WeRide Inc. (WRD) Earnings Call Transcript

Good morning, and good evening, ladies and gentlemen. Thank you for standing by, and welcome to WeRide's Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note that today's event is being recorded. The company's financial and operating results were released by the Newswire earlier today and are currently available online. Joining us today are WeRide's Founder, Chairman and CEO, Dr. Xu Han; and CFO and Head of International, Ms. Jennifer Li. Before we continue, I would like to refer you to the safe harbor statement in the company's earnings press release, which also applies to this call as of today's call will include forward-looking statements, including WeRide's strategies and future plans. Actual results could differ materially from those stated or implied by these forward-looking statements as a result of various important factors, and please refer to the Risk Factors section of the company's U.S. prospectus filed with the SEC for a full disclosure of these risk factors. Please note that all numbers stated in the management's prepared remarks are in RMB terms, and we will discuss non-IFRS measures today, which are more thoroughly explained and reconciled to the most comparable measures reported in the company's earnings release and filings with the SEC. With that, I'll now turn the call over to the company's Founder, Chairman and CEO, Dr. Tony Han. Please go ahead.

Hello, everyone, and thank you for joining us today. This past quarter has been both exciting and full of progress. As we write, we remain committed to our long-term vision, transforming the future mobility through safe and accessible driverless solutions. Over the past few months, our teams have reached significant milestones, most notably the rollout of our robotaxi service to Dubai, Riyadh and Shanghai. These new locations expand our global footprint to 10 cities around the globe, making a major step forward. We also have -- we also partnered with Lenovo to launch our latest computing platform, HPC 3.0. This breakthrough offers a new level of cost effectiveness and scalability for Level 4 autonomous vehicles. With that in mind, let's take a look at some of the key highlights from this quarter. We have made major progress in expanding our global robotaxi operations, and this is just beginning. Today, we operate the largest public commercial robotaxi fleet outside the U.S. and China. The Middle East is a strategic priority for WeRide and it will remain one of our key growth regions throughout 2025. In 2023, we became the first company to be granted a nationwide commit in UAE. And last December, we launched our partnership with Uber. In just 6 months, the WeRide-Uber robotaxi fleet has tripled in size, now covering roughly 50% of Abu Dhabi's core areas, including major highways and airports. By year-end, we aim to further scale the fleet to hundreds of vehicles and expand service into new areas such as Khalifa City, Masdar City and the Mall of downtown Abu Dhabi. This growth is expected to double our ride volume. On average, each robotaxi is expected to complete dozens of rides in a typical 12-hour shift with each typical ride exceeding 6 kilometers. We have also begun driverless testing in Abu Dhabi, paving the way for commercial driverless launch in the months ahead. We couldn't be more excited about what's to come. In June, we kicked off testing in Dubai and anticipate launching our pilot operation later this year. During this initial phase, a safety driver will be presented in the vehicle, much like our approach in Abu Dhabi. Our ultimate goal is to introduce a full driverless service in Dubai next year. As part of our strategic plan with Uber, we are expanding commercial robotaxi service to 15 additional cities. Earlier this month, we partnered with the Transportation General Authority of Saudi Arabia to launch the Kingdom's first ever robotaxi pilot in Riyadh. The initial rollout covers key locations, including King Khalid International Airport, major highways and several city center destinations. Riyadh is now third city where WeRide and Uber have introduced robotaxi services together. We are also making waves in China, where our robotaxi service not only serves as a proving ground for our technology, but also plays a vital part of our commercial operations. This month, at the World Artificial Intelligence Conference, we announced our debut in Shanghai through our collaboration with Chery and Jinjiang Taxi. Together, we are launching our autonomous rides to major cities -- major city landmarks, including the Shanghai World Expo Center, Pudong International Airport and Shanghai Disney Resort. On the heels of our robotaxi success, new opportunities are emerging for the commercialization of our other L4 products. In Guangzhou, our robovan W5 has secured a second round of permits following its successful debut in April. In Singapore, we launched fully driverless robobus operations in Sentosa, the first of its kind in Southeast Asia. Meanwhile, in Paris, we partnered with Renault Group for the second consecutive year to provide robobus shuttle service at a prestigious Roland-Garros tennis tournament. These milestones reflect our commitment to safety and our proven track record of transporting tens of thousands of passengers around the world. What truly sets us apart isn't just our ability to commercialize, but our relentless drive to innovate. Earlier this month, we unveiled HPC 3.0, our proprietary computing platform developed in collaboration with Lenovo; HPC 3.0 featuring dual NVIDIA Thor X chips. It delivers up to 2,000 TOPS of AI computing power, making it one of the most powerful computing platform for L4 autonomy. This full auto grid computing platform with a design 10 years of lifespan is rigorously tested under extreme weather conditions. Not only does it deliver exceptional performance, it also cuts the cost of our autonomous driving suite by 50%, positioning WeRide strong for large-scale commercial deployment. HPC 3.0 is already integrated into our GXR robotaxi, making it the world's first mass product produced Level 4 autonomous vehicle using NVIDIA Thor chips. In partnership with Chery, we have also introduced our next-gen robotaxi CER, which is now ready for mass production. CER is built with 5-layer redundancy across the core systems, including the steering system, braking system, communication system and power supply, ensuring we maintain the same high safety standards proven over past 2,200 days of public operation. As we continue to scale our operations, policy compliance remains a critical pillar of our strategy. We are incredibly proud of the trust we have earned globally. We are now the only company in the world whose products were granted autonomous driving permits in 6 countries. Each of these permits represents not only the right to operate, but also a stamp of recognition showing that our vehicles meet the high standards wherever we go. To date, we have logged more than 40 million kilometers of real-world autonomous driving mileage, continuously making our system smarter, safer and more reliable. Now I will pass to our CFO, Jennifer Li, to discuss the company's financial performance.

