Hesai Group Aktie

Hello, ladies and gentlemen. Thank you for standing by. Welcome to the Hesai Group's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] 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.

Thank you, operator. Hello, everyone. Thank you for joining Hesai Group's Second Quarter 2026 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 SEC filings.

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

Thank you, Yuanting. Hello, everyone. Thanks for joining us. Let me start with the headline. The second quarter of 2026 marks a major turning point for Hesai. We are opening a truly exciting new chapter in our history. Over the past decade, we have built the technology, manufacturing engine and commercial scale required to lead the lidar industry. Today, we are setting our sights on the much larger opportunity, expanding Hesai into a full-stack infrastructure platform for robotics and physical AI, empowering them to see, understand and act. The simplest way to think about Hesai now is 3 layers. First, see our Lidar less intelligent machines see the physical world, what things are, where they are, how fast they are moving and how the theme changes around them. Second, understand cost molten real environments into reusable AI-ready 3D spatial assets, so intelligent machines learned from the world instead of guessing at it. Third, act, our robotic actuation modules turn intelligence into precise physical motion. We are already seeing commercial momentum across all these layers. Our core lidar business keeps scaling profitably and generating strong cash flow. Cosmo shipped prototypes in July 2026 secured initial orders and remains on track to contribute revenues in the third quarter of 2026.

Actuation modules started generating revenues in the second quarter of 2026 and are ramping fast. Together, these 3 layers form an integrated platform, opening up a significantly larger addressable market than we saw a year ago.

Let me start with see. ADAS was our first big commercialization market and it's still a phenomenal cash engine. Think about it. A modern intelligent car is arguably the most widely deployed robot on earth. And the industry has moved beyond the question of can the car drive itself. The question now is, whether it can do it safely every single time with backup when something fails. That's a completely different bar. Regulation is catching up fast. In China, the first mandatory national safety standards for Level 3 and Level 4 will take effect in 2027. In the U.S. proposed New Jersey legislation would require commercial autonomous vehicles to run 2 independent sensing technologies beyond cameras, typically lidar and radar. So the vehicle still sees when the cameras don't. This is what we have been saying for years, lidar is the invisible airbag.

You never think about your airbag on a normal drive. But the one time you need it, it is the difference between a bad day and a catastrophe, and nobody removes airbags to save bucks. So the market is shifting from does it have lidar to better lidar and more lidar. Better means longer range, higher resolution, rock solid reliability where it matters. This quarter, we won a design win with Great Wall Motor for mass production programs using our ultra long-range high-end ETX lidar with SOP expected in late 2026. ETX extends detection range to more than twice that of ATX while ATX has already established itself as the benchmark for cost-efficient lidar. More means multi lidar, phone coverage and higher redundancy. Momentum on our FTX blind spot lidar is strong. Changan and other leading OEMs picked Hesai for multi-lidar programs and Lee Auto L8 and L9, each equipped with 4 Hesai lidars are now in mass production. Li Auto's newly launched L6 model, price to RMB 250,000 now offers an optional 4 lidar configuration, 4 lidars at a mainstream price point. That is the moment an advanced feature goes mass market, and that is how content per vehicle compounds.

Globally, we are accelerating too. Following Mercedes-Benz, we won a major design win with Volkswagen covering multiple models from its China joint venture brands and expanded collaboration with GAC Toyota. We are also riding along with Chinese automakers that are going global with meaningful overseas volume expected in 2027.

Our leadership is also reflected in third-party market data. For [indiscernible], we took 44% of China's long-range ADAS lidar market in June 2026 and have been #1 in China for the long-range ADAS lidar market for 17 straight months.

Now here is where it gets fun. That same demand for high-performance 3D sensing is expanding rapidly into humanoid and other intelligent machines. Morgan Stanley estimates that robots could deploy roughly 6x as many lidar sensors as automotive by 2050. And you can only drive one car at a time, but in the future, you might interact with many different robots in a day.

We are already leading this trend. We work with more than 50 embody AI companies worldwide with recent orders coming from Unitree, Robbie And, Gauba, Galacia, Dexmal and many others. Our JT128 has become the go-to lidar for humanoid and quadruped robot. And the numbers are, frankly, remarkable. Robotics lidar shipments in the second quarter almost tripled compared with the same quarter last year following year-over-year growth of 47% in 2023, 67% in 2024 and 426% in 2025. And we expect another 2 to 3x shipment increase in full year 2026.

The next leap is going from geometry to mini. Classic lidar gives you the skeleton of the world distance, shape and position. A robot needs to know what a thing is, not just where it is. That is Picasso, our full colored ultrasensitive fixed DespatSOC. People love to frame the debate as camera versus lidar. That is like asking a human to choose between color and death. You need both. Picasso fuses them on one chip. We are pleased to share that the Picasso SOC is now SOP ready. Since its launch in April 2026, the full color ETX powered by Picasso has secured initial design wins, including cargo bot. It is now undergoing customer validation and advancing into RFI and RFQ discussions with leading robotaxi operators and global automakers.

Because depth and color come off 1 chip under 1 time stamp, you get intrinsically time aligned multimode information, exactly the fuel world models need. We believe Picasso will be the eyes of the next generation of robots.

Then layer 2, understand, helping robots understand and learn from their environments. This is where Cosmo comes in. Cosmo is a spatial intelligence platform that integrates an AI spatial camera, AI algorithms, 3D spatial assets and cloud services into 1 unified system for capturing, reconstructing and understanding the physical world. It addresses the SIM to real gap bottleneck. Robots need enormous digital representations of the physical world that are geometrically accurate and physically grounded. Training on bad inputs is like teaching a kid from a blurry textbook, plenty of pages, but they may learn the wrong things. Cosmo makes the textbook sharp. It turns real environments into high fidelity, editable interactive 3D assets, reality itself as the training ground. That is exactly the foundation robotic scaling loss need without the model collapse risk from low-quality inputs.

Validation came fast. Pro types went out this July. And within 7 days, we had orders from a lineup of leading humanoid robotics companies, including Galbot. Customer feedback has been extremely encouraging. Cosmo reconstructs a 200 square meter restaurant at roughly 5x the efficiency of a leading alternative with such high fidelity that even 4 millimeters text on a menu remains clearly visible. Scale that across thousands of scenes and you get the generalization robots need to walk into an actual home.

Cosmo also goes well beyond robotics, cultural tourism film and TV, games, advertising and beyond. Imagine standing on stage at a concert or on the field for historic sporting moment. Cosmo turns real places into reusable digital assets. Since the April preview this year, more than 200 prospective partners have come to us and initial revenues are expected to land in the third quarter within SGI.

But the part which I am most excited about is the business model of Cosmo. The AI spatial camera is the front door. Behind it is proprietary algorithms, cloud services and a compounding library of 3D spatial assets. Every deployment adds assets. A richer library enables more applications, more applications attract more users, more users create more assets. That is a flywheel, recurring revenues, network effects and real operating leverage. Cosmo doesn't digitize a space once, it compounds the value of that space over time.

Layer 3 is act, the muscles. JP Morgan sees 2026 as a milestone year for humanoid. Actuation modules can be more than half a robot [indiscernible] and 1 robot may need more than 100 modules. Run that math and long-term demand could approach 1 trillion units, 1 trillion. It is also brutally hard engineering. You need strength and precision in something compact, efficient, durable and consistent like asking a pro athlete to run a marathon every day for years without losing a step. This is exactly our wheelhouse.

For more than a decade, we have built precision electromechanical systems, in-house chips, material science, thermal engineering and automated manufacturing. People think lidar is a sensor, but it is not. It is a precision machine where optics, electronics, software, motors and encoders stay in perfect sync through heat, cold and vibration for years. The physics of a lidar scanner and a robot joint are cousins, both demand precise control of position, speed and force. Going from helping robots see to helping robots move is the most natural extension we have ever made. We rebuilt the entire actuation stack from first principles, materials, structure and system integration. The result is a breakthrough in actuation modules, roughly 3x the torque density and power density of leading products available today in a package 37% smaller with transmission efficiency above 95% and performance validated through 2 million operating cycles.

We deliberately started with the hardest system in humanoid robotics, the dexterous hand. Walking get the robot to the workstation, hands or what makes it useful once it arrives. Starting with this demanding hand application allowed us to validate our architecture at the highest level before extending it across the rest of the body. That strategy is already converting into revenues.

We are supplying actuation modules to Sharpa, a global front-runner in AI robotics. In August 2026 in Shanghai at a Dairy Queen store, a Sharpa humanoid is expected to complete what we believe is the world's first 0 retrofit commercial deployment of its kind. The robot is set to autonomously work a full TQ shift preparing signature blizzard ice cream treats, a complex long horizon challenge, while demonstrating the potential to generalize across diverse real-world tasks. That is the whole point. Robotics is not about impressive lab demos. It is about useful work done repeatedly and reliably in a real operating environment. And as Sharpa earns market recognition and its backlog grows, our volume grows with it.

At the same time, real-world field experience feeds directly back into engineering, creating another powerful flywheel for our product development. Our dedicated production line is fully operational. Cumulative shipments exceeded 10,000 modules by the end of the second quarter. We are ramping towards roughly 10,000 modules per month in the near term and expect 6-digit volumes in 2027.

Meanwhile, full body modules SOP is expected in the second half of 2026, expanding into shoulder and wrist joints.

Beyond robotics, these modules fit anything needing dense, precise, reliable motion. This is only the beginning. As intelligent machines proliferate across industries, we believe the addressable market for high-performance actuation will expand dramatically.

Let me close by returning to the bigger transformation we are witnessing today. If digital AI gave machines of voice and a mind, physical AI is giving them eyes to see, a body to move and the ability to act in the real world. Hesai is becoming a full stack infrastructure platform for robotics and physical AI, empowering them to see, understand and act so as to power the AI-driven fourth industrial revolution.

With that, I will turn it over to Andrew for our financials and outlook. Andrew, please go ahead.

Thank you, David. Hello, everyone. The second quarter of 2026, once again demonstrated our ability to deliver solid growth and scale while investing in Hesai's next chapter. As we introduced last quarter, we now manage and report our business through 2 segments: our core lidar business and our strategic growth initiatives, or SGI, giving investors greater visibility into their distinct financial profiles and the growth trajectories.

With that framework in mind, let me begin with our consolidated financial performance. Total net revenues for the quarter reached RMB 861 million or USD 127 million, representing an increase of approximately 22% year-over-year. The second quarter of 2026 marked our ninth consecutive quarter of year-over-year revenue growth.

Gross margin remained healthy at 40%. On operating expenses, we remain disciplined while continuing to invest in long-term growth.

Sales and marketing expenses were RMB 50 million, General and administrative expenses were RMB 67 million, and research and development expenses were RMB 231 million. The increase in R&D primarily reflected our targeted investments in the SGI opportunities that David discussed earlier.

Even with these continued investments, we maintained solid profitability. GAAP net income reached RMB 71 million or USD 10 million, representing an increase of 60% year-over-year, marking our fifth consecutive quarter of GAAP profitability demonstrating the strength of our operating model and the financial foundation built by our lidar business.

Non-GAAP net income was RMB 101 million or USD 15 million.

Now let me turn to the performance of each segment, beginning with our core lidar business. Lidar revenues reached RMB 816 million or USD 120 million. The segment generated operating profit of RMB 66 million or USD 10 million, demonstrating strong profitability and the cash-generating capacity. Total lidar shipments reached over 628,000 units, up close to 80% year-over-year. ADAS lidar shipments increased approximately 60% to over 485,000 units while robotics lidar shipments grew approximately 193% to over 142,000 units. The accelerating growth in robotics alongside the continued expansion of ADAS further demonstrates the breadth and resilience of our lidar business.

Turning to SGI. The second quarter marked the segment's first revenue contribution, an important step from technology development to commercialization. SGI revenues reached RMB 45 million or USD 7 million, driven by strong early demand for our robotic actuation modules. The segment recorded an operating loss of RMB 64 million as we continue to invest in product development, commercialization and production capacity to support the future growth of both our robotic actuation modules and Cosmo.

I am especially pleased to share that SGI commercial momentum has significantly exceeded our expectations. Our robotic actuation modules are already generating revenues while Cosmo remains on track to begin contributing revenues in the third quarter of 2026.

Given this strong momentum, we are raising our full year 2026 SGI revenue guidance from RMB 100 million to a range of RMB 200 to RMB 300 million. We are particularly encouraged by SGI's growth trajectory and expect the business to reach approximately USD 100 million in 2027 in revenues and achieve breakeven in the same year. This give us increasing confidence in Hesai's dual-engine growth model.

Our lidar business continues to deliver scale, profitability and cash generation, while SGI is rapidly emerging as a powerful new growth engine. Together, they position Hesai to capture the enormous opportunities ahead in robotics and physical AI.

With that, this concludes our prepared remarks today. Operator, we are now ready to take questions.

[Operator Instructions] Our first question comes from Tina Hou with Goldman Sachs.

