as just an industry trend, which will feel as a tailwind. So as our older products roll off and these newer higher-performance products roll on, and the customer experience is actually a net decrease in their vehicle architecture cost because more functions go on to these platforms, more of the vehicle becomes software-defined. It actually enables the automaker to deploy additional features inside their vehicle environment. But with a higher performance computer in the car and higher performance software, we definitely will -- we should continue to see, I would say, an increase in ASP.

Well noted. And my last question is on our software license as well as the service sector business. So gross margin for these 2 actually declined sequentially for the second quarter. Software license went to almost 0 breakeven and service gross margin declined as well. Do you have anything to highlight that contributed to this or just normal business seasonality?

Wei, perhaps I comment on that. I mean 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. We saw that in Q1 2025, for instance. 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 on those are just general business dynamics as the quarters move over. It's principally driven by new product launches and being specified on platform.

[Operator Instructions] There are no further questions at this time. I would now like to turn the conference back to Mark Hankinson for closing remarks.

Thanks very much, operator, and thanks for joining today. The second quarter clearly reflected strong execution. We saw this demonstrated through our financial performance, and we saw it in progress against our strategic objectives. ECARX is positioned to become a leading global supplier of innovative next-generation solutions for OEMs, and we look forward to providing more updates on our progress in the second half of the year. So thank you very much. And with that, we'll conclude the call.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to the ECARX Q1 2026 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, Mark Hankinson, Head of Investor Relations. Please go ahead.

Thank you, operator. Good morning, and welcome to ECARX's First 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 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 financial measures to the GAAP financial measures can also be found at the bottom of our earnings release. With that, I'd like to hand over the call to our Founder and Chief Executive Officer, Ziyu Shen. Ziyu, please go ahead.

Thank you, Mark. Hello, everyone, and thank you for joining us today. The first quarter was defined by continued disciplined execution and continuing momentum in our global strategy. Our vision for ECARX remains clear, pushed boundaries of automotive intelligence globally and lead the industry's transition from feature centric to intelligent-centric experiences. We are building the high-performance computing platforms or intelligent brands that power software-defined vehicles. We are uniquely positioned us to capitalize on the serving global demand for higher-value software and physical AI across automotive industry.

We have made strong progress on our strategic objectives since the start of 2026, building upon the momentum we gained last year. Throughout the first quarter, we executed relentlessly on our core prioritized for the year, accelerating our globalization strategy, investing in our R&D road map and optimizing our lean operating strategy to sustain profitability. First, on our global expansion. We continue to build out of our global footprint and the government structure, underscored by significant executing and board appointments. Crucially, nearly $200 million in capital, we raised later last year and early this year, is now being actively deployed. This is fueling the build out of our R&D hub in Germany and our operational infrastructure across South America and in our office in Singapore.

Second, the global expansion is being fueled by our commercial execution and continuous investment in our R&D road map. We continue to make solid progress driving further technical innovation and winning new business. A critical component of accelerating this innovation is our broader ecosystem of strategic partnerships. Third, we announced a major milestone in autonomous driving. ECARX expects to develop and deliver thousands of autonomous enabled vehicles for May Mobility's next-generation autonomy system. This marks ECARX's first entry into the robotaxi market, a market with significant global potential. Finally, we are maintaining robust cost discipline, reducing our operating costs to sustain profitability. Our results for the quarter demonstrate the disciplined execution driving this next phase of goods and how we are actively accelerating the transformation to build a truly global business.

Our results for the quarter demonstrated this disciplined execution driving this next phase of growth. They demonstrate how we are actively accelerating that transformation to build a truly global business and sustain this momentum. While the first quarter is traditionally impacted by seasonality, the broad market also navigated macro headwinds, including shifting government policies and memory component inflation. However, our strong project pipeline and a robust base log allowed us to largely mitigate the impact of these dynamics. As a result, we delivered sales of goods revenue of $140 million, a [indiscernible] 6% decrease year-over-year. This demonstrates the underlying resilience of our core business. Crucially, our disciplined execution translated into meaningful profitability improvements. Overall gross profit was $28 million, driving an expansion in gross margin to 21.4%. We also significantly narrowed our operating loss to $13 million, nearly having the $25 million loss reported in the same period last year.

Perhaps most notably, we achieved a positive adjusted EBITDA for the third straight quarter, delivering $4 million compared to negative $15 million in the same quarter last year. This robust performance allows us to confidently repeat our full year 2026 revenue guidance of $1.1 billion, these financial resilience is no accident. It is the direct result of the strategic framework we established later last year. Let me dive a bit deeper into how we are executing against these priorities, starting with our global expansion. We remain focused on our target of 50% of total revenue from international markets by 2030. To drive the execution of this, we spent the first quarter actively fortifying our corporate governance and global leadership team. As ECARX rapidly scales, it is crucial that we adopt top-tier global governance standards to match our expanding commercial footprint. Last month, we appointed Lone Schroder as our new chairperson. This separates the role of Chairperson and CEO to strengthen governance and align the global best prices. Lone has extensive experience across automotive, technology and finance sectors. This will be invaluable as we scale and accelerate the expansion of our central computing cockpit and ADAS solution across Europe, the Americas and Asia.

I'm also pleased to officially welcome our new Chief Financial Officer, Dylan Jeng. Dylan join us in March to drive global financial discipline from our newly operation like Singapore office. Mark Hankinson, who spoke at the start of this call, joined us as Head of Investor Relationships and Corporate Development, and is based alongside myself and Peter in London. Commercially, our global partnerships continue to deepen each vehicle rolling of partner production lines demonstrate the capability and the scalability of our solutions. This is a unique ability to scale across diverse brands and markets is perfectly demonstrated by our strategic relationship with Volkswagen Group in Latin America. Peter will speak more about this later.

Today, we are excited to announce a major milestone in autonomous driving through our strategic framework agreement with May Mobility, a leading U.S.-based autonomous-vehicle company. Under agreement, ECARX is expected to develop and deliver thousands of autonomous, enabled vehicles to make mobility. This will include customized substantial computing panels, a full-stack autonomous driving system keep and a complete sensor suite for May Mobility's next-generation autonomy system. This collaboration brings together ECARX's deep expertise in full stack intelligent driving solution at May Mobility's industry-leading autonomous driving system. It will allow us to leverage the best of both companies' core competence in intelligent hardware and software development. This is exactly the kind of displace high-value commercial execution that will drive our continued growth and profitability, positioning us as a key player in the future of autonomous mobility. This marks ECARX's first entry into the robotaxi market, a market with significant global potential supporting our global expansion is our robust R&D road map.

