Pony AI Inc. (PONY) Q1 2026 Earnings Call Transcript

Hello, everyone. We appreciate you joining us today for Pony's First Quarter 126 earnings call. Earlier today, we issued a press release with our financial and operating results, which is available on our Investor Relations website. An earnings presentation, which we'll refer to during the conference call, can also be accessed and downloaded on our Investor Relations website. Finally, on the call are Dr. James Peng, Chairman of the Board and CEO, Dr. Ken Chan-Loo, CTO, and Dr. Liu Wang, CFO of the company. They will provide prepared remarks, followed by a Q&A session. Before we begin, please refer to the Safe Harbor statement in our earnings release, which applies to this call as we will be making forward-looking statements. Please also note that we will discuss non-GAAP measures today, which are more thoroughly explained and reconciled to the most comparable measures reported under GAAP in our earnings release available on the Investigation Website and findings with the SEC and Hong Kong Stock I will now hand it over to our Chairman and CEO, Dr. James Peng. Please go ahead.

Thank you, George. Hello, everyone. Thank you for joining our Endings Call. We kicked off 2026 with an amazing first quarter. This strong start defines our growth momentum for the whole year. Let me start with the highlights. I'm proud to report that in Q1 2026 our total revenue grew by 145 percent year over year and we also achieved record high quarterly RoboTaxi revenue. Specifically, our RoboTaxi revenues grew nearly 400%, powered by a more than 450% surge in fair charging revenues. Our operational momentum is accelerating across the board. We have scaled our RoboTaxi fleet to exceed 1,700 vehicles and amplified this expansion through a massive surge in user adoption. Now our registered users grew more than 200% year-over-year in China. In fact, our weekly average paid orders so far in May grew more than 100% compared to the beginning of the year. Lastly, we continue to expand our operating area, currently broadening our service footprint into downtown Guangzhou. Globally, we have been advancing our operations in the capital of Croatia, realizing Europe's first commercial robotaxi service. Looking at our overall Q1 results i'm thrilled that our strategic and execution modes translated directly into our exponential growth in robo taxi and fair charging revenues by scaling our fleet user base and paid order volume we have achieved consistent month over month growth this year this is a remarkable achievement as spring typically is a low season for ride hailing. Our dual engine strategy that is focusing on both China and global markets and the joint deployment model started unlocking new and diversified revenue streams. China market remains our primary growth engine where we have secured a dominant lead. We are steadily ramping up our domestic fleet while simultaneously broadening our operational footprint. We expanded our operation in Guangzhou from Nansha and Panyu districts into Haju district, which is the heart of Guangzhou that covers high demand areas like like Canton Tower, the Pazhou CVD, and Canton Fair complex. In Shenzhen, we have been continuously increasing the size and density of our fleet in Nanshan and Bao'an districts, the city's two business areas. For key transportation hubs, we are now providing comprehensive airport transfer services across Beijing, Shenzhen, and Guangzhou. Our international expansion is also gaining traction. We have now established a presence in nine countries and started the services to the public in four overseas markets including Croatia, Qatar, Singapore, and South Korea. In the capital of Croatia, Zagreb, we realized the first robotaxi commercialization in Europe. In the Middle East, our footprint in Dubai and Qatar continues to expand, currently initiating driverless deployment in Dubai. These achievements serve as proof that our model can be applied smoothly across multiple regulatory and operational environments ultimately creating solid revenue streams and for the joint deployment model we consistently make significant strides because of our technology leadership our operational success and our commercial maturity partners increasingly recognize us as their preferred collaborated. We have seen more partners from both domestic and international markets join forces with us, starting to contribute sizable revenue in Q1. Our robotexy success is continuously driven by our innovation and execution, which helps us to achieve a large-scale