So my question is really regarding the actuation module. So obviously, you have raised your revenue guidance for the strategic growth initiatives. And also, I think, starting from June second quarter, we've seen more news regarding [indiscernible] collaboration with not only NVIDIA, but also Google Gemini robot. So just wondering if you could share more details requiring these and other future potential collaborations. At the same time, what would be the long-term revenue potential for this business? And also, how do we achieve the strategic synergies for the partnership with Sharpa between Sharpa and Hesai?

Thanks for the question. This is David. I will take this question. Look, Hesai is building a full stack infrastructure platform for robotics and physical AI, empowering them to see, understand and act. And these are capabilities that take years of R&D, engineering and real-world validation to build, right? Since day 1, Hesai's vision has always remained the same, empower robotics, elevate lives. Lidar happened to be the first commercial product through which we demonstrated that we could build a leading technology platform and scale it globally. But that is not the end of our journey you see, it is just the beginning.

And I, myself, am also a Co-founder Sharpa, a humanoid robotics company that has gained meaningful recognition globally, including recent adoptions by Gemini Robotics and NVIDIA. And very soon, Sharpa is expected to begin its first real-world commercial deployment at a Dairy Queen store in Shanghai. We believe this will be the first deployment of its kind, not a lab program demonstration, not a pop-up showcase, but a regular operating store with the robot performing tasks autonomously in a real commercial environment. And that means this is an important milestone, right, because it demonstrates what humanoids can potentially achieve when they move beyond demonstrations and into a real operating environment.

For Hesai, you know Sharpa can serve as a valuable real-world proving ground. We already supply lidar to a diverse pool of robotics companies and expect to ship more than 500,000 units this year. Through Sharpa, we can also gain first-hand insight into what actuation systems actually need to deliver in real-world environments. And that creates a powerful feedback loop. Hesai puts its technologies onto robots. The robots in turn, tell us what the market really needs from performance metrics and form factors to reliability requirements, cases, duty cycles and total [indiscernible]. We can not [indiscernible] to insight in a right rollback loading in the real world, day after day and even more importantly, from a company founded by the same founding team firsthand understanding of both the [indiscernible].

Let me give you some examples of this flywheel. For a humanoid, lidar is typically more about resolution, field of view, some packs and will and simply maximizing the testing launch [indiscernible]. And for actuation, we retain very well and with respect to reliance rental performance, consistent, durability and performance [indiscernible] all matter. These are the pension reform to be a much clear when you are building and operating [indiscernible]. And that is a difference, right, between being a component supplier and being a supplier with first-hand knowledge of how the end product actually works in the real world.

Our supply of products and provision of manufacturing services to Sharpa act as a high signal test bed and learning platform before bringing our products to the broader market. As disclosed in the announcement and circular for the continuing connected transactions with Sharpa, we are seeking to increase the annual cap under the supply of products framework agreement with Sharpa up from RMB 100 million to RMB 300 million, subject to shareholders' approval at the EGM, with the majority of this year's transactions expected to be in actuation modules.

Longer term, the opportunity is much broader than Sharpa. Our products are all designed to serve third-party customers at scale. If fiscal AI is entering a period of rapid adoption, Hesai's role is to provide the foundational infrastructure effectively selling the shovels in the physical AI gold rush. Sharpa gives us a way to sharpen those tools faster, validate them in the real world and understand what the market will need next. That is the strategic value of the flywheel. Sharpa is the proving ground, while the broader physical AI market is the opportunity. That's my answer to your question. Thank you.

Our next question comes from Tim Hsiao with Morgan Stanley.

This is Tim from Morgan Stanley. Congratulations on this exciting new chapter as management just mentioned. So just a quick question about the actuation modules. Just could you please give us more colors on Hesai actuation modules and how they fit into a broader robotic strategy? And what kind of financial profile do you expect these products to have over time? And are you currently shipping those products to customers beyond Sharpa? Those are my questions.

Thank you. This is David. Okay. Three questions really, do we want to do it? Is the market ready to do it? And can we do it well? [indiscernible] easy, yes. Actuation can be more than half of robot's bam. One humanoid may need over 100 modules. Run that math and long-term demand approaches 1 trillion units, 1 trillion, and the margin profile is currently around 40%. That's the market we want, right?

The second question, ready? Yes. Humanoids are hitting volume and real-world deployment starting this year. Every robotics company is hunting for great joints, but they're hard to find. A lot of suppliers don't have firsthand knowledge of what leading robot makers need or why those metrics matter. Joints are both critical and hard. Power, precision, size and durability all at once, like asking a pro athlete to run a marathon every day.

The third question, can we....

Next question comes from Jeff Chen with Citi.

Congratulate on excellent result. My question is about the SGI. What drove the increase in sGI revenue guidance previously set? And how should we think about the revenue mix between robotech actuation modules and the Cosmo's SGI?

Okay. I know a lot of our investors care about this. We actually raised the full year 2026 SGI revenue guidance from RMB 100 million to a range of RMB 200 to RMB 300 million. For 2027, we are now looking at roughly USD 100 million, about RMB 700 million. And most excitingly, SGI is expected to reach breakeven in 2027. This is because commercial demand and the speed of tech validation came in well ahead of what we originally modeled. That's also a strong signal. Hesai is evolving into an infrastructure platform for robotics and physical AI, not just a lidar company.

The main SGI driver this year is robotic actuation built on more than a decade of engineering experiences. These products matured fast and started generating revenue in Q2. Demand from Sharpa has been a major source of our revenue for robotic actuation. Sharpa produced one of the first humanoid, maybe the first actually deploying into real restaurants with a path to scale. That demand for our actuation products run ahead of expectations, which is why we raised the [indiscernible] for the continuing connected transactions under the supply of products framework agreement with Sharpa of from RMB 100 million to RMB 300 million.

A quick clarification. That's RMB 300 million is the maximum amount for the transactions with Sharpa under the supply of product framework agreements, subject to shareholders' approval at the forthcoming EGM.

Cosmo, our special -- special intelligence platform is the other SGI pillar, and it's moving fast too. Prototype shipped in July. Initial orders came within 7 days, is well on track to start contributing revenue in Q3. We are not breaking out any exact revenue split between these 2 at this early stage. Directionally, actuation is expected to be the majority of SGI revenue in 2026. Cosmo's initial contribution this year will be smaller, low 8 digits revenue because commercialization starts later this year and the higher-value cloud services compound with deployment scale over time. That revenue mix between the 2 pillars should look differently in 2027.

As Cosmo matures from the AI spatial camera into cloud processing, subscription and licensing of high-quality 3D spatial assets as contribution should raise meaningfully. More importantly, a growing share of Cosmo's revenue is expected to be recurring cloud services under the business model we described earlier at structurally higher margins as expected. So the raised SGI guidance is really about the actuation, commercialization faster than expected this year and the next, with Cosmo setup to become another meaningful contributor as the platform scales.

The next question comes from Nora Min with UBS.

This is Nora from UBS. I had a quick question on Cosmo. Can you brief us the business model of Cosmo, its existing and potential customers, and lastly, the delivery schedule of Cosmo?

Thank you. This is David. I apologize, there's like some errors about muting different lines on the operator side. Can you hear me okay?

Yes, I can, David.

Okay. Good. Good. Thank you. Yes. Well, I guess this is a part that we still work on the AI or the training data, I am sure it's not a part of the reinforcement learning experiment Okay. So Cosmo is actually a super exciting product. We previewed the Cosmo in April and more than 200 prospective partners have reached out, robotics film, gaming, tourism, luxuries and more and keeps extending. And the breadth is the signal that this isn't a niche budget for 1 vertical. I think about it what 2D camera became over decades the infrastructure of how the world gets captured and consumed. Cosmo is that, except this time, it's 3D and AI driven.

Anywhere a regular camera works today, there is a much bigger opportunity digitizing the physical world in 3D. I prefer not to put out a specific cap order value for Cosmo right now at this early stage because we simply don't know how big this could be. And a lot of customers are still in prototype testing on pilots. We'll manage to need is who is buying into this, who is testing hard and who is already ordering and how fast that moved? We started shipping prototypes in July. Within 7 days of the first deliveries, we've got strong feedback and locked in initial orders. That is the real pace.

Early demand is closer in 2 key areas as we see. And the first one is the part we're super familiar, the robotics. It's a sharper near-term pull because humanoids are hitting early mass production in this year. And there are hungry -- they are hungry for high-quality training inputs to [indiscernible]. The ceiling to date is still [indiscernible]. A robot can look flawless in simulation and fall apart the second, it walks into a real factory your home. Train on weak spatial data that you're getting from a blurry textbook, we need 100x that [indiscernible]. Cosmo turns real environment into high fidelity physically grounded 3D assets, richer training stacks, better real performance, less risk of model collapse from a [indiscernible] data. The second one is more interesting is actually the media digital content. We're talking about the gaming, [indiscernible], luxury tourism, AI short-form advertising, et cetera. Content has been stuck in 2D for decades. It needs a dimensional upgrade. These applications share the same goal, to make the physical world immersive and reusable. A store set a concert a historical site stops being a one-off shoot and becomes a 3D spatial asset that's reusable.

You're not photography in the world, you're turning it into a new class of content. Film production is a clear example. Traditional pipelines leaning on green screens and clear practical shoots, expensive, inconsistent and slow. Cosmo changes that equation, higher quality, higher consistency and lower cost. I can't name who we are in close talk with yet, but they are household names globally.

Cosmo is a spatial intelligence platform, AI spatial capital algorithms, 3D assets and cloud services in 1 system. The device is just the front door. The real value compounds behind it. More devices mean more inputs that deepens the asset liability, unlocks more applications, pull in more customers and drive recurring revenue through cloud usage and asset licensing. That's where the operating leverage shows up.

So early commercial traction is real. Orders and prototypes are just the first turn of the wheel. Recent feedback has already validated both our technology and the business blueprint. We are very excited about the next batch orders coming through. Thank you.

Our next question comes from Dan Linen with CICC.

[indiscernible] from CICC. And congratulations on the strong results and impressive I confirm. And my question is about your guidance. Could you please update us on your guidance for both the third quarter and full year 2026, adapting updates to our 3.5 million units lidar shipment guidance for this year?

Thanks for the question. For Q3, we expect that the total revenue of renminbi between RMB 1.1 billion to RMB 1.15 billion, with lidar shipments around 800,000 to 850,000 units. SGI should be high 8 digits of that revenue in Q3. Actuation is ramping faster and is approaching 10,000 modules of monthly production capacity soon. Most excitingly, Q3 is expected to be the quarter where revenue from outside ADAS lidar gets close to or even more than half of total revenue. That's another clear step into our role as infrastructure for robotics and physical AI.

That acceleration also reinforces our confidence for the full year. We have raised SGI expectations, but lidar remains the core. We are reiterating 2026 shipment guidance of 3 million to 3.5 million lidar units. We shipped about 1.1 million units in the first half, almost double last year. And here is what people sometimes miss. Our ADAS business follows auto seasonality. Second half is usually much stronger. Last year, roughly 2/3 of our full year volume came in second half. So this second half ramp is normal for our business. And on top of that, there are 3 things driving lidar growth. First, penetration. Lidar is not just a story for the new EV players anymore, traditional OEMs like Geely and Changan, they are putting more lidar into their EV architectures, too. Lidar penetration on EVs was close to 20% in 2025. We think it could get to roughly 30% to 40% this year, and we've been #1 in China's long-range ADAS lidar market for 17 months straight according to Gasco.

So bigger market, strong position. We like that setup. Second, don't think of penetration as capped at 100%. It can go well beyond 100% because it's no longer 1 lidar per car. China's mandatory L3 and L4 safety standards came out in August and should take effect in July 2027. Automakers can't wait until then and start drilling holes in the car to add lidar. These centers have to be designed in and integrated at the factory. That's why we are already seeing multiple lidar setups for broader coverage and also more safety redundancy.

Remember how we've always described lidar, like airbags. You don't just want 1 airbag in car, and we've already secured a multi-lidar design wins with lia, Xiaomi and Changan with 3 to 6 lidars per car. And I don't think this stops at L3. Over time, we are also seeing advanced L2 picking up blind spotting lidards. So multi-lidar is becoming a major trend in 2026. And once people experience a safer, more capable driving system, it's very hard to go backwards.

Third, robotics. Humanoid, low modes, robovans, robotaxi, demand is picking up across the board. [indiscernible] AI is especially interesting. We are already working with more than 50 leading companies in this space, including Unitree. Morgan Stanley estimate that the robot lidar hand would be 6x the size of cars. Personally, I think it can be even larger because any robot moving through the real world needs to know where it is, what's around it and what's changing around it, especially when it's interacting with people all the time. Lidar is becoming a basic sense organ for robots, the way eyes are for humans.

So put it together, the core lidar business can keep compounding and frankly, remaining our cash cow, while SGI is the new growth driver, that's already taking off, okay? Hope this answers your question.

Our next question comes from Jia Lou with BOCI.