We are continuing to invest in the development of next-generation solutions. This allows us to capture great value across our technology stack and capitalize on opportunities in adjacent sectors like robotics. To accelerate and strengthen our long-term products and technological committees, we recently announced our preliminary plan to potentially acquire a minority stake and a certain IP rights from DreamSmart technology and affiliates and the development of the Flyme auto operating system. This is a highly strategic opportunities for ECARX, while our Cloudpeak cross-domain software stack handles underlying middleware, primary auto as the critical application and interaction layer, integrating this technology deeper into our solutions unlocks a powerful competitive advantage. This will enable true seamless interoperative mobility between the intelligent vehicles, smartphones and emerging smart devices like smart glasses. These are fully integrated cross-demand ecosystem. It equips all makers with solutions that are easily replicable across vehicle lineups to differentiate their driving guidance in a highly competitive market.

We view Flyme auto as a fundamental, monumental strategic piece of our full stack ecosystem, capturing this vital application layer above our Cloudpeak middleware [indiscernible] or potential investment even during a period of strict cost discipline. While this potential acquisition remains at an exploratory stage, it underscores our ambition to own the most critical software layers of the intelligence-centric vehicle experience. Staying with technology. Silicon is a fundamental capability for us. We partner with providers like Qualcomm and SiEngine to precisely specify the requirements for our silicon chips to ensure performance and efficiency. This goes beyond the standard chip customization. These are differentiated, automotive optimized SoC core modules such as SiEngine, 7-nanometer, high-performance SE1000 chipset which powers our highly successful Antora 1000 computing platform. This is not a plug and play or assembled technology. This is a highly specialized and integrated full stack technology.

Another example of our silicon high-end is SiEngine itself. This was established by ECARX alongside Arm China before becoming an independent business. During the first quarter, we recognized a $40 million gain from divesting a small portion of our shareholding in silicon engine to a new third-party investor. This is not just a onetime financial gain. It validates our ability to incubate integrate and monetize the value of our technology. This transaction allows SiEngine to diversify its shareholder base for its next stage, while we remain its largest shareholder and maintain our deep technology called integration. It proves we can create inverse value while maintaining our technological edge. This is exactly the kind of disciplined capital allocation and lean operations that will sustain our profitability and industry leadership.

In summary, we entered the 2026 with a clear road map, and we are successfully executing against it. We are expanding globally. We are capturing higher value opportunities and we are optimizing our operations to ensure we capitalize on the enormous opportunity ahead of us as the automotive industry evolves. I will now pass the call over to Peter Cirino to discuss our operational progress in more detail.

Thank you, Ziyu. Good morning, everyone. As Ziyu outlined, we are rapidly accelerating our clear vision for automotive intelligence. Operationally, the first quarter demonstrated our ability to execute on this vision at scale as we continue to drive our global expansion, deepen key partnerships and innovate new solutions from our R&D road map. Our defining competitive advantage is our ability to seamlessly integrate our full stack hardware and software into a competitive platform allowing us to execute on complex global programs across diverse vehicle lineups and markets.

By delivering highly integrated solutions, we are translating our technological leadership into compounding commercial momentum globally. Demand for our innovative solutions continues to be strong with over 360,000 units shipped this quarter. While this represents a lower absolute volume compared to the same period last year, it reflects a deliberate and strategic shift towards a high-end product mix. As a reminder, we made the strategic decision in the second quarter of last year to actively phase out our lower-margin legacy platform business. While this intensely moderates our shipment volumes, it vastly improves our overall revenue quality. Validating the strategy, shipments of our high-end pikes and Antora solutions. We are up approximately 73% year-on-year. This brings the cumulative total number of vehicles shipped with ECARX technologies to over 11 million vehicles, up nearly 30% from the same period last year.

Today, our solutions power 28 distinct brands across 18 leading OEMs globally. This growing scale demonstrates our reliability and reputation as a trusted partner which we are capitalizing on to unlock higher value growth opportunities from existing new partnerships globally going forward. Our global expansion is leveraging this momentum and continued to make solid progress during the quarter. Our partnership with Volkswagen Group is progressing smoothly and serves as a perfect example of our ability to strategically execute projects on a global scale, and how we are leveraging that to develop future large-scale revenue opportunities across EMEA, the Americas and other emerging markets. This program utilizes the full flexibility of our portfolio to meet diverse market needs. Deploying our high-performance Antora 1000 integrated with our Cloudpeak software stack and Google Automotive Services alongside our cost effective Antora 500 for entry-level segments. I am pleased to report that during the first quarter, we successfully moved this comprehensive program into the industrialization phase, keeping us firmly on track ahead of the anticipated launch in 2027.

While the first quarter is typically a quiet period for vehicle launches, we began mass production for 4 new models across 3 different brands, all of which are using our next-generation pikes and Antora Series solutions. Combined with our Cloud Peak cross-domain software stack and next-generation architecture, that is compatible with Google Automotive Services and Flyme Auto. They will power next-generation AI cockpit experiences and enable the delivery of in-vehicle AI agents at scale, offering a truly unique intelligence centric experience. Looking at business development. Despite a seasonally quiet quarter in Q1, our pipeline continues to convert. We recently secured a new contract win from a leading Chinese automaker outside the ecosystem. This program expected to begin production in 2026, represents another key step in diversifying our revenue base and actively validates the stand-alone technological superiority of our solutions in the open market.

Innovation remains the bedrock of our long-term growth and our strongest competitive moat. We are actively focusing on our R&D road map to deliver highly scalable centralized automotive intelligence architectures that global automakers urgently need. A prime example of this is the debut of our Zenith computing platform at CES earlier this year, powered by the upcoming Snapdragon Elite automotive platform. Zenith represents a breakthrough in integrated single-box cabin to ADAS systems. By seamlessly running mixed criticality workloads, such as powering immersive 5K digital cockpits alongside Level 2 ++ ADAS on a single SoC, we are significantly reducing the architectural complexity and cost pressures facing our global partners. Zenith not only underscores our deep long-standing capability to commercialize industry-leading technologies at scale, but also provides a highly modular, upgradable foundation for software-defined vehicles of the future. With Zenith firmly on track for mass production in 2027, we are ensuring we remain at the absolute forefront of the intelligent-centric revolution.

