LONDON – November 04, 2026 -- ECARX Holdings (Nasdaq: ECX) posted a third-quarter net loss of US$48.6 million, up from US$8.4 million a year earlier, as higher memory costs cut gross margin to 7.0% from 21.9% despite a 10% rise in revenue to US$240.8 million.
Memory costs outpace pricing and gross profit falls 65%
Gross profit dropped 65% year-over-year to US$16.9 million. Total cost of revenue rose 30% to US$223.9 million, driven mainly by memory costs tied to goods sales. ECARX said cost escalation exceeded what its pricing could offset, so a larger share was absorbed internally to support volume growth and partnership commitments.
Sales of goods revenue climbed 23% to US$222.7 million on pricing adjustments and higher volume. Service revenue fell 53% to US$17.7 million as partner model launches, which peaked in the second quarter of 2026, slowed sharply in the third. Software license revenue fell 56% to US$0.4 million.
Adjusted EBITDA (non-GAAP) was a loss of US$37.7 million, against a loss of US$0.9 million a year earlier. The company expects memory costs to keep weighing on gross margin and operating profit over the next few quarters, including the fourth quarter of 2026.
US$191.5 million Flyme purchase drains cash to US$53.7 million
Cash stood at US$53.7 million on September 30, down from US$165.5 million at June 30. ECARX paid US$191.5 million for the Flyme software business, funded by cash reserves and US$67.8 million of bank financing drawn in the quarter. A further US$30.5 million in bank financing covered operating cash outflow and working capital for new program launches.
The Flyme deal closed on September 30. Flyme will run as an independent software division, giving ECARX the application layer and a route to recurring software revenue. Flyme Auto recorded more than 1.2 million vehicle deployments from January to September 2026, taking cumulative deployments by ECARX to over 3.5 million.
Restatement and impairment add accounting charges
ECARX acquired 100% of Hubei Qiguang Technology, an entity under common control, and restated comparatives using the pooling-of-interests method. It also corrected errors in the accounting for government subsidies recognized in 2021 and 2022. Management judged the errors immaterial to prior statements but material to the current period if left uncorrected. The adjustments hit other current liabilities and equity at the start of the earliest comparative period.
Selling, general and administrative expenses and others, net rose 11% to US$25.6 million, including a US$6.7 million impairment on convertible bonds previously issued by DreamSmart. Excluding that charge, the line fell US$4.2 million, or 18%. Research and development expenses fell 12% to US$27.5 million.
ECARX holds 2026 revenue guidance at US$1.0-1.1 billion
The company reiterated full-year revenue guidance of US$1.0 billion to US$1.1 billion, citing its backlog and commercial pipeline. It plans to mitigate memory-cost pressure through pricing adjustments, operational efficiencies and product mix optimization.
Shipments reach 721,000 units as high-end mix climbs to 30%
ECARX shipped about 721,000 units in the quarter. High-end Antora solutions made up 30% of shipments, up from 25% a year earlier. Mass production began for 21 new models across 5 brands, 6 of them for markets outside China, such as Korea. The company secured 23 vehicle design wins.
Its technology runs in more than 12 million vehicles across 18 OEMs, 28 brands and 159 markets. The Volkswagen Group program remains on track for a 2027 launch, with engineering, supply chain and support infrastructure being built out across Latin America.
ECARX signed a non-binding memorandum of understanding with Arm to co-develop AI compute platforms for automotive use. It is also finalizing a Joint Cockpit AI Innovation Lab on Flyme OS with a European luxury automaker, aimed at cockpit systems for the automaker's vehicles in China. Tencent Cloud's WorkBuddy AI assistant will be integrated with Flyme AIOS.