Hesai (HSAI) Q3 2025 Earnings Call Transcript

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Date

Tuesday, Nov. 11, 2025 at 9 p.m. ET

Call participants

• Chief Executive Officer — David Li
• Chief Financial Officer — Andrew Fan
• Investor Relations Director — Yuanting Shi

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Takeaways

• Net revenue -- $112 million, up 47% year-over-year, marking a sixth consecutive quarter of double-digit growth.
• Total shipments -- 441,398 units, increasing 229% year-over-year.
• GAAP net income -- RMB 256 million ($36 million) for the quarter; RMB 283 million ($40 million) for the first nine months, attaining the company's full-year profit target one quarter early.
• Gross margin -- 42% for the quarter, with management issuing guidance for a 40% margin in the next quarter.
• Equity investment gains -- RMB 148 million ($21 million) included in quarterly net income; excluding these, net income was RMB 108 million ($15 million).
• 4Q revenue guidance -- RMB 1,000 million ($140 million) to RMB 1,200 million ($169 million), projecting 39%-67% year-over-year growth.
• Full-year 2025 revenue guidance -- RMB 3,000 million to RMB 3,200 million, targeting approximately 50% year-over-year growth.
• Full-year 2025 GAAP net income guidance -- Raised to RMB 350 million to RMB 450 million, with normalized guidance (excluding equity gains) within RMB 200 million to RMB 300 million.
• Full-year 2026 unit shipment forecast -- At least two to three million LiDAR units, with upside if L3 adoption broadens industry-wide.
• ADAS product mix shift -- Q4 shipments expected to be 80% ATX, with ATX ASP around $200 and downward blended ADAS ASP due to greater ATX share and replacement of higher-priced AT128.
• Operating expenses -- Operating expenses declined year-over-year; management targets RMB 100 million in OpEx savings in 2025 versus 2024.
• Hong Kong primary listing -- Completed with $640 million raised post-greenshoe; public tranche oversubscribed by 169x and international tranche by over 14x, substantially strengthening liquidity and capital structure.
• Market share -- Led the long-range automotive LiDAR market for seven consecutive months, achieving 40% share in August.
• Key ADAS design wins -- New wins at both top two ADAS customers for all 2026 models; 100% LiDAR adoption secured, with multiple SOPs booked for 2025 and 2026 across several OEMs.
• Robotics segment growth -- Robotics LiDAR shipments increased 14-fold year-over-year, with new supply contracts signed with Pony.ai, Hello Inc, JD Logistics (China), and Motiono (international).
• AI-driven efficiency -- Companywide adoption of AI reduced costs by "tens of millions of RMB" in 2025, including in travel, documentation, hiring, and testing.
• Major customers -- Key ADAS customers cited for 2025 and 2026: Li Auto, Xiaomi, BYD, Leapmotor, Zika, Great Wall Motor, with additional SOPs pending for Geely and Chery.
• Overseas design wins -- Secured exclusive global ADAS LiDAR design win with a top European OEM, plus multiyear contracts in North America, Asia, and Europe for robotics products.
• Regulatory catalyst -- New L3 vehicle production approvals and pending L2 safety standards in China are driving accelerated LiDAR adoption rates and content per vehicle.
• Product roadmap -- ATX now the Gen 3 core product, following AT128 leadership in Gen 2; ATX widely recognized for higher unit volumes and robust quality.
• SPAD technology strategy -- CEO Li highlighted both adoption and risk: if you use the off-the-shelf SPAD technology, you simply integrate them, one of the challenges you face is actually noise. With higher risk of false triggering, requiring proprietary safety solutions.

Summary

Hesai Group (NASDAQ:HSAI) achieved record-setting results this quarter, highlighted by a significant acceleration in both revenue and shipment volumes, and delivered profitability ahead of its multi-quarter targets. The company finalized a dual primary listing in Hong Kong, raising substantial capital and deepening investor liquidity. Strategic customer wins across major ADAS and robotics OEMs solidified its competitive positioning, while regulatory changes in China catalyzed further multiyear volume commitments. Product mix shifts, increased operational efficiency through AI deployment, and strong international traction set the intermediate stage for continued margin resilience and expansion opportunities.

• Management raised net income guidance for the year, citing realized gains and early attainment of profit milestones.
• Robotics revenue is accelerating via new multiyear supply agreements, representing tens of millions of dollars, which may further diversify future top-line growth.
• Cost structure improvements, driven by automation and AI integration, contributed to lower operating expenses and improved the company’s earnings efficiency.
• CEO Li stated, "LiDAR content in new vehicles is ramping up fast. We now expect three to six LiDARs per L3 vehicle, representing a system value of roughly $500 to $1,000 per car in the long run."
• Future guidance signals growth in both unit shipments and revenues, with double-digit year-over-year expansion and a stable gross margin profile anticipated into 2026.
• Andrew Fan confirmed, "We've already hit our full-year profit target of RMB 200 to RMB 350 million one quarter ahead of schedule."

