Hesai Group - Earnings Call - Q1 2025
May 26, 2025
Transcript
Operator (participant)
Hello, ladies and gentlemen. Thank you for standing by. Welcome to Hesai Group's first quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. Please note that today's conference call is being recorded. I will now turn the call over to our first speaker today, Yuanting Shi, the company's Head of Capital Markets. Please go ahead.
Yuanting Shi (Head of Capital Markets)
Thank you, Operator. Hello, everyone. Thank you for joining Hesai Group's first quarter 2025 earnings conference call. Our earnings release is now available on our IR website at investor.hesai.com, as well as via newswire services. Today, you'll hear from our CEO, Dr. David Li, who will provide an overview of our recent updates. Next, our CFO, Mr. Andrew Fan, will address our financial results before we open the call for questions. Before we continue, I refer you to the safe harbor statement in our earnings press release, which applies to this call, as we'll make forward-looking statements. Please also note that the company will discuss non-GAAP measures today, which are more thoroughly explained and reconciled to the most comparable measures reported on the GAAP in our earnings release and SEC filings. With that, I'm pleased to turn over the call to our CEO, Dr. David Li. David, please go ahead.
David Li (CEO)
Thank you, Yuanting, and thank you, everyone, for joining our call today. Let's start with an overview of this quarter's progress. We began with a strong start in 2025, supported by outstanding momentum in our ADAS and robotics segment, and backed by solid financial results. Our shipments more than tripled year-over-year to nearly 200,000 LiDAR units in the first quarter, despite the impact of typical seasonal patterns. This explosive growth supported an almost 50% year-over-year jump in our net revenue. Thanks to sharp execution, operational discipline, and cost control, we're also able to reduce our net loss by an impressive 84% year-over-year. Meanwhile, Hesai's leadership is being recognized across the industry. For the fourth consecutive year, Yole Intelligence, a highly respected independent research firm in Europe, ranked Hesai the number one global leader in automotive LiDAR market share.
According to Yole's 2024 analysis, we ranked number one in three major categories: by revenue, with a 33% share of the global automotive LiDAR market, a 26% share of the global passenger car LiDAR market, and a dominant 61% share of the global robotaxi market. These achievements speak volumes at the pace at which we innovate, scale, deliver, and reinforce our position at the forefront of the industry. Next, let's dive into our latest business highlights, starting with an accelerating momentum in the ADAS market. The 2025 Shanghai Auto Show, one of the world's largest and the most influential auto events, featured over 100 vehicle models with cutting-edge LiDAR technology. Hesai stood out with 12 OEMs at the show using our LiDAR technology, and among the 2025 production models making their debut, Hesai had the highest number of model integrations.
The event shows that automakers are rapidly implementing intelligent driving across their lineups, and that LiDAR is fast becoming a must-have for elevating safety in everyday passenger cars. Our ATX LiDAR is the embodiment of our core belief: safety is not optional, [Foreign language], never second best, [Foreign language], and without limit, [Foreign language]. Designed to be affordable, ultra-compact, and offer best-in-class performance in its pricing category, ATX has been a true champion, driving the democratization of intelligent driving. The sensor has already secured design wins with 12 major OEMs. In May, Li Auto announced its entire L-series EV lineup will be integrated with our ATL LiDAR, a specialized variant of ATX, as standard configuration, delivering even sharper 3D perception.
In addition, we recently secured a major design win with Zeekr to integrate ATX across several of its top-selling models, including a standard integration in the newly launched luxury shooting brake sedan, the Zeekr 007 GT. At the same time, ATX is expanding its reach with extended partnerships, landing new design wins with Great Wall Motors EV brand Ora, Chery's iCar new energy lineup, and an upcoming model from Geely aiming at the mass market. With a rapidly growing roster of leading OEMs and flagship vehicles, ATX entered mass production in Q1 and made an immediate impact with close to 40,000 units shipped in its very first quarter on the market, powering models such as Leapmotor's B10, the industry's first vehicle offering advanced ADAS at the RMB 120,000 price point with LiDAR hardware.
According to public data, Leapmotor's B10 saw over 15,000 orders within just the first hour of its launch in March, with more than 70% opting for the LiDAR-equipped version, reflecting its strong appeal in the mass market. As part of our expanded strategic relationship with Leapmotor, we've secured a landmark order for 200,000 units of Hesai's ATX LiDAR, which is set to power a wide range of Leapmotor's production models starting in 2025. Internationally, we're also achieving breakthroughs. In addition to our exclusive design win with a top European OEM, a multi-year program across both ICE and EV platforms that extends into the next decade, we're excited to share that our business in Japan is rapidly gaining momentum. We recently secured a new proof-of-concept POC development project with a top five global tier-one supplier headquartered in Japan.
