Horizon Robotics recently released its 2026 interim report, revealing first-half revenue of RMB 2.055 billion, up 32.9% year-on-year, alongside a net profit of RMB 3.784 billion versus a loss of RMB 5.233 billion in the prior-year period. Driven by fair value changes and other items, the company's net profit actually exceeded its revenue for the period, though after stripping out these one-off gains, its core operating losses continue to expand. Still, the weighting of licensing income with 90% gross margins keeps rising, yet overall gross margin stayed nearly flat as margins in the product solutions segment declined, indicating a slower-than-expected product mix upgrade.

Beyond persistent losses in its main business, Horizon Robotics has sustained net operating cash outflows for a long period, while receivables and accounts receivable turnover days have both climbed, worsening cash collection. Since 2024, the company has raised over HK$15 billion through an IPO, placements, and convertible bonds, and is additionally converting debt into equity to further lighten its burden. CEO Yu Kai has guided toward breakeven by 2028, suggesting that financial and operational pressures are unlikely to ease in the near term.

Core operating losses keep widening, gross margin stalls, product mix upgrade disappoints

Horizon Robotics is a supplier of advanced driver assistance systems (ADAS) and high-level autonomous driving (AD) solutions for passenger vehicles in China. In the first half, revenue reached RMB 2.055 billion, up 32.9%, with net profit of RMB 3.784 billion, turning positive on a book basis from a loss of RMB 5.233 billion a year earlier. Notably, the RMB 3.7 billion net profit topped the roughly RMB 2.0 billion revenue for the period. This is largely attributable to a fair value gain of RMB 5.2406 billion from the convertible loan issued to Volkswagen's CARIAD due to share price movements, plus a one-off gain of RMB 2.169 billion from deconsolidating subsidiary D-Robotics. Neither item relates to operating performance. Excluding these non-recurring items, the adjusted net loss widened to RMB 1.671 billion from RMB 1.333 billion in the prior-year period, up 25.4%, while the loss from continuing operations grew to RMB 1.672 billion from RMB 1.504 billion year-on-year. Despite 32.9% revenue growth, core operating losses rose instead of falling, with overall gross margin hovering around 65%, flat versus last year.

By segment, licensing and services revenue reached RMB 1.129 billion, up 52.7% and accounting for 55% of total revenue, surpassing hardware for the first time as the largest revenue source, marking the most significant structural shift in the company's history. However, the gross margin for product solutions fell to 36.2% from 44.2% in the prior-year period, an eight-percentage-point decline. Product solutions revenue grew just 14.8% to RMB 926 million. Based on financial statements, the average chip selling price was around RMB 417 per unit in the first half, up only 2.4% year-on-year. The flagship Journey 6P chip has yet to ship in volume, with shipments still dominated by mid-to-low-end chips such as the Mono series. The pace of product mix upgrades has been clearly slower than market expectations, with average selling price growth nearly stagnant. Gross profit from product solutions fell 6% year-on-year to RMB 335 million. Against intensifying price competition in the autonomous driving chip market, weak pricing power suggests the company struggles to improve profitability through product upgrades. Licensing revenue with 90% gross margins continues to rise as a share of total, yet overall gross margin has remained almost flat after a sharp decline in 2025, indicating that the product mix upgrade has under-delivered versus market expectations.

Persistent negative operating cash flow, rapidly deteriorating collections, over HK$15 billion raised via direct financing with ongoing debt-to-equity swaps

Beyond recurring losses in its core business, Horizon Robotics faces considerable pressure on its cash position. In 2025, operating cash flow came in at negative RMB 2.106 billion, with cumulative net outflows of RMB 6.5 billion over the past five years. In the first half of this year, total receivables reached RMB 2.981 billion, up 36.5% year-on-year, while accounts receivable turnover days widened to 183.5 days, a surge of 80.3% versus last year, pointing to persistently worsening collection trends. Domestic passenger vehicle retail sales fell 20.2% year-on-year in the first half of 2026, and automakers' own cash constraints are inevitably passing through to upstream suppliers. Given that Horizon Robotics' customer base is largely automakers, the company's operating strain is evident. Meanwhile, research and development spending hit RMB 2.755 billion in the first half, up 21.9% year-on-year and equivalent to 134% of revenue. Cumulative R&D investment over the past four and a half years has approached RMB 15 billion. Such intensive R&D, combined with administrative expenses of RMB 328 million and selling and marketing costs of RMB 354 million, has continued to worsen the company's cash shortfall.

Since its Hong Kong listing in October 2024, Horizon Robotics has carried out multiple large-scale financing rounds within less than two years. In June 2025, the company raised HK$4.719 billion through a placement of 681 million shares; in October of the same year, it raised another HK$6.384 billion via a placement of 639 million shares. In July 2026, it announced a US$450 million zero-coupon convertible bond offering maturing on July 27, 2027. From IPO to public placements and convertible bonds, direct financing in under two years totals more than HK$15 billion, a pace and frequency rarely seen among Hong Kong-listed companies. This not only highlights the company's acute need for capital but also raises serious doubts about its ability to self-fund operations. Following each financing announcement, the share price has dipped to varying degrees, reflecting visible market resistance to continued capital injections. Just last month, Horizon issued 1.302 billion new Class B ordinary shares to Volkswagen's CARIAD at HK$3.99 per share, again using a debt-to-equity conversion to ease liabilities.

Worth noting is that CEO Yu Kai said during this year's results briefing that the company expects to reach breakeven around 2028. This implies that for the next two-plus years, Horizon Robotics will still rely on external financing to sustain operations, a warning signal for a company listed for less than two years.