WeRide Inc. (WRD) Earnings

Management highlights

### Core Strategic Positioning - WeRide reorganized its business into three core segments (L4 autonomous driving, L2++/L3 ADAS, AI infrastructure) to align with its strategy as a physical AI company, built on proprietary foundation models and infrastructure, with autonomous driving as the most advanced commercial application. - All segments share a unified technology platform, creating a synergistic double data flywheel: L4 robotaxi operations generate high-quality real-world data that improves L2++/L3 technology, while scaled L2++/L3 deployments provide additional data to accelerate L4 development, reducing redundant R&D investment and improving overall efficiency. ### L4 Robotaxi Progress - **Overseas expansion**: WeRide uses an asset-light model where it does not own operating vehicle assets, instead licensing its autonomous driving technology to local partners for recurring service and mileage-based fees. The company entered three new European markets (Spain, Switzerland, Denmark) in Q2, bringing its total European footprint to 6 markets, and expanded right-hand drive market entry via partnerships in Singapore and Hong Kong. In the Middle East, the robotaxi fleet doubled QoQ to ~400 vehicles, now covering over 70% of core urban areas in Abu Dhabi and Dubai, with expanded operations to Riyadh's airport and central business districts. - **Domestic Chinese operations**: Expanded fully driverless operation design domain (ODD) in Guangzhou by nearly 3x compared to end-2025, reaching key central business districts and major venues. Average daily rides per vehicle grew 24% QoQ to 21, while domestic robotaxi ride-hailing revenue grew 140% QoQ, and registered users grew 35% QoQ. - **Regulatory competitive moat**: WeRide's 2-3 year regulatory advantage is built on three pillars: localized technology adaptation for local traffic rules and conditions, deep ecosystem integration with local partners, and proven rigorous safety validation that builds regulator trust. This framework is replicable across markets, with existing validation reducing compliance costs for new market entry. ### L2++/L3 ADAS Progress - Won six consecutive championships at China's national intelligent driving competition, confirming technology leadership. Launched an L3 proof-of-concept program with Mercedes-Benz, marking third-party validation of WeRide's technology by a leading global OEM. - Cumulative vehicle deliveries equipped with WeRide's one-stage end-to-end L2++/L3 solution exceeded 30,000 units as of Q2 end, with strong growth in mass production adoption from multiple OEM partners. ### AI Infrastructure Progress - Officially launched the WIT physical AI cognitive foundation model, which introduces the concept of minimum physical fact units to build a physical fact-centered AI understanding framework. WIT works in tandem with the Genesis World Model to create a closed loop for data processing, simulation, and algorithm iteration, underpinnning both L4 and L2++/L3 product lines.

Guidance

- Commercial: Overseas L4 robotaxi is expected to enter a phase of meaningful, profitable growth with secured licenses, expanding fleets, and recurring revenue by end-2026. For L2++/L3 ADAS, cumulative vehicle deployments are expected to exceed 100,000 units by end-2026, and surpass 500,000 cumulative units in 2027. - Financial: Operating leverage is expected to accelerate as the asset-light L4 business scales and L2++/L3 enters mass commercialization. R&D cost per vehicle will continue to decline as R&D is shared across all business lines, and peak AI infrastructure investment is already complete. WeRide reaffirms it remains on track to achieve positive cash flow in a single quarter by 2028, and full-year break-even in 2029. - Strategic: In China, WeRide will first build benchmark fully integrated robotaxi operations in Guangzhou before disciplined, repeatable expansion to other major Chinese cities. For L2++/L3, the top priority is securing additional OEM partnerships, growing market share with key OEMs, and scaling deployed volume. Broader L4 segment revenue is expected to strengthen in the second half of 2026 as deployment of non-robotaxi L4 projects ramps up.

