Hello, ladies and gentlemen. Thank you for standing by. Welcome to Hesai Group's Third Quarter 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. I will now turn the call over to our first speaker today, Yuanting Shi, the company's Investor Relations Director. Please go ahead.

Thank you, Operator. Hello, everyone, and thank you for joining CoreSite Group's third quarter 2024 earnings conference call. Our earnings release is now available on our IR website at investor.litetek.com as well as with your newswire services. Today, you will hear from our CEO, Dr. David Li, who will provide an overview of our recent updates. Next, we would like to welcome our new CFO, Mr. Andrew Fan, who 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. We will make forward-looking statements. Please also note that the company will discuss non-GAAP measures today, which are most 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.

Thank you, Yuanting, and thank you everyone for joining our call today. Let's start with an overview of this quarter's progress. First, we surpassed the high end of our revenue guidance for the third quarter, delivering net revenue of RMB 539.4 million and maintaining a strong growth trajectory. We also continue to accelerate LIDAR adoption among our customers. We delivered a total of over 134,000 units during the third quarter, marking our second consecutive quarter of nearly 50% growth. This trend underscores a growing recognition of the value that LIDAR brings to autonomous driving systems, and we are confident that this momentum will carry into the remainder of 2024 and next year. Second, our strong commitment to operational efficiency and financial discipline has enabled us to consistently reduce our GAAP net loss for four consecutive quarters. Fueled by powerful trends and exceptional financial performance, we are moving full speed ahead towards a monumental goal, a projected revenue of $100 million with an estimated net profit of $20 million for the fourth quarter alone. We could not be more excited as we are now projecting full-year profitability on a non-GAAP basis for 2024, making us the first automotive LiDAR company worldwide to reach this remarkable milestone. This puts us on a path to close the fiscal year with unprecedented overall financial performance. Looking at the broader industry landscape, LiDAR technology is increasingly recognized as a key driver in the advancement of autonomous driving. According to recent data from Gasco, a leading automotive industry information service platform, approximately two-thirds of the models with highway NOA are now equipped with LiDAR, and the city NOA models have achieved 100% LiDAR adoption. Moreover, a recent research report projected a strong increase in level two and level two plus ADAS adoption in China, estimating a 40% penetration rate in 2024, rising to 50% by 2025. A key turning point is anticipated in 2026 with the introduction of level three autonomous driving solutions, which will demand even higher standards for perception and safety capabilities. This evolution marks an exciting phase of market expansion and technological progress in the autonomous driving sector, as the analysis indicates that not only will more advanced vehicles adopt LiDAR technology, but they will also likely employ multiple LiDAR units to create a 200 to 300-meter safety buffer, significantly enhancing overall safety standards. A recent US safety investigation highlights the critical role of LiDAR technology in vehicle safety systems. The National Highway Traffic Safety Administration (NHTSA) had launched a probe into around 2.4 million vehicles equipped with vision-only ADAS systems after collisions occurred in low visibility conditions like fog and glare. These incidents have exposed the limitations of relying solely on a camera-based system for vehicle safety, raising a critical question: Is a vision-only approach truly sufficient for autonomous driving? While future AI and vision language models will undoubtedly enhance vision-only systems, they will still require extensive training and remain vulnerable in low visibility scenarios. In contrast, LiDAR generates its own light and offers real depth measurement without depending on vision algorithms, which may struggle in poor visibility conditions or with irregular objects. With LiDAR becoming more affordable and scalable, it directly addresses the limitations of vision-only systems. We believe that adopting LiDAR, which functions like an active seatbelt or airbag, alongside cameras, is essential for improving safety in autonomous driving, making it as safe, if not safer, than human drivers. Now let's shift our discussion to our roster of ADAS clients, who are strong advocates for integrating LiDAR into their systems. Our largest ADAS client achieved a remarkable milestone by producing its one-millionth vehicle in October, which also marked a proud moment for us, showcasing our success in supporting Li Auto's rapid growth as well as maintaining a leading share of the LiDAR market in China. We are confident that this momentum will continue as our OEM partners pursue new goals, further cementing our role as a key supplier in the ADAS sector. We also recently secured a new platform win with Zeep Motor, a leading EV maker in China, and the facelift of two flagship models with a premium EV brand backed by a leading Chinese automotive group. Production of these models is expected to commence in 2025, and we will be serving as the exclusive main LiDAR supplier for these new wins. This exclusivity reflects the trust and confidence that these manufacturers place in our technology while broadening our presence in the rapidly growing EV market. What's more, we are thrilled to announce a new collaboration with a leading EV manufacturer in China. As one of our top customers by shipment volume and a leader in the EV industry, this