Industry glossary

• LiDAR: Light Detection and Ranging; a sensing technology that measures distances by illuminating the target with laser light and measuring the reflection, crucial for ADAS and autonomous vehicles.
• ADAS: Advanced Driver Assistance Systems; systems that automate, adapt, or enhance vehicle systems for safety and enhanced driving.
• SOP: Start of Production; the planned or actual date when a new vehicle or system begins mass manufacturing.
• ATX: Hesai’s third-generation automotive LiDAR product, noted for high-volume supply and approximately $200 per unit pricing.
• AT128: Hesai’s previous-generation automotive LiDAR product with a higher ASP compared to ATX.
• FTX/ETX: Hesai’s specialized LiDAR models for blind spot and forward-facing, long-range detection, respectively.
• SPAD: Single Photon Avalanche Diode; a type of photodetector used in some LiDAR sensors, valued for sensitivity but challenged by increased noise and false triggers.
• Greenshoe option: An over-allotment option in an IPO allowing underwriters to sell additional shares to meet excess demand.
• BOM: Bill of Materials; the full list of materials, parts, and components required to build a product.
• TAM: Total Addressable Market; the overall revenue opportunity available for a product or service.

Full Conference Call Transcript

David Li: Thank you, Yuanting, and thank you, everyone, for joining our call today. Let's start with an overview of this quarter's progress. Q3 was a quarter of powerful momentum and exceptional execution. With net revenue surging nearly 50% year over year and a landmark milestone achieved, we produced over 1,000,000 LiDAR units in 2025 alone and are the first to do so globally. We've also led the long-range automotive LiDAR market for seven consecutive months, capturing an impressive 40% share in August, 1.5 times the second player and 2.4 times the third, according to Gaskew. Our profitability performance is even more remarkable.

After turning solidly profitable ahead of schedule in Q2, we kept the momentum going in Q3, delivering a record quarterly GAAP net income of RMB 256 million and a nine-month GAAP net income of RMB 283 million, achieving our full-year target of RMB 200 to RMB 350 million well ahead of schedule. This milestone further reinforces our undisputed financial leadership in the LiDAR industry. With robust growth and solid profitability working hand in hand, we're building powerful long-term momentum and creating sustainable value for our shareholders. Now, let's dive into our Q3 business highlights. Starting with our progress in the ADAS market, firstly, for ADAS, LiDAR is no longer optional. It's rapidly becoming a standard feature.

As a result of our product leadership and strong client relationships, we are proud to announce our new design wins from both of our top two ADAS customers, across all their 2026 models, achieving 100% LiDAR adoption. On top of that, select facelifted versions of Zika's flagship models are now rolling out with Hesai LiDAR as a standard feature. Looking ahead, a growing number of best-selling models across our diverse client base are slated for SOP with Hesai in 2025 and throughout 2026, further cementing our position as a LiDAR partner of choice. Beyond this, we are excited to see China taking decisive steps towards higher-level autonomous driving.

In September, the MIIT introduced conditional approval for L3 vehicle production for the first time. This was quickly followed by a public consultation on the new mandatory safety standard for L2 systems. Together, these regulatory developments are clearing the runway for a new era of smarter, safer, autonomous driving in China. As regulations take shape, one thing is clear: a higher-level autonomous driving system cannot tolerate a single point of failure, making safety redundancy not just important, but essential. At the same time, LiDAR sensors must be factory integrated rather than retrofitted, pushing automakers to future-proof their platforms for tomorrow's L2 and L3 capabilities. The trend is accelerating.

Even as software capabilities continue to evolve, pioneering OEMs are already launching multi-LiDAR vehicles in 2025. These models, featuring two to five LiDARs, are winning consumer recognition and achieving strong sales results. To gear up for the new era of L3 autonomous driving, we launched our Infinity IB LiDAR solution in April. It pairs our forward-facing long-range ETX LiDAR, a new benchmark with the world's longest detection range, with FTX blind spot LiDARs, offering the industry's widest field of view. Most excitingly, I'm thrilled to share that this quarter, ETFs landed yet another design win, this time with a top-three domestic new energy vehicle automaker, one of our valued existing customers.

Paired with multiple FTX units for full 360-degree blind spot coverage, mass production is slated for late 2026 or early 2027. These developments reaffirm a principle we've always stood by: the cost of LiDAR is nothing compared with the priceless value of human life. As the auto industry moves toward higher-level autonomy, LiDAR content in new vehicles is ramping up fast. We now expect three to six LiDARs per L3 vehicle, representing a system value of roughly $500 to $1,000 per car in the long run. This trend is massively expanding our addressable market and supercharging the long-term growth potential of our ADAS business. Beyond our progress in ADAS, our robotics business is becoming an increasingly powerful growth driver.

Fueled by expanding autonomous driving fleets, as core technologies advance rapidly, autonomous driving companies worldwide are approaching a tipping point towards scaled operations, and we're proud to be a key enabler of this transformation. In China, the latest generation of autonomous driving fleets are adopting ADAS LiDAR solutions alongside optimized chips and vehicle design to lower total BOM costs and accelerate commercialization. Spearheading this shift, we've recently signed new deals with Pony.ai, Hello Inc, and JD Logistics. And I'm excited to share that for some of their models, all LiDAR units, up to eight main and blind spot LiDARs, will be supplied entirely by Hesai. Internationally, we've also made strong progress.