fleet, excellent technology and operation and the superior user experience moving forward we will focus on reinforcing these areas to expand market share and cement our industry leadership operating a scaled fleet with consistent stability is a powerful testament to our technology and operational maturity as we scale we are supercharging our growth engine We continue to build competitive barriers, earn trust from policy makers, and fortify our brand position at the forefront of user man-share. Currently, we are accelerating the rollout of Gen 7 vehicles across Toyota, Beijing Auto, and Guangzhou Auto, exceeding 1,700 RoboTaxi vehicles. At the Beijing Auto Show last month, we debuted our 2027 version of the RoboTaxi for domestic markets. This upgraded version will achieve further bond cost optimization to less than 230,000 RMB. This competitive pricing facilitates rapid scaling of the RoboTaxi fleet for the years to follow. Safety has always been the foundation of our company, which is ensured by our technological and operational advantages. Our industry-leading L4 technology, vehicle-level intelligence, and resilient fleet management help us to maintain uncompromised safety. This proven mastery of highly complex scenarios enable our robotaxis to navigate peak rush hours, dense urban areas, and bad weather conditions, satisfying surging user demands. We have moved beyond a novel experience into a go-to daily transportation choice. The results speak for themselves. Our robotics taxi fares maintain a premium over the entry-level ride-hailing services. Despite this premium service pricing, demand remains exceptionally robust, particularly during peak hours. Notably, our weekly average paid orders so far in May increased by more than 100% compared to the beginning of the year, significantly outpacing industry-wide growth. Beyond that, we are continuously optimizing ground operations from charging efficiency to dispatching algorithms. This in turn boosts our fleet utilization and reduce operational cost now let me move to our robot truck business our gen 4 robot truck is slated for mass production in the second half of the year with pre-production vehicles currently rolling off the production line i'm also pleased to share that in q1 robot truck revenues were up 31% year-over-year. This was driven by scaling up long-haul operations. We also strive to expand our addressable market across multiple fronts, particularly in intro city urban logistics. To this end, we launched our L4 autonomous light truck in April, leveraging our fully automotive grade and fully redundant level four RoboTaxi architecture. In terms of intelligent solutions, a business we recently renamed from licensing and applications to better reflect our expanding business in this segment. Here was the ADC essentially the autonomous domain controller controller shipment in this segment surged by over 500% year-over-year. This was mainly driven by domain controller deployment in low-speed delivery applications. 2026 is off to a strong start for Pony. We have achieved supercharged revenue growth in all three business lines without any compromise in safety. Since the first day of our founding, we have been committed to provide safe and reliable autonomous driving services. It is our deepest moat, and it's now the perfect stage for PONI to demonstrate what a decade of rigorous engineering looks like. Our four-fold global tax revenue growth is fueled by accelerated user adoption in domestic tier one cities and revenue contributions from our joint deployment model, both domestically and globally. Reflecting this powerful commercial momentum, I am now raising our 2026 annual target that we forecasted earlier this year. First, upgraded fleet target. We are now on a clear path to surpass a fleet size of 3,500 vehicles, which is an upward revision from our initial 3,000 target. Second, accelerated revenue growth. We are now lifting our RoboTaxi revenue target higher to more than three and a half times from a previous target of Chipotle. Third, scaling our domestic and overseas presence. As we continue to accelerate the scaling up in our existing markets, we are firmly confident to expand our footprint to over 20 cities, both domestically and globally. As an industry leader, our mission goes beyond our own role. We are here to lead the development of autonomous driving that has sustainable societal benefits. By providing a safe driverless technology that is safe and profitable at scale, we are building the future of mobility that the world can trust.