This achievement marks the first time they have joined our client portfolio and is a significant milestone in our global expansion, serving as a powerful endorsement to our LiDAR technology in Japan. Hesai has been actively driving five POC programs with four top global OEMs and tier-one suppliers across Europe and Japan. Three of these programs were successfully completed in the first quarter of 2025. Evaluation results from these programs will be shared with Hesai, fostering a deeper collaboration between both parties and further refine and enhance the market appeal of our products. While these POCs do not yet constitute full design wins, they mark significant progress and we are encouraged by the positive momentum as we look ahead to the next phase of development.
As domestic and international OEM demand continues to evolve across level two, level three, and level four platforms, we took a major step forward this April with the launch of our game-changing Infinity Eye, or Chen Li Yi LiDAR solution, alongside three next-generation automotive-grade LiDAR sensors. This new platform, in conjunction with these sensors, is available in three configurations. Infinity Eye A is built for high-level, level four autonomous systems. We achieve this by combining four AT1440 ultra-high-definition main LiDARs with four solid-state FTX LiDARs acting as a blind-spot detector, offering true 360-degree coverage without blind spots. Infinity Eye B is designed for level three conditional autonomy. It features one new ETX main LiDAR, the world's longest-range automotive LiDAR, which can detect up to 400 meters at 10% reflectivity. That's paired with two FTX LiDARs for enhanced blind-spot perception.
For level two ADAS applications, Infinity Eye C brings the perfect balance of performance and cost efficiency using one compact yet powerful ATX main LiDAR. A core feature of this new platform is a shared architecture across our AT, ET, and the FT series that features more than 85% component commonality. This means faster development, lower cost, and seamless scalability. These industry-leading solutions are a direct testament to our product's technical strengths and our holistic approach to satisfying customer needs. Beyond delivering superior performance, we create comprehensive solutions that integrate our cutting-edge technological capabilities with cost-effectiveness. As a result of these strengths, we have won design wins for over 120 vehicle models across 23 OEMs worldwide. Meanwhile, the broader robotics market represents tremendous opportunities, and our LiDAR solutions sit at the core of this growth.
According to Goldman Sachs estimates, China's autonomous mobility market is set for explosive growth and is expected to expand over the next decade from just $54 million in 2025 to $47 billion by 2035. China is clearly on track to become the world's largest autonomous mobility market. In recent months, we've been at the forefront of a new wave of robotaxi breakthroughs across China and beyond. As the main LiDAR supplier, we're powering mass-produced next-generation fleets for Baidu Apollo Go, DiDi, Pony.ai, WeRide, some of which have already expanded onto the global stage. Today, we're proud to be the world's largest LiDAR supplier for robotaxis. We're also thrilled to be accelerating L4 autonomy across both long-haul and last-mile logistics. Recently, we signed a new agreement to bring our ultra-high-definition AT1440 sensor to cargo bots, level four robot truck fleets.
At the same time, we partnered with Zelos [Foreign language] to scale its last-mile delivery operations and the Neolix Xing Shiqi to deploy its unmanned level four vehicles. As level four autonomy moves into commercial deployment, we're proud to be the LiDAR partner helping customers scale smarter, safer, and faster. Beyond transportation, LiDAR is unlocking a world of new possibilities, each bringing fresh opportunities to reimagine the everyday and drive incremental revenue and profit. We believe that every robot needs LiDAR as a core 3D sensor for precise positioning, mapping, navigation, and perception. Take our JT LiDAR, for example. It's been chosen for the next generation robotic lawnmowers, delivering superior accuracy, stability, and efficiency over traditional RTK and the camera-based systems, especially in signal-challenge or visually complex environments. We also recently expanded our partnership with a leading smart home robotics company in China.
Over the next 12 months, we expect to provide 300,000 JT units to this customer, generating meaningful revenue while helping transform everyday consumer products in intelligent LiDAR-driven capabilities. In summary, Q1 has laid a powerful foundation for what promises to be another transformative year for Hesai. We stand at a pivotal moment where breakthrough technology meets a real market readiness. With our unmatched technology leadership and scalable production, we are leading in the industry to shape the future of mobility. We are doing it alongside customers who share our mission to make advanced perception and safety accessible for all. Before I hand it over to Andrew, I want to share some exciting news. In early May, the U.S. District Court for the District of Delaware has officially dismissed Ouster's patent infringement case against us, with no conditions, no financial settlement, and no injunctive relief.
This brings an end to all existing IP actions against us and reaffirms the integrity of our technology. It's a powerful validation of the strength of our IP portfolio and the years of R&D that power it. We are proud that our innovations have not only withstood legal scrutiny but have also prevailed. Our deep passion for technology and our unwavering commitment to R&D continue to give us a real edge, and no legal tactics can change that. With that, I will now turn the call over to Andrew to share more details of our financial performance and outlook. Andrew, please go ahead.
Andrew Fan (CFO)
Thank you, David, and hello, everyone. I'll now go through our operating and financial figures for the first quarter of 2025. For further details beyond what I cover on this call today, I encourage listeners to refer to our earnings release.