Many overseas robotaxi companies continue to favor mechanical spinning LiDARs for their performance and stability, making them less price-sensitive and creating meaningful opportunities for us. We are proud to share that we have signed new LiDAR supply agreements with leading global autonomous driving companies, including Motiono and others across North America, Asia, and Europe. These large-scale programs represent deals worth tens of millions of dollars, with strong follow-on potential as deployments expand. As our partners move to large-scale operations in the coming years, this marks a defining milestone for the autonomous driving industry. Building on these operational milestones, September marked a historic moment for Hesai as a public company.

We successfully listed on the main board of the Hong Kong Stock Exchange, becoming the world's first LiDAR company with dual primary listings in both the US and Hong Kong. This was the largest IPO in the global LiDAR sector, raising $614 million after the Green Shoe Option. With strong support from global institutional investors and industry leaders, the offering underscores confidence in the long-term potential of the LiDAR industry and in Hesai's ability to deliver at scale. More importantly, it strengthens our financial foundation, enabling us to invest in innovation and capture new market opportunities. To wrap up, our strong Q3 results are a powerful testament to Hesai's momentum and execution.

The successful completion of our Hong Kong IPO marks a bold new chapter for Hesai. We are witnessing the dawn of an AI-driven fourth industrial revolution. As we look toward the decade ahead, Hesai is rising to this moment, evolving into a full-spectrum technology infrastructure builder that redefines how cars and robots perceive and interact with the world. With that, I will now turn the call to Andrew to share more details on our financial performance and outlook. Andrew, please go ahead.

Andrew Fan: Thank you, and hello, everyone. Before we get into our financial performance this quarter, I'd like to start with a key milestone for Hesai as a public company. In September, we completed our dual primary listing on the main board of the Hong Kong Stock Exchange under the ticker 2525. Through this global offering, Hesai has become the world's first LiDAR company to be listed in both the US and Hong Kong capital markets. The market response to our Hong Kong debut was exceptional. The public tranche was nearly 169 times oversubscribed, while the international tranche attracted demand of more than 14 times the available shares.

In total, we raised $640 million after the greenshoe option, further strengthening our balance sheet and improving trading liquidity. These resources have greatly enhanced our capacity to invest in innovation, expand production, and drive operational excellence. We are now in a strong position to capture growing opportunities in the global LiDAR market and extend our leadership as adoption continues to accelerate. I will now walk through our Q3 financial and operational performance. To be mindful of the length of our earnings call today, I encourage listeners to refer to our earnings release for further details. Q3 was another outstanding quarter, delivering record-breaking results across the board.

Total shipments reached 441,398 units, up 229% year over year, while net revenue surged 47% to $112 million, marking our sixth consecutive quarter of robust year-over-year growth. This powerful momentum, fueled by the surging adoption of our category-defining ATX amid the industry's rapid shift toward LiDAR as a standard feature, along with a 14-fold year-over-year rise in robotics LiDAR shipments across expanding applications, underscores the strength and scalability of our business model. Our gross margin remained healthy at 42%, driven by economies of scale and continued gains in manufacturing productivity. Just as importantly, we're now embedding AI across R&D, operations, and customer support, unlocking new efficiencies and strengthening the foundation of a lean, optimized expense structure.

You may have noticed that today's prepared remarks are being delivered through AI-generated voices. While the pronunciation isn't perfect yet, it's a small but meaningful example of our commitment to wholeheartedly embrace AI across the organization. We believe that for companies today, embracing AI is just like embracing digital transformation twenty years ago. It's the key to building greater competitiveness for the future. Since Q2, we've deployed an intelligent assistant across a wide range of daily workflows, cutting costs, sorting cycles, and improving quality. This AI-driven approach has already delivered tens of millions of RMB in savings across travel, documentation, hiring, testing, coding, and more.

As a result of our adoption of AI and other cost control measures, total operating expenses declined year over year in Q3, keeping us on track to achieve RMB 100 million in OpEx savings in 2025 compared with last year. Building on our strong momentum, we delivered a record net income of RMB 256 million or $36 million in Q3, bringing our nine-month total to RMB 283 million or $40 million. We've already hit our full-year profit target of RMB 200 to RMB 350 million one quarter ahead of schedule. This achievement reflects the scale and efficiency our business has reached, where growth is now translating directly into earnings.

Higher volumes drive better unit economics, which in turn fuels more growth, creating a self-reinforcing cycle of profitability and innovation. It's worth noting that Q3 net income included gains from equity investments of RMB 148 million or $21 million. Excluding these gains, quarterly net income would have remained strong at RMB 108 million or $15 million. Taking this into account, we are raising our full-year GAAP net income guidance for 2025 to a range of $49 million to RMB 450 million or $63 million. And we expect full-year net income, excluding these gains from equity investments, to stay within our earlier guidance range of RMB 200 million to RMB 350 million.

For the remainder of the year, we expect to carry forward the strong momentum we have built. For Q4, we're projecting net revenues of between RMB 1,000 million or $140 million and RMB 1,200 million or $169 million, representing a year-over-year increase of 39% to 67%. To wrap up, our successful listing on the Hong Kong Stock Exchange marks an exciting new beginning for Hesai. We're growing faster, scaling smarter, and executing stronger than ever. With accelerating revenues, solid margins, and proven profitability, we're building competitive advantages that will keep compounding over time. We're more energized than ever to seize the opportunities ahead. This concludes our prepared remarks today. Operator, we are now ready to take questions.

