• Nio recorded adjusted profit from operations of 206.9 million yuan in the second quarter, about 3.1 times the first-quarter figure.
• Its GAAP net loss widened to 528 million yuan.

Nio Inc (NYSE: NIO) posted an adjusted operating profit for a third consecutive quarter, as sales of higher-priced models helped strengthen its financial position.

The company's second-quarter revenue rose 69.1% year-on-year to 32.14 billion yuan ($4.74 billion), driven by higher deliveries and an improved product mix, according to its earnings report released Tuesday (September 1).

Revenue increased 25.9% from the first quarter, but was still about 2% below the lower end of the company's previous guidance of 32.78 billion yuan.

Nio recorded adjusted profit from operations of 206.9 million yuan in the second quarter, marking the third consecutive quarter in which the metric remained positive.

The figure was about 3.1 times the 66.8 million yuan recorded in the first quarter. By comparison, the company posted an adjusted operating loss of 4.04 billion yuan in the same period last year.

Excluding share-based compensation expenses, Nio recorded an adjusted net profit (non-GAAP) of 26.1 million yuan in the second quarter, down from 43.5 million yuan in the first quarter.

On a GAAP basis, the company's second-quarter net loss was 528 million yuan, sharply narrower than 4.9948 billion yuan a year earlier but 59% wider than 332.1 million yuan in the first quarter.

Vehicle sales rose 80.1% year-on-year and 27.5% sequentially to 29.0582 billion yuan in the second quarter. Nio attributed the growth to higher delivery volume and an increase in average selling prices resulting from changes in its product mix.

The company delivered 107,658 vehicles during the quarter, up 49.4% year-on-year but below its previous guidance range of 110,000 to 115,000 units.

Nio's overall gross margin was 18.4% in the second quarter, up from 10.0% a year earlier but slightly below the first quarter's 4-year high of 19.0%.

Vehicle margin rose to 18.5% from 10.3% a year earlier and was broadly stable compared with 18.8% in the first quarter. Higher sales of high-margin models and cost-structure optimization supported margins.

Research and development expenses fell 28.7% year-on-year to 2.14 billion yuan in the second quarter, but rose 13.8% sequentially, mainly due to increased investment in developing new products and technologies.

Selling, general and administrative expenses rose 11.6% year-on-year and 26.5% sequentially to 4.42 billion yuan. The company attributed the increases mainly to greater sales and marketing activity related to new product launches.

As of June 30, Nio held 56.7 billion yuan in cash and cash equivalents, restricted cash, short-term investments and long-term time deposits, up from 48.2 billion yuan at the end of March.

Looking ahead, Nio expects to deliver between 108,000 and 111,000 vehicles in the third quarter, representing year-on-year growth of about 24.0% to 27.5%.

The company expects third-quarter revenue of between 33.285 billion yuan and 34.051 billion yuan, representing year-on-year growth of 52.7% to 56.2%.

Nio delivered 35,934 vehicles in July and 35,836 in August. That means it needs to deliver between 36,230 and 39,230 vehicles in September to meet its third-quarter guidance.

Nio founder, chairman and CEO William Li said all 3 brands — Nio, Onvo and Firefly — recorded growth in both sales volume and average transaction price in the second quarter.

Chief Financial Officer Stanley Qu said strong sales of higher-margin models and continued optimization of the cost structure helped the company maintain healthy margins despite rising cost pressures.

($1 = 6.7809 yuan)