Good morning and good evening ladies and gentlemen. Thank you for standing by and welcome to WeRide'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 WeRide'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 forward-looking statements including our strategies and future plans. 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 our U.S. 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 filing with the SEC. With that, I'll now turn the call over to the company's 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] [ph] taxi 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, Robotaxi. We have made exciting achievements together with our partners. In October, we launched our new purpose-built Robotaxi, the GXR, which represents a significant leap forward in AV technology. Just four months after the launch, GXR 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 GXR also coincided with the third anniversary of our Robotaxi 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 U.S. We are excited to announce that by mid-2025, the number of Robotaxi on the Uber platform will reach 50. With the support of Abu Dhabi Integrated Transport Center, our service is available in major areas, including Saadiyat Island, Yas Island,…

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, WeRide reached record-breaking Robotaxi 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 252 million for the fourth quarter. This growth was mainly driven by a significant rise in the sale of Robotaxi, RoboSweeper, and Robovan during the quarter, although partially offset by a decrease in revenue from the sale of Robobuses. 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 growth margin, product growth margin was 17% and service growth margin was 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…

Thank. We will now begin the question-and-answer session. [Operator Instructions]. Our first question comes from the line of Tim Hsiao of Morgan Stanley. Your line is open. Please go ahead, Tim.

Hi. This is Tim from MS. Thanks for taking my questions, and congratulations on a not-so-project breakthrough globally. So, I have two questions. So, the first question is about WeRide's and its business model, because we noticed the industry has been evolving rapidly. So, we definitely want to know that. What is WeRide's current Robotaxi business model? And could the management team also share the latest progress? I think Tony has mentioned several exciting breakthroughs, but what could be the next? So, that's my first question. Thank you.

Thank you, Tim. I'll take the first question. Our Robotaxi business model is quite unique from others. For international markets outside China, we provide autonomous vehicles and services to local partners and global platforms through a combination of selling the vehicles, charging a fixed service fee, and a revenue-sharing arrangement. This ensures we have a positive contribution margin from day one. Our strategy focuses on collaborating with leading platforms in each market so that we can achieve faster Robotaxi deployment, better utilization of Robotaxi fleet, and stronger pricing power. Our goal is to establish a presence in core cities, moving from zero to one to capture the total transport market for autonomous vehicles. We're expanding globally with certain overseas markets offer very attractive unit economics and time, while China provides very rich scenarios to prove and refine our technology and products. For example, in the Middle East, we partnered with Uber to launch commercial Robotaxi services starting from December 2024 in Abu Dhabi. To the best of our knowledge, this is the largest commercial Robotaxi service outside the U.S. and China. We will continue to increase the fleet to 50 Robotaxis by mid-2025 and improve operation by increasing pickup and drop-off points and operation areas. Another example is that we began working on pilot testing our Robotaxi in Switzerland with the largest local operators, and we expect to start open to public trial this year. Also in China, we run our own platform WeRideGo to offer Robotaxi services to users directly. We expect unit economics for Robotaxi in first-year cities in China to turn positive in the coming years. We plan to involve third-party asset owners to purchase the fleet and operate them on our platform by then. In short, our goal is to maintain an asset-live business model and to scale the Robotaxi fleet as much as possible. Thank you.

Thanks for the detailed information and sharing. Just a quick follow-up on Robotaxi, because we think that Robotaxis, as Tony mentioned, remains WeRide's core business and stays very topical these days. Could you elaborate a bit more about WeRide's current market position in Robotaxi industry, probably both at domestically and globally? That's my second question. Thank you.