With that, I'll hand it over to uh cto attention low to go over the technology that's powering our leadership and then please go ahead thank you jen hello everyone this is tian cheng over strong star in 2026 fully proofs of solid technology foundation looking at our scale our robotic fleet no surpasses 1700 vehicles and Q1 Robotech revenue skyrocketed by nearly 400% year-over-year, hitting an all-time high. Building on this robust growth momentum, we are raising our full-year target to over 3,500 vehicles, and revenue goes to three-and-a-half times from the level of last year. This scaling up is driven by our proven capability to expand rapidly in high-value markets. By successfully entering the downtown core of Guangzhou Highway District, and launching Europe's first commercial robotic service, we demonstrated our true technology leadership. Only a tech leader can deploy free so quickly into these high-value, ultra-complex urban areas. Because our technology navigates this environment safely, more users choose to call our robot taxis and more partners want to collaborate with us. It is this demonstrates the capability that gives us the confidence to upsize our skill. Another clear testament was our performance during a series of concerts held in Guangzhou earlier this month. This event attracts tens of thousands of attendees around the stadium. I'm very proud that Ponies' Robot Taxi officially become a government-recommended transportation choice for the peak post-concert crowd. We pull this off because we can master this level of extreme localized demand seamlessly. Being integrated into an official local traffic plan proves that the authorities highly trust our cities and operational capability. So ultimately, mastering this dense, high-traffic environment demands a leap in top-tier engineering by orders of magnitude. It comes down to three core technical pillars, an exceptional training program, robust field operational redundancy, as well as safe and efficient speed management. Many years ago, we realized a critical truth. The public demands a much higher safety standard for airport driving robot taxis than for human This means when human drivers make mistakes, society accepts it as a normal part of daily But if an AI driver makes a mistake, the public trust will be negatively impacted. it. This understanding shifts over tech stack years ago. We knew we could not achieve true L4 by simply learning from human driving data. More importantly, we knew we could not solve L4 through a simply scaling law like that of a large language model, meaning just increasing parameter size and data volume. Learning from human driving data and scaling up parameters can give you a decent L2 driving system. But that level of AI is only good enough for L2-assisted driving when a human acts as a backup. It can never work for large-scale L4 robot taxi because it cannot significantly beat human safety level. Driving is very different from AI coding. In coding, the AI does not need to make decisions with ultra-low latency. and the first output does not mean to be perfect. The AI can try, fail, and fix errors multiple times using an agent framework, competitors, and test environment. Humans expect to see a final result except a multiple round of trial and error. But for AI driver, the model output must be instant and correct on the first try. Therefore, we started using reinforcement learning and world model years ago. Today, this approach allows our logotaxi to drive much safer than humans, especially in complex areas. This early batch gave us a massive first-move advantage, allowing us to rapidly deploy our logotaxi in high-value markets globally. However, for a true L4 vehicle, achieving safety just at an algorithmic level is not enough. If a system downgrades and caused an accident, or simply stop dead on a high-speed road to wait for rescue, the public will not accept it. That is why every single Pony's Robotexy features a full-stack, multi-layer redundancy architecture for both software and hardware. This gives us real operational capability. If any component fails during a trip, the system stays fully functional. The car will continue to drive safely to the secure spot and pull over, avoiding traffic congestion and rear-end crashes. Furthermore, our car can drive normally even when there is no network or GPS signal, both of which can easily drop in urban environments. We also do not rely on a high-definition map. For example, even when road layout or landmark markings change significantly, or even if we need to drive in the opposite lane, our system adapts and navigates safely based on real-time road detection. We also detect any event instantly over cars encrypted with impact sensors, so the system knows immediately if a collision occurs or stops the vehicle right away. We also detect hardware faults, software failures, and network instability instantly to ensure driving safety. We even have specialized water weighting sensors to make sure our cars do not enter deep puddles that could cause damage. At the overall operation extent, keeping the entire fleet safe becomes just as critical as a single robotic safety. To achieve this, We scale our intelligence into city-wide safety net, protecting our large-scale operations through three strong lines of defects. The first line is prevention. We have a dedicated safety team to systematically eliminate risks from the very beginning. We use technical design to stop safety issues before they happen, including risks from human errors or cyber attacks. For example, our remote assistance only provides high-level guidance. They do not control the car. The onboard module on the vehicle is responsible for any collision or accident avoidance. This ensures a remote assistant cannot cause an accident through wrong input or natural delay. The second line is detection. If demand strikes and all vehicles end up heading in the same direction, Our smart detection system ensures they don't arrive at the same section all at once, but rather arrive one after another. If a road is blocked or contracted, our system will also detect it instantly and notify the whole fleet to avoid making the traffic worse. The third line is response. We establish delicate ground sport teams. If a vehicle encounters any issue on the road, our rescue personnel will arrive at the scene within minutes to handle the situation immediately. In short, our technology makes our operations safe, and this allows the operation builds our ultimate mode. Because we choose a rise foundation from day one, and we now have a unique capability and first-move advantage to rapidly extend in high-value markets. By the end of this year, we target to extend our fleet to over 3,500 vehicles across more than 20 cities. This massive scale will allow us to unblock even greater commercial value, while continuing to deliver the first most trusted L4 Robotic service, both domestically and globally. This concludes my prepared remarks. I will now pass the call to our CFO, Dr. Leo Wang. Leo, please go ahead.

