WERIDE-W (00800) Q2 2026 Earnings Call Transcript

good morning and good evening ladies and gentlemen thank you for standing by and welcome to the we write second quarter and third half 2026 earnings conference call please note that today's event is being recorded at this time our participants are in listen only mode for today's call management will use english as the main language a third party interpreter will provide simultaneous Chinese interpretation. The company will be hosting a question and answer session after the management's prepared remarks. If you wish to listen to the management's original statements or ask a question during the question and answer session, please make sure you are dialed in to the English language line. Please note that Chinese interpretation is for the convenience purposes only. In the case of any discrepancy, management statements in their original language will prevail. Joining us today are WeRite's Founder, Chairman and CEO, Dr. Tony Han, and CFO and Head of International, Ms. Jennifer Lee. Before we continue, I would like to refer you to the Safe Harbor Statement in the Company's earnings press release, which also applies to this call as today's call will include forward-looking statements, including WeRite's strategies and future plans. These forward-looking statements are made under the safe harbor provisions of the US 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 20F filed with a SEC and announcement of the website of the Hong Kong Stock Exchange 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 the management's prepared remarks are in RMB terms and will be discussed non-IFS 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 SAC and the Hong Kong Stock Exchange. The company's unaudited financial and operating results were released earlier today via Newswire and can be found on the company's AYAO website. With that, we will now begin with the company's video presentation.

In the physical AI era, autonomous driving is evolving from single vehicle intelligence toward an intelligent flywheel connecting data, models, vehicles, and operations. As the global leader in autonomous driving, WeRIDE continues to advance physical AI toward its next stage of commercialization. In China, we continue to strengthen our operational capabilities. With Beijing and Guangzhou as our core operating hubs, our fully driverless robot taxi coverage continues to expand. Through deployment in complex urban environments and real-world operating scenarios, we continue to enhance system robustness, safety, and operational efficiency. To date, WeRide's autonomous driving footprint has expanded to over 60 cities across 13 countries worldwide. Internationally, WeRide is accelerating expansion across Europe and the Middle East through our AssetLite model. In the Middle East, we have achieved fully driverless robot taxi operations in Abu Dhabi and Dubai, while continuing to expand our operations in Riyadh. This proven robo-taxi commercialization model is now expanding from the Middle East to Europe. Following our rollout in Slovakia, WeRide is rapidly scaling across Europe. In June, we announced new robo-taxi deployments in Madrid and Zurich. In August, we announced plans to deploy Denmark's first autonomous shared mobility services. Within two months, we advanced public commercial operations across three countries, with Denmark representing our sixth European market. At the same time, we are accelerating expansion into right-hand drive markets. In April, we partnered with Grab to launch Singapore's first public autonomous driving mobility service. In June, we partnered with Geely, Farazan, Enquinchung Bus to advance right-hand drive robo-taxi commercialization with Hong Kong as the starting point. This marks a major step toward WeRive's robo-taxi mass production and operational capabilities across both left-hand drive and right-hand drive markets. Beyond robo-taxi, our robo-bus business continues to advance commercialization in Europe with operational progress across France, Belgium, Spain, Switzerland, and other markets. Our L2++ and L3 solutions are scaling rapidly. To date, our single-stage end-to-end platform, RRD 3.0, has won mass production commitments across more than 30 vehicle models, with active road testing and market validation underway in key global markets, including Germany, France, and Japan. Behind these commercial achievements is our continuously evolving Physical AI Technology Foundation. We introduce the WeRideWIT, the Physical AI Cognitive Foundation Model, pioneering the concept of the Minimum Physical Fact Unit and building a new AI understanding framework centered on physical facts. Combined with the Genesis World Model, it connects high-quality real-world driving data, model training, and simulation validation to empower L2++ and L4, accelerating large-scale autonomous driving deployment. Operations validate technology. Technology empowers products. Products drive commercialization. WeRide continues to advance along this intelligent flywheel path, accelerating the global commercialization of autonomous driving.

Now, I would like to pass the floor to the company's founder, chairman and CEO, Dr. Tony Han. Please go ahead, sir.