Okay. I will take this question. First of all, I think WeRide is definitely in a leading position in Robotaxi segment. I will explain in detail. First of all, I think WeRide maintains her global leadership in both technology and commercialization. If you really look into the numbers, so far, WeRide has declared one of the largest fleets globally with the best safety records. As I mentioned in the opening remarks, we are the only company, to our best knowledge, that holds a track record of zero regulatory discipline caused by AD system failure. That is an amazing number. Also, we are the only company that holds autonomous driving permits from four countries. We test and operate in various complex environments with dense population. That one is actually a testament of our technological leadership. With our various products, including Robotaxi and Robovan, you can find our Robotaxi operation is highly scalable because we really build a very rigorous operating setup, including remote assistance center, fleet management system, and a fail operation design. We also, over the years, we have established streamlined SOP that enables successful development in any new city within one month. We have launched a purposely built and cost-effective car model, GXR, that ensures safe and reliable driving performance at a large scale. And last and also most important, since the foundation of WeRide eight years ago, we always treat technology as the base of the whole company. We devote tremendous efforts, lots of research efforts, lots of fundings for R&D, and we really put huge efforts to recruit talents. All of this finally resulting in a very, very advanced Robotaxi technology, which reflects our performance. And if you look at our current safety standards, that reflects our technology advance. So with all of these results, I do believe WeRide is definitely in a leading position.

Thank you, Tony, for the brief colors, and congratulations, again, for the remarkable breakthrough in the global market. Thank you.

Thank you. Our next question comes from the line of Jiajie Shen of JP Morgan. Your line is now open. Please go ahead, Jiajie.

This is Jiajie from JPMorgan. First of all, congrats on your recent encouraging business development and expansion in global markets. I have two questions. The first one is, while scaling Robotaxi operation in both domestic and overseas markets, what major challenges do you foresee? And the second question is, how do you view the future competitive landscape from here? Thank you.

Okay, let me answer these two questions. I think the first question is really about challenging in scaling Robotaxi operation. That is a great question, and I think that is the challenges facing all the automobile driving companies who have a business in Robotaxi. And to WeRide, we believe these challenges also introduce lots of opportunities. Why? Because if you can conquer these challenges and handle these challenges very well and the way you handle it becomes the moat of your business. More specifically, city-level opening up is necessary for commercial operation at scale and WeRide has been known to be very good at taking this step-by-step. Most authorities, like municipal governments or state governments, will prefer a responsible approach when they adopt AV. And WeRide has a way to gradually introduce automobile driving products, like we can always introduce RoboSweeper at first, and also fixed-route minibus, which the challenges for safety for this product relatively low compared to the requirements for Robotaxi. But with this progressive approach, we can gradually build up a mutual trust and actually show the local government like our technology is safe, and then we can gradually introduce Robotaxi at a scale. And new operational challenges will emerge at each of the scale, like when you deploy 1,000, 10,000, and 100,000 levels of fleet size. And so the backbone is really about the robustness of your technology and how safe can you maintain your Robotaxi fleet during the operation. With our track record, I think we have already shown we can handle this challenge pretty well. Okay, that is my answer to the first question about challenging for scaling Robotaxi operation. The second question is really about future competitive landscape. And as I mentioned during my answer of the first question, you know like Robotaxi…

Thank you. Our next question comes from the line of Li Ping Zhao of CICC. Your line is now open. Please go ahead, Li Ping.

I also got two questions here. And thanks for taking my question. The first question is for the Robotaxi business. What's your current course and path to profitability? And how big a fleet can achieve the breakeven? And second question is about the overseas expansion. So in general, why do you expand your business in so many countries instead of focusing on the domestic market? Thank you.

Thank you, Li Ping. I will take the first question. We believe in operating as part of a hybrid fleet as that will afford us to better ramp up the schedule and utilization of the Robotaxi fleet. That said, our business model is not to be an operator outside China. So our margin is positive on day one. As of the BOM cost, our current BOM is highly competitive. We understand certain peers' unit cost goes over like 150,000 U.S. dollars, while ours is substantially much, much lower and is still reducing. This is mainly benefiting from the mature and advanced EV supply chain in China. As for breakeven, it varies by market and by the business model. But in our target market, autonomous vehicle operating alongside human drivers in a hybrid mode, it can achieve quick profitability due to guaranteed utilization. Like for instance, in high cost markets, like say some of the European countries and some Middle East countries, we expect operating profit margin of approximately 60% by 2030. So in terms of breakeven, as long as the utilization of Robotaxi is high, breakeven is achievable, even with a small Robotaxi fleet in a new city. However, if like say a Robotaxi player operates on its own platform in a small zone, for example, in West Falls or one-sixth of a city area, it's relatively difficult to have a high utilization rate unless they have a huge sitcom, and the rate of healing price is very low. Either way, it's pretty hard to operate in a smaller zone on its own platform and achieve quick breakeven. This is why we will prefer the hybrid mode for outside China. Thank you. Tony, you want to take the second question?

