Hesai Group

Thank you for standing by and welcome to the HERSI Group second quarter 2023 earnings conference call. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Yanting Xu. Please go ahead.

Thank you, operator. Hello, everyone, and thank you for joining Hesite Group's second quarter 2023 earnings conference call. Our earnings release is now available on our IR website at investor.hesitetech.com, as well as via newswire services. Today, you will hear from our CEO, Dr. David Lee, who will start the call with an overview of our recent updates. Next, our global CFO, Mr. Louis Teh, will address our financial results before we open the call for questions. Before we continue, I refer you to the safe harbor statement in our earnings press release, which applies to this call, as we will make forward-looking statements. Please also note that the company will discuss non-GAAP measures today, which are more thoroughly explained and reconciled to the most comparable measures reported on the GAAP in our earnings release and SEC findings. With that, I'm pleased to turn over the call to our CEO, Dr. David Lee. David, please go ahead.

Thank you, Yuan Di, and thank you, everyone, for joining our call today. In the second quarter, our team's dedication and hard work resulted in record-breaking quarterly figures. In particular, we achieved unprecedented milestones in our quarterly net revenues, experiencing a surge of over 100% year-over-year. Furthermore, our total LIDAR shift for the quarter soared to a record over 52,000 units, marking a tenfold increase compared to the same period last year. Both our ADAS revenue and shipments also reached all-time highs, with ADAS shipments growing 27 times year-over-year, further reinforcing our leading position in delivering high-quality LIDARs for passenger cars. As a result, we are delighted to report that our strong shipments, along with our unwavering focus on operating efficiency, have generated a positive operating cash flow for the second consecutive quarter, with a four-fold increase over prior quarters. Among our six U.S. listed peers, we take pride in being the sole players with a positive operating cash flow. These financial achievements underscore our commitment to sustainable and profitable growth in the long run. We are also thrilled to be named as the number one global automotive LiDAR supplier for the second consecutive year in a recent report published by EU Intelligence, a world-renowned independent research company in Europe. We have captured 47% of the worldwide LiDAR market share by revenue in 2022. Your report indicated astounding growth of 95% of the global automotive LiDAR market from 21 to 22. Meanwhile, we extended our leading position, increasing our global LiDAR market share from 42% in 2021 to 47% in 2022, clearly surpassing the second largest player at 15%. Furthermore, according to the report, Hasai is projected to be the largest shipper of ADAS LiDAR units again in 2023, with an anticipated volume almost 1.5 times greater than the second-rank supplier, firmly establishing us as a market leader. This prestigious leadership position is a strong testament to our exceptional capabilities in designing, manufacturing, and shipping high-performance, high-quality lighter products at a substantial volume. We take immense pride in our unique ability to meet market demands and consistently exceed customer expectations. Now, let's take a closer look at our second quarter business update. On the ADAS front, We're excited to announce that we have secured a new domestic design wing for multiple series production vehicle models with StakeMotor. Our partnership with them now includes new intelligent multi-purpose vehicles in addition to our previous collaboration on passenger vehicles and battery electric heavy-duty trucks. Among our 11 ADAS customers, six of them are scheduled to begin shipping new EV models equipped with Hasei LiDAR by end of 2023. Also, as of second quarter of 2023, among our 11 ADAS OEM customers, we have achieved ADAS design wins for mass production across over 40 vehicle models, showcasing our commitment to providing top-notch LIDAR products to our valued customers. Internationally, our ADAS LIDAR products have attracted significant interest from global OEMs who acknowledge our proven track record in consistently delivering automotive LIDARs of the highest performance and the best quality at scale and meeting production schedules. We are making notable progress in advancing our discussions with leading global OEMs on sourcing arrangements for their next-generation intelligent vehicles. In the second quarter, four additional programs with three leading global OEMs have moved forward to the RFQ phase, and we anticipate final decisions to be made starting in the fourth quarter of 2023. Among our ongoing RFQ engagement, we forged two new strategic development programs with two leading global automotive OEM partners, one from North America and one from Europe. These comprehensive programs encompass long and short-range LiDAR, enabling us to create a comprehensive portfolio of advanced LiDAR solutions that prioritize safety. Development programs like these represent a unique opportunity for us to find new products around the designs of the target vehicle models and offer OEM customers a deeper level of understanding of our technical superiority and engineering capabilities before they make final decisions. Moving on to the autonomous mobility market. In the second quarter, we successfully convinced volume shipments on our latest deal, which represents the largest robot taxi LIDAR contract in the company's history with a leading global robo-taxi player, an order we mentioned during our last quarterly earning call. The entire order spans the next couple of years, and notably, we have already secured contracts to ship LIDAR's value at a couple hundred million dollars for the year of 2024 alone with an improved growth margin. Next, I'd love to share an update on manufacturing and product upgrades. We remain on track to manufacture our upgraded AT series LIDAR featuring a refined design, extended detection range, and lower power consumption. Full-scale production is anticipated to commence in the third quarter of 2023 at Hurst Center, our in-house manufacturing facility in Hangzhou, which operates at an automation rate over 90%. This new, smarter manufacturing facility is designed to increase our production throughput further reduce costs and pave the way for even more scalable production. Anticipating a smooth transition, we expect to begin volume shipment of the upgraded AT128 early in the fourth quarter of this year. In the recent development, we've deepened our long-standing partnership with NVIDIA, which dates back to 2019, through a new venture that seamlessly integrates our cutting-edge LiDAR sensors into their NVIDIA Drive and NVIDIA Omniverse ecosystems. Now, developers can leverage the NVIDIA platform for more accurate testing of the autonomous vehicle algorithms while significantly shortening the development cycle, facilitating a more efficient and powerful approach to autonomous driving. NVIDIA has been one of our top 10 US customers since 2019. Last but not least, safety remains at the heart of our endeavors, a commitment deeply rooted in our conviction that human life is priceless. Our unwavering dedication to spearheading advanced and comprehensive safety standards in our functional safety, cybersecurity, and product quality truly sets us apart in the industry. The pride we take in our achievement is tangible. We are certified by SGIC, the world's leading third-party certification company as the very first LiDAR sector to attain ISOB product certification in our products. Furthermore, we're truly honored to lead the themed Global ISO Automotive LiDAR Working Group, where we collaborate alongside industry giants like Vallejo, BMW, Bosch, Sony, and Volkswagen. Together, we're forging a unified consensus on the test methods for automotive-grade LIDAR, showcasing our leadership role in shaping the industry's future. It brings us immersed pride to shoulder the responsibility of utilizing our technical expertise to drive the establishment of multiple safety standards for the industry. Our devotion to safety knows no bounds. and we continue to push the boundaries to empower a secure and protected future for all. To quickly summarize, our second quarter was truly remarkable. Our operational accomplishments are a testament to the strides that we're making with the record-breaking revenue and LIDAR shipments, backed by a steady, positive operating cash flow. This is just the beginning of an extraordinary journey I have. Our unwavering dedication drives us to build upon these triumphs and see long-term growth opportunities in the booming ADA and AM markets. Our commitment to excellence goes beyond mere words. It's a relentless pursuit to ensure that our products are synonymous with trust and dependability to safeguard the well-being of every end customer. and to craft a tomorrow where safety is paramount and intelligence derives. Now, I'll turn the call over to Louis to share more details on the financial performance and outlook. Louis, please go ahead.