[Management View]
Hesai Group reported a strong Q1 2025 with total revenue reaching RMB 525.3 million ($752.4 million), a 46% YoY increase, driven by significant growth in LiDAR unit shipments. Nearly 200,000 LiDAR units were shipped, marking the third consecutive quarter of over 150% YoY shipment growth. Gross margin was healthy at 42%, and operating expenses decreased by 9% YoY. The company achieved an 84% reduction in net loss, confirming non-GAAP profitability. The ATX LiDAR, priced at $200 per unit, entered mass production and is expected to contribute significantly to Q2 deliveries.

[Outlook]
Management maintained full-year revenue guidance at RMB 3 billion to 3.5 billion for 2025, with shipments of 1.2 million to 1.5 million units and a gross margin target around 40%. Q2 2025 revenue is guided to RMB 680 million to RMB 720 million, with shipments expected to exceed 300,000 units. The company expects to reach GAAP breakeven in Q2 2025 and reconfirmed a full-year GAAP net profit target between RMB 200 million and RMB 350 million. Domestic production capacity is on track to reach 2 million units annually by year-end 2025, and a new Southeast Asia factory is planned to begin operations by late 2026 or early 2027.

[Financial Performance]
- Revenue: RMB 525.3 million ($752.4 million), up 46% YoY
- Unit Shipments: Nearly 200,000 units, more than tripling YoY
- Gross Margin: 42%
- Operating Expenses: Decreased by 9% YoY
- Net Loss: Narrowed 84% YoY to RMB 70.5 million ($2.4 million)

[Q&A Highlights]
Question 1: Are you maintaining your annual shipment guidance for 1.2 to 1.5 million units, and how do you see the trajectory for gross margin?
Answer: We are maintaining our 2025 revenue guidance at RMB 3 to 3.5 billion, with total shipments of 1.2 to 1.5 million units and a 40% gross margin. Q2 revenue is expected to reach RMB 680 to 720 million, with shipments over 300,000 units. The ATX LiDAR, priced at $200, is ramping up and expected to account for 50%-60% of Q2 deliveries. We anticipate reaching GAAP breakeven in Q2 and maintaining a healthy gross margin.

Question 2: How do you foresee the ADAS LiDAR ASP trend with the introduction of new products?
Answer: The blended ASP will decline due to the ramp-up of ATX mass production. The ATP LiDAR will see a moderate ASP decline to around $350, while the high-performance AT LiDAR will remain at about $500. The ATX LiDAR, priced at $200, is expected to ship in high volumes. We project LiDAR content per vehicle to stay in the range of $500 to $1,000.

Question 3: Can you share progress on domestic capacity expansion and the new Southeast Asia factory?
Answer: We are on track to reach 2 million units of annual capacity by year-end 2025, with new production lines starting mass production in Q3. The Southeast Asia factory lease was signed in May, with operations expected by late 2026 or early 2027. Total CapEx for 2025 is projected at $30-$50 million.

Question 4: How do you view competition from local providers winning projects from key clients like Xiaomi and Leap Motor?
Answer: The LiDAR industry is competitive, but we have observed a trend of ADAS customers switching to Hesai. Winning a contract does not guarantee mass production or meaningful revenue. We focus on high-quality clients and sustainable industry growth.

Question 5: Can you provide more details on the new Infinity I platform and its potential impact?
Answer: The Infinity I platform includes three configurations (IA/IB/IC) for L2-L4 autonomy, with shared architecture and over 85% parts commonality. The AT1440 and ETX LiDARs are priced above $500, while the ATX is priced around $200. All three models have secured series production design wins, and we aim for stable gross margins despite the product mix.

Question 6: What is the impact of tariffs on pricing and supply chain, and how are you addressing this issue?
Answer: The U.S. market accounts for only 10% of our total revenue, with 5% under DDP terms. We focus on operational efficiency and cost control to manage tariff-related costs. Our profitability outlook already assumes a 45% tariff scenario, and we have not seen major order cancellations.

Question 7: What is the difference between ATL and ATX LiDAR, and will more OEMs adopt specialized versions?
Answer: The ATL LiDAR is an enhanced version of the ATX, customized for Li Auto's specific requirements. While the ATX remains the mainstream solution, specialized versions may be adopted by OEMs with particular needs.

Question 8: How do you view the adoption of ADAS LiDAR by Robotaxi players, and will you develop specialized products for Robotaxi?
Answer: ADAS LiDAR adoption by Robotaxi players balances price and performance, enabling faster fleet growth. We expect larger LiDAR orders for Robotaxi, boosting revenue and gross profit. Mechanical spinning LiDARs remain important for global Robotaxi companies, but ADAS LiDARs provide a cost-efficient solution for 360-degree perception.

Question 9: When will you deliver LiDARs to global OEMs, and what is the impact on volume and NRE income?
Answer: We are actively driving POC programs with global OEMs and tier-one suppliers. We have secured design wins with five global OEMs, including an exclusive deal with a top European OEM. The market potential is significant, with global LiDAR penetration nearly zero today.

Question 10: How do you respond to market speculation about a dual listing in Hong Kong?
Answer: We periodically evaluate all options to protect investors' interests. There is no legal or factual basis for delisting from NASDAQ, and we are fully compliant with regulatory requirements.

Question 11: What is the impact of the latest AEB draft on the LiDAR industry?
Answer: The AEB draft accelerates LiDAR adoption, making it a critical safety feature. The penetration rate is quickly increasing, and regulatory discussions support the importance of LiDAR in advanced ADAS functions.

Question 12: What is the outlook for operating efficiency improvement and CapEx?
Answer: Full-year CapEx is projected at $30-$50 million. We expect RMB 100 million savings in GAAP OpEx for 2025. Our platform-based development allows for efficient scaling, and we aim for stable R&D investments as revenue and gross profit grow.

[Sentiment Analysis]
Analysts and management maintained a positive tone throughout the call, highlighting strong financial performance, strategic expansion, and robust market demand. Management expressed confidence in achieving full-year targets despite external challenges.

[Quarterly Comparison]
| Metric | Q1 2025 | Q1 2024 | YoY Change |
|-------------------------|------------------|------------------|------------|
| Revenue | RMB 525.3 million| RMB 359.7 million| +46% |
| Unit Shipments | 200,000 units | 65,000 units | +207% |
| Gross Margin | 42% | 38% | +4% |
| Operating Expenses | RMB 220 million | RMB 242 million | -9% |
| Net Loss | RMB 70.5 million | RMB 440 million | -84% |

[Risks and Concerns]
- Tariff exposure and potential impact on pricing and supply chain
- Competitive pressures from local and global LiDAR providers
- Dependence on successful execution of capacity expansion and new product launches
- Regulatory changes and their impact on market dynamics

[Final Takeaway]
Hesai Group delivered strong Q1 2025 results, driven by significant growth in LiDAR shipments and improved financial metrics. The company maintained its full-year guidance and outlined strategic plans for capacity expansion and international growth. Management addressed competitive pressures and tariff concerns, emphasizing operational efficiency and cost control. The positive outlook and robust market demand position Hesai well for continued growth and profitability in the coming quarters.