Hesai (HSAI) Q3 Earnings call transcript Nov 26, 2024

Hesai Group, a leading LiDAR technology company, recently held its Q3 2024 earnings call, shedding light on the company's impressive financial performance and strategic initiatives. With a focus on operational efficiency and financial discipline, Hesai has shown a remarkable ability to reduce its net loss for four consecutive quarters, setting the stage for projected revenue of USD 100 million and a net profit of USD 20 million in Q4 2024, marking a significant milestone as the first automotive LiDAR company to achieve full-year profitability on a non-GAAP basis.

A Strong Financial Performance Amidst Market Growth

Hesai's Q3 2024 earnings reveal a robust financial performance, with net revenue of RMB 539.4 million (USD 76.9 million), surpassing the high end of its revenue guidance. This success is attributed to a surge in LiDAR shipments, which have seen nearly 50% sequential growth, underlining the growing recognition of LiDAR technology's value in autonomous driving systems. The company's commitment to operational efficiency and financial discipline has been instrumental in its financial resilience and ability to navigate market challenges.

Strategic Partnerships and Market Expansion

Hesai's strategic partnerships with key players in the automotive sector have played a pivotal role in its growth. The company has secured design wins with major global OEMs, including 5 prominent joint ventures in China and 2 Americans and 2 European automotive companies. These collaborations have enabled Hesai to leverage its partners' established network resources and expertise, streamlining operations and meeting global standards more effectively.

Moreover, Hesai's expansion into the global market has yielded promising results, with new developments in Japan's autonomous mobility sector. The company has secured two new development projects with a top 3 OEM in Japan, covering both Level 2+ passenger vehicles and Level 4 robotaxis. This significant presence in the Japanese market underscores the trust placed in Hesai's technology and expertise.

A Look Ahead: Robust Outlook and Challenges

Looking ahead, Hesai is poised for continued growth, with plans to explore opportunities in the broader autonomous mobility market. This market, characterized by a performance-driven approach, offers exciting growth opportunities as new use cases continue to emerge. Hesai's latest flagship 360-degree mechanical automotive-grade long-range LiDAR, OT128, has already made a strong impression, securing contracts with over 90 global and domestic clients.

However, Hesai's journey is not without challenges. The ongoing lawsuit with the U.S. DoD poses a significant hurdle, with Hesai expressing disappointment over the DoD's decision to relist the company despite acknowledging the errors in its earlier decision. The company is committed to seeking open dialogue with the DoD to correct these errors and protect the interests of its shareholders.

Conclusion

Hesai Group's Q3 2024 earnings call presents a clear picture of a company on a growth trajectory, driven by strategic partnerships, operational efficiency, and financial discipline. Despite challenges, Hesai remains optimistic about its future, projecting full-year profitability on a non-GAAP basis for 2024. With a robust financial performance, a strong focus on innovation, and a commitment to expanding its global footprint, Hesai is well-positioned to lead the LiDAR technology market and shape the future of autonomous driving.