Release Date: August 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lotus Technology Inc (LOT, Financial) delivered approximately 4,900 units of vehicles and achieved total revenue of $398 million in the first half of 2024, marking a record in the company's 76-year history.
- Second-quarter sales revenue was $225 million, up 103% year-over-year and 30% quarter-on-quarter.
- Gross profit margin improved to 13% in the first half of 2024, compared to 5% in the same period last year.
- The company has seen notable growth in service revenue gross margin, which increased to 58% in the first half of 2024 from 16% in the same period last year.
- Lotus Technology Inc (LOT) has expanded its market presence in China, contributing 25% of total vehicle delivery and retail stores after six years of continuous investments.
Negative Points
- Operating loss for the first half of 2024 was $438 million, a 27% year-over-year increase.
- Net loss for the first half of 2024 was $460 million, with an adjusted net loss (non-GAAP) of $424 million, a 20% year-over-year increase.
- Gross profit margin declined to 13% in the first half of 2024 from 15% by the end of last year, primarily due to inflationary impacts on the cost of the Emira sports car.
- The company faces significant challenges from new tariffs in the US and EU markets, impacting sales forecasts and necessitating product repositioning.
- Adjusted EBITDA loss (non-GAAP) was $382 million, a 15% year-over-year increase, indicating ongoing financial challenges.
Q & A Highlights
Q: How much of the reduction in volume guidance is related to tariffs and other factors?
A: (Qingfeng Feng, CEO) The reduction in the US market is 100% related to tariff hikes, while in the EU market, about 30% is due to tariffs. The US tariffs have dramatically affected our sales forecast, and we are planning to reposition our products in the US market. The Eletre launch in the US will contribute more to 2025 performance.
Q: Can you explain the accounting behind the average selling price (ASP) being above $100,000?
A: (Alexious Lee, CFO) The ASP is calculated differently because US sales of the Emira are accounted for with gross margin rather than full ASP. This approach ensures we protect the price integrity and brand equity value.
Q: How should we think about service revenue for the rest of the year?
A: (Qingfeng Feng, CEO) We are exploring additional revenue streams like Chapman Bespoke services and ADAS/intelligent driving solutions. We project ADAS revenue to be around RMB400 million this year, with significant growth expected in the coming years.
Q: What are the economics behind the ADAS revenue projection of RMB400 million?
A: (Qingfeng Feng, CEO) The revenue model is split 50% for development payments and 50% for per-vehicle licensing costs. For example, the Z10 model from Lynk & Co will cover more cities and offer NOA capabilities, contributing to this revenue.
Q: How do Lotus' intelligent driving solutions differ for Lotus vehicles and other OEMs?
A: (Qingfeng Feng, CEO) The software is the same, but the hardware varies. For example, Lotus uses two Orin chips and four LiDARs, while the Z10 uses one Orin chip and one LiDAR. We offer three levels of solutions adaptable to different OEMs.
Q: What is the demand and take rate for ADAS functions among Lotus owners?
A: (Qingfeng Feng, CEO) Lotus owners use ADAS functions frequently, with positive feedback. For instance, one customer achieved 533 kilometers of non-intervention driving, showcasing the system's reliability.
Q: What is the long-term vision for ADAS revenue and gross margin?
A: (Qingfeng Feng, CEO) We expect the gross margin for ADAS to be around 60% in the future.
Q: What actions are being taken to address the low trading volume of Lotus stock?
A: (Alexious Lee, CFO) We are working on broadening our coverage and increasing liquidity through a rigid IR plan, engaging with various institutions, and targeting both retail and institutional investors.
Q: How will Lotus achieve the high gross margin target for 2026?
A: (Qingfeng Feng, CEO) We will maintain price integrity, control costs, and increase prices for high-demand models like the Emira. Our Win26 plan aims for 30,000 vehicle sales in 2026, contributing to higher revenue and gross margins.
Q: How will Lotus improve its cost management and structure in 2024?
A: (Qingfeng Feng, CEO) Costs have peaked, and we will continue to invest in technology while maintaining a streamlined organization. We aim to explore more revenue streams and reduce costs to achieve our targets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