Operator: Thank you. If you wish to ask a question, please press 1 on your telephone and wait. If you wish to cancel your request, please press 2. If you're on a speakerphone, please pick up the handset to ask your question. For the benefit of all participants on today's call, if you wish to ask your question to the management in Chinese, please immediately repeat your question in English. For the sake of clarity and order, please ask one question at a time. Management will respond. Your first question comes from Tina Hou from Goldman Sachs. Please go ahead.

Tina Hou: Hi. Thanks, management, for taking my question and congratulations on the very strong result. So my question, the first one would be related to the pricing side of things. As we go into the last quarter of the year and enter into price discussions with customers for next year, I'm just wondering if you could give us any color in terms of what kind of pricing we're looking at for next year, considering everything, the annual price cut, competitor dynamics. That's number one. Number two is in terms of the volume. So, just wondering if management is seeing next year, the OEM customers are going to accelerate the adoption of LiDAR.

And in your view, when will be sort of the starting point or the takeoff point for mass market models to start having LiDAR as a standard option? And I guess related to that, if there is any color you can give us in terms of your 4Q as well as 2026 guidance or any kind of color on volume, it would be really helpful. Thank you so much.

Andrew Fan: Thank you, Tina. So I understand your question. I will try to cover our guidance or forecast or color for the current year and also year 2026. For let's talk about the 2025 year, full-year guidance first. On the revenue side, our Q4 revenues are expected to reach about RMB 1,000 to RMB 1,200 million, bringing full-year 2025 revenues to approximately RMB 3,000 to RMB 3,200 million, representing a year-over-year increase of nearly 50%. This strong growth is driven by the rapid adoption of LiDAR in passenger vehicles and the expanding use of the robotic LiDAR across new applications. Volume and ASP during the first three quarters of 2025, we shipped about close to 1,000,000 units in total.

We expect the shipments to continue accelerating throughout the year, with 4Q shipments reaching approximately 600,000 units as a seasonal high. The ATX LiDAR is expected to account for roughly 80% of total deliveries in Q4 in terms of volumes. It has a market price of around $200, with discounts offered to major customers on our pricing strategies. The stronger-than-expected demand for ATX has accelerated its replacement of the AT128 LiDAR among our OEM customers in 2025. Meanwhile, several automakers have adjusted their second-half production schedules for vehicle models equipped with AT128, leading to softer demand for the product. AT128 is priced at several times the price of ATX.

This shift in product mix has resulted in a relatively lower blended ADAS ASP for year 2025. Margin-wise, the blended gross profit margin is expected to remain healthy at around 40% in Q4. We are raising our full-year 2025 GAAP net income guidance to RMB 350 to RMB 450 million. Excluding gains relevant to equity investments recorded in Q4, normalized full-year GAAP net income remains within our previous guidance range of RMB 200 to RMB 300 million. On the non-GAAP metrics, you should add an additional RMB 120 million for stock-based compensation. Looking ahead for year 2026, we see it as a true inflection point.

On one hand, we anticipate strong demand for ADAS LiDAR in passenger vehicles, with our LiDAR shipments expected to reach at least 2 to 3 million units, or potentially even higher if L3 adoption becomes an industry-wide trend. On the other side, we do anticipate a potential decrease in blended ASP. That's mainly due to three things: one, a shift in product mix towards our ADAS LiDARs, which have a relatively lower unit price but will see higher deliveries and revenue share; two, the modest volume-based pricing for our large order strategic customers; three, the standard annual decline for downstream customers. That being said, there is reason to be optimistic.

We expect a strong positive catalyst to emerge in year 2026 and 2027. First, L3 vehicles deployment in China will drive multi-LiDAR setups, pushing LiDAR contents per vehicle to $500 to $1,000. We've already landed a flagship L3 program with a renowned customer, and more exciting deals are in the works. Second, our overseas ADAS business is expected to start contributing, marking the beginning of global ADAS LiDAR mass production. Third, our robotics business continues to gain momentum across diverse applications and customers, and it typically carries a higher ASP and margin compared to ADAS. Fourth, we are also exploring new growth engines and will share more updates as things progress.

On the profitability front, we expect gross margins to remain relatively stable in 2026 compared with 2025, supported by continued cost optimization across product and ASIC design, supply chain, and manufacturing. At the same time, growing adoption of multiple LiDAR in ADAS is expected to help offset pressure on blended ASP. In short, we expect to enter 2026 with a clear path towards double-digit year-over-year revenue growth, accelerated shipments, a stable margin profile, and potential new growth engines. Detailed guidance will follow in the coming quarters. Altogether, this sets the stage for sustained growth in the years ahead. Tina, hopefully, this covers your questions about our guidance in the next eight quarters.

And I just want to say that was actually Andrew. He's not a robot. And I am not a robot.

Tina Hou: Even better. Thank you so much.

Operator: Thank you. Your next question comes from Tim Hsiao from Morgan Stanley. Please go ahead.

