Earnings Call Transcript
WeRide Inc. (WRD)
Earnings Call Transcript - WRD Q1 2025
Operator, Operator
Good morning and good evening ladies and gentlemen. Thank you for standing by and welcome to WeRide’s First Quarter 2025 Earnings Conference Call. At this time all participants are in the listen-only mode. The company will be hosting a question-and-answer session after management's prepared remarks. Please note that today's event is being recorded. The company's unaudited financial and operating results were released by the Newswire earlier today and are currently available online. Joining us today are WeRide’s Founder, Chairman and CEO, Dr. Tony Han and CFO, Ms. Jennifer Li. Before we continue, I'd like to refer you to the safe harbor statement in the company's earnings press release, which also applies to this call as today's call will include forward-looking statements including WeRide’s strategies and future plans. These forward-looking statements are made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. The company's actual results could differ materially from those stated or implied by these forward-looking statements as a result of various important factors and please refer to the risk factors section of the company's Form 20-F filed with the SEC for full disclosure of these risk factors. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Please note that all numbers stated in management's prepared remarks are in RMB terms and we will discuss non-IFRS measures today which are more thoroughly explained and reconciled to the most comparable measures reported in the company's earnings release and filings with the SEC. With that, I'll now turn the call over to the company's Founder, Chairman and CEO, Dr. Tony Han. Please go ahead, sir.
Tony Han, CEO
Hello, everyone. Thank you for joining us today. I'm excited to give you an update on our last quarter. We have reached a number of new milestones as we continue our global expansion and also cemented deeper collaboration with key partners such as Uber. Specifically with Uber, we have committed to providing Robotaxi service in 15 additional cities internationally and accepted a commitment for an additional $100 million equity investment on the heels of their initial investment at our IPO. Other notable milestones included launching the first driverless Robotaxi testing in Abu Dhabi, the first of its kind in the Middle East. In China, we rolled out the country's first autonomous mobility service in the central area of Guangzhou, the third largest city in China. While some of this will be reflected in our near-term financial results, others lay the foundation for the robust growth in the quarters to come. First, let's quickly discuss our latest Uber announcement. This expanded partnership and the incremental $100 million investment is a testament to our shared commitment to autonomous mobility and confidence in our operational and technological excellence. We began our partnership with Uber in the Middle East and we continue to scale our operations there. As a reminder, we first launched Abu Dhabi in December of last year and have recently announced plans to expand in Dubai. There have also been mentions of expansion to a third city recently in the press, so look out for more information there. We are excited about our program in the region and the opportunities that it creates. In addition to the Middle East, we expect to scale and expand our Robotaxi presence to other geographies, such as Europe, with a particular focus on markets where we have already deployed some of our other autonomous mobility products, such as our autonomous buses. We believe having multiple autonomous mobility products widens our time and also makes dialogues with stakeholders, such as regulators, more substantive. We continue to expand our autonomous mobility operations in China and abroad. As alluded to earlier, we launched full driverless Robotaxi testing in Abu Dhabi. This means that we will be the first company to have Robotaxis running without safety drivers. At the same time, we also expanded our operational service to include new destinations, such as Al Maryah Island and El Reem Island, covering a range of vibrant areas in the city. Through this, you can see in action our phased approach to operational expansion. This phased approach allows us to ensure a high quality of service while meeting all regulatory and safety standards. To date, we have a leading safety track record in the commercial delivery of our services. In China, we expanded our Robotaxi service in Beijing and Guangzhou. In Beijing, we added routes between the sub-centers of the city, Beijing Yizhong, and the Beijing railway station, spanning over 600 square kilometers. In Guangzhou, we launched China's first 24/7 autonomous ride-hailing network and added eight routes in the city center, connecting landmarks and transport hubs such as the airport, Guangzhou South Railway Station, Canton Tower, and the Canton Fair complex. These routes cover more than 250 kilometers of public roads in a densely populated urban area with very busy traffic. Going forward, our Robotaxi service in China will be integrated into Tencent's smart transportation