Segment performance

WeRide reported total Q2 2026 revenue of RMB 232 million, an 82% year-over-year (YoY) increase and a 103% quarter-over-quarter (QoQ) increase. The company is organized into three business segments: L4 autonomous driving, L2++/L3 ADAS, and AI infrastructure, with the first two segments contributing the vast majority of current revenue. 1. **L4 Autonomous Driving**: Q2 2026 revenue reached RMB 125 million, up 47% YoY, driven primarily by robotaxi operations. This segment accounts for approximately 53.9% of total company revenue. The L4 fleet grew to ~3,400 units total, with the robotaxi sub-fleet reaching more than 1,800 vehicles, up 40% from the prior period. 2. **L2++/L3 ADAS**: Q2 2026 revenue grew ~2,600% YoY (26x) and 219% QoQ, as the business transitioned from development to mass production deployment. The company delivered ~30,000 units of L2++ solutions during the quarter. This segment's rapid growth has increased its revenue contribution significantly quarter-over-quarter. Overseas revenue overall grew 164% YoY and ~170% QoQ, accounting for nearly 40% of total group revenue in Q2 2026.

Risks & headwinds

- The asset-light business model relies on ecosystem partnerships, and there is risk that key platform or fleet partners could switch to competing autonomous driving technology providers, reducing revenue and growth opportunities. - Forward-looking statements, including profitability and deployment targets, are inherently uncertain, and actual results could differ materially due to regulatory changes, slower-than-expected technology adoption, and competitive pressures. - Safety incidents in autonomous driving operations could damage regulatory trust, lead to operational suspensions, and harm the company's reputation and ability to secure new permits. - Intensifying competition in both the L4 robotaxi and L2++/L3 ADAS markets, including from large established players like Tesla and NVIDIA, could put pressure on market share, pricing, and margins.

Analyst Q&A

• Q: How does WeRide prioritize resource allocation across its three business segments and regions, and what are its H2 2026 goals? /

  A: Management explains that the unified physical AI platform and new foundation model architecture create strong technology and data synergies across all three segments. A single R&D investment benefits L4, L2++/L3, and AI infrastructure simultaneously, enabling WeRide to advance all three lines with efficient resource use. For H2 2026, the key goals are to progress toward 100,000 annual L2++/L3 deployments, secure additional OEM ADAS partnerships, expand the L4 robotaxi fleet globally, and drive adoption of WeRide's AI infrastructure among other robotics companies. Management also plans to directly compare its L2++/L3 solution to Tesla's FSD ahead of FSD's China entry.

• Q: How replicable is WeRide's asset-light overseas expansion strategy across different regions? /

  A: Management confirms the overseas strategy is highly replicable, with a proven playbook of securing permits, localizing technology, building a flagship benchmark project, and then scaling at lower marginal cost. WeRide's model avoids heavy capital expenditure for vehicles, focusing on recurring technology licensing revenue that delivers strong unit economics, with annualized revenue per robotaxi estimated at $40,000-$50,000 with upside as density increases. The model is already operating successfully across 12 countries, with fleet doubling in the Middle East in Q2 even amid regional geopolitical tension, and 40% of total group revenue now coming from overseas, demonstrating the model's traction.

• Q: What is the trajectory of WeRide's future operating expenses, particularly R&D spending? /

  A: Management notes that operating leverage is already emerging: Q2 revenue grew 82% YoY while R&D only grew 36% YoY. R&D is shared across all business segments on the unified platform, so it does not scale linearly with revenue or vehicle deployments, leading to declining R&D cost per vehicle as volume grows. Peak investment for AI infrastructure buildout is already complete, and WeRide remains disciplined on spending. The company confirms it stays on track to hit positive single-quarter cash flow by 2028 and full-year break-even by 2029.

• Q: In WeRide's asset-light model, partners own vehicles and platforms own end customers, so what is WeRide's leverage to maintain partner relationships if platforms like Uber choose to switch to other AV providers? /

  A: WeRide's core long-term leverage is its proven ability to secure regulatory autonomous driving permits, which requires a strong global safety track record that few competitors can match. WeRide currently holds official autonomous driving licenses in 8 countries and operates in 12, more than most global peers, and regulators prioritize safety performance when approving new operations. WeRide also partners with multiple local and platform partners in each market to build a resilient ecosystem, and sees large untapped demand for autonomous mobility at the early stage of the industry.