In closing, our operational execution in the first quarter provides a resilient and highly scalable foundation for the year ahead. We have a growing portfolio of diverse and replicable solutions and a rapidly advancing global footprint, and a disciplined operational strategy to continue to capture growth opportunities and delivering long-term value to our shareholders.

With that, I will turn the call over to our new CFO, Dylan Jeng, to review our financial performance. Welcome to your first ECARX earnings call, Dylan. The floor is yours.

Thank you, Peter, and hello, everyone. The first quarter of 2026, while seasonally challenging, clearly highlights the resilience of our business model and disciplined execution in navigating complex market conditions. Despite facing significant industry headwinds, we made meaningful progress in optimizing our cost structure and improving our operational efficiency which is a clear indication of our strategic focus on building a sustainable foundation for long-term profitable growth.

On the top line, our sales of goods revenue in Q1 was $114 million, a modest 6% decrease year-over-year. This performance reflects 3 main drivers. First, we navigated and anticipated a challenging market environment, characterized by policy changes and delay vehicle launches across the broader automotive sector during Q1. Second, as Peter noted earlier, our deliberate strategic decision in Q2 last year was actively phased out our lower margin legacy platform business created a high base effect when compared to Q1 2025. While this intentionally impact our top line, it vastly improves our revenue quality and mix, as seen by the growth in shipments of our newest Antora and pikes solutions this quarter. Third, we successfully balanced significantly higher memory costs we experienced in this quarter, which is structurally supported our top line revenue.

Turning to software. Revenue was $2 million this quarter, this is structurally consistent with the normalized run rate we established in quarters 2 through 4 last year of around $1 million to $2 million per quarter. For context, the $26 million reported in Q1 last year reflected a specific onetime software license authorization contract recognized in this quarter. Service revenue was $16 million, down from $21 million in Q1 last year. Services revenue primarily reflects the timing of the design and development contracts, deliveries and booking schedules. And as such it generally tracks the vehicle launch cycles in Q1, but which we fully expect to accelerate it in subsequent quarters.

Now turning to our profitability metrics. Despite the revenue headwinds, we demonstrated a strong operational discipline and cost management throughout the quarter. Gross profit reached $28 million with gross margin expanding to 21.4%. This margin improvement achieved despite significant DDR cost pressures that increased by over 300% since September 2025, directly demonstrates our ability to manage the supply chains in challenges effectively. Crucially, this margin resilience was supported by price adjustments and product mix optimization, which more than partially offset the margin headwinds caused by the onetime software license authorization contract recognized in Q1 2025. Our new operating strategy delivered substantial efficiency gains during the quarter. Operating expenses decreased by 29% year-over-year to $41 million.

Research and development expenses were reduced by 32% to $24 million, driven by continued resource prioritization that enhanced operational efficiency and synergies from R&D integrations, and the internal deployment of AI across our business to drive innovation while reducing structural costs. Selling, general and administrative expenses decreased by 24% to $18 million primarily driven by the continued improvement in global operating efficiencies and lower share-based compensation expenses incurred during the quarter. Our operational performance demonstrates resilience despite seasonality and a challenging overall market environment. Our operating loss came out at $13 million for the quarter, a significant improvement from the $25 million loss reported in Q1 2025.

Most notably, adjusted EBITDA was positive for the third consecutive quarter, coming in at $4 million compared to negative $15 million in the same quarter last year. This represents a complete structure turnarounds from 2025 and was driven by our focus on cost discipline that was complemented by the $14 million partial monetization of our holdings in SiEngine, which Ziyu spoke about earlier. Looking ahead, our visibility into the remainder of the year gives us the confidence around our strategic trajectory. Based on our current backlog and accelerating commercial pipeline, we are reiterating our full year 2026 guidance of $1 billion to $1.1 billion in total revenue. With respect to profitability, our margin profile will naturally be influenced by the ongoing dynamics and uncertainty around global memory costs, as well as the cadence of our strategic investments. We do expect that in the coming quarters, gross margin and operating profitability will be negatively impacted by memory cost dynamics.

In summary, while Q1 represents a seasonally slower period for the industry, we are highly encouraged by the underlying strength of our business model and the progress we have made operationally. For the remainders of 2026, we expect to benefit from the launch of new vehicles models in the quarters ahead, continued operational efficiency gains from our lean operating strategy and disciplined cost management, strengthening demand drivers for automotive technology as the market environment improves.

Most importantly, we maintained our full confidence in the resilience of our business model and our ability to navigate market cycles effectively. Our focus remains on delivering sustainable growth and creating long-term value for our shareholders. That concludes our remarks today.

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

[Operator Instructions]

We will now take our first question today. This is from Wei Huang from Deutsche Bank.

This is Wei from Deutsche Bank. I have 2 questions. So the first, given regarding guidance. So you told us that you expect 2026 to book $1 billion to $1.1 billion in revenue. Can you give us volume guidance as well? And regarding margin, I know you mentioned that it is going to be highly dependent on memory pricing throughout the year. But can you give us some guidance on how it will trend in the following quarters and for the whole year?

And the second question is, can you maybe give us more details on the May Mobility collaboration? Regarding, for example, which regions digital will operate and which platform or supply? Thank you.

Thanks. This is Dylan. Well, you have heard the calls that we are reiterating our previous guidance around the revenue, which we expect to be in the $1 billion to $1 billion range as previously guidance. So we don't generally provide any specific ASP guidance, but we do expect volume terms that the year will progress as it is typical for our markets, with the Q1 representing the seasonal low point for volumes and we do expect a significant pickup from Q2, both in terms of vehicle launches and shipments.

And we -- in terms of revenue, we're also reiterating our previous -- the revenue that we mentioned. But in terms of profitability, Q1 was a strong performance in the profitability terms with our -- with us being able to grow the gross margin and deliver our third profitable quarter at the EBITDA level. And overall, we do expect that our margin profiles will influence by ongoing market dynamics and uncertainty around the global memory cost, as well as the cadence of our strategic investments.

So we do expect that in the coming quarters, the gross margin and operating profitabilities will negatively impact by memory cost dynamics and profitability for 2026 at the operating profit and EBITDA levels will be -- depends on how this dynamic plays out in the coming quarters. So we remain focused on the cost controls and focusing our R&D on the highest impact projects, and we will remain focus on the -- for this during 2026.

This is Peter Cirino. I'll answer your question on the May Mobility topic. So thanks for the question. Overall, we are extremely excited about this strategic partnership. May is a leading U.S.-based autonomous vehicle and robotaxi company. And under the agreement, we're expected to develop and deliver thousands of autonomy-related vehicles, which include a customized central computing platform and a full stack sensor suite for May Mobility's next-generation autonomy system.