Okay, I'll take the second question. So if I remember correctly, the second question is really about why not just focusing on the domestic market? Well, first of all, I think it's very natural if you can do well in both global market and domestic market, why not do well in both? Actually, look at our track record and our numbers. I think we can say we do well in both markets. So there are several reasons why we can do well in both markets with a relatively new team, but the fact is, we do believe we can do well in both markets. So one reason is we have a kind of very general, very universal foundation model and we build our autonomous driving technology from just the same set of code library and then branch out for different products. That's one unique advantage of WeRide. And besides, we observe a strong demand from countries that are facing challenges of aging population and rising labor costs, such as Singapore, Japan, European countries. So they usually are a very good market. We can definitely generate enough profit margin. And so with this kind of good market and there are not very strong autonomous driving vehicle company can deploy there. So that is definitely a natural market for WeRide. And we also believe this is definitely a favorable window to engage local stakeholders, such as a first mover and shape local regulatory framework of autonomous driving vehicle. And besides, a multi-market approach helps us diversify our revenue streams, as I mentioned in opening remarks, and that can improve our resilience against single market fluctuation. If you look at numbers, international markets represent 10% to 30% higher gross margin than domestic markets, leveraging the robustness of our products. So with all of these reasons, I think we can definitely do well both in domestic market and in global market. And WeRide has unparalleled, unique advantages to do both markets very well.

Thank you. Our next question comes from the line of Ting Song of Goldman Sachs. Your line is now open. Please go ahead, Ting.

Congratulations on all the progress. So I have two questions. The first one is you have launched Robotaxi GXR and Robovan W5. So what will be your next milestone regarding technology and product development? And the second question is you just mentioned that you have started to deploy end-to-end models and VLM in your L4 system. Could you elaborate more on this, on how you could further develop your technology? Thank you.

So I think these two questions are technology-related, so I will cover this question. Thank you for the question, Ting. So I think that there are many exciting developments over last year. So I just want to highlight a couple of them. So in 2025, we plan to deploy hundreds of vehicles across multiple cities worldwide. So our next-generation AV system will incorporate advanced high-dynamic range cameras, solid-state LiDARs, as well as autogrid computer units. So I think these upgrades will significantly reduce the total BOM cost while enhancing our overall system reliability and ensuring a robust and cost-effective solution for autonomous mobility. So next, regarding the computer unit, we have established a strategic partnership with Lenovo to implement an NVIDIA drive-thru platform and co-develop a next-generation domain controller. This autogrid domain controller will feature NVIDIA's latest Blackwell architecture system on chip. It was engineered for L4 autonomous driving, and we anticipate deploying this cutting-edge technology in our commercial Robotaxi fleet by the second half of this year. I also want to talk a little bit about our data and models. By leveraging the extensive data collected from both ADA and L4 vehicles, we are accumulating millions of long-tail traffic scenarios. Those data sets will be integrated into our vision language models to encode a complex urban driving environment. As a result, our autonomous driving system will achieve unparalleled capability in navigating intricate urban scenarios, demonstrating the skill and the intuition of an experienced taxi driver. We are committed to advancing autonomous driving technology, driving innovation, and delivering scalable, reliable solutions for the future of mobility. I think the second question is about how do we deploy the end-to-end models, and how do we train and deploy the VLMs to our L4 system? So actually, we began developing end-to-end models…

Thank you. Our next question comes from the line of Xinyu Fang of UBS. Your line is now open. Please go ahead, Xinyu.