mini-program on WeChat to serve a wider user base in China. We also continue to expand our other autonomous mobility businesses. Our Robobus has entered downtown Guangzhou, one of the most complex urban environments. The development follows our launch of the first robust BRT route in the city last year. The Robobus has now become an integral part of the daily life of Guangzhou citizens, who can easily hop on the driverless shuttle in the main district by simply tapping their city pass. It stands as a paradigm of the future mobility that we envision, where autonomous vehicles are fully integrated with the local transportation system, enabling safe and seamless movement for the communities. We are also making progress in the international market, bringing our products to Switzerland, Spain, and France. In March, our Robobus was granted an operation permit by France, making it the first and to date the only autonomous driving company whose products have received operational approvals in five countries, including China, the UAE, Singapore, France, and the U.S. Technology and safety are the cornerstones of our success. Our autonomous mobility products all operate atop what we call WeRide One, an autonomous driving technology platform designed to handle a broad spectrum of operational environments, from complex urban settings to full-day functionality and varying weather conditions. It has proven adaptability in a range of real world applications, providing a fundamental tech advantage over our peers. The high level of universality of WeRide One has recently demonstrated once again through our Robovan W5, which secured Guangzhou's first group of driverless testing permits for logistic equipment in less than three months after the product launch. The powerful adaptability of WeRide One is further demonstrated by our real world operations across a broad geographic area. The initial deployment of our AV fleets in a new city can be completed in just a couple of weeks, enabling rapid adoption for our partners. We believe safety is the best test of autonomous driving technology. In over 2,000 days of operation, our safety records remain industry leading. While we have iterated multiple times, we have not had any accidents attributed to the failure of our autonomous driving systems. Our commitment to safety and transparency is key to earning the confidence of both regulators and partners. We also leverage our core autonomous mobility know-how in our ADAS business. In April this year, we announced a partnership with QNX, a division of BlackBerry, to work together to enhance the safety and reliability of our ADAS solution. By integrating QNX OS for safety into our ADAS system, WeRide is helping OEMs and tier one companies fast track the future of intelligent vehicles. I will now hand over the call to our CFO, Jennifer Li, to discuss our financial results in more detail. Jennifer, please go ahead.
Jennifer Li, CFO
Thank you, Tony. Hello, everyone. Before we get into the financials, please know that all amounts are in RMB and all comparisons are on a year-over-year basis, unless otherwise stated. Now let's discuss our first quarter financial performance. Total revenue for the first quarter of 2025 increased 1.8% to RMB72.4 million, primarily driven by the growth in product revenue, which was partially offset by a slight decline in our service revenue. RoboTaxi has been one of the core drivers in our business. Following our achievement of record high RoboTaxi revenue for the financial year of 2024, we continue with the momentum in the first quarter of this year with RoboTaxi revenue of RMB16.1 million. RoboTaxi's contribution to group revenue reached 22.3%, rising from 11.9% during the same period in 2024. Product revenue delivered strong growth, increasing by 46.7% to RMB9.5 million for the first quarter. This encouraging growth was primarily driven by a substantial increase in the sales of RoboTaxi and RoboSweepers, which were introduced into new international markets. Our total revenue rose to RMB62.9 million, primarily due to a reduction of RMB33.5 million in revenue from ADAS, Research and Development Services, as the compromised R&D project for a certain client has been completed in 2024. This decline was partially offset by an increase of RMB29.8 million in revenue from Intelligent Data Services and an increase of RMB1.9 million in revenue from Operational and Technical Support Services. As technical support engagement increased quarter over quarter, along with the transition into the operation phase of certain projects, we recorded a group level growth margin of 35%, representing a gross margin for product of 49.9%, and a gross margin for service of 32.8%, respectively. This reflects a sustaining improvement in our business structure in line with our RoboTaxi business expansion and global commercialization. We are building a sustainable business model by engaging trusted partners and localized deployment, which helps us sustain a healthy gross profit level. Now turning to our operating expenses, we recorded a rise of 14.2% for the first quarter, amounting to RMB463.5 million. The increase was driven by a 48.4% rise in personnel-related