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01/11 03:34
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary indicates strong vehicle delivery growth, market share leadership, and strategic product launches. The Q&A session reveals positive developments in chip technology, sales system reorganization, and overseas strategy. Despite some concerns about cash flow and management's unclear responses on certain issues, the strong cash position, consistent gross margin outlook, and aggressive expansion plans support a positive sentiment. The expected delivery and revenue growth, coupled with strategic initiatives, suggest a likely stock price increase in the near term.
Total Revenue RMB 30.2 billion, down 4.5% year-over-year and up 16.7% quarter-over-quarter. The year-over-year decrease was mainly due to lower average selling price caused by product mix changes, customer interest subsidies, and higher sales incentives, partially offset by increased vehicle deliveries.
Vehicle Sales Revenue RMB 28.9 billion, down 4.7% year-over-year and up 17% quarter-over-quarter. The year-over-year decrease was mainly due to lower average selling price caused by product mix changes, customer interest subsidies, and higher sales incentives, partially offset by increased vehicle deliveries.
Cost of Sales RMB 24.2 billion, down 5.2% year-over-year and up 17.3% quarter-over-quarter.
Gross Profit RMB 6.1 billion, down 1.8% year-over-year and up 14.1% quarter-over-quarter.
Vehicle Margin 19.4% versus 18.7% in the same period last year and 19.8% in the prior quarter. The year-over-year increase was attributable to lower average cost of sales mainly due to cost reduction, partially offset by lower average selling price caused by product mix changes, customer interest subsidies, and higher sales incentives.
Gross Margin 20.1%, versus 19.5% in the same period last year and 20.5% in the prior quarter.
Operating Expenses RMB 5.2 billion, down 8.2% year-over-year and up 3.8% quarter-over-quarter.
R&D Expenses RMB 2.8 billion, down 7.2% year-over-year and up 11.8% quarter-over-quarter. The year-over-year decrease was primarily due to decreased employee compensation. The sequential increase was mainly impacted by the pace of new vehicle programs and higher expenses to support product portfolio expansion and technology advancement.
SG&A Expenses RMB 2.7 billion, down 3.5% year-over-year and up 7.4% quarter-over-quarter. The year-over-year decrease was primarily due to decreased employee compensation, partially offset by increased marketing and promotion activities. The sequential increase was mainly due to increased marketing and promotion activities.
Income from Operations RMB 827 million, up 76.7% year-over-year and 204.4% quarter-over-quarter.
Operating Margin 2.7% versus 1.5% in the same period last year and 1% in the prior quarter.
Net Income RMB 1.1 billion, down 0.4% year-over-year and up 69.6% quarter-over-quarter.
Diluted Net Earnings per ADS RMB 1.03 in the second quarter, versus RMB 1.05 in the same period last year and RMB 0.62 in the prior quarter.
Cash Position RMB 106.9 billion as of June 30, 2025.
Cash Used in Operating Activity RMB 3 billion versus RMB 429.4 million in the same period last year and RMB 1.7 billion in the prior quarter.
Free Cash Flow Negative RMB 3.8 billion in the second quarter versus negative RMB 1.9 billion in the same period last year and negative RMB 2.5 billion in the prior quarter.
Li MEGA Home: Launched in April 2025, achieving approximately 3,000 units sold monthly. It became the best-selling MPV priced above RMB 500,000 since May 2025 and the top-seller among all BEVs in the same price range since June 2025.
Li i8: Officially launched on July 29, 2025, with deliveries starting on August 20. It combines off-road versatility, luxury sedan handling, and MPV comfort. Test drive satisfaction rate exceeded 97%, and cumulative deliveries are expected to surpass 8,000 units by the end of September 2025.
Li i6: A 5-seat BEV planned for launch and delivery by the end of September 2025, aimed at expanding the product lineup to a broader audience.
Market Share: Captured a 13.4% market share in the RMB 200,000 and above NEV market in China in Q2 2025, maintaining a top 3 position despite sales fluctuations.
Charging Network: Operates over 3,100 charging stations with 17,000+ charging stalls, covering major highways and urban areas. Plans to expand to 4,000 stations by the end of 2025.
