Li Auto Inc (LI) reported a solid 10.6% year-over-year increase in revenue for the fiscal second quarter of 2024, reaching $4.36 billion. Although this figure slightly missed analyst expectations of $4.45 billion, the company still achieved a positive performance. Adjusted net earnings per ADS stood at $0.20, surpassing the analyst consensus of $0.19.
The increase in revenue was primarily driven by a significant surge in vehicle sales, which climbed 8.4% to $4.2 billion. This growth was fueled by a remarkable 25.5% year-over-year increase in total vehicle deliveries, reaching 108,581 units during the quarter.
Despite the impressive sales figures, Li Auto faced challenges in terms of profitability. The vehicle margin experienced a 230 basis point (bps) decline year over year, settling at 21.0%. This downturn can be attributed to shifts in product mix and pricing strategies. Consequently, the gross margin also dipped by 230 bps to 21.8%.
The company’s adjusted income from operations fell by 57.4% year-over-year to $119.7 million, while adjusted net income plunged 44.9% to $206.8 million.
Li Auto maintains a robust financial position, holding $13.4 billion in cash and equivalents as of June 30, 2024. However, the company’s operating cash flow for the quarter was negative at $59.1 million.
As of June 30, 2024, Li Auto boasts a strong retail presence with 497 stores in 148 cities across China. The company also operates 421 servicing centers, authorized body and paint shops in 220 cities, and 614 supercharging stations with 2,726 charging stalls.
In July 2024, Li Auto achieved a significant milestone by delivering 51,000 vehicles, marking a substantial 49.4% increase from the same period last year. This achievement underscores the company’s continued commitment to growth and market leadership.
Mr. Xiang Lil, Chair and CEO of Li Auto, highlighted the company’s recent accomplishments, stating, “In June 2024, we surpassed the 800,000-vehicle milestone in cumulative deliveries, making history for Chinese premium automotive brands. In addition to our strong sales results, we made substantial progress in autonomous driving. In July, we rolled out our high-definition map-independent NOA with nationwide coverage to over 240,000 Li AD Max users and launched our next-generation autonomous driving technological architecture that integrates an E2E model and a VLM.”
Looking ahead, Li Auto projects third-quarter revenue in the range of $5.4 billion to $5.8 billion, representing a year-over-year increase of 13.7% to 21.6%. This projection slightly outpaces the analyst consensus of $5.74 billion. The company anticipates delivering 145,000 to 155,000 vehicles in the third quarter, marking a substantial year-over-year growth of 38.0% to 47.5%.
Despite the positive outlook, Li Auto stock has faced a significant decline of 47% over the past 12 months. This downturn reflects broader challenges within the Chinese EV industry, including sluggish domestic demand and protectionist tariffs.
As of the last check on Wednesday, LI shares were trading down 0.80% at $21.39 in premarket trading.