Thank you, Chen Chen. Hello, everyone. This is Leo. I will focus on year-over-year comparisons for the first quarter of 2026, unless otherwise noticed. For detailed financials, please refer to our earnings release. 2026 is the year where our commercialization strategy translates into remarkable financial performance. This quarter, total revenues reached a record of 34.3 million U.S. dollars, representing a 145 percent increase from 14 million U.S. dollars in the same quarter last year. The triple-digit top-line growth was driven by RoboTaxi revenue growth of 395 percent and the intelligent solution growth of 246 percent. We are also capturing compounding benefits as we extend our autonomous driving technology from RoboTaxi into Robotrack and other partners along the value chain. Diving deeper into RoboTaxi, this segment continues to serve as our core growth engine. This quarter, we reached a record high RoboTaxi revenue of $8.6 million, U.S. dollars grew by nearly 400%, compared with 1.7 million U.S. dollars in the first quarter of 2025. As James mentioned, three key elements have helped Pony to achieve a leadership mode in robotaxi operations. These are skilled fleet, excellent technology and operation, as well as superior user experience. Pony's RoboTactic has become a popular service that has captured user mindshare, and this is now reflected in our financial numbers. Specifically, our fair charging revenues delivered an exceptional growth of 456 percent. This impressive increase was driven by several compounding factors. We continue to add more vehicles and expanding into more regions, especially to core downtown areas with higher economic values. Operating metrics reflect our growing capacity and the strong user demand. For example, our weekly average paid orders so far in May grew more than 100% compared to January. Registered users increased more than 200% year-over-year, and our daily order growth rate continued to outpace the industry average. What makes this strong growth trajectory even more remarkable is our pricing power. Even after this time, our effective fare rate per kilometer remains above entry-level pricing on ride-hitting platforms and is on par with the standard express gear. Our demand remains robust and is growing at a very fast speed. we believe this is a clear reflection of the superior ride experience and the robust technology we deliver especially during peak hours and in traffic heavy downtown areas on the cost side we continue to make good progress on both operating costs and the bomb cost front ponies combined the depreciation and operating costs per vehicle are already among the most competitive globally and this is achieved while operating in the busy downtown area during the morning and evening peak hours under most demanding traffic conditions. By leveraging operational efficiency, we continue to drive operating costs even lower and are also on tracks to bring RoboTaxi bomb costs below 230,000 RMB by mid-2027 in the domestic market. Together, these two levers, declining operating costs and lowering bomb costs, will further enhance our RoboTaxi margins as we scale the fleet. Aside from fair charging revenues, our joint deployment model has started to contribute meaningful revenues with both domestic and overseas partners. Such a model will enable more efficient use of capital in fleet deployment. Specifically, as a global technology enabler, we successfully launched the first commercial robotics service in the city center of Zagreb, Croatia, together with our local partners. Combined with our expanding operations in China, this is a strong testament to the execution of our dual engine strategy. Turning to RoboTruck, RoboTruck service revenue grew 31% to $10.2 million this quarter, up from $7.8 million in the first quarter of 2025. This growth was driven by the addition of more trucks and the expansion of our diversified client base, reflecting increasing demand from downstream logistic clients in the long-haul business. We continue to see our industry-leading