We see this as being selected for the partnership by May Mobility is a huge validation of our expertise in full stack intelligent driving solutions, it really leverages. We see the partnership as leveraging the strengths of both companies. We bring fantastic core competency in potential architecture and software-defined vehicle. And May Mobility brings strong capability in autonomy and their Level 4 software stack is very impressive in terms of its performance. For ECARX, it's a huge growth opportunity for us. It allows us to expand into the robotaxi market with this partnership and overall, it absolutely improves our total available market very significantly. I'm excited to be at the May Mobility Analyst Day tomorrow, and we'll add more color to the partnership at that stage.

There were no further questions at this time. In that case, I will hand the conference back to Mark Hankinson for closing comments.

Thanks very much, and thank you, everyone, for your attendance and attention today and for your continued interest in ECARX. Please do reach out to me, Mark Hankinson via e-mail if you have questions or if you would like to meet with management over the coming weeks.

We are scheduled to attend a number of investor conferences in the coming months across Europe and the U.S. We would, of course, be very happy to meet with you at these events. So please do contact us if you'd like to schedule a meeting.

Peter mentioned that he will be attending tomorrow, the May Mobility Analyst Day in Arlington, Texas. With that, we will conclude the call. Thank you.

Thank you. This concludes today's conference. Thank you for participating, and you may now disconnect.

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 and 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 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 ECARX into a robust, compliant and most important, a truly global business.

The fourth quarter was a critical inflection point and marks the start of our next phase of sustainable profitable growth. We delivered net income of $2.8 million, adjusted EBITDA of $22 million and operating income of $7 million, marking our second consecutive quarter of positive results as revenue hit a historical high of $305 million, up 13% year-over-year. Gross profit was $64 million, up 11% year-over-year with a gross margin of 21%. These results are a direct reflection of the execution of our lean operating strategy, which continues to deliver a resilient recovery in gross margin, enhanced R&D efficiency and optimize the operating expenses despite several challenges posed by tightened 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 2 distinct engines that are allowing us to unlock growth opportunities from existing and new partnerships. First, our computing platform continued to drive strong sales growth for best-selling models, allowing us to deepen the penetration rate of our solutions across our partner vehicle lineups and anchor the stability of our core business.

Notably, shipments of our Antora series reached a 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 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 cockpit and driving our international expansion. This agreement utilizes our platform to meet diverse market needs with high-performance Antora 1000 for online brands that integrates our Cloudpeak software stack and Google Automotive Service and cost-effective Antora 500 for entry-level segments. This highlights how our core technology already proving the popular launch of Geely Galaxy EX5 and Volvo EX30 can seamlessly scale across diverse brands and international markets. This flexibility showcases how we differently address the evolving 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 prioritize as we progress will focus on 3 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 blueprint to demonstrate the capability and scalability of our physical AI architecture and will allow us to further stronger partnerships with significant commercial value and drive an increase in overseas revenue. We are on the path to transforming our business into even more of a truly global technology leader. While 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 road map and development of next-generation computing platforms. Intelligent driving solutions like Skyland Pro to drive high-performance AI computing power and in-vehicle AI large models by driving the industry transition from feature-centric to intelligence-centric experience. We will maintain our leadership position and part of our business towards 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 transition to an automotive AI technology provider allows for great platform modularity, which drives R&D efficiency and sustain profitability. Our target for 2026 is continue to generate meaningful annual revenue growth and maintain positive operating income throughout 2026.

Moreover, we raised nearly $200 million in recent months from partners, including Geely and ATW Partners, a powerful endorsement of our global growth strategy, technology leadership and proven ability to capitalize on accelerating demand. This additional 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 Southeast Asia, providing us with R&D delivery and supply chain capabilities to fuel our global expansion. With a strong finish to 2024 and accelerating global expansion, a growing suite of innovative solutions and the first 2 quarters of 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 quarter in more detail.

Thank you, Ziyu. Good morning, everyone. In the fourth quarter, we made strong progress executing our strategic priorities. As we continue our global expansion, deepen key partnerships and execute on our R&D road map, 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 ECARX 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 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 are 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 EMEA, 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 Ziyu 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 Pies computing platform and Cloudpeak 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 Lynk & Co 07 and 08 EMP, further expanding its global visibility and adoption. Additionally, the highly sought-after Geely EX5 also launched in the U.K. during the quarter with the AI-enhanced Antora 1000 and Cloudpeak 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 Flyme 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-stack 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 Cloudpeak software stack running side-by-side on 2 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 reduce 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 U.S. to engage with U.S. 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 disciplined execution and focused innovation, we have successfully navigated complex macroeconomic headwinds to deliver our second consecutive quarter of positive operating income and EBITDA, a powerful testament to the resilience of our business model and our clear path towards 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 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 enables us to achieve the double-digit annual revenue growth target we set for 2025 with the full year 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 Antora, Makalu and Pikes series increasing by 62% year-over-year during the quarter.

These advanced platforms contributed 74% of 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 components, particularly in storage and significant cost pressures, we delivered an impressive margin performance. Gross profit increased by 11% year-over-year to $64 million. Gross margin was 21% for the quarter. This performance demonstrates our strong operational resilience and disciplined cost management. Our lean operating strategy continues to yield significant efficiency gains.

Operating expenses decreased by 19% year-over-year to $57 million for the quarter. For the full year, operating expenses fell 24% to $216 million. Most importantly, we achieved these efficiencies while simultaneously driving global expansion and hitting critical R&D milestones. Our operational performance speaks to a fundamental transformation. Operating income reached $7 million during the quarter, a 155% improvement year-over-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 road map. In recent weeks, we successfully signed a convertible bond financing agreement of up to $150 million with ATW Partners and raised $45.6 million from our strategic partner, Geely. This is a powerful endorsement of our global growth strategy, technology leadership, and long-term growth prospects.

Starting this quarter, to enhance transparency and 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 the full year 2026, we expect to drive total revenue in the range of $1 billion to $1.1 billion, representing a year-over-year increase of 20% to 30%. Furthermore, we are committed to maintaining positive operating income throughout 2026, underscoring the impact of our lean 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 this seasonality with our full-year outlook.