Thank you, Tony. Hello, everyone. Before we dive into the Q2 financials, I want to highlight that all figures are in RMB and comparisons are year-over-year unless stated otherwise. Now let's discuss our second quarter financial performance. We delivered total revenue of RMB 127.2 million, up 60.8% year-over-year, driven by strong growth across both product and service segments. This performance underscores the accelerating commercial momentum of our global strategy. Product revenue delivered strong growth of 309.6% year-over-year to RMB 59.8 million in Q2, driven by steadily increasing demand for our robotaxi and robosweepers. Robotaxi revenue reached a record high of RMB 45.9 million, up 836.7% year-over-year, marking its highest ever contribution to group revenue at 36.1% since 2021. This growth reflects our global market leadership. We now operate the largest robotaxi fleet in the Middle East with rapid expansion in Abu Dhabi and Saudi Arabia's first-ever robotaxi pilot operation in Riyadh. We also have strong regulatory momentum. WeRide is the only company with autonomous driving permit in 6 countries, which means our technology meets a high global safety standard. This demonstrates our technology advantages and encouraging success of our globalization strategy. Service revenue grew 4.3% year-over-year to RMB 67.4 million, supported by a RMB 35.8 million increase in intelligent data services and L4 operational support, which is partially offset by the completion of legacy ADAS R&D contract. Group level gross profit increased 40.6% to RMB 35.7 million for the second quarter with a group level gross margin of 28.1%, underscoring our continued commercial leadership in the industry. This healthy margin reflects the strength of our international expansion and robotaxi business growth. Operating expense increased 42.5% year-over-year to RMB 487.8 million, with R&D accounting for 65.4% of the total. To break down this further, R&D expense increased by 33.1% to RMB 318.9 million in the second quarter of 2025 compared to the same period of 2024. Excluding share-based compensation, R&D expense increased by 50.5% to RMB 280.3 million. The increase in R&D expense was primarily due to an increase of RMB 45.1 million in personnel-related expense from headcount increase as well as average salary increase. Also, there is an increase of RMB 31.5 million in services for R&D projects. Administrative expense increased by 71.3% to RMB 155.1 million. Excluding share-based compensation administrative expense increased by 93.8% to RMB 75.6 million. This increase was primarily due to an increase of RMB 28.9 million in professional service fees, mainly related to audit and legal compliance services. Selling expense increased by 12.9% to RMB 13.8 million. Excluding share-based compensation, selling expense increased by 17.5% to RMB 12.1 million. We continue to prioritize our talent strategy, recognizing that a growing team of high-caliber profession remains pivotal to sustain our technological leadership. Together with our expanding commercial outreach, those investments are laying a resilient foundation for long-term competitiveness. Our net loss decreased by 1.7% to RMB 406.4 million in the second quarter of 2025. On a non-IFRS basis, the net loss increased to RMB 300.6 million, mainly due to continued investment in R&D and the broader operating activities. As of June 30, 2025, we hold a total capital reserve of RMB 5.8 billion, including RMB 4.1 billion in cash and cash equivalents and time deposits, RMB 1.7 billion in wealth management products and RMB 15.4 million in restricted cash. We believe our sustainable liquidity position will continue to fuel robust R&D efforts and support our scale-up ambitions. In conclusion, our recent progress in driverless activities, which is now underway in Abu Dhabi and the recent launch in Riyadh, Shanghai and Singapore validate our path to commercialization. With Robotaxi unit economics improving and partnership accelerating, we are confident our ability to convert global potential into long-term value. With that, operator, we are now ready to take some questions.