pioneering OEM has also exclusively selected our next-generation level three ultra-high-performance LiDAR alongside our cost-effective ADX LiDAR to power their upcoming models slated for release in 2025. Building on this momentum, our ATX LiDAR is rapidly approaching its launch. Its innovative integrated design and exceptional cost efficiency have already sparked significant interest, with multiple customers planning to adopt this as a standard feature in their 2025 lineups. The future of scalable autonomous driving is here, and we are proud to lead the way. This quarter's success extends beyond the ADAS market with new progress in expanding our global reach. First, our worldwide shipping programs with a leading global automotive OEM have advanced through several critical phases to the successful delivery of these sample units, a key step in validating our technology's performance and ensuring that it aligns with the partner's rigorous standards. These samples are essential for assessing how our LiDAR solutions perform under real-world conditions and verifying their integration into the OEM's vehicle platforms. Our progress also enhances our position as a vital contributor to the global automotive ecosystem, helping shape the next generation of vehicles that will define the future of mobility. Furthermore, we recently signed a collaborative framework with SAIC Volkswagen for an automotive LiDAR program, marking a new chapter in our partnership and elevating our position to a strategic supplier for the top-selling automotive joint venture in China by sales volume. Together, we aim to innovate and integrate advanced LiDAR technology into vehicles, enhancing safety and automation features while propelling the OEM's vision for smart vehicle innovation. To date, we have secured design wins with five prominent global OEMs, including four joint ventures in China with two American and two European automotive companies. These joint venture collaborations enable us to leverage our partners' established networks, resources, and expertise. Their guidance has been instrumental in enhancing our collaborative capabilities, helping us streamline operations and meet global standards more effectively. We believe our strategic alignment will position us to capitalize on emerging opportunities and pave the way for our participation in the global supply chain. Our efforts to expand our global footprint across the broader Asia market have also yielded promising results. We are delighted to announce two newly secured development projects post-proof of concepts (POC) programs with a top three OEM in Japan. These programs cover both level two plus passenger vehicles and level four robotaxi applications, highlighting our growing influence and capabilities in diverse segments of the ADAS and AM market. Securing these POC projects with a leading OEM in Japan underscores the trust placed in our technology and expertise while providing a valuable opportunity to showcase our LiDAR systems' functionality across various scenarios. Currently, we have four POC programs underway with three global OEMs, and we are excited about the potential of these partnerships as they move into the next phase. Over the past two years, both Hesai and the broader LiDAR industry have seen substantial growth driven by rapid advancements in intelligent driving, particularly in China. While the ADAS sector will remain a key focus, we are also committed to exploring opportunities in the broader autonomous mobility market, where we have traditionally held a significant global share. As a market that prioritizes performance over price sensitivity, autonomous mobility offers exciting growth opportunities as new valuable use cases continue to emerge. In September, we unveiled our latest flagship 360-degree mechanical automotive-grade long-range LiDAR, OT128, at the 2024 IAA Transportation Fair in Germany. Inheriting 95% of the key components from Hesai's best-selling AT120P ADAS LiDAR, OT128 boasts a point rate of 3.45 million per second and a 200-meter detection range at 10% reflectivity. This high-performance 360-degree perception LiDAR with a market-proven vertically integrated architecture makes OT128 an ideal solution for scalable applications, including robotaxis, industrial robotics, smart factories, and logistics. OT128 also integrates Hesai's proprietary all-weather system, the intelligent point cloud engine, to enable effective detection of rain, fog, and other adverse conditions, distinguishing it as a unique and innovative mechanical LiDAR offering in the market. Since its debut, OT128 has made a strong impression in the market, emphasizing our technology's potential across diverse application scenarios and autonomous systems. We have already secured contracts for OT128 with over 90 global and domestic clients such as Westwell, Embotech, and Easymile, and production and delivery have already begun. Our OT128 LiDAR played an instrumental role in the success of the champion autonomous race car at Formula Student Germany 2024, the world's largest competition for electric and driverless vehicles. These early successes highlight the growing recognition of our advanced LiDAR solutions across a wide range of industries. We remain committed to exploring new use cases and engaging new customers in both the ADAS and AM sectors, leveraging our lineup of versatile LiDARs. Lastly, I would like to introduce Mr. Andrew Fan, who has recently joined Hesai as our new CFO. With over 18 years of experience in accounting and corporate finance, we are confident that he will further strengthen our financial management, enhance our engagements with the investor community, and help us create sustainable value for Hesai and our shareholders. Welcome, Andrew. At this point, I will now turn the call over to Andrew to share more details on our financial performance and outlook. Andrew, please go ahead.

