• Revenue: RMB539.4 million (USD76.9 million), surpassing the high end of guidance.
• Lidar Shipments: Over 134,000 units, marking nearly 50% sequential growth.
• Gross Margin: Approximately 47.7%.
• GAAP Net Loss: Narrowed for four consecutive quarters.
• Fourth Quarter Revenue Projection: Nearly USD100 million.
• Fourth Quarter Net Profit Projection: Estimated USD20 million.
• Fourth Quarter Lidar Shipments Projection: Expected to reach 200,000 units.
• Full Year Profitability: Anticipated on a non-GAAP basis for 2024.

• Warning! GuruFocus has detected 2 Warning Signs with HSAI.

Release Date: November 26, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Hesai Group (NASDAQ:HSAI) surpassed the high end of its revenue guidance for the third quarter, achieving net revenue of RMB539.4 million.
• The company delivered over 134,000 lidar units in the third quarter, marking nearly 50% sequential growth for the second consecutive quarter.
• Hesai Group (NASDAQ:HSAI) is on track to achieve full-year profitability on a non-GAAP basis for 2024, making it the first automotive lidar company worldwide to reach this milestone.
• The company has secured new platform wins with major EV manufacturers, including Leapmotor and a premium EV brand backed by a leading Chinese automotive group.
• Hesai Group (NASDAQ:HSAI) has expanded its global reach, securing development projects with a top three OEM in Japan and signing a cooperative framework with SAIC Volkswagen.

Negative Points

• Hesai Group (NASDAQ:HSAI) is facing legal challenges, including being relisted by the DOD on a different basis, which could impact its reputation and customer confidence.
• The company anticipates a potential low season impact in the first quarter of 2025, which could affect demand and margins.
• There is uncertainty regarding the detailed breakdown of shipments between ATX and AT128 for 2025, which could impact revenue projections.
• Hesai Group (NASDAQ:HSAI) faces competition from Huawei, which has a significant share in the intelligent driving market and operates within its own ecosystem.
• The company's operating expenses are expected to grow by 10% to 15% on a non-GAAP basis in 2024, which could impact profitability.

Q & A Highlights

Q: What's the latest development regarding the contention between COFI and USB OD, and when do you expect the overhang to be fully removed? Are all projects scheduled for 2025 in the United States still on track? A: This is David Li. The DOD removed Hesai from the 1268 list in October, which was a win for us. However, the DOD relisted us on a different basis, falsely accusing us of associating with the Chinese military. We are seeking open dialogue with the DOD to correct these errors and look forward to proving the government's new analysis is unlawful in court in the coming months.

Q: Should we expect 2025 to be the first full-year GAAP profitable as well? A: This is Andrew Fan. We are on a steady path towards profitability in the fourth quarter of this year, with projected revenues approaching $100 million and deliveries reaching 200,000 units. For 2025, we expect solid top-line growth and well-controlled expenses, targeting profitability for the full year.

Q: Regarding 2025 volume, revenue, and margin guidance, what should we think about in terms of 2025 overall? A: We have secured significant design wins for new car models achieving SOP in 2025 and beyond. We expect to ship millions of units throughout 2025 and 2026. Revenue contribution from ATX will start to increase quickly in 2025. Excluding NRE revenue, our Q3 gross margins are about 40%-plus.

Q: What's the main lidar production for the customer in robotics, and what are the technology differences between the robotics and ADAS areas? A: This is Andrew Fan. For industrial robotics applications, we have secured new orders from both domestic and international clients. Products like Panda OT and XT are popular in this segment. Robotics lidar ASP is higher than ADAS due to volume differences. Robotics lidar focuses on wider FOV and better resolution rather than longer range.

Q: How do you see the cooperation with OEM brands in the Huawei ecosystem going forward? A: This is David Li. Huawei is a competitive player, and their ecosystem uses Huawei's solutions at a system level. It's unlikely we will become a component supplier within Huawei's ecosystem. Our strategy is to maximize our market share outside of Huawei's ecosystem, and we have been successful with OEM customers who don't use Huawei solutions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.