Executive Summary / Key Takeaways

• Ferrari's core strategy of prioritizing revenue quality, brand exclusivity, and deep personalization continues to drive exceptional profitability and a robust order book extending into 2027.
• Technological leadership, particularly in electrification with the upcoming Ferrari Elettrica and in-house component development via the E-building, positions the company for future growth while maintaining its performance heritage.
• Strong financial performance in Q2 2025, with total revenues of approximately EUR 1.8 billion and an EBITDA margin of 39.7%, underscores the effectiveness of its strategic initiatives and pricing power.
• Despite macroeconomic uncertainties and geopolitical tensions, Ferrari maintains a confident 2025 guidance, supported by lower industrial costs and strategic product launches like the Ferrari Amalfi and 849 Testarossa.
• The company's unique competitive moat, built on brand heritage, proprietary technology, and disciplined production, enables superior margins and resilience against broader automotive industry challenges.

The Prancing Horse's Enduring Legacy and Strategic Vision

Ferrari N.V. ($RACE) stands as an icon in the luxury performance sports car sector, a testament to its rich heritage in design, engineering, and racing. Founded in Maranello, Italy, in 1947, the company has meticulously cultivated a brand synonymous with exclusivity, unparalleled performance, and emotional appeal. Ferrari's overarching strategy consistently prioritizes the "quality of revenues over quantity," a principle that underpins its deliberate allocation strategy and meticulous product mix management. This approach allows Ferrari to operate in a niche luxury segment, distinct from mass-market automakers, and to command premium pricing.

The company's historical journey, marked by legendary models like the 1984 288 GTO and the 1980s Testarossa, has continuously shaped its current position. Ferrari's foray into electrification began with the first Hybrid F1 car in 2009, followed by the LaFerrari hybrid in 2013, demonstrating a long-term commitment to innovation. A pivotal moment arrived at the 2022 Capital Markets Day, where Ferrari unveiled a roadmap of 15 new models by 2026 and a multi-year share buyback program of approximately Euro 2 billion, expected to be completed by 2026. This strategic direction has been complemented by significant infrastructure investments, including the inauguration of the E-building in June 2024, a crucial facility for the in-house development and manufacturing of key electric vehicle components.

Technological Prowess: Fueling Performance and Future Growth

Ferrari's competitive edge is deeply rooted in its technological differentiation, a holistic approach to high-performance vehicle engineering that spans advanced internal combustion engines (ICE), hybrid, and now electric powertrains. The company's commitment to in-house development of critical components is a key differentiator, ensuring that its vehicles deliver a unique blend of performance, emotion, and timelessness.

The F80 supercar, launched in 2024, exemplifies this prowess. It features a V6 hybrid powertrain directly derived from the 499P race car, delivering a combined maximum power of 1,200 horsepower. This vehicle incorporates 4-wheel drive, an ultralight carbon fiber chassis, and extreme aerodynamic solutions, making it the "most powerful road car ever to come out of the factories gate." Similarly, the recently introduced 849 Testarossa hybrid, a plug-in hybrid, boasts a mid-rear mounted 4-liter, eight-cylinder turbo engine (830 hp) coupled with three electric motors for a total of 1,050 HP, which is 50 horsepower more than the SF90 Stradale it replaces. This model is capable of a top speed exceeding 330 km/h (205 mph).

Central to Ferrari's future technological roadmap is the E-building, inaugurated in June 2024 and already awarded the LEED Platinum Certificate. This state-of-the-art facility is dedicated to the in-house development, testing, and manufacturing of crucial electric vehicle components, including electric motors, high-voltage battery modules (featuring patented carbon fiber housing for weight reduction), and front axles that incorporate silicon carbide transistors and advanced decoding systems. This internalization of know-how is vital for guaranteeing the "timeless feature of our cars" and providing the flexibility to integrate and offer future technologies.

Looking ahead, the highly anticipated Ferrari Elettrica, the company's first all-electric vehicle, is slated for a technological unveiling in October 2025, with deliveries commencing in October 2026. CEO Benedetto Vigna emphasizes that the Elettrica represents an "addition, not transition" to Ferrari's offering, designed to appeal to both existing enthusiasts and new clients. Furthermore, the Ferrari Hypersail project, a revolutionary boat currently under construction, demonstrates the company's ambition to push technological limits in new arenas, fostering two-way technological transfer in areas such as aerodynamics, energy efficiency, and power management. These technological advancements are not merely about raw power; they are foundational to Ferrari's competitive moat, ensuring product excellence, enabling premium pricing, and safeguarding brand identity and residual values in an evolving automotive landscape.

Robust Financial Performance and Liquidity

Ferrari's financial performance consistently reflects its strategic discipline. In Q2 2025, the company reported total revenues of approximately EUR 1.8 billion, marking a 4.4% year-over-year growth despite flat deliveries, underscoring its commitment to revenue quality over volume. Profitability remained robust, with EBITDA exceeding EUR 700 million and an impressive EBITDA margin of 39.7%, alongside an EBIT margin close to 31%. These strong percentage margins were primarily driven by a favorable product mix and continued strong personalization trends.