Thank you, David, and hello, everyone. Let's go through our operating and financial figures for the third quarter of 2024. To be mindful of the length of our earnings call today, I encourage listeners to refer to our third quarter earnings release for further details. Starting with numbers, in the third quarter, we achieved quarterly revenues of RMB 539.4 million, or USD 76.9 million, surpassing the high end of our revenue guidance. The robust momentum across our revenue streams was supported by strong LiDAR shipments of over 134,000 units this quarter, marking our second consecutive quarter of nearly 50% sequential shipment growth. Shipments this year are distributed more broadly across a diverse range of customers, reflecting a significant increase in customer diversification compared to the previous year. Meanwhile, our blended gross margin remains robust at approximately 47.7%, thanks to effective cost management and our flywheel approach to cost and scale optimization. The margin was further bolstered by NRE revenues from our L4 LiDAR, which is being prepared for potential large-scale deployment by a leading global robotaxi player in the coming years. As a result, our quarterly GAAP net loss has narrowed for four consecutive quarters. This consistent improvement reflects our commitment to operational efficiency and financial discipline, enabling us to better manage our resources while focusing on sustainable growth. Looking ahead, we are expecting a record-breaking fourth quarter, with LiDAR shipments projected to reach 200,000 units and outstanding volume nearly matching our total shipments in 2023. Based on our current estimate, fourth-quarter net revenues are expected to soar to nearly USD 100 million, delivering an estimated net profit of USD 20 million and a positive operating cash flow. Additionally, we anticipate achieving full-year profitability on a non-GAAP basis for 2024, positioning us to become the first automotive LiDAR company worldwide to reach this notable milestone. This anticipated explosive growth underscores our unstoppable momentum as we drive towards a landmark fiscal year finish. We would like to remind you that this outlook is based on the current market conditions and reflects the company's preliminary estimates of market and operating conditions and customer demands, which are all subject to change. In conclusion, our strong market acquisition capabilities, robust financial performance, and commitment to operational excellence have positioned us for a successful close to 2024. We are proud of the progress we have achieved and are enthusiastic about the opportunities ahead. Thank you for your continued trust and support as we work to build a stronger future for Hesai and the global industry. This concludes our prepared remarks today. Operator, we are now ready to take questions.

Thank you. For the benefit of all participants on today's call, please immediately repeat your question in English. For the sake of clarity, please ask one question at a time. Management will respond, and then feel free to follow up with your next question. The first question comes from Cindy Huang with Morgan Stanley. Please go ahead.

Hi. Thanks for taking my question. This is Cindy from Morgan Stanley. So my first question is, what's the latest development of the contention between Hesai and the US DOD? While the dispute involves no ban, when do you expect the overhang could be fully removed? And are all projects scheduled for the 2025 launch in the United States still on track?

