Earnings call transcript: Hesai Group Q3 2025 sees revenue surge, stock climbs

Hesai Group, a leading provider of LiDAR technology, reported a significant increase in revenue for the third quarter of 2025, with net revenue reaching RMB 795 million ($112 million), marking a 47% rise year-over-year. The company also achieved a record quarterly GAAP net income of RMB 256 million ($36 million). Following the earnings announcement, Hesai Group's stock price rose notably in premarket trading, reflecting investor optimism about the company's performance and future prospects.

Key Takeaways

• Hesai Group's Q3 2025 revenue increased by 47% year-over-year.
• The company reported a record quarterly GAAP net income of RMB 256 million.
• Stock price increased by 4.9% in premarket trading.
• Hesai achieved a dual primary listing on the Hong Kong Stock Exchange.
• The company is expanding its AI and sensing capabilities beyond traditional LiDAR.

Company Performance

Hesai Group demonstrated robust performance in Q3 2025, driven by substantial growth in LiDAR shipments, which surged 229% year-over-year to 441,398 units. This growth underscores the increasing adoption of LiDAR technology in advanced driver-assistance systems (ADAS) and robotics. The company's strategic focus on innovation and expansion into new markets has positioned it well against competitors, maintaining a 46% market share in long-range automotive LiDAR and a 60-70% share in the robotaxi LiDAR market.

Financial Highlights

• Revenue: RMB 795 million ($112 million), up 47% YoY
• Gross Margin: 42%
• Quarterly GAAP Net Income: RMB 256 million ($36 million)
• Nine-month GAAP Net Income: RMB 283 million ($40 million)

Market Reaction

Following the earnings release, Hesai Group's stock price rose by 4.9% in premarket trading, reaching $24.19. This increase reflects positive investor sentiment driven by the company's strong financial performance and strategic advancements. The stock's movement is also notable as it approaches its 52-week high of $30.85, indicating a potential upward trend.

Outlook & Guidance

Hesai Group has raised its full-year GAAP net income guidance to RMB 350-450 million, signaling confidence in continued growth. The company anticipates LiDAR shipments to reach 2-3 million units by 2026. However, it expects a decrease in the average selling price (ASP) due to changes in product mix and volume pricing strategies.

Executive Commentary

Dr. David Li, CEO of Hesai Group, emphasized the transformative potential of LiDAR technology, stating, "The cost of LiDAR is nothing compared with the priceless value of human life." He also highlighted the company's role in the evolving AI-driven industrial landscape, saying, "We are witnessing the dawn of an AI-driven fourth industrial revolution."

Risks and Challenges

• Supply Chain Constraints: Potential disruptions could affect production and delivery timelines.
• Pricing Pressure: Decreasing ASPs may impact profitability despite higher volumes.
• Market Competition: Increasing competition in the LiDAR space could affect market share.
• Regulatory Challenges: Navigating different regulatory environments in international markets.

Q&A

During the earnings call, analysts inquired about Hesai's international expansion plans and pricing strategies for different autonomy levels. The company detailed its efforts to penetrate ADAS and robotics markets globally and explained its approach to maintaining competitive pricing while ensuring quality and innovation.

Full transcript - Hesai Group ADR (HSAI) Q3 2025:

Conference Operator: Hello, ladies and gentlemen. Thank you for standing by. Welcome to Hesai Group's third quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. Please note that today's conference call is being recorded. I will now turn the call over to our first speaker today, Yuanting Shi, the company's Head of Capital Markets. Please go ahead.

Yuanting Shi, Head of Capital Markets, Hesai Group: Thank you, operator. Hello, everyone. Thank you for joining Hesai Group's Third Quarter 2025 earnings conference call. Our earnings release is now available on our IR website at investor.hesaitech.com, as well as via Newswire services. Today, you will hear from our CEO, Dr. David Li, who will provide an overview of our recent updates. Next, our CFO, Mr. Andrew Fan, will address our financial results before we open the call for questions. Before we continue, I refer you to the Safe Harbor statement in our earnings press release, which applies to this call as we will make forward-looking statements. Please also note that the company will discuss non-GAAP measures today, which are more thoroughly explained and reconciled to the most comparable measures reported under GAAP in our earnings release and filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange.

With that, I'm pleased to turn over the call to our CEO, Dr. David Li. David, please go ahead.

Dr. David Li, CEO, Hesai Group: 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 million LiDAR units in 2023 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 46% share in August, 1.5 times the second player and 2.4 times the third, according to GasGoo. 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 200-350 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 Zeekr'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 the second half of 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 a 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 null 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, ETX 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-$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, Halo 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're proud to share that we have signed new LiDAR supply agreements with leading global autonomous driving companies, including Motional 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 toward 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 U.S. and Hong Kong. This was the largest IPO in the global LiDAR sector, raising U.S.