This is Lia Lou from BOCI. My question is regarding robotics lidar. Any upside or downside risk to our robotics lidar shipment guidance for 2026. In terms of downstream market, beyond the lawn mowers, lower van and 2-wheelers, where is the penetration accelerating? And that the FCC's recent action on following produced robotics devices affect our robotics business?

Thank you. Okay. We are still expecting the full year outlook for our robotics lidar over 500,000 units. Last year, it was around 240,000. We are on track for the delivery. Q2 robotics lidar shipments are almost tripled year-over-year. Demand is broad, not concentrated in 1 niche.

On the FCC piece, we don't see a material direct impact at this point. Most of our robotics lidar volume this year is robotic lawnmowers. Those customers are largely Chinese manufacturers focused on Europe as their key overseas markets. U.S. lawnmower penetration is still relatively low. We are watching the rules closely and we'll stay fully compliant. But as of today, it doesn't change our shipment outlook. More importantly, lawnmowers are just 1 wedge of a much bigger opportunity. The core view is simple, any robots moving through the physical world has to do what humans do, see, understand and act in real time.

Lidar is becoming a fundamental sense of organ for robots. A robot without reliable 3D perception is like working through an unfamiliar room with your eyes closed. We already hold leading positions across humanoids and robotaxi, robovans and robotic lawnmowers per GGI [indiscernible]. Humanoid demand is especially strong. We are working with more than 50 [indiscernible] AI companies worldwide, including Uniti. JT128 is quickly becoming a go-to light up for human noise and paves navigation, [indiscernible], avoidance, safe interactions with people and objects.

Warehouses and logistics are moving fast too. In some high net performance setups, a single machine can carry as many as 15 JT128 units for full coverage. JT128 also carries a higher ASP than the JT16 used in lawnmowers, harder performance requirements, more lidar content per machine. So robotic lidar isn't just an add-on to auto, over time, it can get substantially larger, more environments, potentially far more machines.

We like to say lidar is the shovel in the physical AI gold rush. We don't need to call which category scales first. Humanoids, warehouse robots, robotaxi, lawnmowers or something else, whichever wins reliable spatial perception is essential. Hesai is set up to ride that growth across the whole ecosystem.

Your next question comes from Jesse Lowe with Bank of America Securities.

This is Jessie from Bank of America. I just have a quick 1 around our key customers, Xiaomi. Xiaomo has included [indiscernible] its lidar supplier on the latest model on. So how do you see the size developing in Xiaomi future models? And more broadly, as more suppliers enter into our customer supply chain, how do you expect the competition pricing pressure and also the supplier shares to evolve?

Okay. First, Xiaomi, moving further into [indiscernible] lidar is actually encouraging for the whole industry, even on L2, they are adding a real lineup where there used to be 0. That tells you something, automakers and consumers are recognizing what lidar is worth. Our long-term view hasn't changed. Every intelligence vehicle eventually carries at least one lidar. Many will carry several for coverage and redundancy. So it isn't a flight over 1 liar per car. As lidars per vehicle rise, the opportunity can become several times larger. The pie itself is turning out to be much, much bigger than people thought.

On competition, market sourcing is normal in auto industry, especially as programs scale. We don't comment on allocation for individual future models. That may shift sometimes with performance, cost, capacity and platform needs. Better to let the data speak. According to GasCo, Hesai has been #1 in China's long-range ADAS lidar market for 17 straight months with roughly 40% to 50% share. And we've done that while keeping relatively healthy pricing and margins. As the leader, our goal is at 100% share at any cost. A disruptive price war is the worst outcome for everyone. It starts, technology, quality and safety. We'd rather stay clearly ahead on tech, deliver more value to customers and earn a fair return on that value. That confidence comes from structural advantages. Proprietary ethics, deep system engineering, large-scale automated manufacturing, a broad product portfolio, automated grade reliability and years of mass production, those let us stay competitive even when we are not the cheapest option.

Customers aren't buying a cute little box on the blue, they are buying safety and reliability for the moment that camera fails. New cars, lidar is the airbag, as we've always said. We are also investing in the next cycle, Picaso, our full-color ultrasensitive 60D integrated debt and RGB color at the chip level. To the best of our knowledge, Hesai is currently the only company in China taking [indiscernible] chip level full-color lidar into mass production on track for the second half of 2026. That's the kind of innovation that lidars compete on more than price. Over time, the lidar versus camera debate phase, they become 1 integrated system. The only question that remains is when the car drives itself, is my family safe enough?

People also obsess over shipments or revenue share but misprofit share. Just look at Apple in smartphones. Its share of industry profits has been fairly high -- far higher than its share of unit shipments. That wasn't a price war, it was technology, product, brand, and a differentiated value. We think about Hesai the same way. We'll keep working to hold our leading position like 40, 50-ish, but leadership isn't just shipping the most units, it's capturing a leading share of the industry economic value, protecting healthy gross margins, reinvesting in innovation and creating long-term values for users and for society.

Our next question comes from Aaron Wang with Jefferies.

This is Aaron from Jefferies. My question is on the LIDAR ASP and the margin side. Given the ongoing industry-wide pricing pressure and also the competition from peers, could management elaborate more on the ASP trend for lidar products over the next few quarters? And also, how should we think about our margin profile going forward?

Okay. We are positive on the resilience of gross margin. Full year 2026 outlook is unchanged, close to 40%. When -- and we expect to keep a healthy margin profile going forward. First, look past the half line blended ASP. The L3 shift change the mass from one lidar price to total lidar content per vehicle. An L2 car typically carried one large long-range lidar. Now we are already seeing L2 as a real live sport unit, 2 lidars. Entry-level L3 might be 1 ATX plus 2 FTX sporting lards. More advanced setups with ETX and actual can push total content to roughly USD 500 to USD 1,000 per vehicle. So the lidar value we deliver per car is rising, and that's showing up in vehicles launching this year.

Gross margin is just about price, it's price minus cost. Our price, we're already #1 in the market share. So we have no interest in giving up pricing just to chase more share. We compete on brands, technology and quality. On cost, years of in-house ethics, system level integration, automation and scale have led us keep bringing costs down. Net of that, we target a relatively stable ADAS margin profile. The mix helps the group too. Robotics lidar and overseas business generally run higher margins than domestic ADAS. Robotics lidar almost tripled year-over-year in Q2, and the global business should keep expanding. As those scale, they remain important support for healthy group margins.

SGI also started contributing revenue in Q2. Too early to comment on near-term financials, while products are still ramping. But long term, we expect SGI margins above 40%.

Cosmo especially, with cloud services in the mix, should carry a structural higher margin than pure hardware and become increasingly accredited to the growth.

There are no further phone questions at this time. I'll now hand the call back over to Yuanting Shi for closing remarks.

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

That does conclude our conference for today. Thank you for participating. You may now disconnect.

Hello, ladies and gentlemen. Thank you for standing by. Welcome to Hesai Group's First Quarter 2026 Earnings Conference Call. [Operator Instructions]. 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.

Thank you, operator. Hello, everyone. Thank you for joining Hesai Group's first quarter 2026 earnings conference call. Our earnings release is now available on our IR website at investors.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 SEC filings. With that, I'm pleased to turn over the call to our CEO, Dr. David Li. David, please go ahead.

Thank you, Yuanting, and thank you, everyone. Today, we are incredibly honored and excited to announce that Hesai serves as strategic LiDAR partner and confirmed supplier for Mercedes-Benz models, enabling Level 3 autonomy. We see this as a major milestone, not only a strong validation of our technology leadership, but also a clear signal that LiDAR is moving to core infrastructure in the global evolution of intelligent driving. More importantly, I am thrilled to announce that Hesai has officially entered a new era of growth and profitability. 2026 marks a transformative chapter for us as we initiate a strategic paradigm shift evolving from spatial perception to spatial intelligence.

Beyond our LiDAR business, we are actively forging the eyes and muscles of Physical AI. This evolution underscores what has always been at the core of Hesai's DNA. A deep-tech enterprise that leverages hard core technological innovation and sustained R&D intensity to deliver the world's most cutting-edge products, ultimately unlocking profound long-term industry value. At our recent 2026 Tech Open Day, we unveiled several breakthrough innovations that we believe will redefine the industry landscape. I will come back to these in more details later in my remarks.

Before turning to the broader opportunities in Physical AI, let me first walk through our LiDAR business highlights for the quarter. Last year, we delivered a record 1.6 million lidar units. This year, we expect our total shipments to approximately double, reaching between 3 million to 3.5 million units. We are confident that this level of scale firmly reinforces our leadership position in the global LiDAR industry. The trend we highlighted before is only accelerating. LiDAR is fast becoming the invisible airbag deployed across vehicles at scale. This was clearly demonstrated at the recent Beijing Auto Show, where Hesai lidar was featured in 56 vehicle models across 24 leading automotive brands, ranking #1 in lidar presence across exhibited models. At the show, our lidars were deployed across the automotive ecosystem, from leading brands such as Audi, Cadillac, Lotus, Li Auto, Xiaomi, BYD, Leapmotor, Geely, Great Wall Motor, Changan, Cherry, to autonomous driving leaders like Pony.ai and WeRide. This broad adoption reflects our deep ecosystem penetration and the growing strength of the Hesai Inside effect.

According to Yole Group, we ranked #1 globally in long-range ADAS LIDAR shipments with a 43% market share in 2025. Our leadership only strengthened in March 2026 when our China market share surged to 55% according to Gasgoo, roughly triple that of the second-ranked player, marking our 14th consecutive month in the #1 position. This momentum was fueled by our industry-leading product portfolio with our flagship ATX continuing to scale across major platforms. In April 2026 we began SOP for the rebound version of ATX. OEM demand remained exceptionally strong, with backlog now exceeding 6 million units.

As Level 2 scales, Level 3 is emerging as the next major growth driver for the LiDAR industry. As responsibility shifts from the driver to the automaker, vehicle safety requirements are rising rapidly, driving architectures from typically one LiDAR per vehicle last year, representing roughly USD 200 of LiDAR content per car to 3 to 6 LiDARs in Level 3 platforms, increasing content to about USD 350 in entry-level multi LiDAR setups and USD 500 to USD 1,000 in more advanced configurations. We are well positioned for this transition with multi lidar design in wins secured across legal OEMs, such as Li Auto, Xiaomi and Changan. Notably, Li Auto officially commenced deliveries of its Multi lidar model on May 15, 2026, marking the first mass production deployment of our FTX blind spot lidar. Level 3 is not just about more sensors, [indiscernible] elevates the role of LiDAR from a passive backup to an active decision enabler in safety-critical driving scenarios.

To lead this shift, we introduced Picasso, the world's first 6D full-color-ultrasensitive at SPAD-SoC. It uses RGB color and precise 3D geometry at a true chip level, generating real-time colorized point cloud. In plain terms, it enable systems to see and understand the world more like humans do and directly addresses the long-standing LiDAR versus camera debate. For the first time, we are delivering a unified perception stack in a single chip, bringing both worlds together and taking a [indiscernible] in how machines perceive and understand the physical world. For example, through native pixel-level fusion of color at depths, Picasso equipped LiDARs help address challenging real-world edge cases across intelligent systems, not only in autonomous driving but also in robotics and industrial applications such as distinguishing overlapping traffic lights at adjacent intersections or differentiating a yellow signal from sunlight scenarios where vision-based systems can struggle.

Powered by the Picasso platform, our flagship ETX lidar now supports up to 4,320 channels and delivers a maximum 600-meter range, enabling ultra-high-resolution full color 3D imaging. With enhanced small object detection, ETX pushes safety margins to unprecedented heights. Commercial momentum is already building for this industry-first technology. we Secured an exclusive design win with Cargo Bot for its Phase 2 Transport Robots, deploying our 4,320 channel ETX together with FTX-blind-spot lidars. This marks the first commercial vehicle contract for our 6D full-color lidar. ETX is expected to enter mass production in the second half of 2026 across multiple flagship programs with additional engagements actively progressing among both ADAS and robotics clients. Looking ahead, with lidar expanding far beyond today's boundaries with many camera dominated applications naturally shifting toward lidar over time, positioning us for the next wave of Physical AI.

On the global side, we are incredibly honored and excited to announce that Hesai serves as strategic lidar partner and confirmed supplier for Mercedes-Benz models, enabling Level 3 autonomy. The new supply agreement supports Mercedes-Benz programs in Europe and China with lidar production supported by Hesai's new Galileo manufacturing center in Thailand. In parallel, we continue to deepen our footprint with Chinese joint ventures as well as fast-growing Chinese automakers expanding overseas. We have been selected for GAC Toyota's 2026 bZ3X model, marking our first entry into the Japanese automotive ecosystem.

We have also secured new overseas design wins with Xiaomi, one of our largest customers with SOP expected to begin in 2027.

Looking ahead, we see strong and sustained momentum driven by both global OEM partnerships and the continued international expansion of Chinese automakers. Together, these two forces are becoming the key structural growth drivers for Hesai in the years ahead. Beyond ADAS, Robotics is emerging as an addressable market, roughly 10x larger. We are already a leader across key segments, including humanoid and quadruped robots, robotaxis, robovans and robotic lawn mowers, ranking #1 according to GGII, Yole Group and Frost & Sullivan.