Our Q1 results highlight strong, sustained momentum. Total revenues soared 46% year-over-year, reaching RMB 525.3 million or $72.4 million. This impressive growth was fueled by exceptional shipment performance. Nearly 200,000 units were delivered during the quarter, more than triple the volume from the same period last year. Notably, this marks our third consecutive quarter of over 150% year-over-year shipment growth, a clear reflection of both surging market demand and the strength of our operational execution. The surge in shipments was driven primarily by the rapid adoption of our ATX LiDAR among OEMs, with large-scale mass production commencing in Q1. At the same time, our JT LiDAR gained strong momentum with 45,000 units shipped in the first quarter alone, driving our robotics LiDAR shipments to nearly 50,000 units in the first quarter of 2025, with over 600% year-over-year growth.
Meanwhile, our gross margins stood healthy at 42% in Q1, and we cut operating expenses by 9% year-over-year, reflecting the strength of our disciplined cost management. As a result, we narrowed our first quarter net loss by 84% year-over-year to RMB 70.5 million or $2.4 million, while remaining non-GAAP profitable for the quarter, a performance that was significantly stronger than our earlier guidance and especially notable given that Q1 is typically a seasonally slower period. Looking ahead, we are encouraged by the strong momentum we built in Q1 and remain confident in our outlook for the rest of the year. For Q2, we are expecting net revenues of between RMB 680 million or $93.7 million and RMB 720 million or $99.2 million, which would be a 48%-57% increase year-over-year.
This forecast conservatively takes into account the current tariff environment, as well as some expected short-term shifts in customer demand to Q3, mainly from U.S.-bound robotics LiDAR shipments. Despite these considerations, we are projecting total shipments of over 300,000 units in the second quarter, a substantial increase of almost 250% year-over-year. Even more encouraging, we expect to reach GAAP break-even in Q2 and remain firmly on track to hit our full-year profitability targets despite navigating a dynamic tariff environment. As the global environment continues to evolve, we will remain proactive, refining our strategies to ensure minimal disruption to our long-term growth path. We are confident that our products remain highly competitive even in a tariff-impacted landscape. If cost adjustments are needed, we will take a measured approach to pricing, always focused on delivering strong value to our customers.
At the same time, we are prioritizing long-term resilience with strong momentum behind our overseas manufacturing plans to swiftly mitigate geopolitical risks and better serve our global customers. In May, we signed a lease for our new factory in Southeast Asia, a decisive first step forward. To conclude, Q1 represents an exceptional start to 2025 with outstanding performance across revenue, shipments, margins, and cost management. We have laid a solid foundation and are confident in our ability to sustain this positive momentum in the coming quarters. This concludes our prepared remarks today. Operator, we are now ready to take questions.
Operator (participant)
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question.
For the benefit of all participants on today's call, if you wish to ask your question to the management team in Chinese, please immediately repeat your question in English. For the sake of clarity and order, please ask one question at a time. Management will respond, and then feel free to follow up with your next question. Your first question comes from Tina Hou from Goldman Sachs. Please go ahead.
Tina Hou (Head of China Autos Equity Research)
Hi, thanks management for taking my question and congrats on the strong result and strong guidance. My question is mainly regarding our full-year guidance. Since we have seen, I think starting from the beginning of the year, we have seen a very strong take rate for LiDAR from both premium OEMs as well as mass-market ones. Wondering if we're still maintaining our annual shipment guidance for 1.2-1.5 million, or do we see more upside from there?
Also related to that, as the ADAS LiDAR portion becomes larger for our entire portfolio, how do we see the trajectory for our gross margin and where could 2025 total company gross margin end up? Yeah, that's my main question. Thanks.
Andrew Fan (CFO)
Tina, thanks for the question. Let me take this first. Regarding our 2025 full-year guidance, despite the evolving tariff environment, I think we are still maintaining our 2025 revenue guidance at RMB 3 billion-RMB 3.5 billion. The total shipment remained at 1.2 million-1.5 million and 40% in gross margin with RMB 200 million-RMB 350 million gap net profits for 2025. We maintain our 2025 full-year guidance unchanged. I would also like to share some information about our Q2 guidance.
In the upcoming quarter, in the current quarter, our revenue is expected to reach about RMB 680 million-RMB 720 million, a strong year-over-year growth of about 48%-57%, driven by the rapid adoption of LiDAR in passenger vehicles in China. This forecast conservatively takes into account the current tariff environment as well as some expected short-term shifts in customer demand to Q3, mainly from the U.S.-bound robotics LiDAR shipments. In Q1, we shipped about nearly 200,000 units in total, up over 200% year-over-year. We expect the shipments to continue accelerating through the year, with Q2 shipments reaching over 300,000 units. The ATX LiDAR, which has a market price at around $200, entered mass production in Q1 and is ramping up shipments in Q2, expected to account for about 50%-60% of total deliveries in Q2.