$614 million after the green shoe auction, 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, an era that promises unprecedented gains in productivity and human well-being. 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 over to Andrew to share more details on our financial performance and outlook. Andrew, please go ahead.

Andrew Fan, CFO, Hesai Group: 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 U.S. 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 $614 million after the green shoe auction, 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 RMB 795 million or $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 the 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 is not perfect yet, it is 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 20 years ago. It is 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, shortening 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 200-350 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 RMB 350 million or $49 million-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 200-350 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%-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.

Conference Operator: Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. 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, Analyst, Goldman Sachs: Hi, thanks management for taking my question and congratulations on a very strong result. 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 discussion with customers next year. 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. Just wondering if management is seeing next year the OEM customers are going to accelerate the adoption of LiDAR. 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?

I guess related to that, if there is any color you can give us in terms of your Q4 as well as 2026 guidance or any kind of color on volume, it would be really helpful. Thank you so much.

Andrew Fan, CFO, Hesai Group: Thank you, Tina. I understand your question. I will try to cover our guidance or forecast or color for the current year and also year 2026. Let's talk about the 2025 full-year guidance first. On the revenue side, our Q4 revenues are expected to reach about RMB 1.0-1.2 billion, bringing full-year 2025 revenues to approximately RMB 3.0-3.2 billion, 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 million units in total. We expect the shipments to continue accelerating throughout the year, with Q4 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 the second half of 2025. Meanwhile, several automakers have adjusted their second-half production schedules for vehicle models equipped with AT128, leading to softer demand for the product. As 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 350-450 million.

Excluding gains relevant to equity investments recorded in Q4, normalized full-year GAAP net income remains within our previous guidance range of CNY 200 million-300 million. On the non-GAAP metrics, you should add an additional CNY 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 2-3 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 is mainly due to three things. One, a shift in product mix towards our ADAS LiDARs, which have a relatively lower unit price, but we 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-$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're also exploring new growth engines, and we'll 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 LiDARs in ADAS is expected to help offset pressure on blended ASPs. In short, we expect to enter 2026 with a clear path toward a 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. I just want to say that was actually Andrew, not a robot, and I am not a robot.

Tina Hou, Analyst, Goldman Sachs: Even better. Thank you so much.

Conference Operator: Thank you. Your next question, it comes from Tim Hsieh from Logan Stanley. Please go ahead.

Tim Hsieh, Analyst, Logan Stanley: Hi, this is Tim. Thanks for taking my question, and congratulations on the robust result and steady project wins. I've got two questions. The first one about the competition, because we noticed that the competitors in China launched new products to undercut Hesai's ATX products. How should we think about the peers, the mainframe product like EMX versus the key volume driver of Hesai, i.e., ATX? The second question is about the technology, because we noticed lots of discussions over the past few months about the SPAD SoC system and chip lately. How should we think about the advantage of SPAD-based digital LiDAR? I also want to get some updates from the management. Yeah, those are two questions from my side. Thank you.

Andrew Fan, CFO, Hesai Group: 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 name one of them. It's a great product, and they always have great technology. I do want to bring your attention to maybe zoom out a little bit. 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? In the mechanical LiDAR era, it was like a Pandar128. It was really the king of the world. We don't have to go there.

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, and it was also relatively expensive. It was a higher ASP than the competitors. Most importantly, people believe that's the highest quality, highest performing by a large margin product, super successful, right? That's Gen 2, right? Gen 3 is ATX. The ATX, I think by now, it's fair to say it's another complete victory on the market that we received way more contracts than any of the competitors, and we're shipping a much larger volume. I think everyone believes that this is a much higher performing and as reliable as any Hesai product to the highest quality standard. Again, that's Gen 3. That's ATX. That's clear, right?

Of course, we also have our own timeline to release the next generation. As a company that has enjoyed the highest market share and the most premium brand and product, we do not want to have to rush things just because a competitor released a product after us. That should not 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. That is the biggest reason that when somebody releases a product like half a year or a year after us, before our next generation, they always have interesting features. In the end, if you zoom out and look at the overall result, at least so far, we always had the greatest achievement on performance, volume, definitely margin.

In the end, it's really always the most well-rounded and the best performing product on the market. Hopefully, we'll 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? 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 on SPAD. SPAD stands for single photon avalanche diodes, right?