This is Xinyu from UBS. I have two questions here. The first one is that we know that ADAS is a very important component of our service income. Can you elaborate a little bit more about this ADAS service? How do we partner with Bosch, our partner? And technology-wise, how do our ADAS initiatives interact or transfer for our L4 technology? This is my second question. Thank you.

Thank you for the question, Xinyu. So we started to co-develop L2 plus ADAS solutions with the world's largest Tier 1 supplier, Bosch, since 2022. We delivered our first solution for mass production cars within a record-breaking 18 months. Our solutions have been deployed on the Cherry Exeed platform. So our ADAS system is actually designed to seamlessly integrate with our L4 system through a unified architecture. It leverages the same data pipelines, tool chains, simulation platforms, and off-board infrastructure. So this one-size-fits-all approach allows engineers to efficiently transition between L2, L3, and L4 development. So it enables rapid iterations and deployment across different target platforms. I also want to mention that this insight and expertise gained from our ADAS development have significantly influenced our L4 stack. For instance, the end-to-end model development for ADAS serves as an alternative for path planning in our L4 system. Additionally, our HD MAP3 solution provides a robust mechanism to verify map accuracy and determine real-time updates during operations. So the rigorous auto-graded standards applied in ADAS have also been instrumental in shaping system requirements, defining performance metrics, advancing cutting-edge simulation tools, refining our validation framework, and mitigating risks associated with commercial deployment. So I think this symbiotic relationship between our ADAS and L4 systems not only accelerates development but also ensures a consistent level of reliability and safety across all levels of autonomy. So I hope that answers your question. Thank you.

Thank you very much for the color. My second question is about our R&D expense. Can we have any color on the R&D expense going forward in 2025 or more near term over the next few quarters? Thank you.

I'll take the question. So our R&D expense increased 3.1% in 2024. It's mainly due to increase in personnel-related expense resulting from our expansion of the R&D team as well as the cost of upgrading our sensor suite and hardware design. So we expect our R&D expense to continue to grow at a moderate rates along with our progress in recruiting top talents to expand our R&D force and also speeding up our compute resources. Throughout the years, we have been very cost-cautious and maintain a much lower cash burn rate compared to our global and China peers. So our total liquidity position is around 910 million U.S. dollars, which is like 6.6 billion as of like end of last year. So we believe that our current capital resource will be sufficient to meet our current and anticipated working capital requirements for the next couple of years as well as for other capital expenditure of R&D and business expansion. And in the next few years, we expect to see our actually 50-hour business to take off. So as we make more commercial results, the liquidity position will be even stronger. Yes, thank you.

Our next question comes from the line of Jiaqi Huang of SPDBI. Your line is now open. Please go ahead, Jiaqi.

This is Jiaqi from SPDBI, and I've got two questions. My first question is about our business partnership. Could you please share more about our collaboration with like NVIDIA, Uber, and other key business partners?

Okay, so I will take this question. So first of all, I think if you look at major business partners of WeRide, they are Uber, NVIDIA, Bosch, and GE for a reason. Many of them are just like top-notch company and a very, very impactful company. So I think it's all because of WeRide's unique technology advance and our great business operation and our advantages in the market that all of these tech giants want to work with us. So for NVIDIA, we have very good relationships since the early years, like when we just found this company in Silicon Valley, and we have been in touch with Jameson, and Jameson Huang as an entrepreneur always proved for the best technology. At that time, WeRide was a startup and showed Jameson the best technology. Today, we still show the best autonomous driving technology. So NVIDIA has become our very early investor, and also we adopted NVIDIA's SoC since Xavier's era, and then we gradually adopted [RNX, RNY,] [ph] and now together with Lenovo, we are developing the newest SoC for both L4 and L3 systems based on their newest SoC platform. So I think our relationship with NVIDIA is very strong, and we will continue to use the best SoCs available to facilitate the development of our L4 system. With Uber, this is definitely a winning partnership. As I mentioned in opening remarks, we are going to have at least 50 Robotaxis in Abu Dhabi by mid-2025, and the numbers will only be growing bigger and bigger, and you will expect more collaborations. And this is definitely a win-win partnership in the Middle East, and to our best knowledge, this is the first time Uber has an autonomous driving company that has their Robotaxi hooked up in their platform out…

Yes, yes. My second question is about our insights on autonomous driving. How do you think about the claim that autonomous driving will take away jobs?