Cindy, thank you for the question. I want to give you some updates on the 1260H lawsuit progress. First, we are glad to see that the DOD actually removed us from the 1260H list in October. This delisting was undoubtedly a win for us as the DOD has acknowledged and corrected their erroneous and baseless decisions from January by removing us from the list. We believe it also validated the truthfulness of our position, which has remained consistent throughout this entire process. However, we are disappointed that the DOD relisted us on a different basis after acknowledging that its original evidence was insufficient. We had hoped that the DOD would correct its mistakes and move on, but instead, it has continued to falsely accuse us of associating with the Chinese military. This is especially frustrating because the government never really asked us a single question or tried to confirm any facts with us before making the decision to relist us. The government did share with us the new basis of our relisting, though due to the ongoing nature of the lawsuit, we are currently limited in what we can discuss. From our first reading, we immediately realized that the new rationale is just as faulty and flawed as the original listing was. We have stated definitively that the DOD has not accused Hesai of being owned or controlled by any military bodies, selling products to any military bodies, or otherwise directly supporting any military bodies. The DOD has put forward vague claims that Hesai somehow supports Chinese military-civil fusion. Protecting the interests of our shareholders remains our top priority. We have been very transparent and consistent in sharing these facts. But the moment when the DOD relisted us, it challenged our integrity. It also caused confusion for our customers and investors, and they were concerned that we might be hiding something. We will continuously seek open dialogue with the DOD so that we can correct those errors. We look forward to proving that the government's new analysis is unlawful in court in the coming months. These are the current status of the 1260H situation. Cindy, do you believe this is helpful?

Yeah, that's very helpful. Thanks for the clarity. I think in the prepared remarks, you also mentioned Hesai will achieve GAAP net profit in Q4. Should we expect 2025 to be the first full year GAAP profitable as well?

Thank you, Cindy. Let me take this question. Before I address this question, let me express my gratitude for your continuous support to Hesai. I look forward to working with all of you in the future together with Hesai's IR team. For this question, we are happy to share that we are on a steady path towards profitability in the fourth quarter of this year, a major milestone for us. Q4 is set to be our peak season every year, with projected revenues approaching USD 100 million and deliveries reaching 200,000 units, an unprecedented achievement since our inception. Besides, our cost management remains robust, ensuring financial strength as we scale up mass production. To our knowledge, no other player in the global LiDAR industry matches our financial resilience while operating at such an impressive delivery schedule. As highlighted in our financial statements, our Q3 gross profit nearly doubled year over year, while operating expenses grew by only 10% year over year, showcasing our exceptional operating leverage. We also anticipate the blended gross margin for Q4 to exceed 40%, with operating expenses remaining stable quarter over quarter. Additionally, our average quarterly other income and interest income typically are around RMB 30 million, positioning us well to reach breakeven in Q4. Taking it to the next level, we have received additional payments from a leading customer, preparing us toward an estimated USD 20 million net profit in Q4. This is an incredible achievement and attests to the solid financial foundation we are building as we continue to drive growth and scale our success. Hopefully, that covers your question.

And for 2025, I think what's relevant to your question, Cindy, is that our top-line growth will be very solid because more and more customers, both domestically and internationally, are adopting LiDAR. We see the penetration rate ramping up very fast. On the other side, cost is well controlled. Expenses will be well controlled. So for the full year 2025, we will be targeting profitability as well. Thank you. That's very helpful.

Your next question comes from Tina Ho with Goldman Sachs. Please go ahead.

Thanks, management, for taking my questions. So the first question is regarding our 2025 volume, revenue, and margin guidance. Since we are onboarding more OEMs, but at the same time, there might be more mix of the AT product. So just wondering what we should think about in terms of 2025 overall. And also for the third quarter of 2024, wondering if excluding the NRE project impact, what is our more normalized LiDAR gross margin? Thanks.

Okay. Let me take this question. Looking forward to 2025, we believe that we have already secured significant design wins for new car models, which are achieving SOP in 2025 and beyond. Some of our major customers' best-selling models, including those from the world's largest EV manufacturer, are expected to begin production with our LiDAR solutions very soon. Additionally, some of our clients are adopting LiDAR as a standard configuration starting next year. This positions us to ship millions of units throughout 2025 and 2026, based on our customers' forecasts. As of now, we have two manufacturing facilities in operation, one in Shanghai and one in Hangzhou, and are expanding with new production lines to meet our clients' needs for the coming year. Revenue-wise, by our year-end earnings next March, we will have a clearer view. As of now, for 2025, we will have three different modules of AT in production. The first one is the current ATP, which will experience a moderate annual decline in ASP in teams. The second module is the ultra-high-performance AT, designed to meet L3 standards, which will enjoy a much higher price tag. Lastly, the cost-effective compact ATX will begin production in 2025, with some flagship series car models adopting it as a standard configuration. I expect that the revenue contribution from ATX will start to increase relatively quickly in 2025. Regarding Q3 margins, if we exclude the NRE revenue, I would expect that this will be largely the same as our normalized quarters, which is about 40% plus gross margins.

