Zeekr (NYSE: ZK), the prominent Chinese electric vehicle manufacturer, unveiled its third-quarter financial results today. While revenue saw a notable year-over-year increase, it faced a decline compared to the previous quarter. Additionally, the company’s net loss narrowed, signaling potential positive trends ahead.
Revenue Growth Despite Quarterly Decline
In the third quarter of 2024, Zeekr reported total revenues of RMB 18.36 billion ($2.62 billion). This marks a substantial 30.7% increase from RMB 14.04 billion in the same quarter last year. However, when compared to RMB 20.04 billion in the second quarter of 2024, revenue dipped by 8.4%.
The rise in year-over-year revenue can be attributed to a surge in vehicle sales, driven by the launch of new models and an expanded market presence. Yet, the quarterly decline reflects challenges such as market saturation and increased competition in the EV sector.
Vehicle Deliveries Steady with Yearly Increase
Zeekr delivered 55,003 vehicles in Q3 2024, marking a 51.13% increase from the third quarter of 2023. However, deliveries remained almost flat, with only a 0.35% rise from the second quarter of the year.
This stability in vehicle deliveries indicates a mature market where growth is more incremental. The steady delivery numbers also suggest that Zeekr is maintaining its production capacity despite external economic pressures.
Table: Zeekr Vehicle Deliveries Comparison
| Quarter | Vehicle Deliveries |
|---|---|
| Q3 2023 | 36,632 |
| Q2 2024 | 54,878 |
| Q3 2024 | 55,003 |
The table above highlights Zeekr’s vehicle delivery performance, showcasing significant year-over-year growth while maintaining consistency quarter-over-quarter.
Gross Margin and Cost Management
Zeekr’s gross margin for Q3 2024 stood at 16.0%, slightly down from 16.3% in Q3 2023 and 17.2% in Q2 2024. The reduction in gross margin is primarily due to a lower average selling price and changes in the product mix.
“Maintaining our gross margin amidst fluctuating market conditions is challenging,” a company representative noted. “We are focusing on optimizing our production processes to improve efficiency and reduce costs.”
- Product Mix Adjustments: Shifting focus to higher-margin models to compensate for lower-margin vehicles.
- Cost Optimization: Implementing measures to streamline operations and reduce manufacturing expenses.
These strategies aim to enhance profitability without compromising on product quality or customer satisfaction.
Net Loss Narrowed, Showing Financial Resilience
Zeekr reported a net loss of RMB 1.14 billion in Q3 2024, a significant decrease of 21.7% from RMB 1.45 billion in Q3 2023. Moreover, the net loss was down by 37.0% compared to RMB 1.81 billion in Q2 2024.
Excluding equity incentive fees, the adjusted non-GAAP net loss was RMB 1.09 billion, down 23.4% year-over-year but up 26.3% from the previous quarter. This adjustment highlights Zeekr’s efforts to manage expenses more effectively and improve financial stability.
“Reducing our net loss is a testament to our commitment to financial discipline and strategic planning,” the spokesperson added. “We are continuously working towards achieving profitability while scaling our operations.”
Revenue Breakdown: Vehicle Sales Lead the Growth
Revenues from vehicle sales reached RMB 14.40 billion in Q3 2024, a 42.0% increase from RMB 10.14 billion in Q3 2023 and a 7.2% rise from RMB 13.44 billion in Q2 2024. This growth is largely due to the introduction of the ZEEKR 7X model and an enhanced product lineup.
However, revenues from batteries and other components saw a slight decline of 1.3% year-over-year and a significant drop of 38.8% quarter-over-quarter, totaling RMB 3.25 billion. Similarly, revenues from research and development services decreased by 45.4% compared to the previous quarter but saw a 16.2% increase year-over-year.
“While vehicle sales continue to drive our revenue growth, we are monitoring the performance of our other business segments closely,” explained the financial analyst.
Operating Expenses and Strategic Investments
Zeekr’s operating expenses revealed a mixed picture. Research and development (R&D) expenses slightly decreased by 2.6% year-over-year to RMB 1.97 billion and dropped by 25.1% from the previous quarter. This reduction was mainly due to lower share-based compensation expenses following the company’s initial public offering.
On the other hand, selling, general, and administrative (SG&A) expenses increased by 25.4% year-over-year to RMB 2.27 billion but decreased by 12.7% quarter-over-quarter. The rise in SG&A expenses is attributed to expanded marketing efforts and the launch of new models, aiming to capture a larger market share.
Strategic Initiatives and Future Outlook
Despite the challenges, Zeekr remains optimistic about its future prospects. The company is focused on expanding its product portfolio, enhancing production efficiency, and exploring new markets to drive sustainable growth.
“Looking ahead, we plan to leverage our technological advancements and strategic partnerships to strengthen our market position,” the spokesperson stated. “Our goal is to deliver exceptional value to our customers while achieving long-term profitability.”
Zeekr’s commitment to innovation and quality continues to position it as a key player in the competitive electric vehicle industry. With ongoing investments in R&D and a robust product pipeline, the company is well-equipped to navigate the evolving market dynamics.