Again, 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 on any automotive LiDAR for all the competitors we know. We shipped the first fully solid-state automotive LiDAR for near-range blind detector, ST-120, I think since two, three years ago. Not in large volume, but it's a fully automotive product that's on cars globally, right? We also acquired SPAD technology companies out of Switzerland because we believe they have interesting technologies. We look at them, we feel 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 off-the-shelf SPAD technology and you simply integrate them, one of the challenges you face is actually noise. 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. I think the biggest question and the challenge for the industry today is that. I think everyone's trying to find a solution. Today, if you look at the long-range SPAD, people always tell you, with the high sensitivity, there's 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. We're diligently working on that.

We have our in-house solution, hopefully to be able to address that. Our strategy is not always just try to buy off-the-shelf components that are the latest and 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 safety has to be first. You do not want to be sacrificing your reliability. You do not want to increase the chance of false triggering for such a thing as a LiDAR. We always try to explain to the market, it is almost like your invisible airbag. Just to make it simple for people to understand, you probably do not want to sacrifice the chance of a new airbag when you know there is a challenge on false triggering. You definitely want to be able to solve that problem.

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. We are also diligently working on that. I just want people to be more informed on the pros and cons of such an interesting technology that everyone is carefully evaluating.

Tim Hsieh, Analyst, Logan Stanley: Thank you so much for sharing all the great insight and valuable perspective. Thank you.

Conference Operator: Thank you. Your next question comes from Jeff Chang from Citigroup. Please go ahead.

Jeff Chang, Analyst, Citigroup: Hi, David. This is such a great result. Congratulations with the excellent earnings. I have a question on L3 for David. Any sign for the improvement of Product X and LiDAR per car and any view on the Level 3 legislation in both China and Europe? I also have a question for Andrew. It looks like the full Q guidance is really optimistic in the sense that in the best-case scenario, revenue should up 50% Q on Q, and the core earnings should up 100% Q on Q. Could you share with me the views on why you are so confident on this? Thank you very much.

Tim Hsieh, Analyst, Logan Stanley: 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 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 year 2025. Huawei's Ito M9 with four LiDARs, Avatr 12 with four, Zeekr 9X with five, and the Nio ES8 with three. All received strong customer demand and proving that demand for smarter, safer vehicles is real. 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-$1,000. Beyond the numbers, every additional LiDAR unit directly enhances safety, underscoring the irreplaceable value of our technology and 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 on the way. Stay tuned for future developments. We will share more details when available.

Andrew Fan, CFO, Hesai Group: Thank you, Andrew. This is David. I wanted to also give you a little more insight on how I think about this problem. Obviously, we are talking about price. We are talking about the total dollar amount on each of the vehicles. I think in the end, what is deciding a dollar amount is really the value it creates, right? That is rapidly changing from Level 2 to Level 3, right? In the Level 2 era, we are looking at an airbag or a seatbelt. Of course, it is important. Of course, it is saving lives. If you look at airbags, it is also saving lives. It has a certain price expectation people have. You are not going to be willing to pay $10,000 for an airbag, even though it is life-saving. For such a function, in the end, we feel like below $200 is the right range. We are at there.

That's why I think 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 3 is a completely different game. Especially when people think about Level 3, I think people are already remotely thinking about Level 4. Maybe I'll talk about Level 4 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? If you buy a Level 2 car, at most, it gives you an hour or two a day back to you, right? For Level 2, it doesn't even quite give it back to you. They ask you to have your hands on the steering wheel.

That's why it's great as a life-saving device, but it's of limited value. If you look at Level 4, or a.k.a. Robotaxi, you are literally looking at maybe 20 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 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.

That's the way I look at Level 3, and especially Level 4. The total dollar amount on a car, maybe not 10x, but people's tolerance is much higher because it's creating roughly 10 times the value, if not more, compared to the Level 2 system we used to be on. That's why people should be more excited about the total content and the value it creates as a complete sensor suite.

Conference Operator: Thank you. Your next question comes from Jesse Lu from Bank of America Securities. Please go ahead.

Tim Hsieh, Analyst, Logan Stanley: 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. Let's take the low end of the range, for example. We are basically guiding that our Q4 revenue will be above RMB 1 billion, comparing to roughly RMB 800 million in Q3. If that achieves, the additional net profit comparing to Q3 will be roughly RMB 80 million pre-tax. If you look at our first nine months' results in this year, our total or accumulated net income is about $256 million—sorry, it's $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. If we exclude that, our normalized first three quarters' earnings is roughly RMB 130 million. If we add another RMB 180 million to that, it already adds up to more than RMB 350 million net income in year 2025. That is 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 both of us.

