Nio posts better-than-expected Q2 earnings as deliveries hit record high

Nio today reported second-quarter earnings that beat expectations, as vehicle deliveries unexpectedly exceeded the upper end of its guidance range.

The Chinese electric vehicle (EV) maker posted revenue of RMB 17.446 billion (USD2.4 billion) in the second quarter, better than the RMB 17.385 billion that analysts expected in a Bloomberg survey.

That's up 98.89% year-on-year and up 76.07% from the first quarter, and also exceeded the upper end of the guidance range of RMB 16.59 billion to RMB 17.14 billion.

The strong rebound in revenue was largely due to a sharp increase in vehicle deliveries.

Nio delivered a record 57,373 vehicles in the second quarter, exceeding the upper end of its guidance range of between 54,000 and 56,000 vehicles. That's a 143.93% increase year-on-year and a 90.91% increase from the first quarter.

The company reported revenue of RMB 9.91 billion in the first quarter, missing analysts' expectations of RMB 10.75 billion at the time, mainly due to a decline in deliveries amid a traditionally slow season and price wars.

Nio guided third-quarter vehicle deliveries to be between a record 61,000 and 63,000 units, representing year-on-year growth of about 10% to 13.7%.

The guidance means it expects Sep deliveries to be between 20,326 and 22,326 vehicles, considering it delivered 20,498 and 20,176 vehicles in the last two months, respectively.

The company guided third-quarter revenue to be between RMB 19.11 billion (USD2.63 billion) and RMB 19.67 billion, representing growth of about 0.2% to 3.2%.

Nio's vehicle sales revenue in the second quarter were RMB 15.68 billion, an increase of 118.2% year-on-year and up 87.1% from the first quarter.

The year-on-year increase was mainly due to higher deliveries, partially offset by lower average selling prices due to changes in product mix and user rights adjustments since Jun 2023, Nio said.

Its cost of sales increased 81.4% year-on-year to RMB 15.76 billion in the second quarter, up 67.3% from the first quarter.

The year-on-year increase in cost of sales was mainly attributable to an increase in deliveries, partially offset by a decrease in material costs per vehicle, according to the company.

Nio reported a net loss of RMB 5.05 billion in the second quarter, a decrease of 16.7% year-on-year and a decrease of 2.7% from the first quarter.

Excluding share-based compensation expenses, adjusted net loss for the second quarter was RMB 4.54 billion, below analysts' expectations of RMB 4.9 billion. That was down 16.7% year-on-year and 7.5% from the first quarter.

It posted a gross margin of 9.7% in the second quarter, above analysts' expectations of 8.736% and a new high since the third quarter of 2022. The figure was 1.0% in the second quarter of 2023 and 4.9% in the first quarter of 2024.

Vehicle margin was 12.2% in the second quarter, compared to 6.2% in the second quarter of 2023 and 9.2% in the first quarter of 2024.

The increase in vehicle margin was primarily attributable to lower unit material costs, partially offset by lower average selling prices due to user rights adjustments since June 2023, the company said in its earnings report.

Due to ongoing cost optimizations, Nio's vehicle margin rose to 12.2% in the second quarter, its CFO Stanley Qu said, adding that the company will continue to adopt flexible market strategies and optimize product portfolio.

"We are confident that these efforts will result in steady improvements in gross profit and cost efficiency in the future," he said.

Nio reported R&D expenses of RMB 3.22 billion in the second quarter, a decrease of 3.8% year-on-year, but an increase of 12.4% from the first quarter.

Excluding equity incentive expenses, non-GAAP R&D expenses were RMB 2.89 billion, a decrease of 1.9% year-on-year, but an increase of 8.7% from the first quarter.

The sequential increase in R&D expenses was primarily due to higher design and development costs for new products and technologies and higher personnel costs for R&D functions, according to the company.

As of Jun 30, Nio's balance of cash and cash equivalents, restricted cash, short-term investments and long-term time deposits was RMB 41.6 billion.