To share a few recent highlights in humanoid robotics, our JT128 lidar powered Honor's Lighting robot to deliver a championship winning performance and break the human world record at the world's first humanoid robot half marathon. In Robovans, we secured an exclusive design win with Zelos for 200,000 lidar units and deepened our partnership with Neolix as its largest lidar supplier. We are also expanding into smart mobility with an FTX design win from new technologies for next-generation electric 2-wheelers, a market with more than 60 million units sold annually in China. Having established our [indiscernible] a global leader in 3D perception solutions, one thing is clear, bringing AI into the physical world takes more than just LiDAR. That's why we are taking our most exciting step yet, expanding from spatial perception to spatial intelligence.

To build an un-compromised digital foundation for the physical AI era, we introduced Kosmo, an AI algorithm-integrated spatial intelligence device. As physical AI accelerates, we believe richer, higher fidelity spatial data is becoming an increasingly scarce strategic resource, arguably even more critical than computing power itself. Kosmo is purpose-built to break this bottleneck. Unlike traditional 3D reconstruction solutions that rely on bulky hardware and costly workflows, Kosmo-combined Hesai's ultrahigh precision lidar with proprietary 3DGS and AIGC algorithms to rapidly generate photorealistic production-grade 3D environments at scale. For 200 square meter [indiscernible], Kosmo requires only 1/5 the time of existing 3DGS solutions and roughly 1/50 the time of traditional methods with dramatically lower labor costs. More importantly, Kosmo is far beyond a hardware AI integrated product, it is the starting point of a scalable new business model. Combining hardware, AI software, spatial data and future platform services, creating recurring revenue streams, strong ecosystem effects and a durable long-term moat. We believe Kosmo unlocks trillion-RMB downstream opportunities across robotics, simulation and training, immersive media, 4D entertainment and beyond. Commercial traction is already building rapidly.

We are actively engaging with a powerhouse roster of industry leaders spanning global pioneering embody AI companies and top-tier entertainment studios to market-leading tech giants, AI-driven industrial titans and global luxury brands with some customers already having placed orders. We are incredibly excited about the long-term growth potential ahead.

Beyond perception, bringing AI into the physical world also means enabling it to act, giving it the muscles to truly come to life. This leads to our next strategic pillar. Robotic Actuation Modules. This is a natural extension of our systemic expertise in materials, simulation, physical design and the manufacturing of delicate components. We also bring proven know-how gained from millions of in-house developed automotive-grade, motors and encoders deployed in our lidar products. Consider this a first glimpse an easter egg, more exciting updates will follow in the near future.

To wrap up, let me bring us back to the core theme today. Our evolution from spatial perception to spatial intelligence. We are executing this across three clear dimensions: First, perceiving the world powered by our chip-based lidar solutions, giving robots the eyes to see the physical world in high fidelity. Second, understanding the world with Kosmo and its ecosystem, transforming rich special data into actionable intelligence for real reasoning and decision-making. Third, changing the world through our Robotic Actuation Modules, the muscles that allow machines to truly interact with the physical world and serve humanity. Together, these are unlocking powerful new growth engines and presenting us as a core enabler of physical AI, digitizing the real world and redefining how humans and robots perceive and act.

With that, I will now turn the call over to Andrew to discuss our financial performance and outlook. Andrew, please go ahead.

Thank you, David. Hello, everyone. Before diving into our first quarter financial and operating performance, I would like to provide an important update on our financial reporting structure. As David highlighted, 2026 marks a year of strategic evolution for Hesai as we expand our [indiscernible] to become the key enabler of Physical AI. To better reflect this shift and further enhance our disclosure transparency. Starting this quarter, we are updating our segmentation into 2 distinct categories: our Core Lidar business and our strategic growth initiatives or SGI, which includes our new AI algorithm-integrated spatial intelligence device, Kosmo. We believe this updated reporting framework will help investors better appreciate the distinct financial profiles, independent growth trajectories and underlying value drivers of these 2 segments. By separately reporting our robust rapidly scaling Core Lidar business from our highly transformative SGI segment, we aim to provide you with clearer visibility to better model our business and track how each engine contributes to our long-term shareholder value.

With that, let me walk you through our first quarter operating and financial performance, followed by our outlook for the second quarter and the rest of 2026. To be mindful of the length of our call, I encourage listeners to refer to our earnings release for further details. We kicked off 2026 with strong momentum and delivered another strong quarter of robust growth, improving scale and disciplined profitability. Starting with the top line. Total net revenues reached RMB 681 million or USD 99 million, representing an increase of 30% year-over-year. This marked our eighth consecutive quarter of year-over-year revenue growth, reflecting both sustained demand across our core markets and our ability to scale with consistency and operational rigor. This performance was supported by total lidar shipments of over 471,000 units for the first quarter with both broad-based ADAS and Robotic shipments more than doubling year-over-year.

Our gross margin for the quarter stayed healthy at over 39%. On operating expenses, we maintained a disciplined approach while continuing to invest strategically in long-term growth. During the quarter, total operating expenses increased by 9% year-over-year, primarily reflecting targeted R&D investments in the new initiatives that David outlined earlier, partially offset by savings from scale adoption of AI tools across the company. Excluding these investments, our Lidar operating expenses declined year-over-year, driven by ongoing efficiency gains and cost discipline. This brings us to the underlying profitability of our 2 segments.

For the first quarter, our Lidar business delivered a robust operating profit of RMB 42 million, demonstrating its strong self-sustaining profitability. Meanwhile, our SGI business recorded an operating loss of RMB 51 million, representing our deliberate and forward-looking investment in building the infrastructure of Physical AI. As a result, we delivered GAAP net income of RMB 18 million or USD 2.7 million and non-GAAP net income of RMB 48 million or USD 6.9 million for the quarter. This extends our track record to 4 consecutive quarters of GAAP profitability and 6 consecutive quarters on a non-GAAP basis. The sustained profitability reflects the strength of our operating model and the benefits of scale as our business continues to expand, firmly positioning us at the forefront of the industry.

Looking ahead, we expect to build on this strong momentum. For the second quarter of 2026, we expect net revenues to be in the range of RMB 850 million to RMB 900 million or USD 123 million to USD 130 million, representing year-over-year growth of approximately 20% to 27%. We also expect revenue momentum to strengthen progressively each quarter throughout the year. From a broader perspective, we believe our business is entering a more sustainable growth trajectory. Our Core Lidar business will continue to drive growth, scale and cash generation while SGI is beginning to contribute and significantly expand our long-term growth potential, supported by our strong customer base and the momentum from early adoption, we expect SGI to generate approximately RMB 100 million in revenues this year, with revenue contributions expected to start in the second quarter of 2026.

Looking further ahead, we aim to scale this to around RMB 500 million by 2027, and over time, establish it as a meaningful and long-term growth driver for Hesai. Together, these developments are accelerating our evolution into a key enabler of physical AI, unlocking the next phase of growth with greater scale and global impact. This concludes our prepared remarks today. Operator, we are now ready to take questions.

[Operator Instructions] Your first question comes from Tina Hou with Goldman Sachs.

Congrats on a strong set of results, and also very excited about our new opportunities here. So my question is more related to our announcement with Mercedes-Benz and supply into their L3 models going forward. So just wondering how should we think about the opportunity in terms of volume, revenue and margin contribution over the next, let's say, 1 to 3 years and then longer term from this collaboration?

I'll take this question. This is David. We are pleased to announce that Hesai serves as strategic lidar partner and confirmed supplier for Mercedes-Benz models, enabling L3 economy. The new supply agreement supports Mercedes-Benz programs in Europe and China with lidar production supported by Hesai new Galileo manufacturing center in Thailand. We will not be able to disclose further details on the strategies of the customer, but we do confirm the new contracts are a continuation of the existing collaboration with additional volumes and car models.

Our global expansion is fully supported by our new Thailand manufacturing center, unified product architecture and strategic NVIDIA partnership uniquely positioning Hesai to lead the global ADAS market. Meanwhile, we are expanding our overseas reach with Chinese joint ventures and fast-growing domestic OEMs going global, winning a design win on GAC Toyota's 2026 bZ3x model marks our breakthrough into the Japanese auto ecosystem. We've also locked in new overseas design wins with Xiaomi, a top customer targeting a 2027 SOP. Looking ahead, our growth will be structurally driven by two powerful engines, international OEM partnerships and the global expansion of Chinese automakers. That's my response to your question. Thank you.

Your next question comes from Tim Hsiao with Morgan Stanley.

This is Tim from Morgan Stanley. Switching gears to the spatial intelligence device, because we noticed the Kosmo has already received early orders. And it's also highlighted in the announcement that is a scalable business model. So wondering if you could elaborate a bit more about how we should think about the fundamental difference. Our synergy between the Kosmo [indiscernible] conventional by the business. Are there any comparable products currently available in the market? And how does Kosmo stand out against such alternatives, if any.

Additionally, it would be great if the management team can share more details regarding the existing client base. I think David also share a lot of information. And in the meantime, the time line for consumer-facing rollout as well as your expectation for financial contribution from Kosmo. Yes, that's a few follow-ups.

Thank you for raising the question. Well, Kosmo is much more than a sensor or a hardware device. I will describe it as the world's first AI algorithm integrated spatial intelligence device, combined or custom-lidar, multiple sensors and our in-house 3 DGS and AIGC algorithms together into one system, like allowing us to capture and reconstruct the physical world in a very seamless and photorealistic way. And we believe in the era of Physical AI, high-quality special data is becoming a scarce strategic resource.

Arguably, I mean, even more important than compute itself, and Kosmo is designed to provide what we call the un-compromised digital foundation for this new era, right? So one key difference between traditional LiDAR and Kosmo is really the output. Traditional LiDAR gives you raw point cloud, which are almost like the water-frame or skeleton of the world. Kosmo goes much further, using AI algorithms, it reconstructs a fully photorealistic 3D model with color, texture and shadows, much closer to how humans actually experience the real world, right? And we think we have two very important advantages here.

First is hardware. Since we used our own custom high-performance lidar, the raw input quality is already extremely strong compared to most third-party solutions. Second is software. Our proprietary reconstruction and AIGC algorithms are a major differentiator, based on early customer feedback, you know our models consistently deliver higher quality results compared with other software solutions. As a result, efficiency improvement is actually very significant. For example, for a 200 square meter space Kosmo can complete reconstruction in roughly 1/5 of the time of existing 3DGS solutions and around 1/50 of traditional workflow, while also reducing labor costs substantially, which is huge, right?

Now the [indiscernible] opportunity here is still very early and evolving. So it's difficult to define a precise TAM today. But directionally, we think this could become a very large multi-industry opportunity spanning robotic simulation and training, immersive media, 4D entertainment, industrial applications and on. what's even more important, in my view, is the business model we are building around Kosmo.

The AI integrated Kosmo is really just the front door. It gets us into the ecosystem, but recurring revenue is what we believe becomes the long-term engine over time. Today, we are already engaging with a very exciting group of customers, ready from pioneering in-body AI companies and top-tier entertainment studios to, well, global technology leaders, industrial companies, and luxury brands. We also already have early orders in place. Beyond the device itself, covers also pay for software and platform usage, whether it's data processing, model training or cloud-based services through licensing and subscription models. So compared with traditional LiDAR, I mean, this business naturally carries a more software-driven and potentially higher margin profile.

Longer term, like in the coming years, we see two major paths ahead for Kosmo. First is for 4DV, essentially 3D plus time, where we believe a single lightweight Kosmo device can eventually replace today's bulky, expensive, camera-based 4D capture systems. Second is a broader consumer feeding opportunity. Over time, we believe even ordinary consumers will be able to use Kosmo to create 4D immersive full content themselves, much like how smart-phones democratized photography and video creation over the last decade, right? So overall, see Kosmo as a starting point, a scalable new business model and a very important expansion opportunity for Hesai beyond traditional LiDAR. We will soon begin demo shipments, and we believe it can become a meaningful growth driver for us in the Physical AI era with initial 8-digit revenues expected this year. That's my answer for your question. Thank you.

Your next question comes from Nora Min with UBS.

This is Nora Min from UBS. So my question is about your progress of the Humanoid Robot Actuator business? And what do you think is the current technical bottleneck and who are your potential customers, also are the actuators for the body or hand?

Thanks for the question. Well, people often think lidar is simply a sensor, but in reality, it's much more like a precision machine. Inside a lidar system, I mean you have optics, electronics, software and sophisticated mechanical engineering, all working together in tight synchronization, right? So for both our mechanical and [indiscernible] lidars the moving components are extremely demanding from an engineering standpoint. They must meet automotive-grade standards and survive years of continuous vibration, heat, cold and harsh real-world driving conditions, while still maintaining extremely high precision every single second, right? I mean it's a bit like asking a professional athlete to run a marathon every day for years without ever losing former accuracy.