autonomous driving technology expanding into wider use cases, for example, long-haul trucking and the intrastated logistics. Looking ahead, with the launch of Level 4 autonomous light trucks and the Gen 4 robot trucks, we are firmly on track to deliver even better autonomous driving trucks with lower costs, superior driving performance, and wider use cases expanding into a wider addressable market. Our intelligent solution segment, formerly the licensing and application segment, delivered a remarkable growth of 246%, reaching $15.5 million in the first quarter of 2026, up from $4.5 million in the first quarter last year. This exceptional performance was mainly fueled by a strong sale of Atom's domain controllers. Such strong growth is yet another testament to the opportunities of our Atom driving technology, as we empower other customers along the value chain. Moving to cost and margin, total cost of revenue was $28.7 million, translating to a growth margin of 15.2%. Total operating expenses were US$63.9 million, a modest increase of 9.5%. On a non-GAAP basis, operating expenses were US$59.3 million, representing a 20.2% increase. Such commitments, especially in R&D, have helped us to maintain our technology leadership and will effectively drive down our bond cost. Loss from operations was $58.3 million, remaining relatively flat compared to $56 million in the first quarter last year. Net loss was $53.5 million compared to $37.4 million in the first quarter last year. The increase was mainly attributable to the realization of investment income that occurred in Q1 2025, coupled with a modest increase in operating expenses. Excluding the impact from this investment realization, the underlying loss amount remained broadly stable. It's worth noting that the loss from operation margin narrowed drastically from negative 401% in the first quarter of 2025 to negative 170% this quarter. Similarly, our net loss margin narrowed from negative 267% to negative 156% year over year. The narrowing loss margin trend demonstrates our operating leverage driven by the rapid revenue growth, and the gradual realization of commercial-scale benefits. Turning to our balance sheet, cash and cash equivalent short-term investment, restricted cash, and long-term debt instruments for wealth management stood at $1.4 billion as of March 31, 2026. This compares to $1.5 billion U.S. dollars as of December 31st, 2025. We continue to maintain an exceptionally robust financial position with ample dry powder to execute our strategy. Net cash used in operating activities was $74.2 million U.S. dollars this quarter, compared to $54.2 million U.S. dollars in the first quarter of 2025. The increase was primarily due to an increase in the accounts receivable resulting from substantial sales revenue, increase of atomic guarding domain controllers, along with the increase of non-GAAP loss from operations. Capital expenditures were $12.5 million this quarter, compared to $4.9 million in the first quarter last year. The increase was primarily due to Gen 7 vehicle production for the quarter and the procurement of vehicle components for future manufacture and investments in data center and servers. We believe 2026 will prove to be a defining year for the industry and we are confident in our ability to outperform the industry in operational and financial execution. With our solid RoboTaxi operational excellence, continuous bond cost optimization, increasing partner interests, and a strong cash reserve, we are highly confident in accelerating our path towards sustainable profitable growth for our shareholders. I will now turn the call over to the operator to begin our Q&A session. Thank you.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. For the benefit of all participants on today's call, please limit yourself to one question. If you have more questions, please re-enter the question queue. If you ask a question in Chinese, please repeat them in English. The first question today comes from Zhao Yi Li with Jefferies. Please go ahead.