Our full-year order pipeline remains robust and aligns with our growth targets. We have implemented proactive cost management strategies in place to mitigate margin pressure. The underlying demand drivers for our core automotive technologies continue to strengthen. Most importantly, despite the typical first-quarter seasonality, we maintain full confidence in our ability to navigate these near-term dynamics and achieve our full-year 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 technological innovation. By consistently meeting each milestone, they have been critical in building a 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 the Q&A session.

[Operator Instructions] We will now take our first question. This is from the line of Wei Huang from Deutsche Bank.

Congratulations on a 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, generally, so far, our demand has been impacted by the weakening of the government's supportive policies. What is your outlook for the rest of the year?

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 the range of $1 billion to $1.1 billion. And this is representing a year-over-year increase of 20% to 30%, even under the macroeconomic headwind you just mentioned. And yes, in Q1, it's true that the overall automotive market is impacted by policy, as we mentioned just now, and end-user demand is shrinking.

Yes, some reports show that the estimation of a 20% decrease or even worse in auto wholesale in Q1 year-over-year. And part of the reason is also triggered by electronic component cost inflation, especially in the memory side. But ECARX, we have a pretty good momentum. We delivered a very strong Q4 2025 and full year, and we will move our momentum into 2026. And we have all kinds of actions in place to mitigate the potential challenges and risks. And Q1 is a low season, but we have full confidence to deliver a solid full year 2026.

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

Yes, sure. And as you can read from our financial report, 2025, we delivered a pretty good margin performance, especially in Q4, we are able to maintain or even improve our hardware gross margin consistently. And that is due to our strong execution in cost optimization, VAV strategy execution. And when moving to 2026, along with industry-wide cost inflation, we still need to execute pretty well in terms of cost management, and we will collaborate closely with our customers on the industry-wide cost inflation as well. And on the pricing strategy, we will also drive a very reasonable pricing CapEx to offset, to mitigate the challenge as well. In terms of the total gross margin outlook for 2026, I would say a range of about 15% to 18%and that is a calculated number after our internal guidance.

That is very clear. And my last question is, can you provide us with another update on your latest progress with foreign OEM order wins?

Yes, Peter.

This is Peter Cirino. Let me address that question. So as Ziyu mentioned in his comments, I mean ECARX is positioning ourselves as a global physical AI provider to the -- technology provider to the automotive industry. So early in 2025, we announced our first major global win with a European OEM with BW 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 Antora platform across additional vehicle lines in Volkswagen Latin America, including our collaboration with Google.

Currently, as we look across the market in Europe, we've got a really broad level of significant opportunities that are emerging from our engagement 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 2 very significant and tangible wins with the Volkswagen Group.

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

Good day and thank you for joining us. Welcome to ECARX's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded.

I would now like to turn the call over to your host for today's call, Rene Du, Head of Investor Relations at ECARX. Please proceed, Rene.

Good morning and welcome to ECARX Third Quarter 2025 Earnings Conference Call. With me today from ECARX are our 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 you to our forward-looking statements at the bottom of our earnings press release, which will 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 also 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, Rene. Hello, everyone, and thank you for joining us today. Building on the strong momentum from the first half of year, quarter 3 delivered several significant milestones that demonstrate the continued progress we are making in laying a sustainable foundation for future growth. We successfully achieved EBITDA breakeven per our guidance in quarter 2 and recorded EBITDA of USD 8.3 million. Even more notably, we became net profitable for the first time achieving breakeven with net profit of USD 0.9 million.

Our move to profitability was supported by a recovery in gross margin, enhanced R&D efficiency and ongoing optimization of operating expenses. This all reflected the strength and the effectiveness of our lean operating strategy. Revenue grew by 11% year-over-year and 41% quarter-over-quarter nudging USD 219.9 million. Gross profit was USD 47.6 million, up 39% year-over-year, lifting gross margin to 22%. This growth was fueled by the successful launch of multiple vehicle models incorporating our solutions and a recovery in average selling prices and by strong demand across our portfolio.

Our Pikes computing platform built on the Qualcomm 8295 Snapdragon chipset is our latest solution to begin mass production and was a key contributor to our strong performance during the quarter as we began scaling up production. With a growing global project pipeline and expanding partnerships, we are on the trajectory to drive this strong momentum into next quarter and 2026 where we will maintain profitability in quarter 4 and achieve double-digit revenue growth in 2025 and beyond.

Shipments reached in quarter 3 to approximately 667,000 units, up 51% year-over-year and 26% quarter-to-quarter and shipments of our Antora series reached a record high of 196,000 units. The increased deliveries of Antora series is a key driver of our success in achieving profitability in our future growth. We expect our vertical integration capabilities will further improve profitability as shipments of Antora family account for a larger percentage of total shipments.

By the end of September, approximately 10 million vehicles on the road globally incorporated ECARX technology, a testament to our delivery at scale and the trust we have earned from automakers worldwide. The breadth of our global partnerships with automakers continues to amplify the unique value proposition we offer as a core technology provider. More vehicles integrated with our solutions are hitting the road and driving strong sales growth such as Geely's best selling models: the Xinyuan, Xinyao 8 and flagship [ Gas MI ].

We also continue to unlock new growth opportunities from existing partnerships. Building on the momentum from our initial project win last quarter with one of Chinese Top 5 automakers, we secured a second project. We will work with a local partner to integrate our solution into a new model expected to launch next year. Additionally, we secured a new project win with another Chinese automaker for its upcoming MPV model.

Most importantly, we continue to make meaningful breakthroughs globally, securing a second project recently with a leading European automaker that will add another USD 400 million in lifetime revenue to our pipeline. This brings total contracted lifetime revenue from global automakers across Europe and Americas to over USD 2.5 billion. This win reflects growing trust in our solutions and is paving the way for deeper strategic collaboration going forward.

Our technological leadership is in software-defined vehicle with the full stack capabilities of Cloudpeak and the integration of Google Automotive Service into Antora platforms provide significant value to global automakers allowing them to cut gas certification time by over 50% to just 8 months. These wins demonstrate the rapid capability and scalability of our core technologies across diversified platforms and geographies, allowing us to follow stronger partnerships and drive significant commercial value.

This underscores how our flexible software-defined solutions and platform strategy effectively address the evolving needs of leading automakers worldwide. Furthermore, our capabilities to rapidly integrate Google Automotive Service combined with our intelligent manufacturing infrastructure provide us a powerful competitive advantage. These strengths enable us to both accelerate time to market and efficiently scale up on a global level.