Over the past decade, you see we have already developed and shipped more than 1 million automotive-grade motors and encoders into our lidar systems. And fundamentally, like the physics behind lidar scanning modules and robotic actuation modules are very similar. Both require extremely precise control of velocity position and force. So in many ways, moving from lidar into robotic actuation was a very natural extension for us, really. The same capabilities we built for lidar such as material science, simulation, proprietary ASICs, precision manufacturing and system-level engineering can now be extended from helping robots see the world, to helping them move within it.

Now on Robotic Actuation, we haven't yet disclosed detailed information, but early signals are very encouraging, and key performance metrics are already reaching what we believe is, well, among the industry's highest level. We look forward to sharing more details in the coming quarters as this business develops, of course. That's my answer. Thank you.

Your next question comes from Jessie Lo with Bank of America Securities.

My question is around the strategic growth initiatives as well. Could you talk about the ASP revenue and also margin on both the Kosmo and also Robotic Actuator models?

Thank for the question. This is Andrew. Both the Robotic Actuated Modules and Kosmo are part of our new strategic growth initiatives or SGI segment. [indiscernible] this as an early-stage innovation layer sitting alongside our Core Lidar business. At this stage, because these products are still in early commercialization, we are reporting them on a consolidated basis within SGI rather than splitting them out individually. On the revenue side, we expect SGI to start contributing in the second quarter this year. With strong early customer interest and initial adoption we currently anticipate around RMB 100 million in full year 2026 revenues.

Looking further out, we see a clear scaling path, potentially reaching around RMB 500 million in 2027. And over a longer horizon within 5 years, we believe this business could grow to a scale that is comparable to our Core Lidar business.

On profitability, SGI is expected to be accretive to group gross margin over time as this segment scales and matures. Kosmo, in particular, should carry a structurally higher margin profile because it is not just the hardware product. It integrates hardware, software and data workflows. Over time, we also expect part of Kosmo to evolve toward a recurring ARR model through software and platform services. which naturally improves profitability as the installed base expense. On ASP, it's important to note that we are still in a very early deployment phase, so current pricing is highly customized and driven by pilot programs. At this stage, these early data points are not representative of long-term economics. As we move into mass production and the product lines mature, we will provide more normalized unit economics to the market. That's my answer to your question. Thank you.

Your next question comes from [indiscernible] with CICC.

Hello, everyone. This is [indiscernible] CICC Auto Team. And congratulations on the strong results and exciting partnership with Mercedes. The question is regarding your Picasso [indiscernible], we think the market came to understand how your product interacts with cameras. And to what extent can 6D lidar replace certain camera functions? And additionally, some of your peers are also promoting camera-lidar fusion solutions. How does your approach defers from peers? And what has the customer feedback so far?

Thank you for the question. First, let me set the stage here. People often debate cameras versus LiDAR. But I think that's a little bit like asking whether humans should choose between seeing colors or seeing depth. In the real world, we naturally use both together. That's exactly what our 6D full-color lidar does. It helps machines not only detect objects, but truly understand the physical world more like humans do. And this is why we believe in many future applications, your next camera may not even be a camera anymore. It could be a 6D full-color lidar, the opportunity is massive across autonomous driving, robotics, industrial automation, infrastructure and even electronics like Kosmo. What makes us different is that many existing solutions are still basically a camera and lidar packaged into one box with software trying to combine the information afterwards. [indiscernible] system level fusion.

With Picasso, our world's first 6D full-color SPAD-SoC with RGB color and precise 3D geometry directly at the chip-level from the very beginning, almost like the human brain naturally combining both eyes in real time. You can think of it as early fusion. The benefit is very clear. The system instantly understands both depth and color together in fully aligned realtime, improving perception capability, reducing edge case errors and enhancing safety. We understood some peers are moving in a similar direction now, which we see as validation of the trend, but we believe we are roughly about a year ahead in R&D. Customer feedback so far has been extremely encouraging across both ADAS and Robotics.

For example, with overlapping traffic light at adjacent intersections, traditional cameras struggle with depth, while traditional LiDARs cannot understand colors. Our 6D full-color lidar solves both simultaneously. We believe this creates a strong differentiator for us and supports premium pricing given the very clear value add. Importantly, customers also do not need to completely rebuild their perception stack. The data from 6D full-color lidar and traditional LiDAR are compatible. And commercially, the momentum is already starting. We recently secured an exclusive design win with Cargo Bot for its transport robot, which marks the industry's first mass production deployment of 6D full-color lidar on commercial vehicles.

We are also actively engaging with both Robotaxi and ADAS customers. Looking ahead, we expect the Picasso equipped ETX to enter SOP in the second half of 2026 with broader global adoption ramping through 2027 and 2028. We really believe this could become one of the key technology transitions for the entire perception industry over the next several years. That's my response to your question.

Your next question comes from Jeff Chung with Citi.

David, what's the updated to the [indiscernible] revenue forecast right now? And how much SGI contribution to the [indiscernible] revenue first question. And secondly, if we take out the RMB 100 million revenue from SGI in the second quarter, the core revenue, excluding SGI Q-on-Q growth will become 18%. Would that be a little bit conservative? And finally, any volume guidance for the second quarter?

Thank you. It's Andrew here. For the second quarter, we expect total revenues to be in the range of RMB 850 million to RMB 900 million with around 650,000 lidar shipments. Importantly, the second quarter will also mark the initial revenue contribution from SGI. Gross margin has remained resilient even as our ADAS business continues to scale rapidly. We've now delivered GAAP net income for 4 consecutive quarters and non-GAAP net income for 6 consecutive quarters, and we expect this momentum. And if you look at the pattern of our business and OEM production cycles, we also expect financial performance to continue improving sequentially through the year, with SGI expected to contribute around RMB 100 million in 2026 during this early ramp stage.

For the full year 2026, we are reaffirming our lidar shipment guidance of a record 3 million to 3.5 million units. We remain highly confident in our top line and delivery trajectory supported by several strong and accelerating drivers, including higher lidar penetration across the market increasing lidar content per vehicle as the industry moves toward Level 3. The early ramp of global ADAS programs, including the overseas expansion of Chinese OEMs as well as broader robotics adoption across increasingly diverse applications. Overall, we believe Hesai is executing strongly across all fronts. Our Lidar business continues to serve as a very solid foundation with clear market leadership and global scale.

At the same time, we are extremely excited about the future of SGI, and we look forward to sharing more updates on these new businesses very soon. That's my answer to your question. Thank you.

Your next question comes from Zang Yu with Huatai Securities.

This is Zang Yu from Huatai Securities. I have a question about ASP. How do we unpack the ongoing decline in lidar ASP, and what's your long-term outlook for pricing as a market [indiscernible].

Thank you for the question. We think it's important to look beyond headline blended ASP because what we are really seeing today is a reflection of strong market expansion and a clear product mix shift. As we scale into the mass market, ADAS lidar naturally takes a larger share of volume. These products usually carry lower unit prices than robotics lidars, so blended ASP comes down. But fundamentally this is a healthy signal. It reflects lidar becoming a mainstream standard across both automotive and robotics.

Looking ahead, we see a clear structural catalyst as the industry moves towards Level 3 autonomy. Level 3 raises the bar on safety, redundancy and sensing performance, which directly drives higher sensor content per vehicle. At Level 2, lidar content per vehicle last year was roughly around USD 200, typically anchored by 1 long-range ATX. At Level 3, it already steps up to about USD 350 as a starting point. For example, 1 ATX, plus 2 FTX for blind spot coverage, as systems evolve further with ETX high-end lidar and additional blind spot FTX content can increase to roughly USD 500 to USD 1,000 per vehicle. This is already emerging in early customer adoption and is increasingly reflected in ongoing engagements and once more with our newly launched Picasso 6D full-color SPAD-SoC, lidar is also evolving from a passive safety sensor into an active intelligence layer, enabling richer perception through real-time colorized point clouds that shift from safety only to active functionality creates a clear upgrade cycle and we do see these value add potentially supporting higher pricing for advanced lidar configurations.

Ultimately, we see the market evolving very much like smart-phones. Once users experience a better smart-phone, they don't go bad because they truly appreciate the value it creates in daily life. In the same way, as automotive and robotics applications become more intelligent over time, end users will increasingly recognize and cherish the value enabled by our technology, not as a cost but as a capability upgrade in how they move, work and interact with the physical world. That's my answer to the question you just raised.

Your next question comes from Jia Lou with BOCI.

Hello, [indiscernible] I have a question regarding the competition dynamics. Over the past few years, the lidar industry has been focused on cost reduction. However, since the beginning of this year, we've observed a shift towards performance raise such as escalation in channel counts, while the technology road map have begun to convert. So how does management envision the evolution of the competitive landscape lidar industry. What will be the key differentiator for Hesai to maintain its leadership?

Thank you. That's a very good question. When people talk about lidar competition, the discussion often goes straight to price. Yes, the price of a single lidar has come down over the years, but that's really the result of strong in-house ASIC capability and system integration, which helped bring lidar from a luxury technology into massive option without sacrificing performance. That is exactly why today lidar can be deployed not only in USD 10,000 vehicles, but even in affordable home appliances. We are seeing penetration rapidly expand across sectors, including categories many people did not initially expect, such as robotic lawnmowers and two-wheelers. Once the cost performance curve crosses a certain inflection point, adoption doesn't grow linearly. It's hard to expand across [indiscernible], and ultimately, the results speak for themselves.

According to Yole Group, we ranked #1 globally in long-range ADAS lidar shipments in 2025 with 43% market share. In March this year, [indiscernible] showed our share further increased to 55%, roughly 3x that of the second player. Beyond automotive. We are also seeing strong momentum in robotics, where we believe we are already the #1 global player in Robotics Lidar revenues across Robotaxis, Robovans, lawnmowers, humanoids and other emerging applications. But the more important question is not price. It is who can lead across multiple technology cycles. Today, the industry is moving towards higher performance, higher resolution, new architectures and new types of demand. We are already at 4,320 channel-level products.

At the same time, we are expanding into blind spot lidar with full 360-degree coverage for large-scale deployments like the Li Auto [indiscernible] platform, and we are moving towards deeper fusion of lidar and imaging with Picasso, our 6D full-color SPAD-SoC as well as into Physical AI with Kosmo for high fidelity spatial intelligence. Across all these shifts, our key advantage is the engineering capability and talent we have built over the past decade. We have built multiple distinct product architectures from gas detection to mechanical lidar, semisolid state and the fully solid-state systems, while they all fall under lidar, they are fundamentally different in architectures.

Today, we are extending that same capability into physical AI, including Kosmo and Robotic Actuation Modules. At the end of the day, whether competition is in technology, product or market share, we welcome it. We remain confident in our long-term structural advantages and our ability to continue launching category-defining products with a strong pipeline of major launches in 2026. Our leadership in physical AI is, in our view, an important differentiator versus peers. Ultimately, this is a deep tech business. That's my answer to your question. Thanks for that.

There are no further questions at this time. I'll now hand back to Yuanting Shi for closing remarks.

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.

That does conclude our conference for today. Thank you for participating. You may now disconnect.

Hello, ladies and gentlemen. Thank you for standing by. Welcome to Hesai Group's Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] 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.

Thank you, operator. Hello, everyone. Thank you for joining Hesai Group's Fourth Quarter and Full Year 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 SEC filings.

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

Thank you, Yuanting, and thank you, everyone, for joining our call today. I'd like to start by taking a step back and looking at what we accomplished over the course of the year. 2025 was a defining year for Hesai.

We achieved a milestone no other lidar company has reached, industry first full year GAAP net income of RMB 436 million. This was not just a year of growth, it was the year our technology leadership, operational scale and execution converged to set new standards for the industry.

On the product front, we continue to lead the way. According to Gasgoo, ATX, our flagship ADAS lidar, largely contributed to our #1 position in 2025 with over 40% share of the long-range automotive lidar market. Meanwhile, our JT series entered mass production and shipped over 200,000 units in its first year alone, establishing clear leadership in Robotics as well.

At the same time, we reinforced our financial position through a successful USD 614 million dual primary listing in Hong Kong, further strengthening our robust balance sheet and enhancing our capacity to support long-term growth.

As we enter 2026, we are carrying significant momentum across markets. With demand accelerating across various key applications, we are raising our 2026 lidar shipment outlook to between 3 million and 3.5 million units. This reflects the massive scalability and resilience of our business.

Now let's take a closer look at our business highlights, starting with our progress in the ADAS market. Currently, lidar is rapidly becoming what we call the invisible airbag, essential, affordable and increasingly standard.

Over the past year, we have been a key force behind the broader rollout of lidar across the industry. We achieved 100% lidar adoption on best-selling models from partners, including Li Auto and Xiaomi, while also breaking into the sub RMB 100,000 price segment with Leapmotor. This marks a fundamental shift. Lidar is no longer a premium add-on, but a core safety feature in mainstream vehicles.

Our momentum is also reflected in the strength and breadth of our partnerships. we have secured 2,026 design wins with key partners, including Li Auto, Xiaomi, BYD, Leapmotor, Great Wall Motors and Changan, many on an exclusive basis. Additionally, leading automakers such as BAIC and FAW Bestune are joining our SOP roster.

