Hesai Group Q1 FY2026 earnings call

• Strategic Evolution

• The company is executing a paradigm shift from spatial perception to spatial intelligence, positioning itself as a core enabler of physical AI across three pillars: chip-based LiDAR perception (eyes for machines), spatial intelligence via Cosmo (understanding the physical world), and robotic actuation modules (muscles for machine interaction).

• LiDAR Business Leadership & Commercial Milestones

• Ranked #1 globally in 2025 long-range ADAS LiDAR shipments with 43% market share; held 55% China market share in March 2026 (14th consecutive month at #1), roughly triple the share of the second-ranked competitor.
• Secured a landmark strategic supplier agreement to provide LiDAR for Mercedes-Benz Level 3 autonomy models (supported by the new Thailand Galileo Manufacturing Center for European and Chinese programs), marking the company's first entry into the Japanese automotive ecosystem via a design win for GAC Toyota's 2026 BZ3X model, and secured new overseas design wins with Xiaomi for 2027 SOP.
• 56 exhibited vehicle models across 24 leading automotive brands at the 2026 Beijing Auto Show featured Hesai LiDAR, ranking #1 in LiDAR penetration among displayed models. Flagship ATX LiDAR scaled across major OEM platforms, with a revamped ATX entering SOP in April 2026 and total backlog exceeding 6 million units.
• Multi-LiDAR design wins for Level 3 autonomy secured across leading OEMs including Li Auto, Xiaomi, and Chang'an; Li Auto began mass deliveries of its multi-LiDAR model in May 2026, marking the first mass production deployment of the company's FTX blind spot LiDAR.
• Unveiled Picasso, the world's first 6D full-color ultra-sensitive SPAD SoC that fuses RGB color and 3D geometry at the chip level to generate real-time colorized point clouds, solving long-standing edge case challenges for vision-only systems. The Picasso-powered flagship ETX LiDAR supports up to 4,320 channels and 600-meter maximum range, and secured the industry's first 6D full-color LiDAR commercial design win with Cargobot for Phase II transport robots, with mass production expected in H2 2026.

• Robotics & New Market Expansion

• Ranked #1 globally in LiDAR for key robotics segments including humanoid robots, quadruped robots, robotaxis, robovans, and robotic lawnmowers; secured an exclusive 200,000-unit design win with Zelos and deepened partnership as the largest LiDAR supplier for Neolix, and won an FTX design win for next-generation electric two-wheelers (a 60 million annual unit market in China).

• New Strategic Growth Initiatives

• Launched Cosmo, the first AI algorithm-integrated spatial intelligence device that combines custom LiDAR with proprietary 3DGS and AIGC algorithms to rapidly generate photorealistic 3D environments at scale. For a 200-square-meter space, Cosmo requires 1/5 the time of existing 3DGS solutions and 1/50 the time of traditional methods with dramatically lower labor costs. Early orders have already been received from a roster of leading global customers across embodied AI, entertainment, technology, industrial, and luxury sectors, and Cosmo enables a scalable new business model combining hardware, software, and recurring subscription/platform services that unlocks massive long-term downstream opportunities.
• Robotic actuation modules are in early development as a natural extension of the company's existing precision mechanical and motor expertise from LiDAR manufacturing; early performance metrics meet top industry levels, with more details to come in future quarters.

Starting in Q1 2026, the company updated its reporting structure to two segments: Core LiDAR Business and Strategic Growth Initiatives (SGI, which includes the new spatial intelligence device Cosmo and robotic actuation modules). For Q1 2026:

• Core LiDAR Business: Delivered an operating profit of RMB 42 million, with total LiDAR shipments exceeding 471,000 units (ADAS and robotics shipments both more than doubled year-over-year). It represents 100% of total Q1 2026 net revenue, as SGI had not yet begun contributing revenue in the quarter.
• Strategic Growth Initiatives (SGI): Recorded an operating loss of RMB 51 million in Q1 2026, reflecting deliberate early-stage investment in physical AI infrastructure. No revenue was generated from this segment in Q1 2026.

• Q2 2026 Guidance: Total net revenue is expected to reach RMB 850 million to RMB 900 million (US$123 million to US$130 million), representing 20% to 27% year-over-year growth. Total LiDAR shipments are expected to reach approximately 650,000 units. Q2 2026 will mark the first revenue contribution from the SGI segment.
• Full Year 2026 Guidance: The company reaffirms its full-year 2026 LiDAR shipment guidance of 3 million to 3.5 million units, which is approximately double 2025's record 1.6 million unit shipments. Total annual SGI revenue is expected to reach approximately RMB 100 million in 2026.
• Medium-term Guidance: SGI revenue is targeted to scale to approximately RMB 500 million by 2027. Over a 5-year horizon, management expects the SGI business could grow to a scale comparable to the core LiDAR business.

No explicit material risks or operational failures were discussed or disclosed by management during the call.

Q: What are the expected volume, revenue, and margin contributions from the new Mercedes-Benz collaboration over the next 1-3 years and long term? / A: Management confirmed the new supply agreement supports Mercedes-Benz Level 3 programs in Europe and China, with production hosted at the company's new Thailand manufacturing center. The agreement is a continuation of existing collaboration with additional volumes and new models, but further customer-specific details cannot be disclosed. The Mercedes-Benz win, combined with other recent global design wins (GAC Toyota, Xiaomi overseas programs), confirms the company's two structural growth drivers for global expansion: international OEM partnerships, and overseas expansion of Chinese automakers. (198 chars)

Q: How is Cosmo different from traditional LiDAR, what is its competitive position, client base, and expected financial contribution? / A: Unlike traditional LiDAR that only outputs raw point clouds, Cosmo is an integrated spatial intelligence system that combines custom LiDAR and AI algorithms to generate fully photorealistic 3D environments. It has major advantages in raw input quality from in-house LiDAR and proprietary algorithms that deliver far higher speed and lower labor costs than competing solutions. Early orders are already in place from customers across embodied AI, entertainment, tech, industrial, and luxury sectors, with a recurring revenue model from software and platform services expected to deliver structurally higher margins than traditional LiDAR. Initial full year 2026 revenue from Cosmo is expected to be in the eight-digit (RMB) range. (496 chars)

Q: How should we think about blended LiDAR ASP trends and long-term pricing outlooks? / A: Blended ASP decline today is driven by healthy product mix shift, as mass-market ADAS LiDAR (which has lower unit pricing than higher-end robotics LiDAR) grows as a share of total volume, reflecting LiDAR becoming a mainstream standard. As the industry transitions to Level 3 autonomy, structural increases in LiDAR content per vehicle will drive higher total revenue: from ~$200 per vehicle at Level 2 to $350 per vehicle at entry-level Level 3, and $500-$1,000 per vehicle for advanced Level 3 configurations. Advanced new products like Picasso 6D LiDAR also enable meaningful functionality upgrades that can support higher pricing for premium configurations, similar to the upgrade cycle seen in smartphones. (452 chars)

Q: How is the LiDAR competitive landscape evolving, and what will sustain Hesai's leadership? / A: While price competition has been a focus in prior years, the industry is now shifting toward higher performance, more features, and new architecture development, with cost reduction enabling mass adoption across new sectors from affordable vehicles to robotic lawnmowers. Hesai's key advantage is its decade-long track record of engineering expertise across multiple LiDAR technology cycles, from mechanical to semi-solid to fully solid-state designs. The company is ahead of peers in key next-generation trends including 6D full-color LiDAR and expansion into physical AI products (Cosmo, actuation), with a strong pipeline of 2026 launches that sustain its leadership. (351 chars)