expenses compared to the same period in 2024. We remain highly cost cautious and disciplined. The increase in operating expense is mainly driven by our incremental R&D effort. In this important phase of development, we prioritize strategic investment in talent acquisition and retention to drive our technological advancement. Combining this with our expansion of selling and marketing activities, we aim to solidify our leading position by laying a sustainable foundation. To further break down, R&D expenses represent 70.3% of operating expenses. This line item increased by 17.3% to RMB325.7 million compared to the same period in 2024. Excluding share-based compensation, R&D expenses increased by 54% to RMB278 million. Administrative expenses increased by 5.2% to RMB123.9 million compared to the same period in 2024. Excluding SBC, administrative expenses increased by 105.8% to RMB73.9 million. Selling expenses increased by 32.4% to RMB13.9 million compared to the same period in 2024. Excluding SBC, selling expenses were up 66.7% in the first quarter. Our net loss decreased by 17.7% to RMB385.1 million in the first quarter of 2025. On a non-IFRS basis, the net loss increased by 108.2% to RMB294.6 million, which was mainly attributed to our continuous investment in R&D. As of March 31st, 2025, we held a total capital reserve of RMB6.2 billion, including RMB4.4 billion in cash, cash equivalents, and time deposits, RMB14.7 million in restricted cash, and RMB1.7 billion in financial assets measured at fair value through profit and loss. We believe that our strong cash capital position will continue to support our ongoing R&D initiatives and facilitate the expansion of our growing global business. On a separate note, our board has recently authorized a share repurchase program, under which the company may repurchase up to RMB100 million of its Class A ordinary shares over the next 12 months. This indicates a vote of confidence in our business fundamentals, growth trajectory, and long-term outlook. In conclusion, we feel encouraged by our financial performance in the first quarter. As we continue to scale our operations with additional deployment underway in international markets, we are confident in building on this success and turning global opportunity into long-term value for our stakeholders. With that, operator, we are now ready to take questions.
Operator, Operator
Thank you. We will now begin the question and answer session. We will take our first question from Tim Hsiao from Morgan Stanley. Please go ahead, Tim.
Tim Hsiao, Analyst
Hi. Thanks for taking my question. This is Tim from Morgan Stanley. I have two questions, and both are related to collaboration with Uber. So the first question, we noticed that Tony briefly touched on the collaboration with Uber at the beginning of the call. I just want to quickly follow up on why WeRide and Uber decided to expand this partnership. It would be great if you can share more details on the deal with us. That's my first question. Thank you.
Tony Han, CEO
Okay. I will take this question. Thank you, Tim, for this question. So first of all, I think our expanded partnership with Uber builds on a proven model. This model is demonstrated by our successful integration of WeRide RoboTaxi into Uber's app in Abu Dhabi. Under this collaboration, WeRide delivers our tried and tested autonomous driving product. Uber will manage fleet operations and customer access via its platform. Together, we also announced a joint RoboTaxi launch in Dubai, where we are currently finalizing mapping and expect to begin operations soon. So I want to talk about this strong collaboration. So we have committed to deploying services across 15 major global cities within the next five years. This is a significant milestone for scalable autonomous mobility. I think this partnership combines WeRide’s world-class autonomous driving technology and international expertise with Uber's unparalleled marketplace reach and operational excellence. Also, I want to reemphasize as a testament of this alignment, Uber is already our shareholder and will invest an additional $100 million in WeRide over the next six months. To my best knowledge, this ranks among Uber's largest investments in non-affiliated autonomous driving companies. Besides the technology, I think our mission is very important. Our shared mission is to make autonomous mobility affordable and accessible worldwide. WeRide operates in over 30 cities across 10 countries with our research, development, testing, and commercial deployments. When entering new markets, we are not just solving the mobility challenges. We want to invest in the local ecosystem by creating jobs in fleet management, maintenance, and customer support. So we have a community oriented approach to ensure sustainable growth and I think we share this kind of mission with Uber. We also believe that by leveraging both companies' leadership in our respective fields, we can accelerate the global adoption of autonomous mobility services. So I think in terms of technology, mission, approach, and shared values, I think Uber and WeRide are well aligned. We are very excited for the next five years and 15 cities globally.