Altogether, we have now secured ADAS orders from every one of the top 10 OEMs in China and have secured ADAS design wins with 40 automotive brands across more than 160 vehicle models, reinforcing our position as the partner of choice for world-class automakers.

This leadership allowed us to go beyond a key milestone we first envisioned almost a decade ago, enabling 1% of all vehicles worldwide with 3D perception. With over 2 million cumulative ADAS lidars delivered, we are capturing over 40% of ADAS long-range lidar demand. This gives us significant manufacturing leverage and drives a powerful flywheel of innovation.

To support accelerating growth at scale, we launched our revamped version of ATX lidar last November at our Tech Day event. Powered by our in-house FMC500 500 SoC, integrating MCU, FPGA and ADC; the revamped ATX features up to 256 channels, delivering enhanced performance, reliability and cost efficiency. With an order backlog exceeding 6 million units, it positions us strongly for the next phase of mass adoption and is expected to begin SOP in April 2026.

While Level 2 drives volume, Level 3 is the value multiplier. In China, the regulatory environment has reached a pivotal inflection point. With Level 3 models now approved for public road deployment in cities such as Beijing and Chongqing, the industry is moving decisively from testing into real-world deployment. As responsibility shift from the driver to the OEM, zero failure has become a mandatory requirement.

To manage complex driving scenarios, Level 3 systems need broader coverage with more lidars. This is where our FTX blind spot sensors come in, enabling full 360-degree perception. At the same time, Level 3 also demands better lidars, raising the bar on performance and reliability.

Our ETX ultra high-performance long-range lidar is purpose-built for these demands. It offers around twice the detection range of ATX and will incorporate our proprietary SPAD, which eliminates the false triggers commonly seen in traditional SPAD architectures. ETX is expected to begin SOP by 2026.

With recent multi-lidar design wins from Li Auto, Xiaomi and Changan, with SOP planned for 2026 to 2027, along with several late-stage Level 3 discussions underway with additional leading Chinese OEMs; we are seeing a meaningful increase in lidar content per vehicle as multi-lidar models typically feature 3 to 6 lidars per vehicle.

This mirrors the evolution we saw in smartphone cameras, where increasing sensor count drove a steady expansion in total system value. We believe ADAS lidars is now entering a similar value creation cycle.

Internationally, our business has also reached a critical inflection point. We are pleased to announce a strategic partnership with Grab, Southeast Asia's leading super app. With Grab as our exclusive regional distributor in Southeast Asia, we are combining Hesai's global lidar leadership with Grab's unparalleled local network to aggressively scale our footprint across the region.

More significantly, we have been selected as the primary lidar partner for NVIDIA's DRIVE Hyperion 10 platform, which we view as a true game changer in how we scale globally. Historically, international expansion in automotive was a slow OEM by OEM process, often taking years of validation and negotiations.

Integration into the Hyperion ecosystem enables a fundamental shift in our go-to-market approach from individual engagements to a scalable turnkey model. This positions Hesai as the default gold standard lidar choice for OEMs building autonomous driving systems on the NVIDIA platform.

Additionally, we have joined NVIDIA Halo AI Systems Inspection Lab to further advance safety in autonomous vehicles and robotics. Building on our momentum, our exclusive multiyear design win with a top European OEM is progressing well, with sample deliveries firmly on track.

More importantly, we've achieved a key breakthrough, unifying our high-performance lidar architecture across China and global markets with the ET series as a prime example, enabling a single platform to scale seamlessly worldwide. This unified architecture eliminates redundant development while combining China's operational agility and cost advantages with the most stringent global quality standards.

In fact, Hesai is the only Asian lidar manufacturer with German VDA 6.3 process audit certification, a globally recognized benchmark for the industry's most rigorous production and quality standards. The result is a structurally advantaged one platform model, delivering superior cost, speed and global scalability that is extremely difficult to replicate, putting us firmly in the driver's seat of global expansion.

Looking ahead, 2026 is going to be a pivotal year for the evolution of intelligence. As NVIDIA's CEO, Jensen Huang, described at this year's CES, we are entering the ChatGPT moment for physical AI, a shift from digital chatbots to kinetic work bots operating in our factories, streets and homes.

If 2025 was the year AI learned to reason, 2026 is the year AI gains a body. However, for AI systems to truly reason about the physical world, it requires a grounding in geometric truth. While cameras provide the context or the what, lidar provides the sub-centimeter spatial accuracy, the where. This makes lidar an indispensable bridge between the carbon-based world and silicon-based intelligence.

Without the spatial intelligence, physical AI remains blind to the loss of physics. This structural shift plays directly to our strengths and the results are already very encouraging. According to GGII, Yole Group and Frost & Sullivan, we now rank #1 across multiple major robotics lidar submarkets, spanning humanoid and quadruped robots, robotaxis, robovans and robotic lawn mowers.

For example, our JT128 lidar showcased this leadership at the 2026 Spring Festival Gala. During China's largest broadcast, which peaked at 400 million viewers, dozens of unitary humanoid robots delivered a complex synchronized [ kung fu ] performance.

By providing 360-degree blind spot-free precision perception and ultra-high reliability, JT128 lidar outperformed competing offerings, seamlessly integrating with [ Unitree ] AI algorithms to achieve ultra-low latency and eliminate cumulative motion errors, ensuring absolute stability.

Beyond human robotics, we have also established a strong market position in robotic lawn mowers. We have secured orders from clients, including Dreame and MOVA, representing a backlog of over 10 million lidar units with strong follow-on potential as deployments scale.

In Robotaxis, we now work with nearly every leading player, including Pony.ai, WeRide, Baidu Apollo Go, DiDi and others across North America, Asia and Europe. In Robovans, we have almost achieved full coverage of key players like Zelos, Neolix and Meituan.

Beyond these segments, we are actively expanding lidar applications. Recently, we secured a design win for NIU Technologies next-gen electric 2-wheel model featuring our FTX lidar. With over 10 million electric 2-wheelers sold annually in China, this brings automotive-grade 3D perception to a massive market and unlocks a new intelligent category.

Together, these fast-growing segments put us right at the heart of the robotics ecosystem, helping bring physical AI from concept to real-world action. After shipping nearly 240,000 robotics lidar units in 2025, we expect that volume to at least double in 2026.

Lastly, I'd like to share what's next for Hesai over the coming decade and why we are genuinely excited about the opportunities ahead.

The physical AI revolution is accelerating at an unprecedented pace, but many of its critical building blocks are still in their early stages, such as sensing, motion control, integrated AI-driven decision-making and full system orchestration. These gaps represent enormous white space opportunities, and they are exactly where we believe the next wave of transformative growth will unfold over the coming decade.

Hesai is uniquely positioned to lead this next phase. We bring decades of expertise in lidar, automotive and robotics-grade hardware. Today, we are doing far more than building components. We are evolving into the key enabler of physical AI, digitizing the real world and redefining how humans and robotics perceive and act. This positions us at the forefront of the AI-driven fourth industrial revolution and perhaps more importantly, opens the door to a decade of exponential opportunity.

Let's now move on to something more immediate. In the next few months, we will launch two groundbreaking products, each targeting an addressable market worth trillions of RMB. One is the eyes of physical AI, enhancing perception and situational awareness beyond what is currently possible. The other is the muscles, delivering precise powerful motion control for robots and autonomous systems operating effectively in the real world.

Together, these products are expected to become Hesai's second growth engine. We anticipate initial revenue contributions beginning as early as 2026. Within 5 years, this business has the potential to rival or surpass our lidar segment and within a decade, to scale another tenfold.

This is more than a product portfolio expansion. Guided by our mission to empower robotics and elevate lives, we are entering the next chapter of our growth story to become the key enabler of physical AI. If 2025 was a year of market validation and record performance, 2026 will be a year of acceleration and transformation. The opportunity ahead is massive, and we are ready to lead the way.

With that, I will now turn the call over to Andrew to discuss our financial performance and outlook. Andrew, please go ahead.

Thank you, David, and hello, everyone. Let me start by walking you through our full year operating and financial performance and share our thoughts and outlook for 2026. To be mindful of the length of our call, I encourage listeners to refer to our earnings release for further details.

2025 was a pivotal year for Hesai, marked by remarkable progress in both our financial performance and operational execution. We delivered record net revenues of over RMB 3 billion or USD 433 million, representing an increase of 46% year-over-year. This performance was underpinned by a substantial ramp in our production volumes, with total shipments exceeding 1.6 million units, more than tripling from last year, including nearly 240,000 units from robotics lidar.

This expansion reflects both robust demand across markets and our ability to execute consistently and reliably at scale across a broad range of applications from passenger vehicles, humanoid and quadruped robots to robotaxis, robovans, robotic lawn mowers and many more. Together, these have reinforced our position not only as a global volume leader, but also as the partner of choice for high-value, mission-critical applications.

Beyond strong top line growth, we also significantly improved the quality of our financial performance. Gross margin remained healthy at over 40%, while operating expenses, excluding other operating income, came down RMB 88 million or USD 13 million despite substantial revenue growth. This reflects strong operating leverage supported by our disciplined cost management as well as efficiency gains enabled by AI across R&D, manufacturing and operations.

These improvements flowed directly to the bottom line, enabling Hesai to achieve industry-first full year GAAP profitability with net income of RMB 436 million or USD 62 million. Full-year GAAP net income, excluding after-tax gains from equity investments of RMB 148 million or USD 21 million was RMB 288 million. or USD 41 million.

On a non-GAAP basis, full year net income reached RMB 551 million or USD 79 million, with the difference from GAAP net income mainly driven by stock-based compensation. Excluding after-tax gains from equity investments, full year non-GAAP net income was RMB 403 million or USD 58 million.

Kindly note that we have already delivered GAAP net income for 3 consecutive quarters and non-GAAP net income for 5 consecutive quarters, demonstrating the sustainability of our earnings performance.

Just as importantly, this profitability was paired with strong cash generation. We delivered positive operating cash flow of RMB 117 million or USD 17 million during the year, marking our third consecutive year of positive operating cash flow, while our net assets grew to around RMB 9 billion or USD 1.3 billion.

Today, we operate with the most robust income statement and balance sheet in the global LiDAR industry, reflecting our ability to scale technological leadership while maintaining a solid financial foundation. Building from this position of strength, we are entering 2026 with a dual focus, scaling lidar leadership while proactively expanding into new growth opportunities.

We expect our core lidar business to deliver shipments of 3 million to 3.5 million units in 2026. This expanded scale will reinforce our operating leverage, supporting sustainable profitability and steady cash generation. At the same time, we expect to maintain resilient gross margins through ongoing innovation and disciplined operations.

Additionally, and perhaps most excitingly, 2026 marks the beginning of commercialization for our new state-of-the-art products, which we believe will become the second growth engine for Hesai in the next decade. As we invest to advance these strategic priorities, we expect to drive a strong and resilient bottom line as we scale in 2026.

For the first quarter of 2026, we expect net revenues to be between RMB 650 million and RMB 700 million or USD 93 million to USD 100 million, representing year-over-year growth of approximately 24% to 33%. We also expect revenue momentum to strengthen progressively each quarter throughout the year.

To conclude, 2025 was a pivotal year that enhanced the quality and scale of our business. Building on this momentum, we are positioning to become the key enabler of physical AI, digitizing the real world, redefining how humans and robotics perceive and act. As we scale, our goal is clear: to build a globally competitive technology leader grounded in innovation and financial rigor, creating sustainable compounding value to our shareholders and the broader ecosystem.

This concludes our prepared remarks today. Operator, we are now ready to take questions.

[Operator Instructions] Your first question comes from Tina Hou with Goldman Sachs.

Congratulations on raising the volume guidance. And also, look forward to the new product launch. So my question is mainly focused on the Robotics business. Wondering if management can give us more details about the different verticals, including robotaxi, robovan as well as humanoid robot. How do you see the businesses pan out in 2026 and then beyond?

Thank you, Tina. It's Andrew here. I will take this question first. As David just quoted Jensen Huang's speech at CES, 2026 marks the ChatGPT moment for physical AI, where our lidar provides the crucial sub-centimeter special accuracy, serving as the indispensable bridge between the carbon-based world and silicon-based intelligence.

Because of this structural shift, our Robotics business is truly blooming everywhere. We are incredibly proud to share that according to industry trackers, Hesai is now ranked #1 across major robotics lidar submarkets.

Let me take a moment to walk you through the key Robotics verticals that may be of interest to our investors.

First, humanoid and quadruped robot. We see humanoid and quadruped robotics as a significant long-term opportunity. At the core of this vision is the need for precise perception and action as any robot interacting dynamically with the physical world relies on accurate sensing. This makes lidar a critical and ultimately standard component for positioning, navigation and obstacle avoidance.

We are currently ranked #1 in humanoid and quadruped robot segment according to GGII and have secured orders from leading players, including Unitree, HONOR Robot, Galbot, Magiclab and Vita Dynamics. We expect annual shipment in this segment to reach 5-digit levels in 2026.