Hello, everyone. Thanks for joining us today. We had a great second quarter this year. To begin, I'd like to highlight three key factors that define our strong performance in the second quarter and emphasize the exciting progress we are making today. That is, overseas acceleration, asset life scaling, and a clear path to self-sustaining cash generation. We made strong progress across all three areas during the quarter, positioning the company for the next phase of growth. Turning to our financial performance, total revenue delivered robust growth, nearly doubling year-over-year and more than doubling quarter-over-quarter, with growth of 103%. Overseas revenue increased 164% year-over-year and approximately 170% quarter-over-quarter. Meanwhile, gross margin reached a record high of 38 percent, representing an improvement of approximately 10 percentage points compared with the second quarter of last year. Benefiting from continued improvement in operating efficiency, EBITDA also improved with a loss narrowing by 8 percent compared with the second quarter of 2025. Our operational metrics, our L4 fleet reached approximately 3,400 units, up 22% since earnings release in April. Within that, our robot taxi fleet grew by 500 units to more than 1,800 vehicles, making a 40% growth over the same period. Furthermore, our one-stage end-to-end L2++-L3 solution has progressed from securing design wins to full-scale miles production. Revenue from this business surged nearly 2,600% year-over-year and increased 219% quarter-over-quarter in second quarter. During the quarter, we delivered approximately 30,000 units of our L2++ solutions, making the beginning of a scaled, high-growth commercialization for our L2++-L3 business. Across the industry, we believe we are uniquely positioned with both mature technology stacks and large-scale commercial deployment for both product lines. the multi-sensor fusion L4 autonomous driving solution, and the proprietary one-stage end-to-end L2++-L3 solution for mass production. Turning to our strategy, this quarter we segmented our business into three areas, L4, L2-L3 ADAS, and AI infrastructure to provide greater clarity into our long-term strategic planning. In second quarter, we further advanced our strategy as physical AI company built on proprietary infrastructure and foundation models with autonomous driving representing the most commercially advanced application of physical AI. Our physical AI infrastructure enables us to distill the capabilities of large foundation models into efficient, lightweight, on-board models. The key lies in our ability to transfer the underlying knowledge and the representations learned by large-scale models, not merely their outputs, into smaller models while preserving the intelligence, generalization, and decision-making capabilities required for real-world autonomous This enables us to bring increasingly powerful AI capabilities to cost-efficient onboard systems, supporting both the scaling of our L4 business and the continuous evolution of our WRD 3.0, i.e., our L2++-L3 solution. More importantly, this creates a powerful technology flywheel. Our real-world L4 operations generate high-value data that continuously improves safety, robustness, and generalization, while our growing L2++-L3 fleet generates additional raw data, accelerating L4 model development and expanding coverage of long-tail scenarios. There are two separate businesses. These are not two separate businesses. There are two reinforcing layers of one physical AI platform where every vehicle deployed and every mile driven makes our technology smarter, safer, and more capable. Next, I will work through our specific progress this quarter across technology development and commercial deployment. Starting with our L4 business, specifically RoboTaxi, our core themes are asset-light overseas acceleration and strengthening regulatory modes. Our overseas operations are built upon an asset-light model. We do not own operating vehicle assets. Vehicles serve as a hardware entry point for market expansion, while we work with local partners to deploy and operate the business. This model allows us to scale our footprint with significantly lower capital requirements and greater operational flexibility. Based on optimal utilization under normalized driverless operations, we estimate the steady state annualized technology service revenue per RoboTaxi could exceed $50,000. As our fleet scales, we expect increasing benefits from the data network effects, cross-market learning, and algorithm generalization, which should further improve vehicle-level economics and create meaningful operational leverage. I would also like to classify how we define unit economics. Our overseas UAE is not based on a fleet ownership plus right-handing platform model, where revenue is derived from fair charging at the gross level. Instead, our economics are based on a licensed virtual driver technology model. We provide regulated, locally verified, and recognized autonomous driving capabilities and charge a recurring fee from autonomous driving technology services and mileage-based fees. Because our positioning and our business model differ fundamentally, the same term UE carries very different operational and financial implications from those in traditional ride-hailing platform. Backed by partners like Grab, Uber, Green Mobility, SBB, etc., we are replicating this proven satellite operational model across Mid-East, Europe, and Southeast Asia. This marks that our overseas expansion is now entering a phase of large-scale commercialization. To put into more details, in second quarter, we announced new RoboTaxi commercial partnerships in Madrid, Spain, and Zurich, Switzerland, and Copenhagen, Denmark. In the Middle East, we continue to expand full driverless RoboTaxi operations in Abu Dhabi and Dubai this quarter, now covering over 70% of the core urban areas. In Riyadh, our robotaxi operation zone has expanded to the airport, terminals, and surrounding central business districts. By the end of 2026, we will be fully entering a phase of meaningful growth supported by secure licenses, expanding fleets, recurring orders, solid revenue, and profitability in overseas markets. This will demonstrate the successful execution of our overseas acceleration and asset-light expansion strategies. For the domestic markets, we continue to strengthen our operational capabilities and expand our driverless operation zones in Guangzhou to key areas of Tianhe district, including Zhuzhian-Newtown and the Haiju district, including the Canton Fair complex. This represents a nearly threefold extension in our ODD compared to the end of 2026. More importantly, our operating efficiency continued to improve meaningfully during the quarter. Average daily rides per vehicle reached 21, up by 24% quarter over quarter, while peak daily rides completed per vehicle climbed to 28. As a reading-healing platform with self-operated robotech fleet, we recorded nearly 35% quarter over quarter growth in registered users in China. This simultaneous expansion in scale, utilization, and user base drove a 140% sequential surge in our right-hailing