Tim Hsiao, Analyst
Great. Thank you very much for sharing all the details, Tony. And just another quick follow-up on the collaboration. So according to the announcement also, what you just shared, out of the 15 cities, what regions or markets would be the main focus for WeRide's RoboTaxi rollout? And in the following quarters, any cycles or milestones investors should monitor? Yeah, that's my second question. Thank you.
Tony Han, CEO
So about the regions of focus. Currently, we are focusing on markets primarily in Europe and the Middle East. We are going to take a phased approach. We are not going to roll out RoboTaxi service in one night in 15 cities simultaneously. Basically, we want to add cities one by one. New cities will come online each year, maybe around three new cities every year. This is just a rough estimate. We will follow a pattern of regulatory approval and then testing, followed by commercial operation and then scaled deployment. This fourth stage has been approved in our current deployment in Abu Dhabi, and I think soon it will also be approved in Dubai. The cities will be chosen based on favorable policies, guidelines, and initiatives for autonomous driving. We also want to maximize social value and create value for our long-term stakeholders.
Tim Hsiao, Analyst
Great. That's super helpful. Thanks for the additional details. Thank you, Tony and Jen. Thanks.
Tony Han, CEO
Thank you, Tim.
Operator, Operator
Thank you. Our next question comes from the line of Li Ping Zhao from CICC. Please go ahead, Li Ping.
Li Ping Zhao, Analyst
Good evening, Tony and Jennifer. Congrats on the strong RoboTaxi revenue in this quarter. I have two questions here. First, could you share with us your RoboTaxi economics? How should we consider the cost structure as you scale? And second, could you please share more about your recent rollout at Guangzhou City Center? When should we expect you to start providing RoboTaxi service in the whole city? Thank you.
Jennifer Li, CFO
Okay. I'll take the first question. Tony will take the second. Regarding the first question on RoboTaxi economics, let's just take a look at the numbers. In conventional road hailing, the driver takes home roughly 60% of the market share. RoboTaxi revolutionized this model by reducing the driver cost to nearly nothing. Yes, we still have the vehicle cost for RoboTaxi, which is slightly higher than traditional taxi, but eliminating the 60% cost changes everything about this business model. Cost optimization has been one of our key focuses, and we are making continuous progress. First, let's talk about the vehicle cost. Leveraging the booming and mature EV supply chain here in China, we have access to components of high quality and competitive pricing. Second, we have also built in-depth collaboration with global OEMs, such as Renault and Nissan. Thirdly, we adopted a modular design of our sensors, enabling a 90% shared component across different autonomous driving products. We also converted to the most cost-effective semi-solid lidar a few years ago. Leveraging all of these factors, our autonomous vehicles are quite cost competitive. For instance, the cost of our sensor suite has reduced by more than 70% over the past five years. Going forward, with more integrated design and increasing adoption of a redundant drive-by-wire chassis, we anticipate another 20% to 30% potential for future cost reduction for the next generation of RoboTaxi. Today, we operate one of the world's largest EV fleets globally, with over 1,200 vehicles and more than 500 dedicated RoboTaxis. All of our vehicles use standardized tech, as well as similar sensors and the same computing platform, which will give us tremendous buying power and simplify maintenance in the long run. Our OEM partnerships will help us keep optimizing every part of the supply chain. So in short, compared to traditional taxi and ride-hailing services, RoboTaxi is expected to be 50% or more cost-effective in developed markets. We're already testing and operating EVs in 10 countries, and we're seeing that on the ground confirms a very critical pain point: many markets are facing severe driver shortages alongside growing challenges in hiring and retaining drivers. This is precisely where our solution makes a difference. By working hand-in-hand with our local partners, we're not just deploying technology; we're solving real transportation problems caused by the labor shortage. That's all for this first question. Tony, I'll leave you to the second question regarding the Guangzhou plan.