That's very clear. Thanks.

Your next question comes from Cheng Yu with Huitei Securities. Please go ahead.

Hi, David. Thanks for taking my question. My first question is about robotics. I want to know currently what's the main LiDAR production for the customer in robotics. And in the long term, what are the technology differences between the robotics and the ADAS area? And the difference in ASP. Thank you.

Let me address these questions in English first. For the industrial robotics applications, e.g., in logistics and hub operations, they are rapidly growing, and we have successfully secured some new orders from both domestic and international clients. Regarding the product series that we are selling to this segment market, I think Panda, OT, XT, etc., all have their own clients. Whether through autonomous vehicles or robotic platforms, our goal is always to deliver superior services and experiences to our users in alignment with our mission to empower robotics and elevate lives. Regarding the ASPs, I think we have to monitor the development of the revenue contributions from different clients from different segments. We'll have to give you a clearer forecast when we see more visibility from the revenue contributions. This is David Li, and I wanted to give a few more remarks regarding the robotics industry. First, let's define robotics. I think it's pretty much everything we cover that's not ADAS and not strictly RoboTaxi. Okay. So a few direct comparisons. First, the robotics LiDARs, the ASP is much higher than ADAS because of the volume. Right? When we talk about ADAS, we're talking about close to million units per year volume, and even bigger very soon. For robotics, it's still in the tens of thousands at the most optimistic side. Secondly, it's about application on the technical side. For ADAS, as we clearly see, it needs extremely miniaturized packaging as well as a forward-looking, like a box looking forward. Right? So most of the robotics applications, that is not the highest priority. The priority is to cover a wider FOV, hopefully, with better resolution, it does not need to see longer range. As a result, for longer range, we have OT, and for shorter range, we have XT and QT. It's a different type of product. Having said that, they share a great level of similarity in terms of Hesai's fundamental capabilities of semiconductors, manufacturing capability, and the very strong capability of our quality system, especially the integrated design of the ASICs. You might think that the ADAS LiDAR and the robotics LiDAR vary a great deal in terms of functions and performance, etc. The truth is that if you boil it down to the different parts of robotics, a robotics LiDAR is really, in the end, the laser, the receiver, the driver, and the signal processing unit, the computational units, the backboard, and power, etc. If you break them down into each of them, a lot of them, we already have a proprietary chip that can support both ADAS and robotics. So in other words, the great strength and capability we develop from ADAS, especially China ADAS, we leverage them to go after extreme cost and quality and performance and use those technologies in robotics. It's like, alright. That's why we are extremely competitive and remain highly profitable, especially with extremely high gross margins on robotics LiDARs compared to ADAS, for that reason. Thank you.

Oh, thank you, David. Thanks very much. It's all clear. And my second question is about the ADAS area. Just now you mentioned that the ATX will grow rapidly next year. I want to know what's the estimated shipment proportion of the new production and the AT128 next year. And also in the long term.

Okay. Let me take this question. Again, if we look at 2025, I believe that the total shipment in 2025 will exceed millions of units in that year. However, regarding the detailed breakdown between ATX and AT128, we can only share more details as we go along, probably until, say, March next year. But no matter how the mix turns, we are still confident with our long-term blended gross margins, which will stay healthy thanks to effective cost management and our flywheel approach of cost and scale optimization.

Oh, thank you. Thanks very much. That's all my questions.

Your next question comes from Olivia Zhang with HTI. Please go ahead.

Hi. Thanks for taking my question. This is Olivia from Haitong. My question is, you know, Huawei has become an important role in the intelligent driving market. I want to know, I know we have established cooperation with some OEM brands in the Huawei ecosystem. So how do we see the cooperation going forward?