Hi. Thanks for taking my question, and congrats on the strong quarter. Just one from me, I'd like to ask about the regulatory environment. We've seen quite a bit of movement on the policy side for the robotics sector, both in China and overseas. So I was hoping you could share your perspective on how this evolving regulatory landscape is shaping up, and more importantly, how you see it impacting Pony AI's business or your competitors' positioning going forward. Thank you.

This is James, and I'll take this question. So, as far as I know, most of the policy discussions, both domestically and globally, are actually centered on the safety operation of RoboPaxi. As you all know, safety is the cornerstone of the time-striving industry. Therefore, I would consider the safety discussion and the result of standardized safety, or even higher safety measures are beneficial for the long-term stable development of the industry. As Tony, we have had many years of experience of successfully operating a large fleet and have the experience working with regulators to have a healthy, more transparent environment. Especially in China, we have built a deep trust with regulatory authorities and we consider that we will continue to work hand in hand with the regulators to safely bring autonomous driving to the public. Back to the safety itself, as Henson mentioned, we have established a full life cycle safety management for both autonomous driving vehicle itself and also the fleet operation. Every vehicle features a fully redundant architecture with their operational capability. That is, our vehicles actually will always safely pull over, even during an extreme case of system failure. Additionally, our fleet management has the capability to detect and respond to any unforeseen issues on the road. The whole system actually serves as a city-wide safety net to prevent traffic jams and handle real-time road changes. This is actually how we ensure safety at scale. This highly sophisticated and robust safety system and also the safety track record have given us confidence to scale our business quickly. The current policy discussions and the policy updates do not have any direct impact on our business. In contrary, we are, as you say, during the prepared remark, I have actually raised our business targets for the whole year of 2026. We are continuing to push forward with our Gen 7 deployment, and we are making smooth progress towards our target in fleet size, revenue, and operational area expansion. So, as I mentioned, there's no immediate impact. And I believe that in the mid to long term, actually, the current standardized regulatory environment will play directly to our advantage as we already established as the industry leader. It highlights once again that the complexity of operating robo taxes at scale in dense urban environment, which is exactly we have proven our capability. I think ultimately this high standard will consolidate the markets, filter out the unqualified players and further raise the entry barrier for the new players. And as a result, it will help the long-term growth of the industry. With this, I'll hand over to the operator.

This question comes from Ming Sunli with Bank of America. Please go ahead.

Hi, James, Tianchen, and Leo.

Congrats for the good results. So, given you raised your robot taxi fleet size to $3,500 by the end of the year, and also you raised the revenue, Could you elaborate more on the key drivers behind your upward revision for these two numbers?

Thank you.

Yeah, thank you, Ming, for asking this question. This is Leo. I'll take this one. So, the upward revision is definitely showing that we are encouraged by our strong commercial momentum, especially the result of Q1. To be honest, this is actually moving faster than we expected, and it's reflecting many core areas in our robot taxi business. For example, we are seeing our domestic operations are accelerating. We are seeing the pickup in revenue in paid order volume and also in the user basis in all tier one cities in China. And this is really a reflection that we are providing a qualified service nonstop in Shenzhen and in Guangzhou, and we are attracting more and more repeated users because we can provide a service even during peak hours with consistency, even during complex scenarios, and that eventually translates into more revenues. And the other point is how we make the UE breakeven milestone in Guangzhou and Shenzhen. This also serves as a proven case for future possibilities. And that's why we're seeing many of the potential partners now they have the real interest domestically and internationally to really participate in our joint deployment business model. This could be more efficient use of our capital but also means we could deploy more vehicles in different markets. So, given all these threats and encouragement, that's why we have the confidence to push our RoboTaxi revenue growth target even higher to be 3.5 times of 2025, and also our resize to be 3,500 vehicles by this year end. And now I've got to get back to the operator.