Tony Han, CEO
Yeah, I believe the second question is about, we want to discuss a little bit about our recent rollout at Guangzhou City Center and provide some details about our RoboTaxi service. First of all, I want to say last week we launched China's first 24/7 autonomous ride-hailing network covering the core areas of Guangzhou. As I mentioned, Guangzhou is the number three city in China. Our expanded RoboTaxi service features eight pilot operation routes in the city center, connecting landmarks and transport hubs such as the airport, Guangzhou South Railway Station, Canton Tower, and the Canton Fair Complex. If you are familiar with Guangzhou, these are all the busiest and most important places and hubs. You probably, if you come to Guangzhou, will visit these places. When we first kicked off commercial RoboTaxi service back in 2019, we started in Guangzhou. This is a mega city with very busy traffic and a population of at least 20 million. To date, we have been providing autonomous mobility service to local citizens for more than 2,000 days, which I am quite confident and proud of as an achievement. The expansion of this service is a significant milestone in the industry. For the first time, RoboTaxi is allowed in the central area of such a large city, which is not easy since it incorporates some of the most complicated scenarios we have ever encountered, including a variety of road types and traffic conditions, as well as subtle interactions with a wide range of road users, such as passenger cars, engineering vehicles, pedestrians, and cyclists. Handling all these factors is a big challenge to our technology, but I believe we have addressed all these issues effectively. Being allowed to operate in central Guangzhou underscores our confidence in safety records and robust technology. We will strive to maintain a high standard of service and will also be very cautious. We will expand progressively and responsibly in accordance with the local authorities' requirements. I think that's all I want to say about this question.
Li Ping Zhao, Analyst
Okay, that's very helpful. Thank you.
Tony Han, CEO
Thank you.
Operator, Operator
Thank you. Our next question comes from the line of Joel Ying from Nomura. Please ask your question, Joel.
Joel Ying, Analyst
Thank you for taking my question. This is Joel from Nomura and I have two questions. For the first one, what is the implication of the recent launch of driverless testing in Abu Dhabi? Is there any operational plan as the next step? And my second question is, since we see some aggressive OEMs also planning to enter the Robotaxi business, what is our company's view on it? Are they competitive compared to level four players, given they have more driving data? And what is our edge on this? Thank you.
Jennifer Li, CFO
Okay, I'll take the first question. We're very excited about the driverless testing in Abu Dhabi. To my knowledge, this is the first of its kind in the Middle East. It's also the first time that a RoboTaxi without a safety driver on public roads is allowed outside of China and the U.S. WeRide is a pioneer in the Middle East. We started RoboTaxi trials in UAE as early as 2021. The desert climate, including high temperatures and a sandy environment, presents unique challenges for autonomous vehicles. Nevertheless, our RoboTaxi fleet has demonstrated a high level of reliability and safety during the initial two years of public operation. Building on this confidence, WeRide secured the first national autonomous driving permit in the UAE in 2023, which remains the only national permit in the world as of today. Last year, our local operation entered a new chapter, sorry, as they joined our forces with Uber, allowing us to provide better services and accessibility for local citizens. The driverless testing marks a major milestone as we begin this phase. It is a significant leap forward in our journey in the Middle East. We are particularly excited to have received approval to expand our service area to include Abu Dhabi's Al Maryah Islands and the Al Reem community, both of which are dynamic urban centers. We are eager to bring cutting-edge transportation solutions to these areas. So now, Tony, I’ll leave it to you for the next question.