[Operator Instructions] And our first question will be coming from [ Liping Zhao of CCC ].

Good evening Tony and Jennifer. Congrats on your strong results. For Tony, could you elaborate a little bit about how should we consider your company's multiproduct strategy? What is the relationship between robotaxi and other products such as robobus? And for Jennifer, we see an expanding revenue contribution of your robotaxi business. Is this trend going to sustain in the coming quarters? And what are the key drivers?

Okay. So thank you for the questions. I will answer the first one, and I think Jennifer can follow up with the second one. So this is about our multiproduct strategy. I think all over the world, among all autonomous driving companies, I mean, leading top-rated, leading autonomous driving company, WeRide is the only company having this multiproduct strategy. And at WeRide, we take a one platform approach that is we build up a universal platform called WeRide One. And that one actually -- that platform powers multiple urban mobility applications, including all of the products you mentioned. Among all of this, robotaxi is our flagship user case. And -- but what is the advantage of this one, okay? The Advantage one, there are several advantages of this strategy. One is like this setup give us access to a huge pool of high-quality of L4 data. That means the data you collected with a robosweeper or with a robobus actually can be used for robotaxi. And during -- over the past 8 years, people keep on talking about in order to build a great robotaxi or any L4 products, you need to cover a lot of long-tail corner cases. These corner cases are very rare. There's no guarantee like you can use your robotaxi to capture all corner cases. However, if we have robosweeper, robovan and robobus all over the city, then we have much bigger, 4 or 5x bigger chance to capture this very precious corner case so that we can improve our system. And besides for the marketing expansion reason, not every market is actually ready for a full-blown robotaxi service yet. and that is the reality. So our multiproduct lineup gives partners and governments the flexibility to roll out autonomy in a way that fits their pace and priorities. For example, take Paris, Singapore and Japan as examples. The regions -- these countries actually having some problem of aging population and a shrinking public transport workforce. For them, robobus is often the entry point to L4 autonomy. Starting with robobus actually help us to build public trust and gives regulators time to develop the right framework. It's a smart way to actually avoid cold star problem that often stops the new tech rollouts. And also, I'm proud to share with you that because all these products and we have already worked with all governments, I'm appointed as a member of Singapore's Steering Committee on AVs. Chaired -- this committee actually is chaired by the Acting Minister for Transport in Singapore, Mr. Jeffrey Siao. The committee is tasked to looking to ensure AVs are safely integrated into Singapore's land transport system, create new jobs and improve everybody's connectivity for resident. Actually, it is a great honor for us to contribute to this important national initiative and also to support the development of AVs through strategic guardianship and leadership. So overall, I think with all these products, and we have many more opportunities. Many times more efficiency in data collection and many times more robust in supply chain. And so I believe this strategy is one key factor that make WeRide so successful. That's all I want to say about this first question. And Jen, do you want to answer the second question?

Yes, I'll take the second question. For the revenue contribution on robotaxi side, we have seen strong momentum in our robotaxi revenue, and we believe this trend is here to stay. In Q2 2025, robotaxi revenue hit a record high, accounting 36% of the total revenue. And going forward, we expect it to continue and remain to be a major revenue contributor as we continue to scale globally and lead the charge in commercialization of the robotaxi. Our core engine are driving the growth are below. So first of all is on the fleet expansion side. As we roll out more robotaxi and launch operations in the overseas market, a larger fleet directly translates into stronger revenue. Secondly, our robotaxi runs a triple growth engine. It started with the hardware sales and it follows with the service revenue as well as the revenue sharing. While the hardware anchors the growth today, the service and service revenue as well as the revenue sharing model offers the long-term upside as our operation mature. Thirdly, we are targeting markets with a stronger unit economics, especially in those with a higher price per kilometer. This is a key factor in scaling revenue efficiently. So robotaxi isn't just part of our product lineup. It's the heart of our global strategy. That will be all for my answer, yes.

And our next question will come from Tim -- the of Morgan Stanley. Again, Tim of Morgan Stanley.

This is Tim from Morgan Stanley. Congratulations on the solid progress in the robotaxi business. I have 2 questions. The first one is about the autograde HPC 3.0 platform. Apparently, it's a supreme process that the new generation platform could cut the cost by 50%. So just want to know that when are we going to deploy the HPC 3.0 platform on our next generation Robotaxi? And when are we going to start the mass production? And in the meantime, I also want to know if there will be any design changes to revise the next generation Robotaxi seat that can help to really enhance the passenger user experience. So that's my first question.

