ECARX Q3 Revenue Rises 10% as Memory Costs Pressure Margins

ECARX Holdings Inc. (Nasdaq: ECX) reported higher third-quarter 2026 revenue and vehicle shipments, but elevated DDR memory costs sharply reduced gross profit and widened losses. The automotive technology company reaffirmed its full-year revenue guidance while outlining pricing, supply and product-mix measures intended to address the cost pressure.

Revenue rose 10% year over year and 7% sequentially to $240.8 million. Shipments increased 8% from a year earlier and 31% from the second quarter to 721,000 units as new vehicle programs ramped up. ECARX launched products in 21 new models across five brands during the quarter, including six models for markets outside China.

The volume gains came despite a weaker Chinese passenger-car market. Citing China Passenger Car Association data, ECARX said retail sales in China fell 25% year over year to about 4.66 million vehicles. The company also pointed to growing export activity by Chinese automakers as it expands its international programs.

Memory costs weigh on profitability

Sales of goods revenue increased to $222.7 million from $181.7 million a year earlier, accounting for most of the top-line growth. Service revenue fell to $17.7 million from $37.3 million, while software license revenue declined to $0.4 million from $0.9 million.

Gross profit dropped 65% year over year to $16.9 million, and gross margin contracted to 7.0% from 22.0%. ECARX said DDR memory cost increases outpaced the amount it passed through to customers during the quarter. The company absorbed a larger share of those costs to secure volume and protect customer relationships after passing through most increases during the first half of 2026.

Adjusted EBITDA was a loss of $37.7 million, compared with a loss of $0.9 million in the prior-year period and positive $0.5 million in the second quarter. The GAAP net loss was $48.6 million, widening from $8.4 million a year earlier, while the net loss attributable to ECARX ordinary shareholders was $49.0 million, or $0.13 per share.

Operating expenses declined about 3% year over year to $53.1 million. Research and development spending fell to $27.5 million from $31.4 million, while selling, general and administrative expenses and other items increased to $25.6 million from $23.1 million.

Product mix and international expansion

ECARX’s higher-end Antora and Pikes series represented 35% of total shipments, up from 29% a year earlier but below 42% in the second quarter. Antora shipments rose 20% year over year, while Pikes shipments were flat from a year earlier and increased 6.4% sequentially. The company said entry-level partner programs added significant volume, while higher-end products continued to grow in absolute terms.

ECARX said its technology is now installed in more than 12 million vehicles across 159 markets. Its Volkswagen Group program remains scheduled for a 2027 launch, with engineering, supply-chain and support infrastructure being developed in Latin America. The planned system integrates the Antora 1000 platform with Cloudpeak and Google Automotive Services.

The company completed its acquisition of Flyme on September 30. Flyme Auto has been deployed in more than 3.5 million vehicles and will operate as an independent software division. ECARX expects the acquired business to begin contributing revenue in the fourth quarter of 2026. Management said the transaction broadens its capabilities in middleware, operating systems, over-the-air updates and interface software, with the aim of generating recurring software and ecosystem-services revenue.

ECARX is also finalizing a partnership with an unidentified European luxury automaker to establish a joint cockpit AI innovation laboratory powered by Flyme OS. Separately, it signed a non-binding memorandum of understanding with Arm covering next-generation AI computing platforms for automotive applications.

Guidance reaffirmed

ECARX reaffirmed its full-year 2026 revenue outlook of $1.0 billion to $1.1 billion, representing expected growth of 20% to 30%. Management said it does not anticipate an adverse effect on customer demand beyond normal seasonality and continues to target revenue from outside China at 30% of the total by 2028 and 50% by 2030.

To mitigate memory-cost pressure, the company said it is using pricing actions, longer-term supply agreements, product-mix changes and cost controls. Memory prices remain a near-term risk to margins, particularly when increases cannot be passed through to customers at the same pace.

ECARX also moved to simplify its capital structure after the quarter ended. It terminated the remaining $100 million of additional notes under a $150 million convertible-note facility with ATW, making a one-time $10 million cash payment on October 15 and paying the outstanding convertible-note balance in cash on October 30. The company said the decision was intended to limit further shareholder dilution. Its separate 2025 convertible-note program, increased to as much as $130 million in July 2026, carries a $2.62 conversion price and matures in 2028.