revenue, further demonstrating the scalability and strengthening the profitability of our operations. Looking ahead, as China's regulatory framework for autonomous driving continues to mature, we expect to further expand our robo-taxi operations into more cities in near term. At the same time, we will continue to build Guangzhou as our domestic benchmark with the goal of integrating driverless robo-taxi into public transportation system at scale. Together, these initiatives will provide a strong foundation for the next phase of domestic commercialization. Beyond this, I would like to take a step back and discuss our regulatory modes. The operational licenses we have secured overseas are by no means simple administrative approvals. They are a combination of years of technology adaptation, ecosystem integration, and rigorous safety validation. This creates a core competitive mode that puts us two to three years ahead of the market. This mode is built on three core pillars. First, the technology localization and the regulatory engagement. We adapt our technology to local traffic laws, road conditions, and driving behaviors while working closely with regulators throughout the process. Second, ecosystem and infrastructure integration. We establish deep technical integration with local operators and service providers, supported by strong on-the-ground execution. Third, rigorous field validation and safety performance. Our fleet continuously accumulates localized real-world data, while safety framework and check record provide the foundation for earning regulatory trust and securing commercial licenses. Importantly, as regulatory frameworks become increasingly aligned across markets, our experience and validation in one jurisdiction can help accelerate approvals in the others. This reduces margin compliance costs, avoids redundant work, and creates increasing operating leverage, allowing us to scale our asset-light autonomous driving business globally with greater speed and capital efficiency. A growing industry consensus on L4 core barriers was also shared by the same mobility platform during its Q2 investor presentation. Technical competitiveness depends not on total driving miles, but on the acquisition cost of rare scenarios, scenario diversity, and practical data quality. Besides, generic large foundation models cannot satisfy autonomous driving needs. AV systems rely on exclusive vehicle hardware and strict regulatory oversight, which demands customized models matching hardware specifications and compliance requirements. Backed by our robust proprietary end-to-end data toolchain, diversified data set accumulated from long-term cross-border L4 operations and outstanding self-developed algorithms, we keep upgrading vehicle engineering safety. Our field-proven safety performance earns sustained trust from global regulators, accelerates regional expansion, and builds an exclusive core advantage for global layout. Then turning into our L2++ slash L3 business, three themes define our progress. industry-leading technology, rapid commercialization at scale, and path toward self-sustaining cash generation. Leveraging on our leading technology advantage in L2++-L3 algorithms, we have secured six consecutive championships at China's intelligence-driving competition, reinforcing our leadership position in intelligent driving technology. Commercially, we are entering a clear acceleration phase with multiple OEM mass production programs advancing steadily. As of June 30, cumulative diversity delivery of vehicles equipped with our one-stage end-to-end L2++-L3 solution has exceeded 30,000 units during the reporting period. Looking ahead, we expect the number of vehicles powered by our solution to exceed 100,000 by year end and surpass half a million units in cumulative deliveries next year, positioning us for significant scale-up in our L2++ ADAS business. Finally, I will provide a brief update on our AI infrastructure. In this quarter, we officially launched the WIT model, which is a physical fact foundation large model, completing a full capability loop spanning data comprehension, data generation, and end-to-end technical stack. It delivers deep synergy with our Genesis world model. The WIT model extracts and verifies physical facts from road test data to build a cognitive foundation for machines to perceive and understand the real world. Leveraging validated physical facts genesis reconstructs diverse extreme operating conditions and the long tail scenarios simulation the two models work in tandem to perform a closed loop covering data generation simulation and algorithm iteration driving continuous upgrades to autonomous driving technology. Currently, it underpins our two core business lines of L4 autonomous driving and mass-produced L2++ slash L3. In closing, in the second quarter, we delivered meaningful milestones and strong results across the business, which lead us to return to three key themes I highlighted at the beginning of today's call. Overseas acceleration, asset lighting, expansion and self-sustaining cash generation. Looking ahead, our focus remains clear. On the L4 side, in overseas markets, leveraging our regulatory leadership and permit advantages, we will replicate our RoboTaxi-proven model across Europe and other markets, accelerating the transition from successful validation to scale deployment. In China, we will continue to expand our deep market strategy, building benchmark operations that are fully integrated into urban transportation systems before expanding in a displaned and repeatable manner across major cities nationwide. On the L2++-L3 side, our top priority is straightforward with more OEM partnerships, increase our market share with key OEMs, and accelerate deployments at scale. Growth installs vehicles in our ultimate objective. I'm sorry, growth is the key. We will invest where we see clear conviction and meaningful skill potential, rather than pursue growth for growth's sake. At the same time, we will remain focused on both long-term cash flow generation and profitability, rather than expand simply for the sake of expansion. Here, beyond the numbers, I would like to thank my team. This is a team that embraces hard problems, confront reality head-on, and remain relentlessly focused on execution. That culture of intellectual honesty and operational excellence is what enables us to consistently turn vision into products, products into services, and services into large-scale commercial value in uncertain environments. Just as our physical AI foundation model, the wit or the intelligence toward truth reminds us true intelligence must be grounded in observable, verifiable facts about the physical world. The same holds our business. What ultimately matters is not what we claim, but what we continue to deliver in the real world. Narratives may change, technologies may evolve, and the market cycles may come and go, but facts endure. Real-world performance endures, and a proven track record remains the most powerful language of all. Next, I will turn a call over to our CFO, Jennifer, who will work you through our second quarter, 2026 Financial Performance in details.