Sales and Service System: Undergoing restructuring to enhance sales and delivery capabilities, build an end-to-end marketing system, and improve sales team morale.
Retail Network: Expanded to over 550 retail stores across 150+ cities, with 50 new stores added since the end of 2024.
AI and R&D Investments: Investing over RMB 6 billion in AI and R&D in 2025, focusing on intelligence, electric drive technology, and 5C supercharging. Introduced VLA Driver large model and MindGPT-powered intelligent agent for enhanced user experience.
Autonomous Charging: Testing autonomous charging robots and launched a pass-through supercharging station in Changzhou to redefine smart charging.
Sales Fluctuations: The refreshed Li L series experienced sales fluctuations since June due to sales and service system adjustments and other market factors. This poses a risk to maintaining consistent revenue and market position.
Sales and Service System Restructuring: The company is undergoing restructuring of its sales and service systems, which includes enhancing sales and delivery capabilities, building an end-to-end marketing system, and boosting sales team morale. This transition could disrupt operations and impact short-term performance.
Market Dynamics: The company faces challenges in responding effectively to market dynamics, which could impact its ability to maintain its competitive position.
R&D Investment: Li Auto plans to invest over RMB 6 billion in AI and other R&D initiatives. While this is aimed at innovation, it represents a significant financial commitment that could strain resources if returns are not realized as expected.
Product Mix and Pricing Pressure: Lower average selling prices due to product mix changes, customer interest subsidies, and higher sales incentives have impacted revenue and vehicle margins.
Free Cash Flow: The company reported negative free cash flow of RMB 3.8 billion in Q2 2025, which could limit its financial flexibility for future investments and operations.
Economic and Market Conditions: The business outlook for Q3 2025 anticipates a decline in vehicle deliveries and revenue compared to Q2, reflecting potential economic and market challenges.
Vehicle Deliveries: The company expects deliveries to be between 90,000 and 95,000 vehicles in the third quarter of 2025.
Revenue Projections: Quarterly total revenues are expected to be between RMB 24.8 billion and RMB 26.2 billion for the third quarter of 2025.
AI Investments: Li Auto plans to invest over RMB 6 billion in AI this year, focusing on infrastructure, product, and technology development.
Product Launches: The company plans to launch the Li i6 and commence deliveries by the end of September 2025.
Charging Network Expansion: Li Auto aims to reach 4,000 charging stations by the end of 2025, up from the current 3,100 stations.
The selected topic was not discussed during the call.
The earnings call revealed weak financial performance, with significant losses and cash flow issues. Despite positive product developments and strategic plans, the negative financial metrics and lack of clear guidance on future profitability overshadowed these aspects. The Q&A section highlighted management's avoidance of key details, adding to uncertainties. Given these factors, a negative stock price reaction is expected.
The earnings call summary indicates strong vehicle delivery growth, market share leadership, and strategic product launches. The Q&A session reveals positive developments in chip technology, sales system reorganization, and overseas strategy. Despite some concerns about cash flow and management's unclear responses on certain issues, the strong cash position, consistent gross margin outlook, and aggressive expansion plans support a positive sentiment. The expected delivery and revenue growth, coupled with strategic initiatives, suggest a likely stock price increase in the near term.
Despite a slight decrease in gross margin, Li Auto's earnings call highlights strong financial performance with increased vehicle margin and net income. The Q&A reveals confidence in sales growth and strategic expansion plans. While revenue guidance shows a potential decline, overall positive sentiment is supported by improved operational efficiency, a strong cash position, and promising product developments like the i8 BEV model. The positive reaction is tempered by management's vague responses on certain financial specifics, but the overall outlook remains favorable, predicting a positive stock movement in the near term.
The earnings call reveals strong financial performance, with improvements in income from operations, operating margin, and net income. Despite a decrease in revenue guidance, the company shows confidence in its growth strategy, particularly in vehicle sales and market share. The Q&A highlights positive sentiment towards product development and market strategy. The strong cash position and improved cash flow further support a positive outlook. Although some management responses were unclear, the overall sentiment is positive, especially with the anticipation of new product launches and continued growth in the high-end NEV market.
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