Tony Han, CEO
Okay, yeah, I would like to address the question regarding our competition against major car companies or OEMs in the RoboTaxi service space and my perspective on our edge. First of all, I want to say competition is ubiquitous. If you are afraid of competition, you are not eligible to be a leading company. WeRide is a first mover and a leading company in the autonomous industry, and we welcome competition. As long as the winner can provide the best quality of service and the most reliable RoboTaxi service to ordinary people, I think that would be a positive outcome. We are confident in WeRide because our proven record has demonstrated the superiority and reliability of our technology over the past seven years. We have been closely working with some major car OEMs to build reliable vehicle platforms for RoboTaxi service. OEMs play a critical part in the whole ecosystem, and we have learned a lot from them. However, I want to emphasize the difference between the ADAS (Advanced Driver Assistance System) and the RoboTaxi system. The primary component responsible for driving a car in an ADAS system is the human driver, while L4 level RoboTaxi is intended for fully autonomous driving without human intervention. They are two distinct entities with different requirements and expectations. Incorrectly applying ADAS technology for RoboTaxi is akin to using an L2 system for an L3 system; it can lead to tragic accidents. We've seen some of these accidents already. To truly realize a RoboTaxi with L4 capabilities, significant time and energy must be invested into simulation platforms, R&D, driverless technology, and extensive testing over millions of miles. Merely having a vast user base is not sufficient; it asserts that the vehicle can produce a competent L2 system, but this does not equate to having a competent L4 system. It’s like comparing a good warrior on land to one at sea—they face entirely different challenges. Our real-world RoboTaxi operations in multiple locations are underpinned by consistent investment in building and enhancing our platform. In terms of safety, we want to proudly announce that after more than seven years in operation, we have maintained an exemplary safety record, and we have not experienced any failures attributed to our autonomous driving systems. I believe this is a remarkable achievement. Currently, WeRide is one of the very few companies that have brought Level 4 mobility to the public, and we are confident in maintaining our leading position in this industry. That's my response to this question.
Operator, Operator
All right, thank you. Next question comes from the line of Yawen Tan from BNP Paribas. Please go ahead, Yawen.
Yawen Tan, Analyst
Hi, this is Yawen from BNP. Thanks for Tony and Jennifer's time. I have two questions. The first one is: is there any specific plan for further expansion of the fleet size and operation area? And secondly, what's your view on regulations in different markets? Have we seen countries accelerating the adoption of L4 technology? Thank you.
Jennifer Li, CFO
Thank you. I will take the first question regarding our plan for future expansion. As RoboTaxi penetrates traditional mobility in different regions, we will maintain a balanced strategy between the Chinese market and international markets. In China, we will gradually increase operations in selected Tier 1 cities, scaling our service step by step, which will be in accordance with the adoption rates determined by local authorities. We have a track record of more than five years of public operation in China, and our recent developments that entered the city center in both Beijing and Guangzhou are natural progressions built on this existing momentum. We will continue on this momentum. In overseas markets, we will scale through strong global partnerships. By collaborating with key mobility and transportation stakeholders worldwide, we can localize and accelerate our deployment more effectively. For example, in the UAE, we work with the Integrated Transport Center in Abu Dhabi and the Road and Transportation Authority in Dubai, who have been extremely helpful. In France, we collaborate with Renault, Beti, and Macif. In Switzerland, we coordinate with the Swiss National Railways (SBB), the Canton of Zurich, and the Swiss Transit Lab on multiple projects. In Singapore, we partnered with Chye Thiam Maintenance, and in Germany, we work with Bosch as a key partner. Last but not least, Uber is a key ally in our plan to roll out commercial RoboTaxi service in 15 new cities globally. The cities we plan to enter typically have an existing ride-hailing and taxi ecosystem, which ranges from a few thousand to tens of thousands of shared mobility vehicles. This environment is ideal for L4 technology integration and scaling up. Through this partnership, WeRide will provide the service via Uber's app, while Uber handles fleet operations. Our global partner strategy is designed around shared execution, risk management, and local market insights. We are not entering the new markets alone; we are assembling a network of trusted global collaborators to accelerate adoption, shorten deployment cycles, and meet each region's regulatory expectations. Tony, I will now leave it to you for the next question about the regulations in various markets.