Conference Operator: Thank you, Jesse Lu. You're now live. Thank you for taking my call. Question is mainly on, could you please make sure it's on the color or on the UID 2026 live 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 Hesai's wallet share. Second, how do we think about the pricing strategy of such customers, given its much higher vehicle sales?

Tim Hsieh, Analyst, Logan Stanley: Okay. 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 deployed 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 AT120HP and ATX, with ATX leading in 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 10 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 investment 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 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.

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

Andrew Fan, CFO, Hesai Group: Hey, thanks, Management, for taking my question. My question is about the robotics side. Given the increasing demand in the robotics area in the coming years, could Management share more color on our robotics shipment in 2026 and also in the next few years? Also the proportion of different end markets and our product mix in this segment. Thanks.

Tim Hsieh, Analyst, Logan Stanley: Our robotics business, which generally enjoys higher ASPs and margins, is contributing strongly to the company's overall financials, with growth momentum accelerating. For the robotaxi part, Hesai is the largest robotaxi LiDAR supplier in the world, holding roughly 60-70% market share. Our main LiDAR and blind spot products are widely used by all the top robotaxi players in China. Companies like WeRide, Baidu Apollo Go, DiDi, Pony.ai, and Halo Inc. have all adopted our technology. Traditionally, robotaxi operators relied on mechanical spinning LiDARs for small fleet testing and operations. 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.ai, and Halo Inc.

Excitingly, for some of their models, up to eight LiDAR units per vehicle, main LiDAR and blind spot 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 mechanical spinning LiDARs for 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 deployment, 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 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 40,000-50,000 units every quarter in year 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 LiDARs' volume could double in year 2026 versus 2025, and we plan to share updates on developments along the way.

Jeff Chang, Analyst, Citigroup: Operator, we can move to the next question, please.

Conference Operator: Thank you. Your next question comes from Zheng Yu from Huatai Securities. Please go ahead.

Zheng Yu, Analyst, Huatai Securities: 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 products, and what kind of demand scale or volume you are expecting for the next year? Thank you.

Tim Hsieh, Analyst, Logan Stanley: In the ADAS spaces, we are also seeing very strong momentum from a number of key 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, Leap Motor, Zeekr, 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 multi-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.

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

Xia Huang, Analyst, SPDB International: Hi, Management. This is Xia. Thanks for taking my question. I've got just one question regarding our overseas update. For the project with the top European OEM customer, is everything on track? Could you please also share more color about the overseas update in terms of other potential customers and design needs, and how do we expect the contributions of overseas revenue for the next two to three years?

Tim Hsieh, Analyst, Logan Stanley: Beyond our success and solid base in China, we are also stepping up our game internationally, both in ADAS and robotics. On the robotics side, recently, we have further strengthened our leadership with new LiDAR supply deals across North America, Asia, and Europe, covering everything from robotaxi, robo trucks, to robo 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 multi-year deal worth over $40 million with a leading U.S. 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 are never compromised on. There is now a clear consensus across the industry that LiDAR is becoming the airbag for autonomous driving, especially for L3 and above. Once these global OEMs make up their minds, they move decisively. 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 the Audi E5 Sportback, featuring Hesai LiDAR as standard configuration, hit the market and racked up over 10,000 orders in just 30 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.

Conference Operator: Thank you. Your next question comes from Lu Jia from VOCI. Please go ahead.

Xia Huang, Analyst, SPDB International: Thank you, Management, for taking my question, and congratulations on your excellent results. My question is related to our new business initiative. 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 LiDAR Hesai is considering expanding into in the future? Thank you.

Tim Hsieh, Analyst, Logan Stanley: Thank you for this very exciting question, David. I'll probably take it. I think there are a few things that are super, super interesting and worth exploring and has 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 not only for robots and also for cars, especially for cars, we're looking at safety. 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.

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, being able to measure speed, or using all different working principles to help our robots and vehicles be able to sense the surroundings better. That alone is a much bigger market than just the LiDAR TAM we see today, considering the importance of such a task. 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. 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.

In a lot of the robotics applications, a lot of the sensor applications, we actually see the possibility of having AI capabilities on 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. That is actually happening, and a lot of our software capabilities are being used on that. 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 are looking at a lot of opportunities in the general definition of space sensing.

I will not 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? Those are the things. Of course, last but not the least, we have been talking about sensing so far, but 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 are not only building the LiDAR sensors for the robots. 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, and the quality capability as a whole. We feel like there is a very good chance we'll be able to leverage that into more infrastructure business that's beyond sensing. I would 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." I would 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.

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

Xia Huang, Analyst, SPDB International: 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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