Next question comes from Wei Huang. with deutsche bank please go ahead oh this is way from ed thanks for pushing my question so i have a question on robot operations you certainly launched the nl4 electron the vision on the show will explain the strategic considerations for launching this platform you can comment on the expansion thank you uh thanks way uh this is james and i'll take this question. As you consider the company vision since our founding has always been autonomous mobility everywhere. And to us, the word everywhere actually has two implications. One is expanding our presence across both domestic and overseas markets. And the other Another is scaling our technology across different vehicle platforms for both the passengers and the freight transportation. So the launch of our L4 autonomous flight truck actually aligns perfectly with our vision and our ambition. In the logistics sector, the value chain actually spans long-haul trucking, urban logistics, and the last mile delivery. We already established a robot truck division that working on the long haul logistics. And for the last mile delivery, we are not directly working on it, but we actually have already becoming the leading ADC provider. So, the recent launch of Level 4 Live Truck is actually serves the purpose of completing 1P segment in our full logistic portfolio. The platform for the Level 4 Live Truck also shares nearly identical software stack as our RoboTaxi. It can also fully utilize our existing operational infrastructure, such as remote assistance, the ground support networks, and even the cleaning charging facilities. This unified architecture creates a powerful synergy. It can actually further flash out our light truck operating cost by half compared with the human-driven light truck fleet. Also, we can actually lower the operational overhead of our robotaxi service because we can share a lot of the background support. In terms of the current status, we are developing the level four light trucks and it's already well underway. For example, we co-developed this level four electric light truck with 3ATL, and we are establishing a solid pipeline with some of the leading logistic companies for the future application of those trucks. In addition, we also started discussing with the regulators on their licensing front and also on the fleet management. So, we expect the autonomous light truck to begin scaled operation early next year. With this, I'll get back to the operator.

The next question comes from Ting Song with Goldman Sachs. Please go ahead.

Thanks for taking my question. Congratulations on the result. My question is on the technology part. So regarding the VLA Visual Language Action Model in Autonomous Driving, could you please share more on PONI strategy and your future expected technology path? Do you think the language part is still necessary as we recently noticed some supply chain players start to remove the language from their models?

This is Tianchen, I will take this one. Let me start from saying that the core of driving is understanding of the intention of other road users and the response appropriately. By putting an intention layer into our onboard model training, we generate different intention combinations and we evaluate the possibility of all other traffic participants. This design ensures our onboard module always selects the safest route and have a plan ready for any event, even for low-possibility edge cases. We believe language is not the essence of driving. Also, language models take too much computer power for a car. Instead, we believe intention is the real call for driving. When humans drive, they think about the intention of other cars, not natural language. Crucially, this intention data is hard to get from simple road testing. We must generate it by one model. We believe large-language models or language layers do not help on the car's inference side. Where would the model and the general data are essential for training? In fact, autonomous driving and large-language models do very different tasks. A large-language model agent, like a coding tool, does not need to have very low latency. It does not need to be perfect on the first try. It works in a low-cost environment where it can try, fail, and fake mistakes inside a testing box. But driving has zero room for mistakes. If you make a mistake, it is an accident. Therefore, our tolerance for air hallucination is zero. To solve this, we build a virtual driving environment in our world model. This allows the system to try and fail during the training stage. not on real load. During the real-world inference data on the car, our model does not pick the single highest possibility path. Instead, it chooses the action that ensures Citi under any probability. With this, back to the operator.

The next question comes from Jeff Chung with Citi. Please go ahead.

Hello, James, Tiancheng, Leo. Thank you, and congratulations. With your record-breaking first quarter results, how should we think about the balance between sustaining this high growth trajectory and your increasing strategic investments, especially when you are revising up the full-year targets?

Thank you, Jeff. This is Leo. I'll take this question. Yes, we have a very good Q1 result, which proves that, you know, our robot taxic commercialization strategy, dual engine strategy is translating into accelerated top line growth. And as you can see, that our top line growth is actually outpacing our expenditure, which resulted in our operating loss margin narrowed quite a lot this quarter. Given all these momentum, we are confident to raise our full-year business targets so that we can achieve even higher growth trajectory, which I think is really important for any growth company. In the meanwhile, we need to make strategic increased investments in certain areas, hence to keep our advantages in the industry. Using an example is we are actually on track to decrease our total bond cost to be less than 230,000 RMB in the domestic market by mid-next year through our R&D works and the deepened collaboration with our OEMs. And we think this definitely will be paid back for our future deployment and will attract more joint deployment business model partners. So I think this is a balancing regarding again the expenditure and also investment versus the trajectory of our growth. We are definitely putting the growth trajectory as our highest top priority. But we will always follow a value-driven and a disciplined approach for these front-loaded expenditures. Thank you. I'll get back to the operators.