Tony Han, CEO
Okay, so I'll discuss the regulations of different markets. There are areas that are favorable to autonomous driving vehicles, particularly several countries in the Middle East, such as the UAE and Saudi Arabia, as well as several countries in Europe. China is also very welcoming of autonomous driving technologies. These are the major markets we want to focus on deploying in. Countries that aim to embrace autonomous driving need to consider several factors, including safety and labor costs. All of these factors play a role in determining their approach. Countries emphasizing the need for RoboTaxi services represent significant opportunities for first movers like WeRide. We're seeing increasing interest in AV technology, which is reflected in our expansion and operations. For example, we launched our RoboTaxi and Robobus service in Guangzhou City Center in January and May, respectively. In February, we received approval to launch our GXR for fully unmanned paid ride-hailing service in Beijing just four months after announcing the product. In March, we obtained Level 4 operation permits in France. In April, we partnered with Dubai's Road and Transport Authority and Uber to integrate our RoboTaxi fleet into Dubai's public transportation system. I can't wait to see this come to fruition as our mission is to deploy RoboTaxis all over the world. As of May, we have started further driverless testing in Abu Dhabi, and I'm currently here testing; it's fantastic. We are operational in 10 countries across Asia, the Middle East, and Europe. From our experience, we understand that regulators are generally supportive of autonomous driving as long as we can maintain our safety record. Overall, we are optimistic about the future and believe WeRide is well-positioned to capture obtaining penetration for autonomous driving technology. Thank you for your question.
Operator, Operator
Thank you. We will now take the next question from the line of Tianquang Hu from China Securities. Please ask your question, Tianquang.
Unidentified Analyst, Analyst
Hi, everyone. Can you hear me?
Tony Han, CEO
Yes, yes, we can.
Unidentified Analyst, Analyst
Yeah, my first question is, is there any new product development that you could share, especially regarding RoboTaxi?
Tony Han, CEO
Okay, so regarding new products, we actually launched a new generation of RoboTaxi GXR last October, which is a purpose-built RoboTaxi tailored for L4 driving. We also modified it for deployment in the Middle East, where temperatures can reach about 40 degrees Celsius. It has to be equipped with powerful air conditioning and large batteries. We upgraded our GXR to make it more suitable for the markets in Abu Dhabi and Dubai. To achieve this, we worked closely with GD Horizon to customize the GXR. We've invested considerable time and effort on it. Our proprietary sensors with a high-performance computing platform are now ready and integrated into the GXR, making it suitable for extreme heat conditions. We've also implemented redundant systems to ensure reliable braking and steering operations. Additionally, we are planning to further upgrade the GXR with a new computational platform in the second half of the year, utilizing NVIDIA's next-generation software platform. This offers an impressive computational power exceeding 2,000 TOPS. Over the past five years, we have worked to reduce costs; for instance, the cost of our sensor suite has dropped by more than 70%. We aim to use innovation and develop new products to achieve another 20% to 30% cost reduction for the next generation of RoboTaxi. Currently, these developments are in progress. I look forward to seeing the large deployment of GXR in Abu Dhabi and Dubai.
Unidentified Analyst, Analyst
Thank you. And I have another question. My second question is, what's your view on the growing level of competition in China as more companies are rolling out autonomous driving technology?