Our quarter 3 results clearly demonstrate the strength and momentum we are building through operational discipline, a robust project pipeline, a strengthened global presence and continued investments in technology and infrastructure. We have delivered on our commitment to achieving EBITDA breakeven and becoming profitable. Moreover, the raising up to USD 150 million in convertible notes last week reflects the strong confidence investors have in our strategy and execution as we enter new phase of growth.

The offering involves a 0 coupon amortized installment structure and an initial conversion price set at a 15% premium to the reference share price at issuance. This additional capital will provide ample liquidity to fuel our international expansion, drive forward new product innovation and explore potential M&A opportunity globally. With this support and the solid foundation led with a profitable quarter 3, we are confident this momentum will carry into the fourth quarter. We are now focused on finishing the year strong and driving growth in 2026 and beyond.

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

Thank you, Ziyu. Good morning, everyone. In Q3 we made strong progress executing our strategic priorities by expanding our global footprint, deepening key partnerships, advancing technology leadership and mass producing new solutions. This disciplined execution is strengthening our foundation and positioning us for sustainable growth. During Q3, we shipped approximately 667,000 units bringing the cumulative number of vehicles equipped with ECARX technologies to approximately 10 million units, a significant milestone highlighting the growing size of our installed base and a direct reflection of the reliability of our solutions.

To date, we proudly serve 18 OEMs across 28 brands worldwide. Our global expansion remains a core focus and in Q3 we engaged extensively with automakers around the world. We are increasingly receiving positive feedback and broader interest in our solutions from both new and existing partners. Following last quarter's first project win with a Top 5 Chinese automaker, we secured a second project for their next model. We will codevelop this with a local partner with an expected launch in early 2026.

We also secured a project with another Chinese automaker for its upcoming MPV model. Internationally, we've also won a second project with a leading European automaker highlighting the growing trust in our intelligent cockpit solutions globally. Overall, with our deepening focus on global automakers, we have a growing pipeline of programs identified in Europe and the Americas, representing more than $2.5 billion in total lifetime revenue spanning almost all major carmakers in Europe and the Americas. We are excited about the future program wins, which will come from this substantial pipeline.

As a core technology partner, our brand's market presence and ability to redefine in-vehicle user experience were validated by several vehicle launches this quarter. Following the successful global launch of the Volvo EX30 across more than 100 countries in 2023, Volvo has integrated the Antora 1000 Pro computing platform and Cloudpeak cross-domain software stack into their XC70 hybrid midsized luxury SUV, which launched in August. The Volvo XC70 is the first model to feature Volvo's SMA super hybrid architecture.

We collaborate closely with them on every aspect of its design and development, including hardware, system architecture, operating systems, HMI, application ecosystem, functional safety, information security and quality control. Our Pikes computing platform and Cloudpeak cross-domain software stack are having a significant impact on the market. The next generation AI cockpit experience they deliver transforms cockpits from feature-centric to intelligent-centric environments.

The Lincoln Code 10 EMP launch early in the quarter was the first model to integrate this advanced solution and set new industry benchmarks for AI-powered intelligent cockpits. Building on this, the platform was rapidly replicated in Lincoln Codes 07 and 08 EMP models further demonstrating its strong scalability and versatility. The Geely Galaxy M9 global launch further highlights how these integrated solutions are driving sales for our partners with orders exceeding 40,000 units within 24 hours of presales openings.

Together, these pivotal vehicle launches exemplify how our solutions can accelerate time to market for automakers and redefine the intelligent cockpit experience. These platforms are fully compatible with Flyme Auto and Google Automotive Services ecosystems, highlighting our commitment to driving innovation and adaptability across multiple vehicle segments and markets worldwide. We continued to strengthen our technology leadership in Q3 as we executed on our R&D road map.

The Antora 1000 Pro received Automotive SPICE 4.0 capability Level 3 certification, the highest rating under the standard, a testament to our relentless focus on R&D, quality control and process maturity. Certifications of this kind are prerequisites for collaborations with leading automakers and our growing portfolio validates the strength of our global R&D system and establishes a platform for us to support large-scale global mandates such as the ongoing project with Volkswagen Group providing solutions for their vehicles around the world.

This certification platform will be pivotal in driving the next phase of our global expansion and meeting the increasingly strict compliance requirements of global automakers. We are making significant progress using our Cloudpeak software stack to deliver intelligent cockpit and in-vehicle AI at scale. This innovative software stack integrates AI agents, generative UIs and an AI operating system. These unique solutions offer drivers an intuitive and adaptive in-vehicle experience.

Paired with Flyme Auto 2, they connect AI models to cross-domain vehicle functions transforming cockpits from feature-centric to intelligence-centric experience. This unique value proposition our software stack offers is driving interest and creating opportunities with European automakers. As we continue to advance our R&D road map, our IP portfolio is growing as well with 730 registered patents and 835 patent pending applications worldwide as of September 30. This expanding IP foundation reflects our commitment to fostering innovation, protecting our technology assets and maintaining a competitive edge across key technology domains.

In summary, the operational and technological milestones achieved in Q3 highlight the disciplined execution and innovation leadership that underpin our growth trajectory. Through ongoing investments in R&D, expanding market presence and strategic partnerships; we are well positioned to capitalize on accelerating industry trends. Importantly, as Ziyu mentioned, this quarter marks a significant step forward in our journey towards sustainable profitability and we are confident this momentum will carry into Q4.

With that, I will now turn the call over to Phil, who will review our financial results.

Thank you, Peter, and hello, everyone. Through disciplined execution of our strategic initiatives, we achieved a remarkable financial progress this quarter reaching operating income and net profit breakeven for the very first time. This milestone marks a major step forward on our path towards long-term profitability. Total revenue for the quarter landed at USD 220 million, up 11% year-over-year. Sales of goods revenue was USD 182 million, an 11% year-over-year increase. The growth was primarily driven by a double-digit increase of customer demand partially offset by strategic price adjustments aligned with our product portfolio strategy.

Our in-house development strategy continued to generate strong results. Antora, Venado and the Skyland platforms contributed 56% of total sales of goods revenue with combined revenue doubling from 2024 quarter 3. Meanwhile, our newest computing platform, Pikes, successfully entered mass production and accounted for 9% of total sales of goods revenue. Fueled by these solutions, quarter 3 average selling price improved by 9% compared to the previous quarter.

Software license revenue decreased 92% year-over-year to USD 0.9 million. This decline resulted from reduced per vehicle software license revenue and lower intellectual property license revenue. In the same period last year, intellectual property license brought in USD 5.5 million revenue. Service revenue reached USD 37 million, up 68% year-over-year mainly driven by higher number and value of design and development service contracts as well as growth in overseas connectivity service revenue.

