Nio reported mostly soft 3Q results, especially on margin, but provided a better than-feared 4Q volume outlook.

Nio today reported third-quarter revenue that exceeded expectations, although guidance for the fourth quarter was relatively conservative.

The company reported third-quarter revenue of RMB 13 billion ($1.8 billion), a single-quarter high, up 32.6 percent year-on-year and the tenth consecutive quarter of growth.

Nio's fourth-quarter delivery guidance of 43,000 to 48,000 units was below market expectations of 55,605 units, representing year-on-year growth of 71.8 to 91.7 percent.

Here is Deutsche Bank analyst Edison Yu's first impression of Nio's third-quarter earnings report.

3Q22 Earnings First Look

Nio reported mostly soft 3Q results, especially on margin, but provided a better than-feared 4Q volume outlook.

Deliveries for the third quarter were already reported at 31,607 units, leading to revenue of 13.0bn RMB, vs. our/consensus 13.2bn/13.1bn forecasts.

Gross margin of 13.3% was meaningfully below our 16.5% forecast (consensus 14.9%), driven by downside in vehicle margin (16.4% vs. our 17.3% due to higher battery costs; down 30bps QoQ) and much lower contribution from regulatory credits than we anticipated.

Opex of 5.7bn was noticeably above our expectations, both on R&D and SG&A, suggesting no slowdown in investment despite weaker macro conditions.

All together, adjusted EPS of (2.11) came in worse than our/consensus (1.04)/(1.11) estimates.

Management provided a better-than-feared outlook for 4Q22, calling for 43,000-48,000 deliveries. This is in line with our 45,000 unit forecast and should alleviate some concerns about the big Nov/Dec recovery.

The casting supply shortage appears mostly behind and ET5 should at least ramp up close to the original 10,000 unit target in December after COVID lock downs disrupted October production.