The next question comes from Purdy Hill with Hoist High Securities. Please go ahead.

Thank you. Manifin, congratulations on the solid results, and thank you for taking my question. I'd like to focus on your international expansion strategy. Given the recent commercial traction is being overseas, would you provide more colors on your roadmap for global fleet expansion? Specifically, as you are evaluating different markets such as the Middle East, Europe, and Asia, What exceeds your prioritization across these regions?

Hey, Perdi, thank you. This is James. Let me take this one. As my answer to the last question, our company vision is autonomous mobility everywhere, and you can see that a global expansion has always been part of our strategic efforts. Our dual engine strategy is rapidly accelerating our global expansion. As more international countries introduce regulations in supporting autonomous driving and also there's many more partners want to work with us, because of these two factors, we're seeing actually tremendous growth opportunities abroad. In fact, several international markets have already started contributing to our contributing sizable revenues to us in Q1. So, essentially we're capitalizing on this window because our technology and commercial operations in China's tier one cities have already given us extensive experience in handling the most complex urban environments. And also, we have already achieved UE break-even in Shenzhen and Guangzhou. So, this proven technical capability and cost advantage, also because of the overseas policy opening, this is actually the underlying driving force for our accelerated global efforts. In terms of our international freight footprint, we are actually, as you mentioned, skating quickly across all these key regions. We have now established a presence in nine countries and started local taxi services to the public in four overseas markets, including Croatia, Qatar, Singapore, and South Korea. In Europe, we partnered with Uber and Vern to launch the region's first commercial robotaxi in Zagreb. In the Middle East, we're advancing fair charging services in Doha and initiating fully driverless operations in Dubai. In Asia, we have deployed public robotaxi services in Singapore and currently are conducting robust testing in Seoul, South Korea. So certainly, moving forward, we'll continue to collaborate closely with all the local regulators and our trusted partners to accelerate our commercialization. We'll certainly double down on our investment and fully committed to expand our footprint to over 20 cities worldwide by this year. With this, get back to the operator.

The next question comes from Eugene Shio with Macquarie Capital. Please go ahead.

Thank you for taking my question. In the earnings release, some of the CapEx of Q1 was for stock building of 80Ks. I'm wondering if you could please update us on if there's any material input cost impacts for writing component costs. And I think Leo mentioned earlier that we're still on track for the bond cost reduction to reach 230K by next year. So what areas are we targeting to reach this target?

Yeah, I'll take this question. This is Leo. Thank you for asking this question. In terms of bomb cost reduction, we have always been using a holistic approach, meaning we are looking into all aspects regarding the vehicle, regarding the autonomous driving hardware kit to get the overall bomb cost down along the road. So, I think several factors will drive down our future bomb cost. First of all, we are deploying more and more vehicles. our vehicle total fleet size will increase with a larger volume, especially with more and more deployment partnership coming in, we could give more quantity order to our suppliers. Definitely they'll help us to negotiate with the pricing from our supplier. Second is now we already have our Gen 7 vehicle on the street and accumulating millions of kilometers, giving us real data showing where we can refine our system, where we can simplify our system, where we can optimize our system. Based on these real data, definitely we can do our R&D work to further cut down our bomb cost. Of course, the supply chain itself has a certain uncertainty. However, Pony has been dealing with this uncertainty along the years. So, for this year, for example, the memory, of course, there is certain shortage. However, we asked quickly last year to secure the supply for memories. So, again, this showing our capability on handling these shortages. That's why we're very confident to hit that bomb cost target by mid-next year. Thank you.

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

Thank you, Wes, again for joining us today. If you have any further questions, please feel free to contact our investor relations team. We look forward to speaking with you in the next quarter.

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