Tim Hsiao: Hi, David. This is Tim. Thank you for taking my question and congratulations on a robust result and steady project wins. I've got two questions. The first one is about the competition. Because we noticed that the competitors in China launched new products to undercut Hesai's ATX product. How should we think about the peers, the mainstream product like EMS, versus the key volume driver of the ATX? The second question is about the technology because we noticed lots of discussions over the past few months about the SPAD SOC, System on Chip, lately. So how should we think about the advantage of a SPAD-based digital LiDAR? So I also want to get some updates from the management. Yeah.

Those are two questions from my side. Thank you.

David Li: Thank you, Tim. Let me try to give you a little more insight on both competition and our view on some of the upcoming technologies. The first one is competitive products. It's a very competitive market, and we're always facing very strong competition from quite a few players, and you named one of them. It's a great product, and they always have great technology. But I do want to bring your attention to maybe zoom out a little bit, and what I'm trying to help you understand is that our strategy is that we have a very structured timeline to release each generation of product. Right? And in the mechanical LiDAR era, it was like a Pana 128.

It was really the king of the world. We don't have to go there. Then the AT128, I think it's fair to say looking back, it is the LiDAR that defined the automotive LiDAR industry. We shipped the largest volume, it was also relatively expensive. There's the higher ASP than the competitors. And then most importantly, people believe that's the highest quality, performing by a large margin product, super successful. Right? That's Gen 2. Right? Then Gen 3 is ATX. And the ATX, I think by now it's fair to say it's another complete victory on the market.

We received more contracts than any of the competitors, and we're shipping a much larger volume, and I think everyone believes that this is a much higher performing and as reliable as any Hesai product to the highest quality standard. So again, that's Gen 3, that's ATX, that's clear, right? So and of course, we also have our own timeline to release the next generation. But as a company that has enjoyed the highest market share and the most premium brand and product, we don't want to have to rush things just because a competitor released a product after us. Right? That shouldn't be the strategy.

The strategy is that you have a certain rhythm or pace, and you put everything, all the good things into the product based on the timing you have. So and that's the biggest reason that when somebody releases a product like us, half a year or a year after us before our next generation, they always have interesting features. But in the end, if you zoom out and look at it, the overall result, we at least so far, always had the greatest achievement on performance, volume, definitely margin. And in the end, it's really always the most well-rounded and the best performing product on the market. Hopefully, we will be able to continue the trend.

We'll never know what we don't know in the future. But so far, leveraging our semiconductor technology, our manufacturing capability, our strong brand power, and the super trusted relationship with almost all of the top OEMs in China, we believe we'll be able to continue that. Even though every generation, we will have a price decline because that's the nature of such a market. We also continue to innovate to keep the gross margin as you continue to see, right? And so that's what we see. Hopefully, that gets the first question out of the way. Now, Tim, you also mentioned a very interesting question, which is the second one is, SPAD. SPAD stands for Single Photon Avalanche Diodes. Right?

I'll give you a little more insight. That's beyond pure competitive advertisement. A, we're actually the first one to use SPAD technologies for any automotive LiDAR for all the competitors we know. We shipped the first fully solid-state automotive LiDAR for near-range blind detector FT120, I think since two, three years ago. And not in large volume, but it was a fully automotive-grade product that's on cars globally, right? And then we also acquired SPAD technology companies out of Switzerland because we believe they have interesting technologies, and we looked at them, we felt like it would be a good addition to us. We actually did that.

However, having said that, we wanted to be objective and rational about what SPAD can or cannot do today. One of the things is that if you use the off-the-shelf SPAD technology, you simply integrate them, one of the challenges you face is actually noise. And when you look at any LiDAR with noise, the challenge you face is that it will have a higher chance of false trigger because SPAD is great, but it's too sensitive. You need to be able to mitigate that. And that's, I think, the biggest question and the challenge for the industry today. And I think everyone's trying to find a solution.

But today, if you look at the long range that people always tell you with the high sensitivity, there is always a higher chance of false triggering, which is actually very bad for LiDAR as a safety product. You don't want your product to experience that type of problem. And we're diligently working on that. We have our in-house solution, hopefully, to be able to address that. But our strategy isn't always just trying to buy off-shelf components. That is the latest, just put it in. Our goal is to incorporate whatever is mature enough as a safety component and then put in the latest and the greatest. That has to be in that order.

Your reliability and safety have to be first. You don't want to be sacrificing your reliability, you don't want to increase the chance of false triggering for such a thing as a LiDAR. I always try to explain to the market it's almost like your invisible airbag just to make it as simple for people to understand. You probably don't want to sacrifice the chance of a new airbag when you know there is a challenge or false triggering. You definitely want to be able to solve that problem. And we do believe that will be solved.

We do believe SPAD has a lot of great new features and also more room on cost that will be eventually adopted, and we're also diligently working on that. But I just want people to be more informed on the pros and cons of an interesting technology that everyone is carefully evaluating.

Tim Hsiao: Thank you so much for sharing all the great insight and value prospect. Thank you.

Operator: Thank you. Your next question comes from Jeff Chung from Citi. Please go ahead.

Jeff Chung: Hi, David. This is such a great result. And congratulations on the excellent earnings. So I have a question on L3. For David. So aside from the improvement of the product mix, and LiDAR per car and the energy on the level three legislation in both China and Europe. And, I also got a question for Andrew. So it looks like the full-year guidance is really optimistic in the sense that in the best-case scenario, revenue should be up 50% Q on Q, and the core earnings should be up 100% Q on Q. Could you share with me the views of why you're so confident in this? Thank you very much.

