Hesai Group's Q3 2025 Earnings Call: Contradictions Emerge on ADAS LiDAR ASP, Capacity Expansion, Pricing Trends, and 2025 Profitability

Date of Call: None provided

Financials Results

• Revenue: RMB 795 million ($112M), up 47% year-over-year
• Gross Margin: 42%, driven by economies of scale and manufacturing productivity

Guidance:

• Q4 revenue expected RMB 1,000–1,200 million (YoY +39%–67%).
• Full-year 2025 revenue ~RMB 3.0–3.2 billion; GAAP net income raised to RMB 350–450 million; normalized net income excluding equity gains expected within prior RMB 200–350 million range.
• Q4 shipments ~600,000 units; ATX expected to represent ~80% of Q4 volumes; 2026 shipments forecast at least 2–3 million (upside if L3 adoption accelerates).
• Blended ASP pressure anticipated in 2026 but gross margins expected to remain relatively stable due to cost optimization.

Business Commentary:

* Revenue and Profitability Growth: - Hesai Group reported a record net revenue surge of 47% to RMB 795 million, marking its sixth consecutive quarter of robust year-over-year growth. - The growth was fueled by the surging adoption of its category-defining ATX LiDAR and a 14-fold year-over-year rise in robotics LiDAR shipments across expanding applications.

• ADAS Market Leadership:
• Hesai led the long-range automotive LiDAR market for seven consecutive months, capturing an impressive 46% share in August 2025.

• The company's ADAS LiDAR solutions are increasingly becoming standard features in vehicles, with new design wins and partnerships with major OEMs, such as Li Auto, Xiaomi, BYD, and Geely.

• Regulatory Developments and Market Expansion:

• The introduction of conditional approval for L3 vehicle production by the MIIT and the upcoming mandatory safety standard for L2 systems are anticipated to accelerate the adoption of higher-level autonomous driving systems.

• Hesai's product offerings, including the ETX and FTX LiDAR solutions, align well with these regulatory developments, positioning the company for market growth.

• Product Innovation and Technological Advancements:

• Hesai launched its null IB LiDAR solution in April 2025, pairing its forward-facing long-range ETX LiDAR with FTX blind spot LiDARs to offer industry-leading detection capabilities.
• The company's strategic focus on innovation and investment in technology, such as exploring SPAD-based LiDAR solutions, is crucial for maintaining its competitive edge in the LiDAR market.
  
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Net revenue surged 47% to RMB 795M; record GAAP net income of RMB 256M in Q3; company raised full-year GAAP net income guidance to RMB 350–450M; completed Hong Kong IPO raising $614M; Q4 revenue guided to RMB 1,000–1,200M.

Q&A:

• Question from Tina Hou (Goldman Sachs): Color on pricing for next year given annual price declines and competitor dynamics; will OEMs accelerate LiDAR adoption next year and when will mass-market models take off; any color on Q4 and 2026 volume/guidance?
  Response: Guidance: Q4 revenue RMB 1.0–1.2B (bringing full-year 2025 to ~RMB 3.0–3.2B); Q4 shipments ~600k with ATX ~80% of volumes; 2026 shipments expected 2–3M+ with potential blended ASP decline but stable gross margins.

• Question from Tim Hsieh (Logan Stanley): How to view competition (e.g., EMX vs ATX) and the market cadence; update on SPAD-based digital LiDAR advantages and adoption?
  Response: ATX is market-leading by performance, volume and margins and Hesai will follow a disciplined product cadence; SPAD has promise but current noise/false-trigger challenges require in-house mitigations before broad automotive adoption.

• Question from Jeff Chang (Citigroup): Any signs on L3 adoption impacting LiDAR per car and views on L3 legislation in China/Europe? Also, why is the Q4/full-year guidance so confident given steep quarter-on-quarter implied growth?
  Response: L3 momentum is driving multi‑LiDAR vehicles (expected 3–6 units, ~$500–$1,000 content per car); management is confident in guidance because projected Q4 revenue/shipments and normalized earnings (ex equity gains) mathematically support the raised full‑year net income range.

• Question from Aaron Wong (Jefferies): Please share color on robotics shipments for 2026, end‑market mix and product mix in robotics.
  Response: Robotics is higher‑ASP/margin; Hesai holds ~60–70% robotaxi share; JT Robotics shipped ~40k–50k units per quarter in 2025 and robotics volumes are expected to roughly double in 2026.

• Question from Zheng Yu (Huatai Securities): Which OEMs will be key ADAS customers next year and what demand scale/volume is expected?
  Response: Key ADAS customers include Li Auto, Xiaomi, BYD, Leap Motor, Zeekr and Great Wall (with Geely and Chery adding SOPs into 2026); these customers underpin significant SOP ramps and multi‑model adoption through 2026.

• Question from Xia Huang (SPDB International): Status of the project with the top European OEM and broader overseas traction; how should we think about overseas revenue contribution next 2–3 years?
  Response: Hesai has an exclusive design win with a top European OEM and multi‑year overseas robotics contracts (e.g., >$40M); multiple JV wins (VW/GM/Audi/Toyota/Ford) are in SOP and overseas ADAS/robotics contribution should ramp materially starting 2026.