Thank you, Tony. Hello, everyone. Let me start with the key message from the quarter. Q2 marks an important inflection point for V-Rite, with strong revenue growth, continued growth margin expansion, and increasing operating leverage across the businesses. Importantly, this growth was driven by three areas where we believe we can support a more sustainable financial model over time. The acceleration of our overseas business, the scaling of our asset-light L4 model, and rapid commercialization of our L2++ L3 business. We're increasingly seeing the benefit of the strategy in our financial results, particularly revenue growth, growth margin, and capital efficiency. In Q2, we generate R&D 232 million of revenue, up 82% year-over-year, and 103% quarter-over-quarter. Importantly, growth is broadening across both our businesses and geographies. Our L4 revenue reached RMB $125 million, up 47% year-over-year, primarily driven by RoboTaxi. Our focus remains on scaling the core L4 business, particularly RoboTaxi. Meanwhile, some of our other L4 businesses have a natural seasonal cycle, with commercial negotiation typically complete in the first half and revenue recognized as deployment takes place in the second half of the year as those projects move into deployment we expect stronger contribution from our broader l4 portfolio in the second half of this year our l2 plus plus l3 business continue to accelerate rapidly with revenue increasingly increasing approximately 26 times times year-over-year, and 219 times quarter-over-quarter. This reflects an important transition from project development into mass production and scaled vehicle deployment. As more OEM programs move towards mass production, we expect L2++ L3 to become an increasing important driver of our overall revenue growth. Oversea market account for nearly 40% of growth revenue and it's becoming an increase in important growth driver as well. Oversea revenue increased 164% year over year and approximately 170% quarter over quarter. More importantly, the economics of our overseas business are increasingly attractive. Our asset light model allows us to scale through local partners and operating ecosystem without requiring a proportional increase in our own balance sheet investment. This gives us three important advantages. Faster geographic expansion, improving margin as operation scales, and lower incremental capital requirements. We believe this model is an important foundation for our long-term path towards self-sustained growth. Turning to profitability at the gross profit level. Growth profit increased 143% year-over-year to RMB $87 million, while growth margin expanded 9.4 percentage points to 37.5%, compared to 28.1% in the same quarter last year. The improvement was driven by continuous scaling of our high-margin asset-light over the L4 business, rapid growth in the L2++, and an overall shift towards higher-value AI service-oriented revenue. As its mix continues to improve, we believe growth profits can grow even faster than the revenue over time. Total operating expenses were RMB $533 million in Q2, slightly up 9.2 percent year-over-year, slightly slower than the revenue growth. This is an early indication that operating leverage is taking hold. R&D expense increased 36 percent year-over-year to R&B $434 million, primarily reflecting our additional investments in AI infrastructure and foundation models. At the same time, a much slower growth in the total operating expense demonstrates that we are beginning to achieve greater efficiency as business scales. GNA declined significantly to RMB $69 million, mainly due to lower share base compensation and professional fees, while selling expense only increased to $29 million as we expand our commercial activities. Overall, we are seeing increasing operating leverage while operating expense growing well below the revenue. Putting all this together, our net loss narrowed 1% year-over-year to RMB 401 million in Q2, while EBITDA loss narrowed 8.1% year-over-year to RMB 335 million. These results reflect the early benefit of our affiliate model and increasing operating leverage, particularly as we scale our overseas business and reinforce our path towards sustained cash generation finally as option 30s we have approximately rmb 5.4 billing in cash and other liquid financial resource this provides us a strong financial foundation for continued expansion let me close with four key takeaways first revenue growth is accelerating and become increasingly diversified second our revenue mix is shifting towards higher margin physical ai service oriented business third operating leverage is beginning to emerge with expense growing significantly slower than revenue and fourth our strong balance sheet and asset light model provide a capital efficient foundation for continued expansion we believe q2 demonstrate an early financial benefit of the model and we have been building global expansion asset light deployment higher physical ai service revenue and increasing operating leverage looking ahead that, our focus is to convert our commercial pipeline into scale deployments, continue improving margin, and progressively translating revenue growth into stronger cash generation. We believe these are the key building blocks for durable capital-efficient growth, a leading position in global autonomous driving, and a sustained path to profitability. With that, operator, we are now ready to take questions. Thank you.

