WeRide Inc.

Tui Wright's fourth quarter and full year 2024 earnings conference call. At this time, all participants are in the listen-only mode. We 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 financial and operating results were released by the Newswire earlier today and are currently available online. Joining us today are WeWrite's founder, chairman and CEO, Dr. Tony Han, and CFO, Ms. Jennifer Lee. In addition, co-founder and CTO, Dr. Yan Li, will also be available during the question and answer session. 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 four looking statements, including our strategies and future plans. Actual results could differ materially from those stated or implied by these four looking statements as a result of various important factors and please refer to the risk factors section of our US prospectus file with the SEC for a full disclosure of these risk factors. 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 founder, Chairman and CEO, Dr. Tony Han. Please go ahead, sir.

Hello, everyone, and thank you for joining us for our first earnings call as a NASDAQ-listed public company. 2024 was an important year for WeRide. marked by significant advance of our call over tax business, international expansion, and product development. As we continue to build on our positions as an industry leader, we remain committed to our mission of transforming urban living through safe, reliable, and accessible autonomous driving solutions. The progress we have made during the fourth quarter has been particularly encouraging. It positions us well for 2025 and beyond. It also reflects our strategic focus on establishing foundations for long-term sustainable growth. We believe this will allow us to best deliver on our mission and create lasting value for our stakeholders. Let's begin with our core business, Lomo Taxi. We have made exciting achievements together with our partners. In October, we launched our new purpose-built robotaxi, the GSR, which represents a significant leap forward in AV technology. Just four months after the launch, GSR has begun her full driverless commercial operation in Beijing, becoming our second AV authorized to provide unmanned and paid robotaxi in the capital of China. This rapid development demonstrates both our technology superiority and the increasing regulatory acceptance of AVs. The debut of GSR also coincided with the third anniversary of our robot taxi operation in UAE. In the fourth quarter, we started a new chapter in this region by collaborating with Uber to launch a ride-hailing partnership in Abu Dhabi. This represents the first time that AVs are available on Uber outside the US. We are excited to announce that by mid-2025, the number of robo-taxis on the Uber platform will reach 50. With the support of the Abu Dhabi Integrated Transport Center, our service is available in major areas, including Sebyat Island, Yas Island, and the road to the Eid International Airport. This marks a key milestone of our commercialization in this region. that the Robotech industry has entered an exciting development phase powered by increasing public acceptance and a more favorable regulatory environment. As a first mover, we are well positioned to capitalize this shift and fully committed to improving the accessibility of our Robotech service globally. In January, we launched our first strategic robotaxi pilot project in Switzerland. In March, we officially obtained a permit to conduct commercial robotaxi ride-hailing service in Kuo urban area in Beijing. Our rewrite one foundation model enables us to operate successfully in diverse environments. Our robotaxi can maneuver smoothly in crowded tier one cities such as Guangzhou and Beijing. and maintain very stable performance in extreme weather conditions such as very heavy rain and extreme heat. Most importantly, we prioritize safety in our operations. Our robot taxi fleet has completed more than 1,900 days of commercial operation on public roads with zero regulatory displaying caused by autonomous driving system failure. Next, I'm going to share with you our market strategy. which focuses on internationalization. We have been spearheading commercialization in the global market since 2021. Back then, we launched our robot taxi ride hailing service in Abu Dhabi, which was the first of its kind in the region. Our outstanding performance leads to UAE's first and only national permit, which was granted to WeRide in 2023. We were greatly encouraged by this success, which validated both our technology and service. In new markets, we are committed to fostering constructive dialogue with regulators to realize our mutual vision for safe autonomous driving. We have also built a robust ecosystem by forging strategic partnership with a wide range of key stakeholders. Besides joining forces with Uber in the Mideast, We collaborate with Zurich