The "Cars and Spare Parts" segment saw a 3% growth in Q2 2025, with personalizations consistently accounting for approximately 20% of total revenues in this segment. These bespoke options, particularly carbon and specialized painting, are significant contributors to revenue. Shipments in Q2 2025 were propelled by models such as the 296 GTS, Purosangue, and Roma Spider, with the SF90 XX family and 12Cilindri family also increasing their contributions. The Daytona SP3, a limited-series model, is gradually phasing out, with deliveries expected to conclude in Q3 2025. The "Sponsorship, Commercial and Brand" segment also contributed positively, benefiting from new sponsorships, including the HP (HPQ) title partnership of Scuderia Ferrari, improved lifestyle activities, and a better prior-year Formula 1 ranking.

From a liquidity perspective, Ferrari generated a strong industrial free cash flow of EUR 232 million in Q2 2025. The company's net industrial debt stood at EUR 338 million at the end of June 2025. Ferrari is committed to returning value to shareholders, intending to resume share repurchases to complete its multi-year program of approximately EUR 2 billion by year-end.

Competitive Landscape and Strategic Positioning

Ferrari operates in a highly exclusive segment of the automotive industry, where its competitive advantages are formidable. The company's "deliberate production limits, deep personalization, and Formula 1 synergies drive its profitability and competitive edge, unmatched by mass-market automakers." This strategy creates a unique competitive moat, sustaining high demand and pricing power.

Direct competitors include Aston Martin Lagonda (AML), Porsche , Mercedes-Benz AMG (MBG), and BMW M Series (BMW). Ferrari distinguishes itself from these rivals through several key factors:

• Exclusivity and Brand Heritage: Ferrari emphasizes artisanal craftsmanship and limited-edition exclusivity, contrasting with Porsche's more volume-oriented approach to performance cars. Ferrari's brand prestige and customer loyalty are superior, fostering stronger pricing power.
• Performance and Engineering: Ferrari's vehicles are often perceived as offering a more exhilarating and track-oriented experience, with superior engineering and performance legacy compared to Aston Martin's broader luxury appeal or AMG's blend of opulence and speed. Ferrari's proprietary technology in engine design and chassis dynamics provides a refined driving experience, exploiting potential weaknesses in competitors' supply chains.
• Profitability: Ferrari consistently demonstrates stronger profitability trends. Its TTM Gross Profit Margin of 51.20%, Operating Profit Margin of 29.37%, Net Profit Margin of 22.92%, and EBITDA Margin of 38.89% significantly outpace those of more diversified competitors like Volkswagen AG (VWAGY) (Porsche), which reported a Gross Profit Margin of 19% and Operating Profit Margin of 8% in 2024. This indicates Ferrari's efficient operational execution in high-margin areas.

• Customer Loyalty: In 2024, 81% of new cars were sold to existing Ferrari clients, with 48% owning more than one Ferrari. This exceptional loyalty translates into predictable revenue streams and a robust order book extending into 2027 for range models, with a record backlog in Asia (excluding Mainland China).

While Ferrari maintains a dominant position, it faces vulnerabilities. High customer concentration could impact financial performance if key markets falter. Additionally, supply chain dependencies, though managed through personnel deployment and second sourcing, expose the company to risks that competitors with more robust and diversified networks, like BMW, might mitigate more effectively.

Outlook and Risks

Ferrari's management expressed increased confidence in its 2025 guidance, removing a 50 basis point risk on percentage margins. This optimism stems from a recent agreement on U.S. tariffs and expectations of lower industrial costs in the second half of the year. The company anticipates deliberately reducing deliveries in the remainder of 2025 compared to 2024, prioritizing revenue quality over volume. A softer product mix is expected in the second half due to the Daytona SP3 phaseout and initial F80 shipments in Q4. Higher selling, general, and administrative (SG&A) expenses and depreciation and amortization (D&A) are projected for the rest of 2025, alongside a greater headwind from foreign exchange if the U.S. dollar's weakness against the euro persists.

For the full year 2025, capital expenditures are guided to be around €900 million, a reduction from the 2024 peak of €989 million. Research and development (R&D) costs are expected to remain around 8% of revenues. The effective tax rate is projected at approximately 22%, benefiting solely from the new Patent Box regime.

Despite this confident outlook, Ferrari acknowledges an "uncertain macroeconomic environment, ongoing geopolitical tensions and market volatility." Potential macro threats include "trade tensions, currency fluctuation and financial market volatility." While management does not perceive a significant impact from U.S. tariffs on customer behavior, the "uncertainty that may have created a sort of wait and see" is a factor. Residual values in certain markets, such as the U.K., have shown some pressure, and high levels of personalization can also impact resale values. However, Ferrari's ability to adapt, as demonstrated by its prompt commercial policy updates for tariffs and a warranty scheme for hybrid batteries, underscores its resilience.

Conclusion

Ferrari's investment thesis remains compelling, anchored by its unwavering commitment to exclusivity, technological leadership, and superior profitability. The company's disciplined strategy of prioritizing revenue quality, coupled with its iconic brand and deep customer loyalty, provides a robust foundation for sustained financial performance. Ferrari's proactive investments in electrification, particularly through its E-building and the upcoming Ferrari Elettrica, demonstrate a clear roadmap for future growth while preserving its performance heritage.

Despite facing macroeconomic uncertainties and competitive pressures, Ferrari's unique competitive moat, characterized by unparalleled brand strength, proprietary technology, and meticulous product management, enables it to maintain industry-leading margins. The confident 2025 guidance, supported by strategic product launches and operational efficiencies, reinforces the company's ability to deliver premium returns. Investors should recognize Ferrari's exceptional positioning as a luxury powerhouse, where innovation and exclusivity continue to drive its unrivaled ascent in the global automotive landscape.