Li Auto Inc - ADR

Q2 financial snapshot: revenues rose QoQ but collapsed YoY; profitability deteriorated sharply - Total revenues: RMB 25.7bn, -15.1% YoY and +11.7% QoQ. - Vehicle sales: RMB 24.1bn, -16.7% YoY (mainly fewer deliveries + lower ASP due to mix) and +11.8% QoQ (mainly higher ASP + more deliveries). - Gross margin compressed hard: 11.0% vs 20.1% YoY and 7.9% QoQ prior quarter; vehicle margin 9.4% vs 19.4% YoY and 6.1% QoQ. - Loss widened: Net loss RMB 1.7bn (vs net income RMB 1.1bn YoY); operating loss RMB 2.3bn (vs income RMB 827m YoY). - Operating expenses: RMB 5.1bn, -2.0% YoY but +6.9% QoQ (SG&A down YoY but up QoQ due to more marketing/promo).

Cash flow and balance sheet: operating cash nearly positive, but free cash flow still negative; buybacks ongoing - Operating cash flow: +RMB 15.0m (vs -RMB 3.0bn YoY; and -RMB 6.1bn in prior quarter) — good improvement. - Free cash flow: -RMB 1.3bn (vs -RMB 3.8bn YoY and -RMB 7.4bn prior quarter) — still a negative, though improving. - Cash balance: RMB 87.5bn at quarter end — described as robust. - Share repurchases: 91.7m Class A shares (including 23.7m ADSs) for ~$631.5m to date — continuing shareholder return, despite losses.

Management outlook / forecast: Q3 deliveries and revenue guided higher QoQ; profitability headwinds likely persist - Q3 2026 delivery guidance: 95,000–100,000 vehicles. - Q3 total revenue guidance: RMB 26.6bn–28.0bn (i.e., up from Q2). - Stated outlook is preliminary and can change. - CFO commentary implies full-year positive operating cash flow & free cash flow depend heavily on Q4 deliveries (delivery-weighted working capital/cash conversion risk).