Gross profit was USD 48 million, up 39% year-over-year with a gross margin percentage of 22%, representing a 4% improvement from the prior year period and 11% improvement from the previous quarter. The strong recovery reflected higher hardware margin from our product transformation and increased service revenue mix. Our commitment to OpEx optimization continued to deliver strong results. Operating expenses decreased by 42% year-over-year to USD 44 million driven by enhanced operational efficiency and a sharper focus on strategic R&D investments. As a result, operating income turned positive at USD 3 million and net profit at USD 0.9 million.

Adjusted EBITDA reached USD 8 million, a significant improvement from loss of USD 32 million in the same period last year. This was primarily attributable to higher gross profit and a lower level of operating expenses. Moving on to our balance sheet. As of quarter end, we had USD 50 million cash and restricted cash. To further enhance our liquidity position, we remain focused on strengthening working capital management and improving profitability.

In summary, our third quarter financial results mark a pivotal turning point for the company reflecting strong strategy execution, disciplined operations and a firm commitment to sustainable growth. As we move into the fourth quarter, we will continue this strong momentum and maintain solid execution to drive scalable and profitable growth on a consistent basis.

That concludes our remarks today.

[Operator Instructions] Our first question comes from the line of Wei Huang from Deutsche Bank.

Congratulations on a very strong 3Q results. My first question is regarding your guidance for 4Q. You have previously guided second half volume to around 1.4 million to 1.5 million units. Is that still the same?

This is Phil. I'm happy to address your question. So your question is regarding our fourth quarter volume. Okay. So in quarter 3, as we just reported, we delivered 670,000 hardware units, a 51% year-over-year growth. This is phenomenal and we will keep strong momentum in Q4 for sure. And everybody knows that Q4 is the peak season and we see both volume and revenue will reach historical highs. We will execute to maintain penetration rate in our key customers and keep a strong growth rate. So this is the answer to your question regarding the volume.

Okay. My second question is looking ahead into 2026, there are concerns that the overall industry is going to be weaker due to weakening government policy support and some pull forward demand into the fourth quarter. Do you expect a much weaker first quarter next year? Do you have a guidance for us for volume, revenue and profitability for 2026?

Yes. Q1 is normally the traditional low season within a year because the industry has a pattern. However, our disciplined execution of our product strategy like the rapid growth from our Antora families and the newly launched platform Pikes will carry on and will offset the low seasonality impact. And in quarter 3 and even in quarter 4, we will keep building enough backlog as much as possible and we will get ready for early delivery in Q1 to mitigate the so-called low seasonality. And we are also in 2026 financial planning season and according to our latest outlook projection, our customers' pipeline maybe also will further [indiscernible] growth in 2026.

So what we need to do is just maintain our discipline, maintain our shares in those customers and focus on execution. Then we should be able to deliver relatively okay outlook in 2026 Q1. And meanwhile, as Peter just mentioned, we are expanding our global progress aggressively and we have lots of pipeline in our hands and we're also expanding our partnership with the global players. And now we are on track to realize the accelerated growth from those overseas business as well and software is one of the key, right? The software collaboration with the global customers, global OEMs is also one of our key growth drivers. So we will maintain the profitability momentum not only in Q4 this year, but kind of it will repeat in '26 and beyond.

And my last question is regarding the overseas OEM business win that you just brought up. So I think during the last quarter call, you talked about you have 4 overseas project wins that totaled $1 billion in lifetime value and in 3Q, this has jumped to $2.5 billion. Can you maybe give us an update on how many new projects that you have won during the third quarter?

Yes. Mr. Huang, this is Peter Cirino. Maybe I'll take that question. I think as we reflect on our business, I think our fundamental belief as we look to grow ECARX into the European and the global marketplace was that we would be able to provide advanced technology solutions in the China market and then be in a unique position to scale those globally and work with all the European OEMs and bring that same industry-leading technology into the global marketplace. And I think we definitely see that fundamental belief coming to reality now.

We've opened up a significant number of projects, as we mentioned, given the size of our pipeline with a number of different carmakers globally. Many of these carmakers in their high volume segments are starting to feel a lot of pressure as Chinese OEMs come to their domestic market and they're seeking new solutions that are industry-leading and very cost competitive. And I think ECARX is in a fantastic position to deliver those great solutions to those customers. So we mentioned another high volume win with a large European automaker that we secured this quarter.

We have a very solid pipeline of both software and hardware -- software and full solution opportunities with both hardware and software in them. So I think our pipeline is definitely growing substantially and we'll be able to demonstrate I think significant wins as we go through 2026.

Our next question comes from the line of Danlin Ren from CICC.

This is Danlin Ren from CICC auto team speaking. Congratulations on your great results. And I have some follow-up questions for you. My first question is we are glad to see that we have won multiple orders from Geely Galaxy with sales ramping up quickly. Could you please elaborate on your production capacity planning and corresponding CapEx road map to support this growth?

Danlin, thank you for the question. We are continuing to scale our smart factory in the Fuyang, Hangzhou area to support all of our business in China. We've established that facility and continue to ramp it up as we've progressed throughout this year and we expect that to continue to ramp next year. So our capacity is at about 1 million units, which has more than doubled since last year and we will continue to grow our China facility for our China business. Globally, we're working with a number of manufacturing partners to expand in South Asia, in South America and in Europe to continue to support our supply chain needs in the global market and we expect to continue to scale those businesses as our global business expands as well.

My second question is regarding your product lines based on several platforms. Could you provide updates on your ASP and gross margin levels, respectively, for your number one, your Qualcomm platforms?

Danlin, this is Phil. I'm happy to address your question regarding the ASP. Actually we launched several computing platform covering from entry level mainstream to high end market segment and the different solutions are addressing different market segment demand and we also manage the product mix selling according to customer demand. So basically the average selling price covers from RMB 2,000 to even RMB 4,000. That is RMB 2,000 to RMB 4,000 so that's the range. And from a hardware margin perspective, we are able to maintain something like a double digit 10% to 15%.

That is our execution level. And I'd like to offer you more information like we always like to launch new platforms to the market to support customer demand. For example in quarter 3, we successfully launched our Pikes solution, which is Qualcomm 8295, and that is to support Galaxy M9 and Galaxy M10. And that also contributed to our ASP uplift in quarter 3 and that is a 9% improvement sequentially, as I mentioned earlier, and this momentum will continue and we have full confidence in our hardware margin mechanism.