David Li: Jeff, okay. Let me first cover these two questions. For the legislation, in relation to L3, we are thrilled by China's decisive push towards higher-level autonomous driving. As regulations evolve, safety redundancy becomes non-negotiable. And the LiDAR must be factory integrated rather than retrofitted, driving automakers to future-proof platforms for L3 capabilities. The market is moving really fast. Leading OEMs are already rolling out market LiDAR vehicles in 2025. Huawei's Ito M9 with four LiDARs, Aveda 12 with four, Zika 9X with five, and the NEO ES8 with three, all received strong customer demand and proving that demand for smarter, safer vehicles is real. So we see tremendous upside in LiDAR content growth.

As L3 adoption accelerates, the number of LiDAR units per vehicle is expected to increase to three to six or even more. Along with the trend towards upgrading main LiDARs to high-end models like our ETX. This could lift the total LiDAR content per vehicle to around $500 to $1,000. Beyond the numbers, every additional LiDAR unit directly enhances safety, underscoring the priceless value of our technology. The critical role we play in shaping the autonomous driving future. We are seeing customers in heated discussion for L3 applications and, of course, more LiDARs. We have signed a flagship program featuring ETX and multiple FTX already. And more contracts are on the way. Stay tuned for future developments.

We will share more details when available. Thank you, Andrew. And this is David. I wanted to also give you a little more insight on how I think about this problem. And obviously, we're talking about price. We're talking about the total dollar amount on each of the vehicles. But I think in the end, what's deciding a dollar amount is really the value it creates. Right? So and that is rapidly changing from level two to level three. Right? In the level two era, we're looking at an airbag, right, or a seat belt. And then, of course, it's important, of course, in saving lives. But you look at airbags, it's also saving lives.

It has a certain price expectation. People have. You're not going to be willing to pay $10,000 for an airbag even though it's life-saving. So for such a function, in the end, we feel like below $200 is the right range and work. At there. That's why I think a few this is the biggest reason penetration rate is exponentially growing. Everyone wants that, and they feel like it's a good value buy. Having said that, Level three is a completely different game. Especially when people think about Level three, I think people are already remotely thinking about level four.

Maybe I'll talk about level four just to give people some ideas on how I think we should think about the problem. Again, we think about value creation. What is value creation? For cars, other than safety, the value creation is the time. The machine gives back to us. Right? And if you buy a level two car, at most it gives you an hour or two a day back to you. Right? But for level two, it doesn't even quite give it to you. It asks you to have your hands on the steering wheel. So that's why it's great as a life-saving device, but it's of limited value.

If you look at level four or aka robotaxi, you are literally looking at maybe twenty hours per day of the utilization of such a product. By the way, I quote this from one of the great leaders of the industry who isn't a big fan of Hesai, it's from Elon Musk. He said that. Which I agree. That the change for such a level will allow the utilization of a machine to be maybe 10x. And if you think about it, if you're creating something that has the potential to have a 10x of the traditional value, you naturally are able to afford much better sensors, much better driving system, computation, and everything.

So that you can be the best in creating such a product. So that's the way I look at level three and especially level four. And the total dollar amount on a car, maybe not 10x, but people's tolerance is much higher because it's creating roughly 10 times of the value if not more, comparing to level two system we used to be on. And that's why people should be more excited about the total content and the value you create. As a complete, sensor suite.

Operator: Thank you. Your next question comes from Jessie Lo from Bank of America Securities. Please go ahead.

David Li: Sorry. Operator, hold on for one second. Let me finish Jeff's second question. Regarding some additional color on our 2025 full-year guidance. Jeff, as we said in the script, we are very confident that our full-year numbers will fall in the range. But I'm not assuring you that we will reach the high end of the range. So let's take the low end of the range, for example. We are basically guiding that our Q4 revenue will be above RMB 1,000 million. If that achieves, comparing to roughly RMB 800 million in Q3, the additional net profit, comparing to Q3 will be roughly RMB 80 million pretax.

If you look at our first nine months' results, in this year, our total or accumulated net income is about RMB 283 million. As we mentioned in the earnings release, we actually have a one-off investment gain from an equity investment, which is roughly RMB 150 million. So if we exclude that, our normalized first three quarters earnings is roughly RMB 130 million. So if we add another RMB 180 million to that, it already adds up to more than RMB 350 million net income in year 2025. So that's why we are relatively confident that our full-year revenue and profits will fall in the range that we just mentioned. Okay.

Operator, let's move on to the questions from Jessie Lo.

Operator: Thank you, Jessie Lo. You are now live.

Jessie Lo: Thank you much for taking my call. My question is, could you please share some color on the BYD's 2026 LiDAR order given that it is quite a debatable topic? More specifically on the timing of the LiDAR adoption on this mass market model and also the LiDAR size wallet share. And second, how do we think about the pricing strategy of such a customer given its much higher vehicle sales?

David Li: Okay. Yeah. We are pleased to see the leading domestic automakers actively accelerating their efforts to make intelligent driving mainstream. Their commitment exemplified by BYD's move to equip its models priced above RMB 100,000 with LiDAR and deploy its God's Eye ADAS systems. This creates massive market demand and accelerates consumer adoption, which benefits the entire ecosystem and raises awareness across the industry and consumers. With this trend, we are proud to be a key partner of BYD. We have gone into mass production with BYD since Q1 2025, and are supplying LiDARs for BYD's models launching in year 2025.