• Question from Lu Jia (VOCI): What new business areas beyond LiDAR is Hesai considering over the next decade?
  Response: Hesai plans to expand into broader sensing (longer range, higher density, material recognition), AI/perception software, 3D environment capture services and adjacent infrastructure leveraging its semiconductor and manufacturing capabilities.

Contradiction Point 1

ADAS LiDAR ASP and Volume Trends

It involves differing statements regarding the impact of product mix shifts on ASP and the overall content per vehicle, which can impact revenue forecasts and investor expectations.

What insights do you have on next year's pricing trends, considering annual price cuts and competitor dynamics? When will mass market models include LiDAR as a standard feature? - Tina Hou (Goldman Sachs)

2025Q3: For 2026, we anticipate at least 2-3 million LiDAR units shipped, but expect a decrease in blended ASP due to product mix, pricing strategies, and annual declines. - Andrew Fan(CFO)

Is Hesai maintaining its 1.2M to 1.5M unit shipment guidance? How is the ADAS lidar ASP trend evolving with the introduction of ATX? - Tina Hou (Goldman Sachs)

2025Q1: Despite ATX's impact on ASP, we remain confident in achieving our full year gross margin target. - Andrew Fan(CFO)

Contradiction Point 2

Capacity Expansion and Capital Expenditure

It involves differing statements regarding the capacity expansion timeline and capital expenditure plans, which can impact operational efficiency and financial projections.

What is the outlook on L3 product improvements and legislation in China and Europe? Why are you optimistic about achieving Q4 growth targets? - Jeff Chang (Citigroup)

2025Q3: We are expanding. Our 2025 CapEx is expected to be around US$30 million to US$50 million. - David Li(CEO)

What impact will ATX, ATP, and other product launches have on ADAS lidar ASP trends? What updates do you have on capacity expansion and CapEx plans? - Jessie Lo (Bank of America)

2025Q1: For capacity, we'll have 2 million units by year-end, and we're expanding. Our 2025 CapEx is expected to be around US$30 million to US$50 million. - Andrew Fan(CFO)

Contradiction Point 3

Pricing Trends and ASP Expectations

It concerns the company's pricing strategy and ASP expectations, which are crucial for financial forecasting and investor confidence.

What are your expectations for pricing trends next year, considering annual price cuts and competitor dynamics? When will LiDAR become a standard feature in mass market models? - Tina Hou (Goldman Sachs)

2025Q3: For 2025, Q4 revenues are projected to be RMB 1.0-1.2 billion, with full-year revenues reaching RMB 3.0-3.2 billion. We expect Q4 shipments to reach approximately 600,000 units, driven by ATX LiDAR. The blended ASP for ADAS is relatively lower due to the shift from AT128 to ATX, despite the latter being priced at $200 with discounts. - Andrew Fan(CFO)

Can you provide guidance on the quarterly volume trajectory, ATX product mix for Q1, and ASP erosion impact? - Tim Hsiao (Morgan Stanley)

2024Q4: In ADAS, we are now in a more stable steady-state ASP price point for ATX, which is in the $200 range. We expect the ASP to remain stable at this price point through 2025, and potentially strengthened thereafter. - Andrew Fan(CFO)

Contradiction Point 4

Capacity Expansion and Production Plans

It involves the company's capacity expansion and production plans, which directly impact its ability to meet demand and drive revenue growth.

Is the top European OEM customer on track, and what are the expected overseas revenue contributions over the next few years? - Xia Huang (SPDB International)

2025Q3: We have secured design wins with top European OEMs, with more in the negotiation stage. Global OEMs are adopting LiDAR for safety, and we expect significant growth in overseas revenue, especially with our robotic applications beyond ADAS. - David Li(CEO)

Can you provide details on capacity and CapEx plans as demand grows in the auto and robotics sectors? - Sia Huang (SPDBI)

2024Q4: Launching new production lines domestically and globally. Capacity expected to reach 2 million units annually by end of 2025. Additional manufacturing facilities in Southeast Asia under review, with full-year 2025 CapEx around USD30-50 million. - Andrew Fan(CFO)

Contradiction Point 5

2025 Revenue and Profitability Expectations

It involves financial forecasts, specifically regarding 2025's revenue and profitability expectations, which are critical indicators for investors.

How should we view competition from new products and the advantages of SPAD-based digital LiDAR? - Tim Hsieh(Logan Stanley)

2025Q3: Our confidence in achieving Q4 growth is based on strong demand for LiDAR in passenger vehicles and robotics, with Q4 revenues expected to surpass RMB 1 billion, driving full-year growth. - Andrew Fan(CFO)

What are your expectations for 2025 revenue and margins as more OEMs join and the ATX product mix evolves? - Tina Hou(Goldman Sachs)

2024Q3: We are on a steady path towards profitability in the fourth quarter of 2024, aiming for full year profitability on a non-GAAP basis. Our cost management remains robust, enabling us to achieve breakeven in Q4. We expect an estimated USD 20 million net profit in Q4. For 2025, our top-line growth will be solid, and cost is well-controlled, targeting full-year profitability. - Andrew Fan(CFO)