Very clear. And my last question is as the trend of integrating cockpit large models into vehicles continues to strengthen, could you share the company's strategic layout of R&D progress in this space?

Yes, sure. Danlin, thank you for the question. So for sure, ECARX has a full stack solution to support AI integration into vehicles. We're continuing to deploy solutions in China for China such as our DeepSeek integration to support an AI experience inside the vehicle. Additionally, we are building out our ECARX AutoGPT as a framework to provide end-to-end solutions for LLMs inside of vehicles and that's been launched in the Geely M9 and other vehicles this quarter like the Lincoln Code vehicles I mentioned earlier. Additionally, we are continuing to work with our global partners on similar developments for the European market and the Americas. At CES this year, we're quite excited to present our next-generation solution with AI integrated into the vehicle cockpit domain as well.

Our next question comes from the line of Elizabelle Pang from DBS.

Okay. First of all, congratulations on the very strong third quarter results. A couple of questions from me around the gross margins. I understand we've discussed a little bit about the improvement in the gross margins earlier, but I would like to have more elaboration on that front. So firstly, we've seen that hardware margins have improved to 15%, which is up from 10% in the last quarter and also 9% last year.

May I understand more information, the driving factors behind this hardware gross margin increase? Is this related to the mass production of the Pikes computing platform and do higher end Qualcomm products typically command higher margins? And following up, last question on this margin, would this margin be sustainable going into the fourth quarter and also next year? So this is my first question.

To address your question regarding the margin performance in quarter 3. Yes, you are right. In the quarter, we executed pretty successfully in terms of the #1 portfolio selling. In quarter 3, we booked services revenue from many programs and which further pushed up our revenue mix from services and our margin as well and that is #1 strategy we implemented. The second thing is that we are able to manage our upstream supply chain cost pretty well.

In the quarter, we managed to realize a decent cost down of our cost optimization through commercial negotiation and the VAV strategy as well and that is also beneficial for our gross margin improvement in hardware. And moving forward into Q4 and even in next year, I think the momentum will continue. And the strategy is working and we will further manage the hardware portfolio selling as well as the services software selling as well as the supply chain cost management.

That's very clear. And may I just ask another follow-up question on the shipment. I'd like to understand more about the shipment mix specifically within ADAS. I would like to understand a little bit more how has the Skyland domain controller product sales performed in this quarter and in the recent quarter? And what is our outlook for the future ADAS domain controller shipment growth going forward?

Peter, go ahead.

Elizabelle, I was just going to say certainly the Skyland product has continued to grow. I think we're on a handful of vehicles in the Geely platform and continue to deploy to a few others as well. We also see a significant trend around fusion inside of the vehicle domain. So we're working very aggressively on deploying on our Antora platform as well as a next-generation platform as well a fusion solution that we'll bring into vehicles, which utilizes the capabilities that we've built with Skyland around ADAS as well as our cockpit solutions to provide a very cost-effective and advanced solution in vehicle to a number of different projects as we go forward. So I think we'll see that continue to develop as we go into next year and hopefully begin shipment in late '26, early '27.

[Operator Instructions] Our next question comes from the line of Nora Min from UBS.

This is Nora from UBS. I have 2 quick questions for Mr. Ziyu Shen. So my first question is among your current order intake, what percentage is from overseas and how fast do you expect this number to increase in the next several years? And the second question is do you intend to enter into new business initiatives such as humanoid robot, et cetera? And what is your latest progress on LiDAR product development?

Nora, this is Ziyu speaking. Thanks for the questions. The first one, overseas revenue, we are strongly moving forward right now. So we are targeting 2028, we have 30% revenue of the company from overseas outside China. And 2030, we have 50% revenue of the company from overseas outside China. We already had very solid pipeline. Also we announced within the last few quarters, we already had accumulated USD 2.5 billion total overseas revenue order we already had. So we are still running forward next quarter. We will keep updated to the market. That's the answer for your first question.

The second one, our flash-based LiDAR is very going well. We are full speed R&D with our first customer OEM for robotics provider in the market. So we believe we'll be ready to the market next quarter 4 2026. That's what we are targeting now. So everything is going well. We're confident on that. Yes, that's the second answer to you, Nora.

Our next question comes from the line of Derek Soderberg from Cantor Fitzgerald.

My other questions have been asked so just 1 question for me. We've seen technology companies, SoC, semiconductor companies become sort of a key negotiating tool for trade talks. Can you just update us on what's changing on that front and how you're positioning the company sort of in this newer geopolitical environment?

Yes. Derek, this is Peter. Thanks for your question. As we look at our business as it continues to scale and grow, we're continuing, as we've talked about in many of these calls, to drive ECARX to be a global player in the automotive technology marketplace. We certainly see we've demonstrated with our products that we've launched on Volvo vehicles, the wins we've had with Volkswagen that we got to announce, the additional wins and potential programs in our pipeline that we have a clear ability to scale the technology globally, deliver very solid, mature, robust solutions into the market both on high volume vehicles as well as high technology applications. And I think we'll be continuing to grow the company in that direction.

We announced earlier this year that we are launching a center in Singapore that will drive a lot of our global supply chain efforts. We'll house both in Singapore and throughout South Asia has a lot of our capabilities to deliver global solutions from those locations into OEMs in the European market and in the Americas. And I think we'll continue then to develop into a framework where we have a fantastic solution in China for China and high technology solutions that we're able to deliver to the global automakers in Europe and the Americas. So I think you'll see us continue to develop down that track.

There are no further questions at this time. So I'll hand the call back to Ziyu Shen for closing remarks.

Okay. Thanks, operator. Thanks, everyone, to join today's earnings call. So we very appreciate that. Today is very important milestone for the company and for our team. So these earnings, our results very successful. We achieved the first time the breakeven and profitable in EBITDA level and free cash flow level in the company history. So we are so proud of the team because most of the tech company in automotive so they haven't started breakeven profitable, but ECARX is going well. The revenue is bigger and bigger and stronger.

So also we are starting profitable and going forward, very health the financing situation. Also, we are full speed globalization. We have big volume and strong life cycle not only from China, but also for overseas in the future. Also, we already had a big win for the global OEMs. Also, we will full speed with other global OEMs soon. We believe and confidence our advantage will be very obvious and significant in the market. So thanks again and thank you, everybody. Thanks.

This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.