This article first appeared on GuruFocus .
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Revenue:Total revenue increased 45% year-over-year and 71% from Q1.
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Gross Margin:Gross margin expanded to 19.8%, up from 10.8% in the same quarter last year.
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Adjusted EBITDA:Delivered fourth consecutive quarter of positive adjusted EBITDA, at $0.5 million in Q2.
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Sales of Goods Revenue:$196 million, increasing 73% sequentially and 50% year-over-year.
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Software Revenue:$0.7 million, a 42% decrease year-over-year due to lower sales volume.
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Service Revenue:$28 million, a 21% increase year-over-year, driven by new model launches.
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Shipments:Approximately 550,000 units in Q2, an increase of 51% quarter-on-quarter; volumes were 2% lower year-over-year.
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Antora Shipments:Increased 92% quarter-over-quarter and 52% year-over-year.
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Pikes Shipments:Increased 43% quarter-over-quarter and over 2,000% year-over-year.
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Operating Expenses:Declined 11% year-over-year.
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Full Year 2026 Revenue Guidance:Reaffirmed at $1 billion to $1.1 billion.
Release Date: August 11, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Revenue increased 45% year-over-year and 71% sequentially, driven by strong demand and new model launches.
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Gross margin expanded significantly to 19.8% from 10.8% in the same quarter last year, reflecting improved product mix and cost management.
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Delivered fourth consecutive quarter of positive adjusted EBITDA, demonstrating operational leverage and cost discipline.
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High-end Antora and Pikes solutions saw substantial shipment growth (92% and 43% quarter-over-quarter, respectively), improving revenue quality.
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Strategic acquisitions and partnerships (Flyme software, TPK LiDAR, Qualcomm Ventures) strengthen the company's full-stack ecosystem and global competitiveness.
Negative Points
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Shipments were 2% lower year-over-year, indicating volume softness despite revenue growth.
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Software revenue decreased 42% year-over-year due to lower sales volume, highlighting volatility in this segment.
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Adjusted EBITDA declined sequentially from $4 million to $0.5 million, partly due to absence of a one-time gain.
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Global memory cost increases are expected to negatively impact gross margin and operating profitability in coming quarters.
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Chinese automotive market demand remains challenging, posing ongoing headwinds to growth.
Q & A Highlights
Q: What is the outlook for gross margin in the second half of the year, given that memory prices are expected to pressure margins, despite the strong 15% hardware gross margin in Q2? A: Dylan Jeng (CFO) explained that while higher memory costs structurally support higher revenue as they are passed through to customers, this pass-through comes at a lower margin. The strong Q2 performance was driven by timing discrepancies between purchasing and passing through costs, a favorable product mix shift toward higher-value products like Pikes and Antora, and effective cost management. Ziyu Shen (CEO) added that the company has strong strategic partnerships with memory suppliers, ensuring a robust inventory and pipeline, and that most of the cost increase has been successfully passed on to customers, mitigating the impact on gross margin.
Q: Can you provide more details on the strategic rationale and expected benefits of the Flyme software acquisition? A: Peter Cirino (COO) detailed three key operational benefits: 1) Road map control, which allows for deeper hardware and software integration, shortening integration timelines for automakers and creating a competitive moat; 2) A new revenue stream not tied to hardware volume, from software licensing and custom development, allowing ECARX to move up the value chain and capture greater margins; and 3) Interoperability, as Flyme OS already spans vehicles, smartphones, and wearables, providing a fully integrated cross-domain ecosystem. The company will operate Flyme as an independent software division to preserve R&D continuity.
Q: What is the expected impact of the memory cost increases on gross margin in Q3 and Q4, as the inventory purchased at lower prices gets depleted? A: Dylan Jeng (CFO) confirmed that as the lower-cost memory inventory is depleted, gross margin will come under more pressure in the coming quarters. However, he noted that the company is working closely with its supply chain teams and the marketplace to manage this impact. Ziyu Shen (CEO) added that the company has a very strong inventory and future pipeline due to strategic partnerships with memory suppliers, and most of the increase has been passed on to customers, which should help sustain margins.
Q: How much higher can the ASP (Average Selling Price) go in Q3 and Q4, given the increased shipments of high-end Antora and Pikes platforms? A: Peter Cirino (COO) declined to provide a specific number but indicated that the trend of increasing ASPs should continue as a tailwind. As older products roll off and newer, higher-performance products roll on, the customer experience improves, and more functions are integrated onto these platforms, making the vehicle more software-defined. This enables automakers to deploy additional features, and with higher-performance computers and software, ECARX should continue to see an increase in ASP.
Q: What contributed to the sequential decline in gross margin for the software license and service sectors in Q2? A: Mark Hankinson (Head of IR) explained that the software line item is very small, generally around $1 million to $2 million per quarter, and its movements are not a significant focus. He clarified that much of what might be considered software revenue is captured in the services line item. The margin movements in these areas are attributed to general business dynamics, primarily driven by new product launches and platform specifications, rather than any specific negative trend.
Q: Can you provide the percentage of high-end Antora and Pikes shipments in Q1 for comparison with the 42% reported in Q2? A: Mark Hankinson (Head of IR) stated that the company did not have that number at hand and would need to confirm it. Peter Cirino (COO) added context by highlighting the strong traction of these product lines, with Antora seeing a 52% increase year-on-year and Pikes, which was just launched last year, seeing over 2,000% growth year-on-year. He expressed confidence that these platforms will continue to grow and are solid performers showing exceptional technology leadership.
Q: What are the key factors driving the strong revenue growth and improved profitability in Q2 2026? A: Dylan Jeng (CFO) attributed the strong performance to four main factors: growing demand outside of China, a shift toward higher-value products, new model launches, and the pass-through of DDR memory price increases. He highlighted that while shipment volumes were slightly lower year-over-year, revenue increased 45% due to the improved quality of revenue and the mix shift toward high-end solutions. Operating expenses declined 11% year-over-year, demonstrating significant operating leverage and the success of the lean operating strategy.
Q: What is the company's confidence level and guidance for the second half of 2026? A: Dylan Jeng (CFO) expressed confidence in the second half, citing three key factors: the launch cadence leaning heavily toward H2, the order backlog underpinning those programs, and historical seasonality where H2 consistently carries the largest share of annual revenue. Based on this confidence, the company reaffirmed its full-year 2026 revenue guidance of $1 billion to $1.1 billion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