Thank you. we will now begin the question and answer session as a reminder we only accept questions in the english language line to ask a question please dial in into the english line and then press star one one on your telephone touchstone keypad if you have any follow-up question please run to the queue thank you and now we're going to take our first question just give us a moment and the question comes line of Jeff Chang from CTU line is open please ask a question hi hi Tony Jennifer a congratulation with the great yourself and my first

question is that we note that we ride currently has a diversified business portfolio spanning our full L2 plus plus L3 as well as the AI infrastructure and And the question for me is, how does management prioritize resources allocation across different business and regions? And what are your goals for the second half this year? Thank you.

Okay. Thanks for the question. So first, let me start with a detailed, a little bit explanation about our financial foundation model. So as you have noticed, these days, I think almost every industry has their capability boost, like back to five years ago with our large language model and AI progress. And I don't think any company in this world can do L4 and L2++, L3 and AI infrastructure simultaneously. But recently, we noticed with our boost in the AI model, especially our genesis and WIT, and we found suddenly we can build a lot of technology into data synergies. That is, by the way, I want to explain a little bit about the name of the WIT. you know this this model witt we announced in a uh a 2026 ai world conference uh it is a solution to a famous german philosopher i think the greatest philosopher uh ludwig wittgenstein um his meaning his famous word like the limit of my language is the limit of my world is exactly what we just learned you know we can segment every video into what we call so-called minimal effect units and we basically can dissect every video and analyze every video to into a very atomic fact and combined with our genesis model we finally find we finally find out we can generate all kinds of data as we desired just like in the matrix one day leo just noticed he he see the nature of the of the world So we have this kind of feeling. And so drastically, we reduce the resource we need. And, you know, we can just, with one investment, we can do three things. That is L4 and L2++ slash L3 ADAS at AI Infra. So we build up our Infra very, very strongly and generate the data from L4 and also generate data from ADAS and make these two things complement each other, build up what we call the double data flywheel. Actually, this flywheel is why we are the only company globally that has achieved driverless vehicle operation at large scale. At the same time, we have many car OEMs adopt our ADAS system. For the goal of our second quarter, we have several aspects. One is like, we want to toward accumulated half million installation goals to work. And we want to really push forward to have a lot of cloud EMs adopting our AIDA system. And hopefully, you know, in the fourth quarter, Tesla FSD may enter China. And we want to do a directly head-to-head comparison against FSD. because I'm a heavily FSD user in California, and I drove our own ADA system, our own cars based on rewrite ADA system, WRD 3.0. I think these two things are comparable. So I want to see more cloud EMs adopt ADA system. And meanwhile, we'll continue to expand our robot taxi fleet. And thirdly, for our AI infrastructure, We want more companies in the robotic industry, humanized robot industry, to adopt our infrastructure. That's the goal. Here I conclude my answer. Thank you. Thank you.

No more questions.