This year, we are taking a strong share of BYD's LiDAR supply with our AT128P and ATX, with ATX leading in the volume. Our partnership extends across double-digit vehicle models with an exciting wave of new SOPs rolling out through year 2025 and 2026. We will share more details on this customer, their new models, and autonomous driving plans once they are ready to make an official announcement. Compared to automakers, Hesai has been investing in LiDAR R&D for ten years, starting with more complex L4 applications. This has enabled us to accumulate extensive experiences and achieve superior product performances.

Meanwhile, by leveraging our years of investments in ASIC technology, we have achieved excellent cost control while maximizing economies of scale through a broad customer base. We believe proactive collaboration between automakers and the LiDAR companies helps create a win-win situation. In summary, Hesai serves as an index to the overall autonomous driving industry. And we are excited to see BYD leading the way in making intelligent driving more accessible while strengthening our partnership with them.

Operator: Your next question comes from Aaron Wong from Jefferies. Please go ahead.

Aaron Wong: Hi. Thanks, management, for taking my question. My question is about the robotic side. Given the increasing demand in the robotic area in the coming years, could management share more color on our robotic shipments in 2026? Also in the next few years. Also, the proportion of different end markets and our product mix in this segment. Thanks.

David Li: Sure. Our robotics business, which generally enjoys higher ASPs and margins, is contributing strongly to the company's overall financials, with the growth momentum accelerating. For the robotaxi parts, Hesai is the largest robotaxi LiDAR supplier in the world, holding roughly 60% to 70% market share. Our main LiDAR and blind spot products are widely used by all the top robotaxi players in China. Companies like WeRide, Baidu's Apollo Go, Didi, Pony, and Hello have all adopted our technology. Traditionally, robotaxi operators relied on mechanical spinning LiDARs for small fleet testing and operations. But recent trends in China show an urgent need for scalability.

By using our flagship ADAS LiDARs, customers can achieve a better balance of sensor prices and performances, enabling faster fleet growth and helping them move closer to profitability. Spearheading this shift, we have recently signed new deals with WeRide, Pony, and Hello Inc. Excitingly, for some of their models, up to eight LiDAR units per vehicle, main LiDAR and blind spots LiDARs, will come entirely from Hesai. At the same time, we have signed new LiDAR supply agreements with leading global autonomous driving companies, including Motional, across North America, Asia, and Europe. These programs represent tens of millions of dollars in deals, with strong follow-on potential as their partners scale up.

The difference is that global players tend to favor high ASP, making mechanical spinning LiDARs their performance and stability, making them less price-sensitive. Regardless of LiDAR type, the gross profit from our Robotaxi business is calculated as fleet size times number of LiDAR per vehicle times ASP times gross margin ratio. With cost reductions and large-scale commercial deployments, we expect the fleet sizes of leading players to grow exponentially in the coming year, driving significant profit growth for Hesai, whether they use mechanical or ADAS LiDARs. The other robotics applications beyond the robotaxi, we have seen huge opportunities in non-auto applications.

With the intelligent robots rapidly gaining traction, our proven strength in high-performance, scalable LiDAR positions us to take the lead. Since starting production of our JT Robotics LiDAR, we shipped around 40,000 to 50,000 units every quarter in 2025. This new product serves a wide range of robotics applications; home, factory, and agriculture robots are clear front runners, freeing people from routine work and creating real value from day one. In the long run, we believe the robotics market could have a TAM several times larger than ADAS. You can only drive one car, but in the future, 10 robots could be working alongside you. We anticipate that robotics LiDAR's volume could double in year 2026 versus 2025.

And we plan to share updates on developments along the way.

Andrew Fan: Operator, we can move to the next question, please.

Operator: Thank you. Your next question comes from Zhang Yu from Quatai Securities.

Zhang Yu: Hi, management. Thanks for taking my question. My question is about the major customers for next year. Could you please share which OEMs will be the key customers for the ADAS product? And what kind of demand scale or volume are you expecting for the next year? Thank you.

David Li: In the ADAS spaces, we are also seeing very strong momentum from a number of OEMs. Based on our current visibility, we expect the following OEMs to be among our top ADAS customers in year 2025, and very likely in year 2026 as well. They are Li Auto, Xiaomi, BYD, Leapmotor, Zika, and Great Wall Motor. Of course, these names are not ranked in particular orders. Meanwhile, more major customers are also kicking off SOPs with us, extending into year 2026, including Geely and Chery. These customers are rapidly advancing in intelligent driving, with some of them expanding LiDAR adoption across more vehicle lines as a standard feature, preparing for L3 capabilities with market LiDAR configurations.

These companies are not only leading players within China's rapidly evolving smart EV sector, but also represent a diverse range of vehicle platforms, from high-end to mass-market vehicles, providing a rich foundation for our technology adoption and expansion. We can move on to the next question.

Operator: Thank you. Your next question comes from Sia Huang from SPDB International. Please go ahead.