Thank you, Olivia. Let me try to clarify our view on the collaboration/competition with Huawei. First, Huawei is a very competitive player. Right? As of now, I use a Huawei trifold phone and a Huawei watch, which are very good products. So they build very good products. Having said that, I feel like our position against Huawei isn't a clear situation in the sense that as far as what we see today, the people who use Huawei LiDARs are within the Huawei ecosystem, namely the AITO of the world. They not only use Huawei's components but also Huawei's solution at a system level. So it's essentially using everything from Huawei. We believe for that reason, it's unlikely that we will become an individual component supplier within the Huawei ecosystem today because we only sell components. Right? We don't sell solutions. So that's why today, the market has been sort of divided between Huawei's brand and their own supply chain and the rest of the world. So far, it seems to be very clear for both sides. Our goal, of course, is to hopefully maximize our market share in our own world. So that has been our strategy. Of course, having said that, there are overlaps. There are brands who have their Huawei cars and have their own branded cars. We have a few OEM customers like that. But in my mind, it works the same way. The car models they work with Huawei's system, it's very likely it will have only Huawei LiDAR, no one else's LiDAR. That has to be in their strategy. The cars that OEMs build with their own effort will have very little or zero Huawei components. That's the market we're going after, and we have been fairly successful in working with those customers when they don't use Huawei solutions. Our belief is that Huawei will continue to have a significant share as an OEM, but the rest of the world is still much bigger. We will also continue to work with our global customers who are not working with Huawei today.

Thank you, David. That's super clear. That's all my questions. Thank you.

Thank you.

Your next question is a follow-up from Cindy Huang. Please go ahead.

Hi. Thank you for taking my question. I have a follow-up question on OT128. Who will be the first batch of customers adopting this new product? And also, can we get some updates regarding our partnership with Cruise?

Okay. Let me take this question. Regarding OT128, yes, this new flagship mechanical LiDAR is built for scalable applications like robotaxi, industrial robotics, smart factories, and logistics. It has already got deals locked in with over 90 clients worldwide. Financially, around 95% of its key components come from our best-selling ADAS LiDAR, which keeps costs down. Also, thanks to vertical integration, like our ADAS products, we can scale production and take advantage of economies of scale. For clients, this means it can be priced more competitively, especially for large-volume orders. Its gross margin is comparable to our typical L4 products, or even slightly higher, with large orders the gross margin can improve even further. We have already started production and deliveries, and it has already brought in over $10 million in revenues so far. The AM sector is more about performance, less on price, and it's full of exciting growth opportunities with new use cases popping up. We are thrilled about what's ahead. Regarding GM Cruise updates, based on public information, Cruise has made significant progress this year. Its group has invested additional funds into Cruise to support its ongoing operations and strategic initiatives. Following a temporary halt in operations in late 2023, the NHTSA closed its investigation into Cruise vehicles in August 2024. Recently, Cruise has resumed supervised autonomous driving tests in cities like Phoenix, Dallas, and Houston. Cruise is clearly making efforts to overcome challenges and solidify its position as a leader in autonomous vehicle technology. As you see, we recorded NRE revenues in Q3 from our L4 LiDAR, which is being prepared for potential large-scale deployment by a leading global robotaxi player in the coming year. International robotaxi players are expanding. Zoox and Nuro were also recently reported to be actively scaling their testing operations, making strides towards the commercial deployment of their autonomous vehicle technologies. We remain optimistic about the business opportunities in L4 autonomy and beyond as the industry continues to evolve and grow. That's my answer to this question.

That's very clear. Thank you.

Your next question comes from Jeff Trang with Citi. Please go ahead.

Hi. This is Jack from Citi. Excellent result and guidance. Thank you, sir, for the good work. My question is, number one, we recognize the OpEx for each quarter. For the third quarter, it's around RMB 350 million. In order to approach a 20% net margin level in the fourth quarter, the OpEx in the fourth quarter will be around RMB 250 million. So could you let us know what should be the normalized OpEx going forward into 2025? Number one. Number two, it's about the low season impact into the first quarter of 2025. As we all know, there should be a potential pre-buying happening in the fourth quarter this year, resulting in a sloppy demand growing into the first quarter potentially. So could you give us the margin guidance in the first quarter and also the normalized GP margin guidance throughout 2025? Those are my first two questions. Thank you.