With these ATX LiDAR shipments in consideration, our GP margin is expected to remain healthy at around 40%. As you can tell from our Q1 gross profit margin, with the ATX ramping up, our quarter-over-quarter margin still enjoyed a moderate improvement. Therefore, we are still very positive about reaching the full-year gross profit margin targets. On the bottom line, despite the typical seasonality in Q1, we achieved a non-GAAP profitability and significantly narrowed our GAAP net loss by 84% for Q1, well above our previous guidance. We anticipate a further quarter-over-quarter improvement in Q2, reaching break-even point on a GAAP level. That's my responses to the questions of Tina. Hopefully, that can address the questions just mentioned.
Tina Hou (Head of China Autos Equity Research)
Yes, that's very clear. Thanks, Andrew.
Operator (participant)
Thank you. Your next question comes from Jessie Lo from Bank of America. Please go ahead.
Jessie Lo (Director of Equity Research)
Hi, David, Andrew, and management team.
Thank you for taking my question. My first question is regarding the ADAS LiDAR ASP trend. As we currently supply ATX or ATL and also existing ATP products to our clients, and then after we migrate to AT1440 and also ET, and even potentially next year for the overseas clients, how do you foresee this ADAS LiDAR ASP trend?
Andrew Fan (CFO)
Thank you, Jessie. Regarding starting from Q1, since our product mix has started to shift meaningfully with the ramp-up of ATX mass production, our blended or average ASP will be naturally brought down. It does not tell the full story. It is more helpful to look at the ASP volume trends by products. For 2025, we have three variations of the AT series in production. First, our ATP LiDAR will see a moderate ASP decline in the low teens year-over-year, reaching around $350 in year 2025.
The ATP is expected to account for a low six-figure shipment volume in 2025, with production scheduled to conclude by end of this year. We will have the ultra-high performance AT LiDAR built for L3 applications, which carries a higher ASP of about $500 but is being shipped in relatively smaller volume this year. We expect large-scale shipments of these high-performance LiDAR to ramp up starting 2026. Lastly, our ATX LiDAR, most cost-efficient compact version with a market price at $200. It started mass production in Q1 and has already been adopted as a standard feature for many popular car models. For large volume orders, customers typically receive a modest discount of the market price, a common practice across the supply chain industry. While the ATX brings down the blended ASP, it opens up much larger volume potential.
We project ATX to shift in the high six-digit range, possibly up to 1,000,000 units in year 2025. At present, we do not anticipate new market products pricing another half of the ATX. For the foreseeable future, the ATX will remain a flagship long-range front LiDAR, offering high-cost performances. Overall, while the mix is shifting, we believe LiDAR content per vehicle will remain stable in the long run, given its irreplaceable safety and functional value. With the adoption of L3 driving the need for multiple LiDAR units per vehicle to enable full 360-degree coverage, we expect LiDAR content per vehicle to stay in the range of $500-$1,000. Jessie, that's my response to your question.
Jessie Lo (Director of Equity Research)
Thank you, Andrew. I have a second question regarding our capacity and CapEx.
Earlier in the last conference call, we mentioned that towards the end of this year, we will be expanding our capacity domestically to 2 million units. Could you share some of the progress on that capacity expansion? On top of that, you also mentioned that we just found a lease in Southeast Asia. What will current CapEx look like for the Southeast Asia capacity and also the total production units and potential profitability from this overseas plant? Thank you.
Andrew Fan (CFO)
As of now, as you just mentioned, we have about 2 million production capacity guided by end of this year. To give you an update of that, we are building up new production lines starting from Q1, which will begin mass production in Q3. Therefore, this 2 million production capacity is being installed on track.
Also, on top of that, we have more production lines in the planning stage, which we might start building up in this year. It typically takes us four to five months to set up a new production line in China. Our operations are very lean and efficient. Meanwhile, I would also want to comment on our overseas expansion plans. We are making good progress on our overseas manufacturing plants, which are a key part of strengthening our long-term resilience under the current geopolitical environment. To better manage the risk and support our global customers more effectively, we have signed the lease contract for our new overseas factories in May, making a key step forward. We plan to break ground later this year and expect the facility to be up and running by late 2026 or early 2027 to support the demand of our overseas customers.
Our highly automated production technology enables us to set up an overseas production line with controlled and efficient CapEx. To summarize, we expect that our 2025 CapEx should be around $30 million-$50 million in total.
David Li (CEO)
Hi.
Jessie Lo (Director of Equity Research)
Thank you.
Andrew Fan (CFO)
David, go ahead.
David Li (CEO)
Sorry. Yeah, this is David. I want to give you some insight on the ASP. There are really two ways to reduce or improve the cost structure of our products. The first one, I think it is by design. It is really the integrated circuit, the ASICs, and it is really the innovation. For each generation, obviously, we design that roughly two years ahead of the shipment and then for domestic market.
The way we look at it is that, okay, we think about the volume, we think about where we should reach at the price, and we sort of reverse that back into the cost structure. By that time, we already factor in how many we're expected to ship for the lifetime of the product, at least for the first two, three years. That's why if you look at the results of the ASP, it's very predictable. It starts with above $500 and slowly declines, but it's within the expectation because we already designed the cost structure based around that. The second reason is that it's still the economies of scale. As you can see, the ATX and ATL product, while we're shipping this year, the volume is much higher than ATP. It will grow to another level next year with very high certainty.