Tony Han, CEO
As I mentioned in my previous responses, as a leading global company, you must be prepared to face all kinds of competition, whether globally or within China, from car OEMs or data systems companies or other RoboTaxi operators. In my view, competition is beneficial. I appreciate the nature of a free market, as competition pushes companies to provide the most cost-effective and high-quality products. What’s wrong with that? It’s a great thing. But if you’re worried about losing in this competition, I think our eight-year track record demonstrates our growth from a small startup to a leading autonomous driving company with over 2,000 employees. We are confident, having overcome the initial stages with limited resources to now being in a strong position. I always mention that we possess four core pillars that set WeRide apart from the competition. The first pillar is tech competence; technology serves as our foundation. The second is a proven business model, and we are focused on large-scale deployments while pursuing enterprises in multiple global markets. The third pillar is our safety record and reliability. Please verify our safety records globally; WeRide boasts the best safety record in the industry. And the fourth pillar is a robust partnership network. If I have additional time, I would like to elaborate on these four pillars. Thanks for your question. First, regarding technology, over the past eight years, we crafted the WeRide One universal platform applicable to various applications like RoboTaxi, Robobus, RoboSweeper, Robovan, and ADAS systems. The data collected across these five branches allows us to improve performance five times multiply, facilitating large-scale deployment across various vehicle types. This broad vision for WeRide is unmatched in the industry. Our business model has demonstrated scalability, and we’ve generated revenue across multiple verticals addressing real-world challenges including mobility and logistics. Operating in 30 cities across ten countries proves our solutions are effective. Furthermore, we maintain a solid safety record, passing tests across diverse and challenging environments, including crowded urban centers in China and extreme weather conditions. Lastly, we emphasize strong partnerships across regions with firms like Uber and robust local authorities in Switzerland, France, Singapore, and the UAE. In terms of data systems, we collaborate with top-tier suppliers like Bosch. In the aftermath of this competition, we remain confident because that is the value of WeRide.
Unidentified Analyst, Analyst
Okay, thanks a lot. Very clear.
Tony Han, CEO
Thank you.
Operator, Operator
Thank you. Next question comes from Leo You from CLSA. Please ask your question, Leo.
Leo You, Analyst
Hi, good evening management. Thank you for the opportunity. So I want to ask about the use of cash. We are quite excited about the share repurchase program. Would you please share more about your thoughts behind rolling out the program now and how would you strike the balance between shareholder return and investing in technology and product?
Jennifer Li, CFO
I'll take this question. Thank you, Leo. So the board has authorized a share repurchase of $100 million, which reflects their strong confidence in the company's solid foundation and leading position in the autonomous driving industry as well as the compelling long-term growth trajectory. The proposed repurchase structure can be made from time to time in the form of compliant transactions. This initiative allows us to opportunistically buy back shares when we see favorable opportunities, demonstrating our commitment to delivering value to shareholders while maintaining financial flexibility for future growth.
Leo You, Analyst
Okay, thank you, Jennifer. And I have another question on the financial part. Could you share more about the growth drivers behind the product revenue and service revenue in the first quarter and how do you see the trend of the revenue line?
Jennifer Li, CFO
At this stage, our growth momentum for the first quarter is primarily attributed to the growth of the RoboTaxi business and our global expansion. Given that all the revenue from different product lines is still relatively small, we think it's best to focus on the product itself instead of breaking it down, as the product and service mix changes every quarter. For instance, when we deliver a large project in one quarter, the product revenue can significantly increase, while in different quarters, service revenue might dominate. Regarding the RoboTaxi service—our core business from day one—the revenue contribution for the RoboTaxi business significantly increased by 10.4% year over year, accounting for about 22% of this quarter's total revenue. According to our knowledge, this is the largest published RoboTaxi revenue among peers, and our gross margin remains healthy at around 35%.
Leo You, Analyst
Okay, thank you very much.
Jennifer Li, CFO
Thank you, Leo.
Operator, Operator
Thank you. There are no further questions. I would like to hand the conference back to our management for closing remarks.
Tony Han, CEO
Okay, everyone, thank you again for participating. I would also like to take this opportunity to thank our partners and our employees. I have to say, none of the progress would have been possible without their support and hard work. We look forward to continuing discussions with everyone again in our next call. Thank you all, goodbye.
Operator, Operator
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.
Tony Han, CEO
Thank you.
Jennifer Li, CFO
Thank you.