Your first question regarding OpEx, yes, on a full-year basis in 2023, our OpEx on a non-GAAP basis is about RMB 1 billion, out of which 65% is R&D, 15% is sales and marketing, and the rest goes to G&A. On a full-year basis, we believe that in 2024, the OpEx will grow by less than 5% on a GAAP basis and 10% to 15% growth on a non-GAAP basis. For 2025, we have committed to taking more active expense management to ensure better efficiency and financial discipline. That actually is my response to your question for OpEx. Regarding the guidance on Q1, typically, due to seasonality reasons, Q1 tends to be weaker than Q4 on a quarter-over-quarter basis. But in order to give you a clearer guidance for Q1, probably we have to wait till the end of this year.

Okay. Thank you. I have no more questions.

Your next question comes from Terry Liu with JPMorgan. Please go ahead.

Yeah. Thanks for taking my questions. I actually just have one question about the ATX. I'm wondering among your 75 design wins, how many of them are kind of pending? And how many of them will be for ATX? And also for the secured design wins, I'm wondering, do you see any clients willing to kind of switch from the AT to ATX for a better cost structure? And how do you think of that potential trend? Thank you.

Thank you for the question. So, maybe I'll first give you a more fair comparison of the product ATX versus AT. The AT started its journey of SOP in July of 2022. Right? So which means that ATX is two to three years behind AT. It has an equally competitive performance, and some parts are optimized, sometimes are slightly worse than AT. But overall, it's a highly competitive product, but it's a much more affordable one. Right? It's in the $200 range. So which means that for people who are looking to do a similar level, which is the level two plus driving with AT, it's a natural and rational choice. By the way, it's also smaller. Right? So it's a natural and rational decision to switch from AT to ATX as long as they can accommodate the change design. It's really because the ATX is our fourth-generation semiconductor. It has a lot of new innovations in making sure that we process a large amount of point cloud with very, very low power and low cost. On top of it, it has additional features like the IPE, the intelligent point cloud engine, to analyze different weather conditions, etc. It has a lot of great features. So that's why the takeaway is that for anybody who's looking at the similar level of performance of AT, it's kind of a no-brainer to switch over as long as you can accommodate the engineering changes and you can enjoy the savings. However, if you look at the direction the industry is moving towards, especially the fact that for the past year, we see great trends of adoption of LiDAR, to me, it's not only a signal of the increase in demand for LiDAR and intelligent driving, it's also a statement on the value such a system creates. So naturally, when it creates more value, people want more and a better version of it, which is what we call level three. Right. If you look at it, the global level three market, we already announced we have a global design win as one of the most famous automotive brands in the world and a level three system. That is a much higher price, much more powerful in terms of everything, in terms of distance and resolution capability. So that will be a much higher ASP product. That is in the AT512 family. So that's why it is true that a lot of the customers will be using ATX while they already use ATX, and they will also have a premium trim line with strictly level three functions with a much more powerful LiDAR to handle the different conditions with close to ten times the resolution and roughly a 50% distance increase. So that's the situation we're facing. Hopefully, this answers your question.

Oh, yeah. That's very helpful. May I just follow up? Could you share a bit of color in terms of the price gap between your ATX and also this advanced AT product?

Thank you. So without disclosing the actual numbers because it's always case by case depending on the volume and SOP time, ATX is in the $200 range, I would argue, depending on the configuration, could be higher or lower. The AT512 family, which will remain at the AT range, is more than double that. It's a much, much more expensive LiDAR. But again, it handles level three functions. So the value proposition is a completely different equation.

Oh, that's very helpful. Thank you, David. And we are hoping to ship the ultra-high-performance LiDAR, which is in the family of AT512, starting from 2025 or 2026. Shipping overseas will enjoy a better margin as well. Okay.

Thank you, Terry.

If there are no further questions, I'd like now to turn the conference back over to the company for closing remarks.

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.

This concludes today's conference call. You may now disconnect your line. Thank you.