Airport in Switzerland to provide RoboBus shuttle service, and partnered with Renault, Belty, and Massif in France to offer trial RoboBus service. We also provide driverless solutions to the largest sanitation operator in Singapore, Techia Maintenance. These initiatives are evidence of our serious commitment to the global expansion. As of today, we have deployed L4 vehicles across more than 30 cities in 10 countries. Domestically, despite current economic headwind, we have expanded our footprint to over 20 cities in China with our robo-taxi, robo-bus, robo-sweeper, robo-van and related services. We are actively building a strong business development team and implementing dynamic pricing strategies to drive growth in our whole market. we remain optimistic about her long-term potential. Our strategy of engaging in multiple markets provide us with resilience and various opportunities for growth, thereby mitigating the risks associated with dependence on any single market. Through focusing on international expansion, we are confident in our ability to expand customer base and turbocharge our long-term growth. Now let's discuss technology and products that underscore our success. Our global strategy is governed by the focus on technology innovation. It ensures that we remain competitive in every single market we enter. We began deploying end-to-end models for both ADAS and L4 driverless systems in the second half of 2024. The end-to-end model employs a large VLM, i.e. visual language model, which is pre-trained with all the data available from the internet as the backbone to encode the world's knowledge. It is then trained with nearly 1 million hours of carefully selected driving data from both human drivers and the simulated driving scenarios based on our world model. The training data continuously grow with high quality driving data, as well as more long tail cases covered by real world data and simulated data. Such an approach ensures the trained model has a general understanding of the world, as well as deep insight in driving. Eventually, our autonomous driving systems can perform like a seasoned taxi driver in various complex urban scenarios. For our L4 driverless products, such as RoboTaxi and RoboBus, the end-to-end model is accompanied with safety-critical frameworks to bring human-like driving experience while maintaining the same high level of safety required by driverless systems. They are available in our latest version of RoboTaxi, GXR, which is currently running in multiple countries. We have also achieved several key breakthroughs in product development in 2024. First and foremost, as mentioned at the beginning, we unveiled our new purpose-built Robotaxi, the GSR. It is carefully tailored for scalable and driverless operation with an improved redundant system. It features an industry-leading L4 drive-by-ware chassis architecture, spacious seating design, and we write the proprietary sensor suite 5.6. With an autogrid computing power of 1,300 TOPS, GSR is able to handle the highest level of complexity. We have also put into thorough consideration of user experience, such as designated carry-on luggage area, a gradual stop button, and an electrical power sliding door. GSR has started serving citizens in Beijing in this February and will soon be deployed in Guangzhou and Abu Dhabi. With this groundbreaking product, We are going to redefine autonomous driving experience by providing a safer and more comfortable mobility option. In other elbow segments, we extended our product family by releasing a new RoboSweeper, the S1, and a new RoboOne, the W5. Both represent our customer-centric productization philosophy. S1 RoboSweeper complements and is deployed alongside our larger S6 RoboSweeper. It can navigate smoothly in narrow space while effectively cleaning various road services. W5 features the largest cargo capacity in its class, making it fit for various point-to-point logistics scenarios. We have seen strong demand just one month after we introduced the W5 RoboVAN. These innovations expand our addressable market enhance our capabilities, and offer to create additional revenue streams beyond our callable taxi business. As we look forward to the remainder of 2025, our strategy will focus on setting the stage for future growth through multiple coordinated initiatives. We are preparing to take advantage of the recovery of the domestic market and expanding our presence internationally. In tandem, we will continue to diversify our revenue streams through product innovation and upgrades. Finally, we are committed to scaling our robo tax fleet to a meaningful size that drives operational efficiencies and strengthens our industry leadership. These efforts will lead to sustainable long-term growth. With that, I will now turn the call over to our CFO, Jennifer Li, to give us our financial report. Jennifer, please go ahead.

