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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 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.
Total Revenues RMB 27.4 billion, decreased 36.2% year-over-year and 9.5% quarter-over-quarter. The decline was mainly due to lower vehicle deliveries, partially offset by a higher average selling price due to a different product mix.
Vehicle Sales Revenue RMB 25.9 billion, decreased 37.4% year-over-year and 10.4% quarter-over-quarter. The decline was mainly due to lower vehicle deliveries.
Cost of Sales RMB 22.9 billion, down 32% year-over-year and 5.3% quarter-over-quarter.
Gross Profit RMB 4.5 billion, down 51.6% year-over-year and 26.3% quarter-over-quarter.
Vehicle Margin 15.5% versus 20.9% in the same period last year and 19.4% in the prior quarter. The year-over-year decrease was mainly due to estimated Li MEGA recall cost and higher per unit manufacturing cost from lower production volume. Excluding recall costs, vehicle margin would have been 19.8%.
Gross Margin 16.3% versus 21.5% in the same period last year and 20.1% in the prior quarter. Excluding recall costs, gross margin would have been 20.4%.
Operating Expenses RMB 5.6 billion, down 2.5% year-over-year and up 7.8% quarter-over-quarter.
R&D Expenses RMB 3 billion, up 15% year-over-year and 5.8% quarter-over-quarter. The increase was mainly due to the pace of new vehicle programs, increased investments in expanding product portfolio and technology, and expenses from product configuration adjustment.
SG&A Expenses RMB 2.8 billion, down 17.6% year-over-year and up 1.9% quarter-over-quarter. The year-over-year decrease was mainly due to the recognition of share-based compensation expenses regarding the CEO's performance-based awards in the third quarter of last year.
Loss from Operations RMB 1.2 billion versus RMB 3.4 billion income from operations in the same period last year and RMB 827 million income from operations in the prior quarter.
Operating Margin Negative 4.3% versus 8% in the same period last year and 2.7% in the prior quarter.
Net Loss RMB 624.4 million versus RMB 2.8 billion net income in the same period last year and RMB 1.1 billion net income in the prior quarter.
Diluted Net Loss per ADS RMB 0.62 versus diluted net earnings of RMB 2.66 in the same period last year and RMB 1.03 in the prior quarter.
Net Cash Used in Operating Activities RMB 7.4 billion versus RMB 11 billion provided in the same period last year and RMB 3 billion used in the prior quarter.
Free Cash Flow Negative RMB 8.9 billion versus RMB 9.1 billion in the same period last year and negative RMB 3.8 billion in the prior quarter.
Embodied AI Robots: Li Auto is focusing on transforming cars into embodied AI robots, emphasizing automation and proactive services. This includes features like autonomous driving, parking, and personalized assistance.
Vehicle Deliveries: The company expects deliveries between 100,000 and 110,000 vehicles in Q4 2025.
Organizational Model Shift: Li Auto is reverting to an entrepreneurial management model to better adapt to rapidly changing technologies and market conditions.
Financial Performance: Q3 2025 revenues were RMB 27.4 billion, a 36.2% year-over-year decrease. Gross margin was 16.3%, impacted by recall costs. Excluding these, gross margin would have been 20.4%.
Focus on Embodied AI: Li Auto is prioritizing the development of embodied AI systems, including advancements in perception, modeling, and hardware to enhance autonomous driving and user experience.
Supply Chain Challenges: The company faced supply chain issues that negatively impacted operations and deliveries in Q3 2025.
Product Life Cycle Challenges: Challenges related to product life cycles were mentioned as a factor affecting operations and deliveries.
Public Relations Challenges: PR challenges were cited as having a negative impact on the company's operations.
Changing Policies: The company faced challenges due to changing policies, which affected operations and deliveries.
Organizational Model Transition: The transition from an entrepreneurial model to a professional management model over the past three years was described as unsuccessful, leading to inefficiencies and a diminished version of the company.
Vehicle Recall Costs: The company incurred recall costs for the Li MEGA vehicle, which negatively impacted vehicle margins and gross margins.
Lower Vehicle Deliveries: A decline in vehicle deliveries contributed to reduced revenues and financial performance.
Higher Manufacturing Costs: Higher per-unit manufacturing costs due to lower production volumes negatively impacted vehicle margins.
Increased R&D Expenses: R&D expenses increased due to new vehicle programs, product portfolio expansion, and product configuration adjustments, impacting financials.
Negative Free Cash Flow: The company reported negative free cash flow of RMB 8.9 billion in Q3 2025, reflecting financial strain.
Deliveries: The company expects deliveries to be between 100,000 and 110,000 vehicles for the fourth quarter of 2025.
Revenue: Quarterly total revenues are expected to be between RMB 26.5 billion and RMB 29.2 billion for the fourth quarter of 2025.
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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