That's where we see slow decline of the ASP, similarly with products like ETX. But you will not be able to expect a decline that's falling to the range of halving that, simply because if you look at the original design and architecture of such a product, it will have slow decline on ASP, but it doesn't have the room to continue to the 50% level that isn't designed. That's how we see the price will change down the road.
Jessie Lo (Director of Equity Research)
Thank you, David. Thank you, Andrew. This is super helpful. That's all from me. Thank you.
Operator (participant)
Thank you. Your next question comes from Tim Hsiao from Morgan Stanley. Please go ahead.
Tim Hsiao (VP and Equity Research Analyst)
Hi, David, Andrew, and Management Team. Thanks for taking my question. I've got two questions.
The first one is about the competition because we noticed that one of Hesai's local LiDAR peers is reportedly winning the project from brands like Xiaomi and Leapmotor, which I think both are Hesai's key clients. With Management Team concerned about the potential order reshuffles, I think your company used to be the sole supplier to the top-notch car EV makers like Xiaomi. What's the implication to our orders and the potential price competition? That's my first question. Thank you.
Andrew Fan (CFO)
Okay. Thank you, Tim. We do not want to comment on market speculations because ultimately, orders and official announcements speak for themselves. The LiDAR industry has been a very competitive arena since its inception, and currently, only a few players possess massive production capabilities. Hesai's products have earned a strong reputation for the performance, quality, and reliability over time.
Notably, we have observed a consistent trend of our ADAS customers switched from our competitors, which underscores Hesai's robust competitive edge. I would say winning contract doesn't mean mass production and doesn't mean they can generate a meaningful revenue from this contract. Strategically, we chose to collaborate with high-quality, promising clients to ensure reasonable pricing and maintain healthy financials. Our customer base comprises top-tier OEMs, reflecting our commitment to quality partners. Unlike the internet industry, the LiDAR sector requires long-term perspective. Our goal is to build a sustainable industry, avoiding short-term gains at the expense of long-term viability. Achieving a win-win scenario with our clients is our ultimate objective.
David Li (CEO)
Hi. This is David. I think it's kind of unfair for Andrew to ask Andrew to comment on competitors, especially Xiang. Maybe I'll offer some of my market information. I'm actually aware of that, what you mentioned.
I think the speculation is always maybe, and it's difficult for an existing vendor like us to prove the negative. I think it's in every customer's best interest to continue to understand what's available on the market, and they do. Everyone does that. It's just a common practice. In the end, you have to provide your unique value proposition for your quality, your performance, and the pricing as a combo, especially when you already are an incumbent player for OEMs. There's a lot of inertia in it in terms of the data compatibility, and also their vehicles are designed around your sensor. There is a pretty high bar for a second vendor to be able to step in, especially during the phase where everybody is rushing to upgrade their products to the smaller, better sensor to take it to the next level.
The answer is we're actually unaware of it. In the end, you should refer to the announcement of the OEM to know what's really going on, and I would not just make decisions or speculations based on rumors.
Tim Hsiao (VP and Equity Research Analyst)
Great. Thank you very much for sharing the details. My second question is about the new products because during the presentation, I think David also mentioned about the new solutions, the Infinity Eye. I just want to gather a little bit more colors about when do you think the shipments or net production will start and the potential client rings. Of course, the value content would be much higher, but we have the rough idea about the rough range of the value contents and the margin as it is the new solution. Yeah, that's my second question. Thank you.
Andrew Fan (CFO)
Okay. I will first provide a response to the question about our launch of Infinity Eye. We are very proud to be the first provider of a full stack of L2 to L4 LiDAR solutions. We have seen very encouraging feedback from our OEM customers since the launch of our new Infinity Eye. One of its key strengths is its flexibility. Infinity Eye A, B, and C are built on a shared architecture but are tailored to different customer needs and system setups. Depending on the OEM's vehicle platform and software stack, each configuration can support anything from L2 all the way to L4 autonomous driving. All of our primary LiDAR sensors deliver outstanding performance, but each is optimized for specific technical priorities. The AT1440 boasts the world's highest angular resolution, delivering ultra-high definition image-level point clouds.
The ETX, which is a core part of our Infinity Eye B solutions, is engineered for superior ranging capabilities, offering best-in-class detection distances. Both AT1440 and ETX are high-performance LiDARs, each priced above $500. The ATX, which is a core component for Infinity Eye C, priced around $200, represents our cost-effective solutions, combining compact design with robust performances. The choice among them depends on the specific autonomous driving capabilities of our customers. All three models, i.e., AT1440, ETX, and ATX, are suitable for L2 to L4 applications and have all secured series production design wins. These design wins are a strong validation of the Infinity Eye solution's adaptability and technical differentiation across our LiDAR portfolio.