Okay, another very good question. I think probably last week, I was interviewed by CNBC and I was asked the same question. I think if you look back to the human history, there are many jobs disappeared, like the invention of programmable switch machine replaced human operator. The invention of washing machine replaced laundry workers. There are lots of jobs that are tedious, and they are not so friendly to human beings. And also because in many developed societies, ageing problem is a big society issue. And for ageing societies like in Japan and Europe, we are short of human laborers, especially for taxi drivers. So if we can replace this kind of jobs with machines, that's really good. And that doesn't mean we are killing jobs. We are actually getting rid of jobs that can do it for the working class. We are basically facilitating the shaping of the jobs, and there will be more other jobs created in a related area like data labeling and fleet management and fleet maintenance. I think all of these jobs are very unequal to human being. And nobody really want to be a taxi driver, drive a car for eight hours, sit there. So we do believe our vision is like we work hard to make all human beings live better. And this is our mission and ambition. And so with this technology development, I think we can definitely just replace some tedious, not so well-paid jobs with better jobs. That's the advice of all human society. And we are so lucky. We are proud to take part in this progress.

Thank you. Our next question comes from the line of Leo You of CLSA. Your line is now open. Please go ahead, Leo.

It's Leo from CLSA. So quick question first. What is your current Robotaxi fleet size? And with this fleet, how many orders can you generate per day on average?

I'll take that question. Hi, Leo. So for now, we have over a thousand autonomous vehicles. That includes Robotaxi, Robobus, Robovan, and RoboSweepers, all of our products. And as for Robotaxi, the total Robotaxi fleet size is around 400 for now. And with 300 plus are in China, and less than 100 are in the overseas markets, but expanding quickly. So the daily orders are not very meaningful as we're still scaling, given our operation area is expanding in different cities. So we're optimistic about the midterm deployment, and we're really committed to expand. As I mentioned about in this call, so we believe as long as the utilization rate for the Robotaxi can be higher, and within the hybrid mode, we're very promising about the pickup, like getting the daily order to a similar rate of human drivers, and maybe higher, given Robotaxi can drive up to 20 hours a day in the near future. Thank you.

Hi, thank you. I'm glad that you mentioned the other Level 4 use cases, and could you elaborate more on their business models, and how do you think of these business lines when you propel the Robotaxi at the same time? Thank you.

Okay, I'll take that. So for other L4 use cases, we generally run from the vehicle sales of Robobus, Robovan, RoboSweepers, as well as the recurring fee for the ongoing operational and technical support services. So all the Robobuses, Robovan, RoboSweepers, are all purpose-built products with high level of market readiness. This is unlike a few years ago, we have retrofit vehicles. All of those vehicles, they are already purpose-built vehicles and designed from ground up to be autonomous vehicles. So it has very good performance and robustness. In the meantime, we expect lower unit costs for those L4 use cases as they continue to scale. In terms of the synergies, all of the different use cases, they do have great synergies with Robotaxis. So this is an extension and complement of the Robotaxi business. They provide rich data from a variety of operating scenarios. And for some of the markets, like our Robobus, RoboSweeper, and Robovan business line tend to serve as a spearhead when we enter into some of the new markets. And in some markets, the stakeholders, they may prefer products with lower speed and in geo-sensing deployment at the initial stage for them to understand autonomous driving. So this is all the synergies we can see. We're expanding our sales force to promote those products, as well as building a broader distribution network. Yes, thank you.

Thank you. As there are no further questions, I'd like to hand the conference back to our management for closing remarks.

Okay, thank you all. We are proud of the incredible progress we have made in 2024, and we are keen to drive further innovation as a key to our long-term success. Thank you all again for joining our call today. If you have any further questions, please feel free to contact us or request us through our IR website. We look forward to speaking with you in our next call. Have a good day. Thank you.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.