Our JT128 lidar was deployed across Unitree's robot at the 2026 Spring Festival Gala and was selected for its superior range and reliability, enabling large-scale synchronized movements with high precision and stability.

Second, robotaxi. Hesai is the world's largest robotaxi lidar supplier according to Yole report. Our main and blind spotting lidars are widely deployed among Chinese leading players, including Pony.ai, WeRide, Baidu Apollo Go, DiDi and Hello. Globally, we have secured a supply agreement with a wide area of top autonomous driving companies across North America, Asia and Europe.

In short, we collaborate with nearly every key player worldwide, an important differentiator from our peers. Whether ADAS or mechanical lidar solutions are selected by robotaxi customers, our revenue model scales with their fleet size, number of lidars per vehicle and ASP.

As leading operators accelerate large-scale deployments, we expect exponential fleet growth to drive rapid revenue expansions for Hesai. For robotaxis, we anticipate 5 to 10 lidars per vehicle to ensure a full 360 degrees coverage.

Thirdly, robovan. The robovan sector is undergoing a major transformation. No longer limited to closed campuses, robovans are increasingly operating on complex urban rails. Supported by favorable government policies and proven business models, the market is projected to scale from 5 digits to 6 digits of robovans in 2026. Each robovan typically features 2 to 6 lidars.

Hesai is ideally positioned to capture this growth. We are the core LiDAR supplier for leading robovan players globally, including Zelos, Neolix, and Meituan and DoorDash, serving as the sole supplier for many. GII recently ranked Hesai #1 in lidar design wins for this sector.

Several players that previously relied on competitors' products are switching to Hesai this year, underscoring our role as the go-to hardware partner in the accelerating commercial robovan market.

Fourthly, robotic lawn mowers. The robotic lawn mower market is a major growth opportunity for our Robotics business. Global annual lawn mowers sales reached about 20 million units, yet lidar-equipped robotic lawn mowers account for just 1% to 2%, highlighting a huge untapped market as consumers adapt smarter, hands-free yard care.

Hesai is moving aggressively to capture this space. Since launching the JT Series 3D lidar at CES 2025, cumulative deliverables have already exceeded 200,000 units by 2025, supported by strong global partnerships with leading brands, including Dreame, MOVA and Nexlawn.

We recently secured a milestone agreement to exclusively supply 10 million JT lidars to Dreame and MOVA, ranked #1 globally by Frost & Sullivan for lidar robotic mowers in 2025. This record-setting order signals a fundamental industry shift, establishing lidar as the standard for high-end smart yard products and ushering in a new era of outdoor robotics perception.

As a quick summary, across these diverse applications, our Robotics business sits at the heart of the ecosystem, consistently delivering relatively higher ASPs and strong margins. After shipping 200,000 Robotics lidar units in 2025, accelerating momentum across these segments gives us full confidence that volumes will at least double in 2026. In the long term, new types of robots will begin to adopt lidar.

For example, new technologies, 2-wheel scooters recently integrated our FTX lidar for autonomous operation. The robotics market could have a TAM several times larger than ADAS. After all, you can drive only one car, but in the future, 10 robots could be working alongside you. Tina, that's my answer to the question just raised.

Your next question comes from Tim Hsiao with Morgan Stanley.

This is Tim from Morgan Stanley. Congratulations on the strong results and sustained industry leadership.

I just want to have a quick follow-up questions also about robotics market because the market is apparently very interesting, exciting and highly focused by investors. But we noticed that the founders of Hesai have also invested in a company called Sharpa, which has been gaining a lot of attention recently.

So just want to understand how should we view the relationship between Hesai and Sharpa? And is there any opportunity for business cooperation with Hesai within that year? And how does management view the future technology and supply chain synergies between the two entities? That's my question.

Thank you, Tim. Thank you for the question. And it's actually a great topic, and I also wanted to offer from my side.

First, I want to clearly define the structural relationship. Hesai and Sharpa are two fully independent operating entities. There is no relationship of equity subordination or operational control between them. What were the co-founders of Sharpa were responsible solely for strategic guidance at Sharpa as a core shareholder role, and we do not hold executive position for actual operational growth.

Our primary and full-time identities remain the CEO, CTO and the Chief Scientist of Hesai, and our focus and energy are dedicated to Hesai. Sharpa possesses its own mature and independent team.

While looking ahead, we remain open to future collaborations where it makes strategic and commercial sense as it can create an actually compelling win-win dynamic. Both companies can apply their technologies in real-world scenarios while benefiting from shared insights and industry-leading expertise.

For example, as an AI robotics company, Sharpa may utilize Hesai's products while Hesai as a hardware innovator may explore deploying humanoid robots in its automated production line over time. At the same time, Sharpa's progress in AI could broaden the perspective of founders and the Hesai team and potentially inform our long-term innovation road map.

That said, I want to emphasize that the coordination, if any, in the future; will be conducted strictly on fair and market-based terms with the objective of maximizing long-term value for Hesai's shareholders. Based on our preliminary estimate of the future humanoid robotics market and the growth of Hesai, such operation will only contribute a small portion of our business.

As Hesai continues to evolve into a key enabler of physical AI, digitizing the real world, redefining how human and the robotics perceive and act, we remain focused on executing our core strategy. This includes strengthening our leadership in lidar, advancing our next-generation eyes and muscles product portfolio and driving sustainable long-term growth by building out the Hesai ecosystem.

We believe the addressable market we're targeting over time expand well beyond the traditional lidar segment, and we're truly excited about the journey ahead. This is hopefully helpful information to help you understand what Hesai and Sharpa each are trying to do and the possible synergies and the collaborations between the two entities. Thank you, Tim, for the question.

Your next question comes from Jeff Chung from Citi.

This is Jeff from Citi. First of all, congratulations, fantastic results. So my first question is that we have the first quarter revenue guidance. So could you give us more color on the first quarter volume guidance? And separately, we recognize Hesai did a great job with the sequential OP margin improvement in the past 4 quarters. Could you give us more color on the first quarter and the full-year GP margin and OP margin guidance?

Thank you, Jeff. I will take this question, and I'll try to address our 1Q and the full year guidance for 2026 to the extent I can. For the first quarter of 2026, we expect the total revenues to be between RMB 650 million to RMB 700 million, representing a solid year-over-year growth of approximately 24% to 33%.

On the volume side, we anticipate total shipments to be in the range of 400,000 to 450,000 lidar units, including around 100,000 units from Robotics. We have delivered GAAP net income for 3 consecutive quarters and non-GAAP net income for 5 consecutive quarters and expect to maintain this momentum.

It is important to note that due to typical automotive industry seasonality and the timing of the holidays, we do expect a sequential decrease in deliveries compared to the seasonal high we saw in the fourth quarter last year. This is entirely consistent with our historical patterns.

However, the fundamental demand for our lidars remains exceptionally strong in 2026, and we expect both revenues and shipment volumes to increase sequentially over the course of 2026. We are highly confident in our accelerating momentum and our ability to maintain a healthy financial profile as we execute our 2026 road map.

Looking ahead to 2026, we see it as a true inflection point. On one hand, we anticipate strong demand for lidar in both passenger vehicles and robotics, which is expected to drive meaningful increase of our full year 2026 revenues. Correspondingly, we are raising our shipment guidance to a record 3 million to [ 3 ] million units for this year, with both ADAS and Robotics lidars expected to roughly double year-over-year.

While volume is scaling rapidly, we do anticipate a potential decrease in blended ASP. That's mainly due to, first, modest volume-based pricing and standard annual decline for our larger order strategic OEM customers. That's mainly for the ADAS products. And secondly, a shift in product mix towards certain lidar products with a relatively lower unit prices, such as the AT series, FT series and JT series, typically around 1 to couple of hundred U.S. dollars each.

Though these products will account for a larger share of deliveries and revenue compared with our traditional high ASP Robotics products such as Pandar and XT Series. That said, we are highly optimistic about our top line and margin resilience because of several strong positive catalysts accelerating in 2026 and 2027.

First, lidar is rapidly transitioning from an optional add-on to a standard configuration, successfully penetrating the mass market for vehicles priced between RMB 100,000, which will continuously drive up overall the penetration rate.

Second, Level 3 vehicle deployment in China will drive multi-lidar setups, pushing lidar content per vehicle to as high as $500 to $1,000 range. We have already secured multi-lidar design wins with our core customers, including Li Auto, Xiaomi and Changan, featuring 3 to 6 lidars per vehicle, with SOP planned for 2026 to 2027.

Third, our overseas ADAS business is expected to start contributing in as early as 2026, marking the beginning of global ADAS lidar mass adoption with international ADAS programs typically carrying higher ASPs. We expect our partnership with NVIDIA to roll this game forward.

Fourth, our Robotics business continues to gain momentum across diverse applications and customers, and it typically carries a relatively higher ASP and margin compared to ADAS.

Finally, our newly second growth engine, the eyes and the muscles of physical AI, will serve as a powerful new driver for our long-term growth. Stay tuned for two new products that we plan to launch in the coming months, each targeting at RMB 1 trillion TAM.

On the profitability front, through continued cost optimization across ASIC design, supply chain and manufacturing and with the launch of our FMC500 SoC to improve cost structure in ADAS products, we expect our group blended gross margin to remain resilient in 2026, despite a strong increase in ADAS lidar shipments. As a result, we are confident that the profits from our core lidar business will continue its solid growth trajectory.

Additionally, and perhaps most excitedly, 2026 marks the beginning of commercialization for our new state-of-the-art products, which we believe will become the second growth engine for Hesai in the next decade.

In short, we are entering 2026 with accelerating shipments, robust revenue growth, a highly disciplined margin profile, solid bottom line increase and exciting new growth engines. Jeff, that's my answer to your question. Thanks for that.

Your next question comes from Aaron Wang with Jefferies.

This is Aaron from Jefferies. I just have a quick question on our guidance. Last year, we had a profit guidance for the full year. I was wondering if the company will also provide a full year net income guidance for 2026.

Thank you, Aaron. Given the differences in compliance requirements and listing rules between the U.S. and Hong Kong market, as you know, we just listed in Hong Kong, and to align with the best disclosure practices for dual listed companies; we have decided not to provide specific full year net income guidance at this time.

However, I want to emphasize that this adjustment in disclosure does not reflect any lack of confidence in our business. On the contrary, underpinned by our solidified customer base, undisputed industry dominance and a disciplined cost structure, we are fully confident in maintaining our growth trajectory of revenues, shipments and profits in 2026.

At the same time, we highly encourage investors to look forward to our new business initiatives. We are investing strategically in these areas, and they are expected to become Hesai's second growth engine. Aaron, that's my answer to your question.

Your next question comes from Nora Min with UBS.

This is Nora from UBS. Thank you for trusting me with the most exciting question. So what is the master plan behind this non-auto, non-lidar new product? Would you share with us a bit of timeline, a bit of progress, a bit of more detail?

Thank you, Nora. Our guiding mission has always been to empower robotics and elevate lives. We have never defined ourselves solely as a lidar company. So as Jensen Huang and David repetitively mentioned, we believe 2026 will be the ChatGPT moment for physical AI. We are entering an era where AI will truly understand the rules of the physical world and learn to interact with it, which will trigger a big bang in robotic applications.

The physical AI revolution is accelerating at an unprecedented pace, but many of its critical building blocks are still in their early stages. These gaps represent enormous white space opportunities. Hesai is repositioning its role in the new era as a key enabler of physical AI, digitizing the real world, redefining how humans and robotics perceive and act.

In the next few months, we will launch two groundbreaking products, each targeting a mass trillion RMB market. First, the eyes, enhancing perception and situational awareness beyond what is currently possible; and second, the muscles, delivering precise, powerful motion control for robots and autonomous systems.

Regarding the financial outlook of these two new products, we anticipate initial revenue contributions from these new products beginning as early as 2026. Within 5 years, we expect this business to rival or even surpass the scale of our current lidar segment. Within a decade, it has the potential to scale another tenfold lidar -- larger.

As we expand into the broader physical AI ecosystem with our upcoming eyes and muscles products, our core advantages come from strategic foresight and a decade of lidar mass production experiences. We tackle challenges head on, refining our products to lead in performance, quality and cost simultaneously.

Building the muscles of physical AI naturally extends our expertise in materials, simulation, design and precision manufacturing, backed by our proprietary ethics, in-house production and rigorous quality management to deliver reliability, scalability and extreme performance at scale.

For the eyes, our strength comes from world-class software and algorithm capabilities seamlessly integrated with our hardwares. Years of R&D in 3D risk construction and rendering recently earned us an award at the September 2025 SIGGRAPH Challenge, a premium global event showcasing the pinnacle of computer graphics. We are truly excited to bring these best-in-class algorithms to life in our soon-to-launch hardware tools.

Together, all these capabilities let us push physical boundaries and raise performance ceilings, supporting our new positioning as Hesai evolves into a key enabler of physical AI, digitizing the real world, redefining how humans and robots perceive and act. Nora, that's my response to your question.