As we repetitively conveyed a message to the market, though we have different price ranges for our different products, when we design the pricing, the architecture of the product, and also the cost components of the product, we always aim at healthy and relatively stable gross margin targets. Therefore, as you can tell from our historical gross profit margin performances, I would assure you that the gross profit margin will not fluctuate significantly in the future due to the change of product mix with these new products launching.
Tim Hsiao (VP and Equity Research Analyst)
Great. Thank you very much for sharing all the insightful information and congratulations on the solid result again. Thank you.
Operator (participant)
Thank you. Your next question comes from Bing Rui Kui from Goethe Haiyong. Please go ahead.
Bing Rui Kui (Senior Analyst)
Hi, Management Team. This is Bing Rui from Goethe Haiyong Securities. Thank you for taking my question and congratulations on the strong result and guidance.
My question is about the tariff. Could you please share some details about the impact of Trump tariffs on pricing, supply chain, etc., and how to deal with this problem? Thank you.
Andrew Fan (CFO)
Okay. We have closely monitored the situations of tariffs, which is changing on a daily basis, and have conducted a thorough analysis of the potential impact. While the tariffs do introduce certain cost considerations, we believe that their impact on our overall business will be limited for three primary reasons. First, our direct exposure is very limited. The U.S. market is projected to account for only 10% of our total revenue in year 2025. Secondly, only 5% of our total revenue or 50% of the revenue from the U.S. is under the so-called DDP terms or delivered duty paid models, where we as the seller bear the cost of tariffs.
Thirdly, our continued focus on operational efficiency and cost control, and also our market position, gives us the flexibility to effectively manage external challenges like those. We have a relatively strong market position against our customers. Moreover, we have several levers, including adjusting the pricing strategies and efficiency gains, which will help absorb or offset these tariff-related costs. When we provided our profitability outlook in our last earnings call, which is March this year, we had already assumed a 45% tariff as our base case scenarios. We have seen some customers front-loaded or rescheduled their orders due to the uncertainty around future policy changes, especially after April. Depending on the current shipment and the delivery schedules, this may shift some of our revenue from Q2 to Q3. That is also part of the reason why our Q2 guidance is presented as a range.
For the full year, we are keeping our revenue guidance unchanged at revenue being RMB 3 billion-RMB 3.5 billion. We haven't seen our major customers canceling their orders due to these tariff changes. For the full-year target, our gross margin target remains healthy around 40%, and we expect the current impact from tariffs on our full-year gross margin and profitability to be immaterial.
Bing Rui Kui (Senior Analyst)
Okay. Thanks for sharing. That's very clear and helpful.
David Li (CEO)
Yeah. I want to also add to the tariff topic. First is, obviously, a small percentage of our revenue today already from the U.S. There are really two types of customers when they face the tariff. A small part will treat this as when it was really high, and they treat this as unacceptable, so they just pause.
They're not canceling because they couldn't find an alternative, but they were pausing for some time until they came back down to where it is now. The other part is actually front-loading more because they realize that there is risk down the road that it could go back up again or facing other challenges, and they definitely don't see an easier solution just to switch over at all. They actually try to buy more, and at the price, they're okay, and they feel like it's a reasonable number, especially now. They just wanted to make sure the continuity of their supply chain is guaranteed. That's why we also see some of the customers placing, let's call that, for lack of a better word, revenge orders. We see both types of customers.
Operator (participant)
Thank you. Your next question comes from Jia Lou from BOCI. Please go ahead.
Jia Lou (Equity Analyst)
Thank you, Management, for taking my question. My first question is regarding our new ADAS product ATL and ATX. We noticed that our key client, Li Auto, has newly launched models all integrated Hesai's ATL LiDAR, which is a customized version based on ATX. Most other OEM customers all choose the standardized ATX version. For Hesai, is there any difference between ATL and ATX in terms of ASP, cost, and gross margin? In future, is standardized ATX will remain as a mainstream solution for OEM customers, or more OEMs will follow Li Auto to adopt a specialized one? Thank you.
David Li (CEO)
I'll just give some of the background of this product. It's a variant, but it's an enhanced and advanced version with enhanced resolution and a few other things.
The main idea behind that is that we wanted to keep the standardized platform for a specific customer like Li Auto. They're very particular about the specific advanced functions of that LiDAR because that's what they see as needed as they develop their ADMAX platform. In a way, it's a customized version for them to best match the requirements of their software. In an ideal world, maybe every customer has something a little differently than others want, but in Li Auto's specific case, we have a very particular requirement that's above the standard ATX, and we were able to meet that. That's the nature of such a product. We don't have additional information on the price or the gross margin, but it remains largely in line with the typical platform.
Jia Lou (Equity Analyst)
Okay. Got it. My second question is related to the Robotaxi LiDAR.
Recently, we see that Baidu, DiDi, Pony all adopt our ADAS product AT series to replace traditional mechanical LiDAR for cost reduction. Just wondering, the usage of ADAS LiDAR by these L4 players, the transitional temporary solution for Robotaxi industry. Looking ahead, will Hesai develop the specialized product series for Robotaxi, or will continue to sell ADAS LiDAR to these L4 players? Thank you.
