ECARX Holdings Inc-CL A (NASDAQ:ECX) Plummets on Major Q2 Revenue and Earnings Miss

ECARX Holdings Inc-CL A (NASDAQ:ECX) reported second-quarter 2025 financial results that fell significantly short of analyst expectations, triggering a sharp pre-market selloff. The mobility technology provider posted revenue of $155.6 million, representing a 10% year-over-year decline and substantially missing the consensus estimate of $1.64 billion. The company's earnings per share came in at -$0.93, considerably worse than the anticipated -$0.28.

Financial Performance Versus Expectations

The revenue shortfall was primarily driven by substantial declines in software license and service revenue segments. Software license revenue plummeted 85% year-over-year to just $1.2 million, while service revenue decreased 34% to $23.2 million. The sales of goods segment showed minimal growth at 1% year-over-year, reaching $131.2 million. This performance reflects both seasonal headwinds and the timing of certain contract implementations that management indicated affected quarterly results.

Gross profit declined 58% to $16.8 million, with gross margin contracting from 23% to 11% compared to the same quarter last year. The company attributed this margin compression to strategic pricing initiatives aimed at market expansion and a shift in revenue mix. Despite these challenges, ECARX demonstrated operational discipline by reducing total operating expenses by 20% to $57.2 million through streamlined operations and reduced share-based compensation.

Market Reaction and Performance Context

The market reaction has been decisively negative, with shares falling approximately 14.2% in pre-market trading following the earnings release. This sharp decline contrasts with the stock's recent performance, which had shown modest gains over the past month (6.3%) and two-week period (10.5%). The dramatic after-hours selloff suggests investors are particularly concerned about the magnitude of the revenue miss and the deeper-than-expected losses.

Business Developments and Strategic Positioning

Despite the disappointing financial results, ECARX reported several positive business developments. Shipments of the Antora series solutions surged 112% year-over-year to 135,000 units, driven by sustained demand across the Geely portfolio. The company continues to expand its global footprint, securing contracts with lifetime revenue exceeding $1 billion and establishing partnerships beyond its traditional automotive business, including its first non-automotive customer for proprietary solid-state 3D lidar technology.

The company also highlighted its progress with major automotive partners, including Volkswagen Group, which awarded ECARX its Technical Development & Innovation award. With over 9.3 million vehicles on the road using ECARX products and a new global headquarters opening in Singapore later this year, the company maintains its position as a growing player in automotive technology.

Outlook and Forward Expectations

Management expressed confidence in achieving EBITDA breakeven for the remaining quarters of 2025 and delivering close to 20% revenue growth for the full year. This outlook appears optimistic compared to analyst expectations, which project full-year 2025 revenue of approximately $7.05 billion and continued losses. The company's guidance suggests significant acceleration in business performance during the second half of the year, potentially driven by new project launches and contract implementations that were delayed from the second quarter.

For more detailed earnings information and future estimates, readers can review the earnings and estimates page.

Disclaimer: This article provides financial analysis for informational purposes only and does not constitute investment advice, recommendation, or endorsement of any security or investment strategy.