Thank you. Now we're going to take our next question. And the question comes line of Tim Hsiao from Morgan Stanley. Your line is open. Please ask your question.

Hi, this is Tim from Morgan Stanley. Thanks for taking my question. Congratulations on the global expansion during the quarter. Just a quick question about the overseas business. I think on the call, the management has highlighted accelerating overseas expansion and large-scale commercialization.

So, just wondering could you share more detail how should we view your overseas strategy in the meantime can it be replicated across different regions uh that's my question thank you thank you tim um so so yeah like we just mentioned overseas market is a it's important ghost driver engine for us and it's already um contributed approximately for almost 40 percent of the group revenue And we do believe there are significant room to run. And the structural case is very compelling. Those markets we're entering into, they're all facing acute labor shortage and rising labor costs, which creates a strong natural demand for autonomous mobility. So if we can, let me give you a sense of the pace. So for the Q2 in the past quarter, we launched three renewable types of deployment and in Spain, and in Switzerland, and in Denmark, and in the Middle East, our robot taxi fleet has roughly doubled to around 400 vehicles since last quarter. So if you recall from the Q1, like earnings, so at that time we have like around 200, and even like, even given the, considering the recent geopolitical tension in the region, and we have doubled the fleet in the quarter. So the momentum is real, and it's accelerating so and also on the rapid capability so this is where we think our model generally differentiated so we operate oversee we don't own any of the vehicles in operation so what we do is we handle the localized tax adaptation and the regulatory compliance then we license our physical AI driver to local partners so we captured requiring technological service revenue as especially as our operations skills. So, this can lead us to let us expand very quickly without having heavy capital. So, and also we can maintain a good margin and good cash flow. And what's more important if we're looking at on the unit economics, the annualized recurring revenue per vehicle it exceeds 40 to 50,000 US dollars. so and it also has meaningful upside as density built up in each city so for us our primary goal is just to increase the fleet size in cities where we already operate uh we're very disciplined about where we go next usually we pick the market with proven like commercial potential and a reasonable regulatory barrier to entry and the playbook is well established um everywhere we go with secured a permit, we adapt the technology locally, we set up a benchmark project in the region and section project in the region, and then we replicate at a lower marginal cost. So, we generally believe this is going to be repeatable at scale. And today we have active L4 operation across 12 countries, all well on track. We're confident in the model and in our pipeline, and we look forward in serving passengers in more markets and thank you very much for sharing all the details it's really helpful that's all my question thank you thank you Tim thank you now we're going to take our next question and the question comes land of Paul Gong from UBS your line is open please ask your question I have this question is regarding the ADAS.

Can you please update the latest progress and future plan for your level 2 plus class? And given the relative small size, what is your competitive advantage in this highly My second question, if I may, is how do you see the ADAS come to the robot taxi by leveraging the data distributed to the ADAS?

Thank you so much for these very two important questions let me answer them one by one okay the first question is about our latest progress and plan for our l2 plus plus slash l3 adus system to make it short i would just use the adus and also so first of all i think you know i have to say the competition in talking to our internal in china we are on paris fsc i'm not sure whether you have noticed or not Just last week, I did a live stream with our ADAS experience Pearl Harbor, Newtown, which is the central CBD area in Guangzhou, our WRD 3.0 ADAS system. At the same time, I do the live stream answering the questions from all audience from my live stream room. And I do this live stream for two hours and just driving rush hour in Guangzhou without any intervention. okay the video is online you can check it i think according to my best knowledge this is the first time a founder of a adus company or autonomous driving company do a live stream in the rush hour in first year city without any intervention and answer the questions that shows the breakthrough of our technology and in terms of the installation units right our revenue grows by 2000 and 600 percent that is 26 times year over year and the 20 and and 220 percent quarter over quarter and we have already in a very short of time we have already had like 30 000 units installed in a quarter but our goal this year is to get a 100 000 units installed and next year accumulatively we want to get to half a minute and this is by far the fastest speed i have ever noticed in the ADAS growth in terms of the installation unit. And this is actually, why can we do that? Thank you for your high praise. Like we are doing with a very relatively small team. The key, the secret sauce is our two important large language model, Genesis model and the WIT model. And I do believe as you guys already noticed with the AI people sometimes call, people can form a one-person company. And with our very good AI infrastructure and the foundation model, we can actually build the best ADA solution in China and in the world with a team of two or three hundred people. That's the power of AI. Okay, so that is what I want to mention about our current progress. The second question, thank you, it's an outstanding question. That is, we have seen like many OEMs, which are, you know, cloud OEMs or some company with Ada Solutions claim, like, you know, very high tone that we are entering robo-taxi sector and we will do great things a lot of pr so my answer to this kind of uh claim uh this this goal is actually first of all we welcome this kind of competition and because this competition will make us stronger we ride as the leader and the first mover in robo taxi industry uh we expand globally and we know we also have a very strong background in ada we know the big difference we know we know the requirements for redundancy, for the reliability, you know, there is a 1,000 times difference. So, I just want to, as I mentioned at the beginning of this year, I proposed a qualification threshold for robotaxi. That is, a company needs to operate at least for half a year with a fleet of 100 private robotaxi without any significant accidents, without severe accidents, they can claim themselves a robotaxi company, otherwise it's just a claim, you know, people may claim every day, and I don't need to respond to this kind of claim. But I just want to mention, like there's a big difference between ADA system and L4 robotaxi. and people will say okay with this progress in large language model we can solve the problems like previously takes like 10 years of uh of your efforts we can solve probably half year now i make another uh uh another claim that is hallucination in digital ai may be entertaining but it is fatal in physical ai so in physical ai you can our society our public growth cannot stand a fatal accident you know if we can avoid it but in digital world you can't just you just restart computer or just do it again but in the real world a life lost is lost you can never get it back so with this kind of philosophy with this this kind of priority on safety we know that we have very very strong competitive edge we have very deep mode for our l4 business okay here are my answers to your two great questions thank you thank you now we're going to take our next question and the question comes down of Tianyu Liu from CTEX Securities.