Thank you, Tony. Hello, everyone. Before we get into the financials, please know that all amounts are in RMB and all comparisons are on year-over-year basis unless otherwise stated. Now let's go through our fourth quarter and full year 2024 financial performance. In 2024, V-Ride reached record-breaking robo taxi revenue and achieved the highest international revenue since our founding. Total revenue for the fourth quarter decreased by 3% to $141 million, primarily due to a decline in our service revenue, which was partially offset by the growth in product revenue. For the full year of 2024, total revenue was $361 million. By revenue type, Product revenue saw substantial growth, increasing by 46% to $52 million for the fourth quarter. This growth was mainly driven by a significant rise in the sale of the robo-taxi, robo-sweeper, and robo-van during the quarter, although partially offset by a decrease in revenue from the sale of robo-buses. Service revenue, on the other hand, decreased to $89 million, mainly because customized R&D service for certain clients were completed during the previous quarter, with renewed contract expected to take effect in 2025. For the full year of 2024, product revenue increased by 62% to $88 million, while service revenue decreased by 21% to $273 million. In terms of gross margins, Product growth margin were 17% and service growth margin were 48% for Q4. For the full year, growth margin for products and services were 18 and 35%, respectively. Now turning into our operating expenses. In the fourth quarter, operating expense rose by 82% to $640 million. For the full year of 2024, The operating expense increased by 32% to $2.3 billion. The change was mainly due to a higher personnel-related expense for both Q4 and the full year, as well as an increase in share-based compensation, which we will refer to as SBC from here on. We believe that its increased operating costs were moderate relative to the market, and it well positioned V-Ride for growth at scale. enabled us to build strong distribution network and become front runner in deploying our products in more international markets with better profit margin and significant growth potential. Breaking this further down, R&D expense increased by 32% to 320 million in Q4 and increased by 3% to 1.1 billion for the full year of 2024. Excluding SBC, R&D expense increased by 57% to $284 million in Q4 and increased by 39% to $857 million for the full year of 2024. R&D expense grew as we continue to invest in attracting industry-leading talents to constantly improving our technical capabilities and products, as well as launching new innovative autonomous driving products and services. Administrative expense increased by 205% to 305 million in Q4 and increased by 82% to 1.1 billion for the full year of 2024. Excluding SBC, administrative expense increased by 63% to 66 million in Q4 and increased by 26% to 201 million for the full year of 2024. The increase was primarily due to our continuous effort to execute our growth strategy. strengthening our organizational infrastructure and recruit key employees across relevant functions. We also face higher professional services fee compared to previous quarters as we transitioned to being a public listed company. Selling expense increased by 52% to 15 million in Q4 and increased by 29% to 54 million for the full year of 2024, excluding SBC, selling expense were up 71% and 74% for the quarter and for the three years, respectively. This increase reflects our continuous expansion of the sales network initiatives to promote the advantage of our autonomous driving products and services, as well as efforts to build brand awareness. With this increased spending, we successfully launched more commercial projects, across multiple cities in China and rapidly expand our presence in key markets in Europe, the Middle East, and Asia. Our net loss increased by 66% to $592 million in Q4 and increased by 29% to $2.5 billion for the full year of 2024. On a non-IFRS basis, which excludes certain factors as outlined in our early release and corresponding US SEC filings, The net loss increased by 112% to $246 million for Q4 and increased by 60% to $802 million for the full year of 2024. As of December 31, 2024, we hold $4.9 billion in cash, cash equivalent, and time deposits, along with $14 million in restricted cash and 1.7 billion in financial assets measured at fair value through profit and loss. We expect our solid cash position will allow us to sustain ongoing R&D efforts and expense deployment of our autonomous driving vehicles across more cities. We believe this investment will yield significant commercial returns in the coming years. In closing, 2024 was a strong year for our company. V-Ride has launched autonomous driving testing and operation in 10 countries, achieved record-breaking robot taxi revenue, and the highest international revenue. Our strategic investment in research and development and other key areas have led to innovative autonomous driving products and extended global deployments. Looking ahead, we have a robust pipeline of opportunities to work on in 2025, which we believe will drive the deployment development of advanced technology, shaping not only the future of our company, but also the future of the autonomous driving industry. With that, operator, we are now ready to take on questions.