Your next question comes from Jessie Lo with Bank of America Securities.

This is Jesse from Bank of America Securities. Congrats on the great results. So my question is surrounding the NVIDIA cooperation. So following the announcement of us selected as the partner for NVIDIA DRIVE AGX Hyperion 10, what are the next steps? Or what could we expect to see in the coming years? And what differentiates us from the peers in this collaboration?

Yes. This is David. Maybe I will offer some insight and our interpretation of such a collaboration. So first of all, I wanted to just help people understand the NVIDIA -- the platform is beyond only the computational hardware. It's the full stack solution, meaning it's the hardware, the software and the data.

And then we are the selected partner for lidar. What that means is that, obviously, in the end, NVIDIA has customers and the customers will ultimately decide the vendor. But as we are already selected by NVIDIA.

It just makes this process a lot easier in the following way. And the first is that the system, the sensor setup, the computation is already a complete system, and that's proven. Obviously, let's say, somehow you wanted to pick a different vendor who's not on the list, it just make it harder for you to verify that.

And then that's actually the smaller part of the problem. The much bigger problem is the rest, including training the model and also data collection and the verification of such a system, right? You can imagine for NVIDIA to provide such a full stack solution to all the robotaxis and the Western OEMs that they're working with you need a large amount of data they already have for the project we already have with NVIDIA, that's with Hesai lidar.

So now let's say, for whatever reason, obviously, I will not understand or support, but they have to use a different lidar. And then you immediately have to face the challenge that what do you have to do with the model we train and the data we collected for the past actually years of collaboration.

So it's not impossible, it just make it very inefficient if you had to do that. So -- and that's one of the reasons that we are super excited and definitely honored to be in this program. And we're also motivated to work alongside with NVIDIA when they are working with customers globally, promoting such a unified solution.

And to me, this actually is the smartest way to push the autonomy because in the end, it's less important if you have different components. It's important that if you have one solution that works and then try to utilize and not reinvent, we will utilize the same solution with all those customers.

And I do believe NVIDIA also shared the same vision, and that's why we are now working very closely with them in supporting them with our latest sensors and in qualifying them in different parts of the world and try to develop and accelerate the programs they already have and the new programs that they will be signing.

Your next question comes from [indiscernible] with CICC.

This is Dani from CICC. Congrats on your strong results last year. I have two questions for you. The first one is about the price. What's your outlook on the trend of your ASP decline? And my second question is, could you please share more color on your methods for further cost reduction?

Thank you, Dani. We wouldn't suggest our investors read too much into total and blended ASPs. It's really just a simple math, and the decline is mainly driven by product mix. ADAS lidars, which are generally lower priced than our Robotics lidars, are taking a bigger share. As Level 3 ramps up, our blind spotting FTX lidars, which are lower priced than long-range ATX lidars, will push blended ASP down further. So this isn't really about price, it's mostly about mix.

That said, ADAS lidars follow the typical annual automotive price declines. For example, ATX is expected to carry a price tag around $150 in 2026, which is already near an optimized cost structure. So we expect the future declines to narrow. Over time, this will be offset by structural growth, more lidars per vehicle and high-performance, higher-priced L3 products like ETX as well as expansion beyond China.

Looking ahead, we see clear and durable pathways to further reduce lidar costs driven by scale, technology and manufacturing excellence. First, scale is a powerful lever. After delivering 1.6 million units in 2025, tripling year-over-year, we are guiding 3 million to 3.5 million units in 2026. This step-change in volume will meaningfully dilute fixed costs and strengthen our supply chain leverage.

Secondly, our proprietary technology, chip technology is structurally lowering our BOM. With 100% in-house development of core modules and our FMC500 SoC integrating MCU, FPGA and ADC functions, we are replacing costly discrete components with a highly efficient single-chip solution, reducing cost while improving performances. Meanwhile, our in-house fab integration is expected to ramp by 2026, further improving our cost structure.

Finally, our highly automated in-house manufacturing drives compounding efficiencies. By standardizing core architectures and continuously improving yields, we expect to maintain a healthy margin profile in the future. Thank you, Dani.

Your next question comes from Frank Tao with CMBI.

I'll add my congrats on the upbeat shipment volume guidance as well. Could management share with us your outlook for the operating expenses in the year of 2026?

Thank you for raising this question. We are very pleased with our progress in expense management, as we guided at the beginning of last year. For year 2025, our operating expenses actually came down by RMB 88 million despite our substantial revenue growth. This clearly reflects the strong operating leverage in our business, supported by our highly disciplined cost management.

A key driver behind this is that AI is at the heart of how we work. We firmly believe that any company not fully embracing AI in 2026 will inevitably be left behind by the market. Because of this, we will continuously and aggressively embrace AI to boost our operational efficiency, transform our workflows and strengthen profitability.

So far, this proactive approach has already delivered tens of millions of renminbi in measurable cost savings and significantly improved our productivity.

Looking ahead to 2026, we anticipate a modest mid-teen increase in overall OpEx, primarily due to RMB 200 million invested in new eyes and muscles products in R&D. Otherwise, excluding new business spend, OpEx is expected to be well managed, flat or even down in single digits in 2026, demonstrating our discipline and AI adoption. Thank you.

That concludes our question-and-answer session. I'll now hand back to Yuanting Shi for closing remarks.

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.

Hello, ladies and gentlemen. Thank you for standing by. Welcome to Hesai Group's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] 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.

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.

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 2025 alone and are the first to do so globally. We've also led the long-range automotive LiDAR market for 7 consecutive months, capturing an impressive 46% share in August, 1.5x the second player and 2.4x 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 9-month GAAP net income of RMB 283 million, achieving our full year target of RMB 200 million 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 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 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 2 to 5 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 Eye B 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 3 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 3 to 6 LiDARs per L3 vehicle, representing a system value of roughly USD 500 to USD 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 8 main and blind-spot LiDARs will be supplied entirely by Hesai.

Internationally, we have 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 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 USD 614 million after the greenshoe 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, 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.

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 169x oversubscribed, while the international tranche attracted demand of more than 14x the available shares.

In total, we raised USD 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 RMB 795 million or USD 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 20 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, 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 USD 36 million in Q3, bringing our 9 months total to RMB 283 million or USD 40 million. We've already hit our full year profit target of RMB 200 million to RMB 350 million, 1 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 USD 21 million. Excluding these gains, quarterly net income would have remained strong at RMB 108 million or USD 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 USD 49 million to RMB 450 million or USD 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 USD 140 million and RMB 1,200 million or USD 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 a proven profitability. We're building competitive advantages that will keep compounding over time. We are more energized than ever to seize the opportunities ahead. This concludes our prepared remarks today.

Operator, we are now ready to take questions.

[Operator Instructions] Your first question comes from Tina Hou from Goldman Sachs.

Congratulations on a 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 this year and enter into price discussion with customers next year. So 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, Tina. So I understand your question. I will try to cover the -- our, like guidance or forecast or color for the current year and also year 2026. Let's talk about the 2025 year, full year guidance first.

On revenue side, our Q4 revenues are expected to reach about RMB 1.0 billion to RMB 1.2 billion, bringing full year 2025 revenues to approximately RMB 3.0 billion to RMB 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 3 quarters of 2025, we shipped about close to 1 million 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 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 of 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 million 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 million 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 million 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 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 content per vehicle to USD 500 to USD 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 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 LiDAR in ADAS is expected to help offset pressure on blended ASPs.

In short, we expect to enter 2026 with a clear path towards 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...

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

Your next question comes from Tim Hsiao from Morgan Stanley.

This is Tim. Congratulations on the robust results 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 product. So how should we think about the peers, the mainstream product like EMX versus the key volume driver of the 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. So how should we think about the advantage of SPAD-based digital LiDAR? So I also want to get some updates from the management. Yes, those are two questions from my side.

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 facing -- always facing very strong competitions from quite a few players, and you name 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 time line to release each generation of product, right? And in the mechanical LiDAR era was like a Pandar128. It was really the king of the world. We don't have to go there.

Then 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 was also relatively expensive with a higher ASP than the competitors. And most importantly, people believe that's the highest quality, highest 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 that we received way 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 time line 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 competitor released a product after us, 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 released a product like half a year or a year after us before our next generation, there always some interesting features. But in the end, if you zoom out and look at the overall results, we -- at least so far, we 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. So hopefully, we'll be able to continue the trend. We will 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.

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 on SPAD. SPAD stands for Single Photon Avalanche Diode, 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 on 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 2, 3 years ago, not in large volume, but it is 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 look at them, we feel like it will 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 and 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. 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 is trying to find a solution. But today, if you look at the long-range SPAD, people always tell you with a high sensitivity, there's always a higher chance of false trigger, 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 try to buy off-the-shelf components that is the latest and just put it in. Our goal is to incorporate whatever is mature enough as a safety component. And then put in latest and the greatest. That has to be in that order. Your reliability, safety has 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.

We always try to explain to the market. It's almost like your invisible airbag. Just to make it simple for people to understand, you probably don't want to sacrifice the chance of a new airbag when you know there is challenge of false triggering and you definitely want to be able to solve that. 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 such an interesting technology that everyone is carefully evaluating.

Your next question comes from Jeff Chung from Citi.

David, this is such a great result and congratulations with the excellent earnings. So I have a question on L3 for David. So any sign for the improvement of the product mix and LiDAR per car? And any view on the Level 3 legislation in both China and Europe?

And I also got a question for Andrew. So it looks like the 4Q 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 of why you're so confident on this?

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 multi LiDAR vehicles in year 2025. Huawei's AITO M9 with 4 LiDARs, AVATR 12 with 4, Zeekr 9X with 5 and NIO ES8 with 3, 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 3 to 6 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 USD 500 to USD 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 increased 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.

Thank you, Andrew. And this is David. I wanted to also give you a little more insight on how I think about this problem. 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 2 to Level 3, right?

In the Level 2 era, we're looking at an airbag, right, or a seat belt. Then of course, it's important. Of course, it's saving lives. But if 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 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 we're at there. That's why I think feel -- 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? And if you buy a Level 2 car, at most, it gives you an hour or 2, a day back to you, right? But for Level 2, it doesn't even quite give it back to you. They ask 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 4 or aka 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 the 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. So that's the way I look at Level 3 and especially Level 4.

And the total dollar amount on a car, maybe not 10x, but people's tolerance is much higher because it's creating roughly 10x of the value, if not more, comparing to the Level 2 system we used to be on. And that's why people should be more excited about the total content and the value create as a complete sensor suite.

Your next question comes from Jesse Lo from Bank of America Securities.

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 that -- 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 billion, comparing to roughly 800 million in Q3. If that achieves the additional net profit comparing to Q3 will be roughly RMB 80 million pretax.

If you look at our first 9 months results in this year, our total or accumulated net income is about 256 -- sorry, it's USD 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 3 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 profit will fall in the range that we just mentioned.

Okay. Operator, let's move on to the questions from BofA.

My question is on -- could you share some color on 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 Hesai's wallet share? And second, how do we think about the pricing strategy of such customer given its much higher vehicle sales?

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 AT128P 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 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 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.

Your next question comes from Aaron Wang from Jefferies.

My question is about Robotics side. Given the increasing demand in robotic area in the coming years, could management share more color on our robotic shipments in 2026 and also in the next few years, and also the proportion of different end markets and our product mix in this segment?

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 part, 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, 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 8 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 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 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 year 2025. This new product serves as a wide range of robotics applications. Home, factory and agricultural robots are clear front runners, freeing people from routine work and creating real value from day 1.

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 volume could double in year 2026 versus 2025, and we plan to share updates on developments along the way.

Your next question comes from Chunsheng Xie from Huatai Securities.

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 the demand scale or volume you are expecting for the next year?

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, Leapmotor, 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 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.

Your next question comes from Sia Huang from SPDB International.

This is Sia. 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 design wins? And how do we expect the contributions of overseas revenue for the next 2 to 3 years?

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, robotrucks to robovans and factory automation. For example, we are proud to be the exclusive supplier for Motional's next-generation all-electric robotaxi. And as we shared earlier, we also signed a multiyear deal worth over USD 40 million with a leading U.S. robotaxi company, with deliveries running through 2026 and room for more as their fleet 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 heat 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. 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 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 will 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.

Your next question comes from Lou Jia from BOCI.

Congratulations on the excellent results. My question is related to our 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. So could you share with us more about the potential new areas beyond the LiDAR, Hesai is considering expanding into in the future?

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 the extremely large TAMs that we feel like we are best positioned for. I'll go through some of the things that's on my list.

I think the first thing is still sensing itself because not only for robots and also for cars, we're -- especially for cars, we're looking at safety. And for safety, you're 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 safety to the next level, including a longer range, higher density and being able to recognize different materials, being able to measure speed, we're 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 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 sensors see better, and number two is making the sensors 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 won't 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. 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're 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 quality capability as a whole, and we feel like there is a very good chance we'll be able to leverage that into more infrastructure business that's beyond sensing.

And I'd like to conclude with one of the new quote, 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'd 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.

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

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.