NIO Financial Results: Analysis

NIO Inc. (NIO) reported mixed results in its Q1 FY 2021 earnings report. The company posted a loss per American depositary share (ADS) that was more than four times larger than analysts estimated. Revenue, however, rose 481.8% compared to the year-ago quarter, beating analysts' expectations.

NIO Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
Earnings Per ADS Miss -3.14 yuan -0.72 yuan
Revenue Beat 8.0 billion yuan 7.5 billion yuan 
Vehicle Deliveries Miss 20,060 20,070

Source: Predictions based on analysts' consensus from Visible Alpha

NIO's vehicle deliveries, which were reported earlier this month, came in at 20,060 for the quarter, narrowly missing what analysts had expected. The company's shares were down nearly 0.5% in after-hours trading shortly after NIO posted the earnings release. Over the past year, NIO's shares have provided a total return of 980.1%, well above the S&P 500's total return of 43.3%.

Key Takeaways

  • NIO delivered a record 20,060 vehicles in the first quarter, just narrowly missing analyst estimates.
  • Vehicle deliveries provide an indication of demand for NIO's main source of revenue as well as the company's productive capacity.
  • The global semiconductor shortage poses significant challenges to NIO's supply chain.

NIO Vehicle Deliveries

Most of NIO's revenue is generated through the sale of vehicles. The company currently delivers three types of models:

  • The ES8, the company's 6-seater and 7-seater flagship premium smart electric SUV
  • The ES6, the company's 5-seater high-performance premium smart electric SUV
  • The EC6, the company's 5-seater premium electric coupe SUV

The number of vehicle deliveries provides an indication of the demand for NIO's vehicles as well as the company's ability to scale production.

NIO's vehicle deliveries rose 422.7% compared to the year-ago quarter, marking the fastest pace of growth since Q2 FY 2019. Vehicle sales for the quarter were 7.4 billion yuan ($1.1 billion), up 489.8% from the same three-month period a year ago. The company attributed the higher vehicle sales to higher deliveries and higher average selling prices.

These factors, as well as lower material costs, helped push NIO's vehicle margin to 21.2% compared to -7.4% in the year-ago quarter. Vehicle margin is a measure of profitability. When vehicle margin is higher, it means more vehicle sales are being generated relative to the costs of making those vehicles.

Product Demand Strong

NIO said that demand for its products remains strong, but its supply chain faces significant challenges as a result of the global semiconductor shortage. In late March, the company halted production for five days at one of its plants in Hefei province due to the chip shortage.

During NIO's conference call, Chairman William Li referred to a fire that took place in March at a Japanese chip factory owned by Renesas Electronics Corp. (6723), which was exacerbating the shortage. He said that the impact of the fire would hit the automobile supply chain in mid-May. However, Li noted that the industry is expecting the shortage to reach a turning point by the third quarter.

NIO also mentioned in its earnings release that it began the planning and building of a new plant in Xinqiao Industrial Park in Hefei, which will help it to secure sufficient production capacity.

NIO Outlook

NIO expects to deliver between 21,000 and 22,000 vehicles in Q2 FY 2021. It also expects total revenues for the second quarter to be between 8.1 billion yuan ($1.2 billion) and 8.5 billion yuan ($1.3 billion), representing a year-over-year (YOY) increase of between 119.0% and 128.7%.