Andrew Fan (CFO)
Okay. I'm glad that you asked this question as Hesai is the largest Robotaxi LiDAR supplier globally with 60%-70% market share. Our main LiDAR products are widely used by all the top Robotaxi players in China and outside China. Historically, Robotaxi operators have used mechanical spinning LiDARs for small fleet testing and operations. However, recent trends in China indicate an urgent need for scalability in the Robotaxi fleets.
By adopting our flagship ADAS LiDAR on Robotaxi, our customers achieve a better balance between price and performance of the sensors, enabling faster fleet growth and helping them become closer to profitability. As a result, we are expecting to receive significantly larger LiDAR orders for use in our Robotaxi for the years to come. Historically, on the Robotaxi side in China, we expected that moving from smaller scale, high-priced mechanical LiDARs to larger scale ADAS LiDARs will boost our revenue and gross profits in the long run as the Robotaxi business grows in China. Meanwhile, global Robotaxi companies continue to rely on mechanical spinning LiDARs to ensure the highest sophistication of their AD solutions. Take this, for example, from the earnings. We are the exclusive supplier to a top global Robotaxi player, and their fleet has already racked up nearly a million autonomous miles in 2024.
Now, they are gearing up for a bigger expansion in 2025, scaling their self-driving fleet in a big way, all powered by our Panda Series LiDARs. With the Robotaxi market rapidly advancing towards large-scale commercialization, our technology plays a crucial role in enabling safe and reliable autonomous transportations. Also, when our AT128 or ATX type of LiDAR to be deployed in the Robotaxi, this ASIC-based semi-solid state design provides a more cost-efficient solution. However, due to its 120 degrees horizontal field of view, Robotaxi typically requires three to four units of our AT Series LiDAR to achieve 360 degrees perception. Also, advanced algorithm approach. So that's my response to your question. Hopefully, that can cover that.
Jia Lou (Equity Analyst)
Okay. Thank you. Very helpful. Thank you, David and Andrew.
Operator (participant)
Thank you. Your next question comes from Zhang Yu from Huatai Securities. Please go ahead.
Zhang Yu (Senior Equity Analyst)
Hi, David, Andrew, Yuanting. Thanks for taking my questions.
My first question is about the global market. When will we deliver LiDARs to the global OEMs, and what's the impact volume for the next one or two years, and how to estimate the NRE income from the global OEMs this year? Thank you.
Andrew Fan (CFO)
Okay. Hesai has been actively discussing and cooperating with our global customers. Recently, we have actively driving five POC programs with four top global OEMs and Tier 1 suppliers across Europe and Japan, including the most recent POC awarded in Q1 by a top five global Tier 1 supplier headquartered in Japan. While these POC contracts are not yet full design wins, they play a critical role in the decision-making process. OEMs typically define final product specifications based on POC outcomes and use this phase to validate and co-develop surrounding components.
As a result, suppliers engaged earlier in the POC stage are strategically positioned and may have a higher chance of securing the design win once the OEM issues a formal RFQ. We have secured design win partnerships with five global OEMs, four through their JVs, and most importantly, an exclusive design win with a top European OEM, as we announced in last quarter. This long-term deal extends into the next decade across both their ICE and EV vehicle platforms, representing the largest global program in the automotive LiDAR industry. When we refer to the largest global program, it signifies not only our collaboration with this leading global OEM, but also the extensive worldwide reach of our shipments, spanning China and numerous other international markets.
Our quality and performance have become our name card, and our ability to deliver a comprehensive solution bundling both long and short-range LiDARs makes us the go-to partner for global OEMs. The market potential is just massive. Global LiDAR penetration is nearly zero today, but as both ICE and EVs started to adopt ADAS and LiDAR, we are unlocking an additional $30 billion-$60 billion market in the overseas market in the long run, driven by 60 million overseas vehicles at a $500-$1,000 LiDAR content per car, as we estimated. That's my response to your question, Zhang Yu.
Zhang Yu (Senior Equity Analyst)
Thank you. It's very helpful for me. Thank you. That's all my questions.
Operator (participant)
Thank you. Your next question comes from Sia Huang from SPDBI. Please go ahead.
Sia Huang (Equity Research Associate)
Good morning, Management team. Thanks for taking my question.
This is Sia from SPDBI, and I've got just one question about our dual-listing plan. As market rumor saying that Hesai has confidentially filed for a Hong Kong listing, how do we respond to this?
Andrew Fan (CFO)
Okay. Thank you for asking this question. Regarding the market speculation about our dual-listing plan in Hong Kong, I have no comment on that. That said, we periodically evaluate all possible and available options, including listing on other stock exchanges, to protect our investors' interest and sustain our growth trajectory. Rest assured, our commitment to the company's long-term success in the capital markets remains that fast. I guess the reason why you asked this question or the market is so focused on this is related to the market rumors about potential delisting of China ADRs from the US market.