Sia Huang: Hi, management. This is Sia. Thanks for taking my question. I've got just one question regarding our overseas update. And for the project with the top European OEM customer, is everything on track? And could you please also share more color about the overseas update in terms of other potential customers and by that means? And how do we extend the contributions overseas revenue for the next two to three years?

David Li: Beyond our success and solid base in China, we are also stepping up in our game internationally, both in ADAS and robotics. On the robotic side, recently, we have further strengthened our leadership with new LiDAR supply deals across North America, Asia, and Europe, covering everything from robotaxi to robot vans and factory automation. For example, we are proud to be the exclusive supplier for Motional's next-generation all-electric robotaxi. As we shared earlier, we also signed a multiyear deal worth over $40 million with a leading US robotaxi company, with deliveries running through 2026 and room for more as their fleets grow. In ADAS, momentum is just as strong.

As you all know, we have already secured an exclusive design win with a top European OEM, and several more are now in the sourcing and negotiation stage for their global programs, with European players clearly setting the pace. As competition heats up, global OEMs are doubling down on autonomous driving, and safety is something they never compromise on. There is now a clear consensus across the industry that LiDAR is becoming the airbag for autonomous driving, especially for L3 and above. And once these global OEMs make up their minds, they move decisively. So give them a little time to gear up their AD versions, both ICE and EV, and we believe more LiDAR deals will follow soon.

Now for the global OEMs' China JVs, things are also moving faster. They are right at the front line of the ADAS race. We have already won design win programs with five major JVs: Volkswagen, GM, Audi, Toyota, and Ford. And several are already in SOP. A recent highlight came in September when Audi E5 Sportback, featuring Hesai LiDAR as standard configuration, hit the market and racked up over $10,000 in just thirty minutes. That's a huge commercial validation and sets the stage for global expansion ahead. Another exciting part of our strategy is backing Chinese OEMs in their global push. We'll be the LiDAR supplier for models heading overseas, with mass production kicking off in year 2026.

We can't share more for now, but stay tuned. Updates are on the way. All in all, these wins reflect the growing trust and recognition we have earned from customers worldwide. Looking ahead, we will keep building on our strengths and serve an even broader range of partners across regions and across industries. Operator, we can move on to the next one.

Operator: Thank you. Your next question comes from Lujia from BOCI. Please go ahead.

Lujia: Thank you, management, for taking my question. And congratulations on the excellent results. My question is related to new business initiatives. At our Hong Kong listing event, management mentioned that for the next decade, Hesai will be more than just a LiDAR company. Could you share with us more about the potential new areas beyond the LiDAR Hesai is considering expanding to in the future? Thank you.

David Li: Thank you for this very exciting question, Lujia. I'll probably take it. I think there are a few things that are super, super interesting and worth exploring and have a lot of potential and extremely large TAMs that we feel like we are best positioned for. I'll go through some of the things that are on my list. I think the first thing is still sensing itself. Because if not only for robots and also for cars, especially for cars, we're looking at safety. And for safety, you are never satisfied just by 99% or even 99.9%. You always try to find the failed cases, and you try to build a better product to make things safer.

And we feel like on the sensing side alone, there are still many, many things we could do to bring the safety to the next level, including a longer range, higher density, and being able to recognize different materials, be able to measure, using all different working principles to help our robots and vehicles be able to sense the surroundings better. And that alone is a much bigger market than just the LiDAR TAM we see today. And considering the importance of such a task. And number two is the best sensing capabilities plus AI. Today, we actually have the capability to do perception software stack, and we actually work with OEMs for that.

But today, we're not directly charging them for it. It's because the value we provide is only really part of someone else's software stack. But a lot of the robotics applications, a lot of the sensor applications, we actually see the possibility of having AI capabilities on the already the best sensing hardware we built, essentially making number one was making the sensor see better. Number two is making the sensor think better. And that's actually happening, and a lot of our software capabilities are being used on that. And number three is along the lines of number two when you have the software capability, AI capability on top of the best sensing capability.

You are no longer being limited by cars. You're looking at a lot of opportunities in the general definition of space sensing. And I will be able to give you more details on this little part, but we definitely see a lot of customer demand directly from customers in being able to fully sense and capture the 3D world around us. Think about how cool would that be if you are able to record the 3D world with the product we provide. Right? So those are the things. And of course, last but not the least is we've been talking about sensing so far.

The truth is that we really did sensing because sensing was the most critical part of the physical AI 1.0 for cars. For 2.0, we're not only building the LiDAR sensors for the robot. There are just so many infrastructure technologies that we feel like we are uniquely positioned to be able to do because we're super proven and good at high-end sensing semiconductor capability, manufacturing capability, the product iteration, the quality capability as a whole. And we feel like there is a very good chance that we'll be able to leverage that into more infrastructure business that's beyond static. And I'd like to conclude with one of the new quotes I learned from the great Mr. Jensen Huang.

I think he said something like, in the future, anything that moves will be autonomous. And I like to add to the second part that anything that is autonomously moving is likely to need the best sensing capabilities from us. Thank you.

Operator: Thank you. This concludes our question and answer session. I'll now hand back to management for any closing remarks.

Yuanting Shi: Thank you once again for joining us today. If you have any further questions, please feel free to contact our IR team. This concludes today's call, and we look forward to speaking to you again next quarter. Thank you, and goodbye.

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