Exchange: NYSE | Sector: Consumer Cyclical | Industry: Auto Manufacturers
Q3 2024
Published: Sep 30, 2024
Earnings Highlights
Revenue of $10.10B up 18.4% year-over-year
EPS of $-0.96 increased by 78.7% from previous year
Gross margin of 15.3%
Net income of -1.81B
""Crisis often presents opportunities. Having overcome these adversities, XPeng has emerged stronger than ever. We're now poised to accelerate our growth and move forward steadily."" - He Xiaopeng
XPeng Inc (XPEV) Q3 2024 Financial Results Analysis: Navigating Towards Profitability with Strong Growth Trajectory
Executive Summary
In the third quarter of 2024, XPeng Inc recorded significant milestones in both delivery volume and financial performance, with total revenues reaching RMB 10.1 billion, an 18.4% year-over-year growth and a 24.5% increase from the previous quarter. The company reported a gross profit margin of 15.3%, marking a robust recovery from the -2.7% margin in Q3 2023. Management emphasized the successful delivery of 46,533 units, showcasing a remarkable 54% quarter-over-quarter and 16% year-over-year increase. This performance underscores XPeng's effective strategy underpinned by technological advancements, particularly in AI and autonomous driving capabilities. However, despite these promising figures, the company remains in operational losses, and addressing these will be crucial as they approach 2025 with ambitious growth targets.
Financial Performance Overview:
- Total Revenues: RMB 10.1 billion (up 18.4% YoY, 24.5% QoQ)
- Gross Profit: RMB 1.54 billion (up 776.2% YoY, up 35.7% QoQ)
- Gross Margin: 15.3%, improved from -2.7% YoY and 14% QoQ
- Deliveries: 46,533 units (54% QoQ, 16% YoY).
The significant YoY revenue growth was primarily driven by higher deliveries and improved product mix, boosting both gross and vehicle margins. Management executed a successful cost-reduction strategy in R&D and manufacturing, supporting profitability improvements.
Comparative Metrics Against Competitors (as of Q3 2024):
- XPeng: Gross Profit Margin: 15.3%, Vehicle Margin: 8.6%
- Tesla (TSLA): Gross Profit Margin: 19.8%, Operating Profit Margin: 10.8%
- Li Auto (LI): Gross Profit Margin: 21.5%, Operating Profit Margin: 8.01%.
This positions XPeng favorably within the sector, albeit still trailing industry leaders like Tesla in profitability metrics.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
10.10B
18.43%
24.54%
Gross Profit
1.54B
776.20%
35.72%
Operating Income
-1.85B
41.56%
-14.79%
Net Income
-1.81B
53.49%
-40.71%
EPS
-0.96
78.67%
-30.70%
Key Financial Ratios
currentRatio
1.37
grossProfitMargin
15.3%
operatingProfitMargin
-18.3%
netProfitMargin
-17.9%
returnOnAssets
-2.37%
returnOnEquity
-5.64%
debtEquityRatio
0.48
priceToBookRatio
2.82
priceEarningsRatio
-12.48
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key Insights from Management: Deliveries and Performance: Mr. He Xiaopeng, CEO, noted, "We delivered 46,533 units in the third quarter, reflecting a 54% increase quarter-over-quarter and a 16% increase year-over-year, beating the high-end of our prior quarterly guidance."
Margin and Cost Strategy: "Thanks to technology-driven cost reductions and growth in scale, our gross profit margin increased to 15.3%, demonstrating continuous improvement for five quarters."
Future Outlook: Management remains optimistic about upcoming quarters, forecasting deliveries for Q4 2024 to reach between 87,000 and 91,000 units, with revenues projected at RMB 15.3 to RMB 16.2 billion.
Response to Market Needs: He Xiaopeng also mentioned, "Our core reasons for attracting customers are the high standard intelligent driving features we provide, defining luxury by technology rather than configuration."
"Crisis often presents opportunities. Having overcome these adversities, XPeng has emerged stronger than ever. We're now poised to accelerate our growth and move forward steadily."
— He Xiaopeng
"I anticipate that in the upcoming three years, we'll see a knockout phase in the Chinese automobile industry, with significant advancements in our technological integration and user experience."
— He Xiaopeng
Forward Guidance
XPeng provided strong forward guidance for Q4 2024, forecasting total deliveries between 87,000 and 91,000 units – a quarterly increase of 87% to 95.6% sequentially. The anticipated revenue for Q4 ranges from RMB 15.3 billion to RMB 16.2 billion, reflecting a 51.5% to 60.4% quarterly increase. Management's commentary highlighted expanding production capacity and firm order backlogs, suggesting that XPeng’s operational growth will likely continue into 2025. He Xiaopeng stated expectations of "significant advancements in autonomous driving and vehicle intelligence" leading to increased market share and reaching profitability by next year.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
XPEV Focus
15.26%
-18.30%
-5.64%
-12.48%
TSLA
19.80%
10.80%
3.10%
96.53%
LI
21.50%
8.01%
4.23%
17.30%
RIVN
-44.90%
-1.34%
-18.60%
-2.59%
LCID
-1.06%
-3.85%
-37.00%
-2.07%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Based on the current financial health and positive future guidance, XPeng shows significant promise as it positions itself for accelerated growth through AI integration and expansion into new markets. However, investors should be cautious of the ongoing losses and the company’s ability to transition to sustainable profitability. The strategic focus on R&D and upcoming model launches may enhance XPeng's market position, providing a compelling investment thesis for long-term growth driven by technology advancements.
Key Investment Factors
Growth Potential
XPeng's significant growth trajectory is bolstered by a strategic transition towards AI-driven technologies and an anticipated rapid expansion of the new energy vehicle market in China, projected to exceed 85% penetration by 2027. The company’s initiative to launch at least four new models in 2025 signals its commitment to leverage AI for competitive advantage.
Profitability Risk
Key risks include maintaining technological leadership in a rapidly evolving EV market, competition from established brands like Tesla, and reliance on government policies that could impact EV sales. Additionally, potential challenges in managing supply chain disruptions and cash flow management can affect profitability.
Financial Position
As of September 30, 2024, XPeng had a solid cash position totalling RMB 35.75 billion, indicative of its health amidst operational losses. While the current ratio of 1.37 signifies short-term liquidity, continuous operational losses pose concerns over long-term financial stability.
SWOT Analysis
Strengths
Strong technological foundation in AI and EV surpassing competitors.
Substantial improvement in delivery volumes and financial metrics.
Robust cash reserves positioning for future growth.
Weaknesses
Continued operational losses despite improving margins.
High reliance on the Chinese market, potentially limiting global outreach.
Opportunities
Rising adoption of electric vehicles in both domestic and international markets.
Expansion into new segments with advanced vehicle models and innovative ADAS systems.
Threats
Intense competition from global EV leaders like Tesla and domestic peers.