Okay. Thank you, Tim. So first of all, about the one question, I think HPC 3.0 is already on road. So we have spent more than 2 years working on this very exciting project. And now finally, we got the results, a very satisfactory result. Our Robotaxi GXR is the world's first mass production L4 autonomous driving robotaxi actually with NVIDIA Thor platform. As people know, like Thor is currently the most advanced auto-grade computational platform produced by NVIDIA. So we have achieved that, okay? So I do believe HPC 3.0 with that dual Thor X chipset is a game changer. Why is that? Because the computational power is absolutely next level. Previously, competitors' computational platform is around anything between 500 TOPS to at most 1,000 TOPS. But now our fully autograde computational platform is 2,000 TOPS. And also, this actual horsepower allow us to process more sensor data using large models and have lower latency all in real time. So that will -- that must lead to much better user experience. And I also want to emphasize making a computational platform of 2,000 TOPS is quite hard, making it full auto-grade is much harder, okay? This is actually really critical. And there's a lot of industry standards such as ISO 26262 and functional safety and AEC-Q100 for quality, we have to handle all of this and actually the HPC 3.0 meet the standards. And also, HPC also cuts our manufacturing cost by up to 50%. So it's ready for large-scale mass production. That's very important breakthrough. And Also, one major improving in terms of our planning of this algorithm is actually with this enhanced computational platform, we can launch a groundbreaking free Pick Up, Drop Off called “PUDO” setup for users. Now, at Beijing Yizhuang, and we achieved this kind of PUDO functionality. So, Pick Up, Drop Off. Of course, you cannot drop off at any street that is not allowed to pick up and drop off. But as long as municipal government allow us to pick up and drop off, we can achieve that kind of functionality. So the user experience has been improved a lot. Okay? That's my answer to the question.

That's super helpful. And my second question is also about robotaxi. As Jennifer mentioned during the presentation, WeRide leads the pack to hold AD permits in 6 countries. And I think Tony, you mentioned that this is just beginning. So just want to know that how many permits currently are in our pipeline where we can get by end of this year? And separately, excluding China, what's WeRide's current fleet size in those countries globally? And what's our expansion target for Robotaxi by end of this year and for 2026? That's my second question.

I'll take this question. So, about the permit side, right? The granting of the permit, it's a rigorous progress in each country. We are making responsive progress every step along the way. Now we have obtained the driverless testing permit in Abu Dhabi, and we expect to upgrade the testing permit to driverless commercial permit in the coming months, which is a huge step for Abu Dhabi. And we will have a similar progress will take place in other countries. On fleet size-wise, we have now totally, we have a fleet size of more than 1,300 autonomous vehicles globally, and we're just still growing. And now about a little bit less than one third of the fleet is outside China. In the domestic market, so our focus will be just on steady policy-aligned expansion so wherever the policy allows us, we will just go to those places. We are building on those existing open zones and open regulator progress. And recently, we just got the autonomous driving permit in Shanghai together with Chery. And in China, we expect by end of this year, we aim to add hundreds more vehicles to our fleet. And internationally, which is more a focus, like for the earning, and you can see, you can tell that we can see that tremendous upside, especially in those regions, like say Middle East, Singapore, Europe where the market potential and a unit economics are highly attractive for Robotaxi deployment. Governments in those regions are also setting very ambitious goals. I'll give you one example. The Saudi Arabia's Transport General Authority has publicly committed that they will reach 25% autonomous driving penetration by 2030. Similar plans were also announced by Abu Dhabi and by Dubai. So that sends a clear signal that autonomous driving products will be a key part of the region's future mobility. So we did a simple math. If by hitting like a similar penetration rate in the region, that will give us the room of 30,000 or more, like 80 products in this region, like for Robotaxi as example. Yeah, so we're moving fast to capture those early opportunities in those developed countries. So our goal is to develop hundreds and maybe next year thousands vehicles globally. This year we'll do hundreds, and next year hopefully if the permit allows, we will love to do thousands. And we would like to focusing on those markets where the demand, the support, and the infrastructure are already lining up. Those are the targeted area. Yeah, I hope that answers your question, Tim.

Yes, thanks for sharing all the details and congratulations again, team. Looking forward for more good news. Thank you.

And our next question will be coming from Jiajie Shen of JPMorgan.

This is Jiajie from JPMorgan. I have 2 questions. The first one is regarding the business model of your robotaxi in the long run. How should we think about it? Through your collaboration with ride-hailing platforms, what kind of role will they play? And my second question is regarding the HPC. It's glad to see you launch the new generation of the computing platform. And my question is, how is HPC 3 going to drive your scaling from here? And what's its implication to your unit economics?