Based on the advice of our SEC compliance counselors, there is no legal or factual basis on the current NASDAQ listing rules or past precedents that support the delisting of Hesai from any government bodies. To date, we have received no inquiries, no investigations, nor communications from NASDAQ concerning the potential delisting or similar actions. Based on the currently available information, we do not find any concrete legal risk of being delisted from NASDAQ. At this time, we are fully compliant with all the regulatory requirements from the NASDAQ market.
David Li (CEO)
Yeah. I do not know if people will respond to a confidential felon. At the entire point, it is confidential.
Sia Huang (Equity Research Associate)
That is very helpful. Thank you, David, and thank you, Andrew.
Operator (participant)
Thank you. Your next question comes from Joanna Ma from CMBI. Please go ahead.
Joanna Ma (Managing Director and Senior Analyst)
Hi, Management team. Thank you for taking my question. And congrats on the solid result.
I have a question regarding could you please share with us your review on impact on LiDAR industry development from latest AEBS draft for soliciting opinions? Thank you.
David Li (CEO)
I'll take it on the AEB question. Yeah. I think it's very important. Hello? Can you hear me?
Joanna Ma (Managing Director and Senior Analyst)
Oh, yes. Yes. Thank you.
David Li (CEO)
Yeah. I think it's taking such a technology to the next level. Historically, the idea is if you buy a car with a LiDAR, you have a few more functions, some type of NOA, blah, blah, blah, blah, blah. And people can always say, "No, I feel very comfortable driving my own car," or, "I feel like I'm safer than the car driving itself." That is where LiDAR was about.
Starting from last year, AEB takes us to a new domain in which it will trigger no matter you turn it on or not if it sees a risk. Essentially, it becomes the future of invisible airbags. It is even better than airbags because, obviously, it can stop a crash before it crashes. The entire penetration of AEB with LiDAR became much faster than the previous round for that reason. This is what we see. The entire LiDAR industry or the ADAS industry is now rushing to have most of the vehicles have a 100% take rate for LiDARs. Almost everybody is doing that because now you buy a car, you do not want people to see to worry about not having a LiDAR.
Now we're also seeing a lot of the discussion at the regulatory level because clearly, having advanced ADAS function with ability to detect in complex environments is a must. Most people agree LiDAR is a critical part of such an effort. That's why you see the penetration rate is quickly going up. Now the marketing for different OEMs are focusing on not only the computation but also the LiDAR. Many, many car launches today will have explicitly a page about LiDAR adoption in their car because no one wants to be not future-proof.
Joanna Ma (Managing Director and Senior Analyst)
Okay. Got it. That's really helpful. My second question, also, can Management share with us your outlook on the room for operating efficiency improvement in the coming years? Also, are there any updates regarding the outlook for your CapEx? Thank you so much. Thank you.
Andrew Fan (CFO)
Okay. Let me answer this question. The second question first. The CapEx, I have guided that we expect our full-year CapEx will be around $30 million-$50 million in the current year. For the OpEx, on a non-GAAP basis, our OpEx in year 2024 is about RMB 1 billion. And about 65% of the OpEx is R&D, and 15% goes to sales and marketing, and the rest are the G&A. In 2025, we actually guided that we are going to we expect that we are going to achieve a RMB 100 million savings in the GAAP basis OpEx. We are committed to taking expenses management to the next level, ensuring even better efficiency and financial discipline. As you can tell from our Q1 results, our OpEx declined by about 9% on a quarter-over-quarter basis, which is in line or even slightly better than the full-year cost-saving target.
Our headcount for year 2025 currently is about 50% for R&D staff, 15% for production, and the remaining is the sales and marketing and G&A-related employees. Also, I would like to highlight the importance of the operating leverage. We have spent over a decade building a strong and stable organization structure, which is what we call a large mid-platform with a lean front end. This allows us to scale our business without significantly increasing R&D expenses while our revenue and gross profit grows. Therefore, we expect our R&D investments to remain relatively stable on the absolute amount, even as our revenue and gross profit continue to grow at a solid pace. Internationally, our ADAS business is still in the early stage and contributes a relatively modest share of total revenue as of today. At the same time, we are allocating some of the R&D resources to support our global programs.
In our robotics segment, most of the costs are tied up to our global sales network. On the product side, we are benefiting from our platform-based development. So we are not starting from scratch in each application of robotics, which helps us scale more efficiently. Yeah. That's my answers to the question you just raised.
Joanna Ma (Managing Director and Senior Analyst)
Okay. Got it. That's really helpful. Thank you, David. Thank you, Andrew. And congrats again.
Operator (participant)
Thank you. As there are no further questions, I'd like to now turn the conference back over to the company for closing remarks.
Yuanting Shi (Head of Capital Markets)
Thank you once again for joining us today. If you have any further questions, please feel free to contact our IR team. This concludes today's call, and we look forward to speaking to you again next quarter. Thank you and goodbye.
Operator (participant)
This concludes today's conference call. You may now disconnect your line. Thank you.