Your line is open. Please ask a question.

Hi Tonya and Jennifer. This is Tianyu from CTEX Securities. I have only one question. How about management will the overall trajectory of future operating expenses, particularly R&D expense? Thank you.

Hi Tianyu. I'll take your question. well um so like we just explained our financial result you can see the operating leverage is already emerging so revenue grow 85 percent this quarter and rmd only increased like 36 percent so and our rmd is literally shared like a technology platform supporting l4 l2 plus plus l3 and all the other you know product categories so it does not really scale linearly with uh with revenue or the vehicle deployment. So as we can see, as we scale across different business, the R&D cost per vehicle will continue to decline. We have also moved past the peak investment phase for the AI infrastructure buildup and where the city deployment cost uh hyper significantly once operations are established so looking ahead we think uh we'll remain very disciplined in r&d spending and continue to invest um in the technology mode like say for the foundation model like on the genesis and width of what tony just described um as our as a light alpha business skills and l2 plus plus l3 enter into mass commercialization And we expect the operating leverage to accelerate. So we remain very well on track to achieve a positive cash flow in a single quarter by 2028. And we aim to have like a break even in the full year of 2029. Thank you.

Okay. Thank you very much.

Thank you.

Now we're going to take our next question. and the question comes line of uh my leo from hsbc your line is open please ask the question for taking my question uh yeah the company just launched the wict model so uh tony could you please share more about this thanks okay i would like to share more about the wheat model okay you can see from the the wheat model so basically i will see the key key part of the wheat model is trying it provide a unique analysis tool for video and combined with Genesis model in tandem we can we can so first of all give you a video it has many facts and you cannot do simply do causal causal inference across different videos and so it's just like I give you a machine and which model can help you to dissect the machine and find out the relationship between different components. And Genesis gives you another capability of learning the functionality of components and put them together to build another machine. So basically just like if I give you a Lego toy of maybe say for example a Lego toy of a Jeep and then I can dissect it and make it into a cargo ship okay so by putting these two together we believe we find a very unique path to analyze hundreds of videos thousands billions of videos and find out the causal relationship between all the facts and then use them to generate the relevant data or very long tail data for our autonomous driving. By this way, we actually boost our training capability and lower our training cost and build up the desired distilled onboard model. In the urban challenge, like we won six consecutive championships, our domain controller is relatively slower and the TOPS is much lower than our competitors. They may have 2000 TOPS domain controller, we only have a 200 TOPS controller, but we are winning. Because we can distill model according to our special needs. and we can get an also long tail so that's the the power of our of our tool foundation model i will stop here if you have further questions you can also ask yeah thanks most tony that's super clear thanks thank you thank you thank you now we're going to take our next question and the question comes down of ming sun li from bank of america you land is open please ask your question well thank you tony and jennifer to give me the opportunity to ask i just only have one

question uh we have noted that uh measurement emphasized your uh competitive advantages uh the market's view on the in on the industry are currently split uh could management articulate your competitive modes uh thank you so i want to understand what are the splits you know Can you be a little bit more specific?

