Nio announced its third quarter earnings today, and Deutsche Bank analyst Edison Yu's team offered their first look.

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Nio reported its third-quarter earnings today, and Deutsche Bank analyst Edison Yu's team thinks it's a bit messy, but the focus will soon shift to a recovery in delivery volumes.

Here's what the team had to say in a research note sent to investors today:

Nio reported somewhat messy 3Q results but we think focus will quickly shift to recovery in monthly deliveries driven by record high backlog and Nio Day on 12/18.

Deliveries were already reported at 24,439 units, leading to revenue of 9.81bn RMB, coming in ahead of our 9.34bn forecast and consensus 9.23bn.

Gross margin of 20.3% was ahead of our/consensus 17.0-17.3% forecast, due to sales of regulatory credits (we/Street had modeled these credits coming in 4Q).

Vehicle margin came in at 18.0%, below our 18.6%, negatively impacted by increased financing at subsidized rates and higher tooling depreciation.

Opex of 3,018m came in as expected with higher SG&A offsetting lower than anticipated R&D.

All together, EPS of (0.36) beat our/consensus (0.82)/(0.80) estimates, partially helped by higher allocation toward SBC (266m) which is excluded from Non-GAAP earnings.

Management provided a relatively muted outlook for 4Q21 as anticipated (only flattish QoQ), calling for 23,500-25,500 deliveries (but implies large step-up MoM to >10k/month at mid-point for Nov/Dec).

This compares to our 25,000 forecast and consensus 25,700. Revenue is expected to be 9.38-10.11bn RMB.

As a reminder, October saw 2 weeks of downtime related to factory upgrades/expansion, constraining deliveries to 3,667 units.

On the earnings call, we will look for updates on the health of supply chain and cadence of capacity growth given large downtime in the quarter.

Moreover, we would inquire about any hints related to what investors can expect at Nio Day next month.