So what kind of split view?

What I mean is that I think the industry, I think currently, I think that the competition is getting more intensified. So I think that's why the capital market has a different view on the industry competitive landscape. So, yeah, just want the management team can articulate more about your competitive mode.

Okay, I got you. Okay, thank you for the clarification. I think, you know, just as I mentioned, explain the foundation model we developed, right? So, Rita and the Genesis. And I think people may want to try to do the same thing, but we have all the same objectives. but like everybody wants to build electric cars but the company who build up the best motor, the best battery, who has the best design aerodynamics will win big orders and for ADAS I think there's a grand challenge I keep on saying that we won six consecutive championships. That is a challenge like we compete against all the all the top-notch data system company and then also our leveraged our l4 capability we have a very large scale of all for driverless operations fleet and it also operates global globally in mid-east in europe and in china we can gather all kinds of different data and and improve our model. And I think the only company in this world has so-called dual flywheel mechanism that is getting data from L4 over taxi to help to improve L2-L3 data system and also get from L2-L3 data and help to improve L4. because with VRite design, they are built on the same foundation model based on the same, very similar sensor configuration. We can use these two things in tandem to help leverage on each other and boost on each other. So with this, I think we have our unit competitive edge and And our results, our financial numbers, our competition numbers, our evaluation numbers have already shown like we really are in a leading position. Just a simple question. Which company else have their founder, have their AIDA system doing live stream video and in the Tier 1 CT for two hours without any intervention parking lot to parking lot? To me, I'm the only guy who first tried it, and next month I'm going to try it again. So I think all the results make it quite straightforward that we are a leader in both L2++ and L4, and we have a very strong competitive edge.

Thank you very much, Tonya. Thank you.

Thank you. And now we're going to take our final question for today. And the question comes to the line of Walter Petrick from Large Shares. The line is open. Please ask the question.

Thanks for taking the question. On the asset light model and the platform relationships, under this structure, your partners own the vehicles and the platforms basically own the riders. So we ride basically sitting in the middle licensing the driver. That makes the durability of those relationships kind of a whole thing. And then on Uber, one of your partners, obviously, in some markets, their track record here is obviously had them rotating way more out in Phoenix. They just wound down their serve robotics relationship. So I guess if you can just review what exclusivity or minimum volume commitments that you have in the Uber market and in the asset-light model where you don't own the cars or the customers, what ends up being your leverage if the platform, Uber or whoever, decides to route demand to other partners?

Jen, do you want to take this question or do you want me to take this question?

Sure, I can take this question. Yeah, so first of all, Water, we have like this athletic business model so that we can expand relatively faster in the global market. And especially wherever we go, we try to build like an ecosystem with the local partners and, of course, also with the platform partners. And so we work with multiple platform partners and we work with multiple and local partners. so uh so for us and this is really a huge market out there this is really at the beginning and we want we think setting up like a healthy ecosystem um it's it's gonna set a good foundation for everybody and if you are looking at the real um deployment figures globally We believe we have the largest robotech fleet outside China and the U.S. among all of the AV competitors by a lot. And we think that our strategic mode is not only like just deploying the asset there and that's it. So basically, if you're looking at what we do everywhere, we sell the assets to the local partners or the fleet operators, and then because we do have like a bomb advantage from China, so we're going to keep having that advantage. And then what's more importantly, because V-Rite has a superior safety record, that's That's why we can get autonomous driving license in so many countries. Right now, we have autonomous driving license, official license from eight countries. We operate in 12 countries. Nobody else, based on my knowledge, has such an operation scale. And for us, the responsibility is also, the key responsibility is to, sorry, is to get the regulatory permit. So that responsibility is with the right. and that's going to be the key for the longer term and everyone can can be on the platform but not everyone can get the regulatory permit and for regulator everything is um it's a marriage basis so for the for the av player who have who keeps having like the good safety record locally globally they definitely can get more permit as business skills but for some of them who doesn't have such a good record in fact some of the competitors are getting like um like they will get questions gas suspension from the regulator when when their safety accident continues to happen so we have a strong confidence in our attack capability in our local deployment capability our regulator uh communication and our safety capability and we have strong confidence in various like safety record so with all of that and that's how we build this strategic mode globally yeah i hope that answered that's very helpful thank you due to time constraints i will conclude today's call thank you for your participation in today's conference this is does conclude the program you may now disconnect thank you very much bye