LiDAR no longer increases revenue and profits, RoboSense enters a positive cycle

Sales volume soared, gross profit margin increased, losses decreased... On May 20, RoboSense released its first quarter financial report for 2024, and the data was very good. More importantly, RoboSense has broken away from the vicious circle of "increasing revenue but not increasing profits" and has taken the lead in realizing the positive cycle of ADAS LiDAR "the more it sells, the higher the gross profit margin, and the less loss". Data shows that in the first quarter of this year, RoboSense's total sales of LiDAR products were about 120,400 units, a year-on-year increase of 457.4%, and the sales of LiDAR products used in the ADAS field were about 116,200 units, a year-on-year increase of 542%.

In contrast, revenue also ushered in rapid growth. In the first quarter, total revenue reached 360 million yuan, a year-on-year increase of 149.1%; adjusted net loss was 84.1 million yuan, a year-on-year narrowing of 11.5%. At the same time, just a few days ago on May 17, the Hang Seng Index Company announced the latest quarterly review results, showing that RoboSense was included in the Hang Seng Composite Index, and the change will take effect on June 11. Under multiple favorable factors, RoboSense's stock price also rose. After the opening of the Hong Kong stock market on May 20, RoboSense went all the way up, and once rose by nearly 90% during the session. As of the close, the company's stock price closed at HK$60.75, a sharp increase of 45.86%. The current total market value is approximately HK$27.395 billion.

However, when talking about the full-year expectations, Qiu Chunchao, CEO of RoboSense, was a little conservative in his answer at the earnings conference. "The automotive industry has seasonal patterns. Based on past performance, sales in the third and fourth quarters will be better." He said frankly that it is difficult to make a detailed judgment at this point in time. The current automotive market is very competitive. In the past, a model might have been a hot seller for several years, but now car companies will directly mention that they may make real-time adjustments during communication. "Fortunately, we are a platform product that can be adapted to multiple production lines."

However, he has some confidence in 2025, believing that models priced between 150,000 and 200,000 yuan will have the opportunity to be equipped with lidar. "To some extent, this will increase the number of our sales." To this end, RoboSense recently released a thousand-yuan product: a highly integrated, small-sized medium- and long-range automotive lidar MX. At the performance meeting, Qiu Chunchao said that this product will be SOP in the first quarter of 2025, and then introduced in detail the logic behind product design and pricing. As for when the balance of payments can be achieved, he still puts the time point in 2025.

01. Financial report data is positive, and scale effect is beginning to emerge

Founded in 2014, RoboSense is a LiDAR and perception solution provider. RoboSense's main business includes product sales (applied to robots and others, as well as ADAS), solutions, services, etc. It was listed on the Hong Kong Stock Exchange on January 5 this year.

Judging from the financial report data, RoboSense's main source of revenue still comes from product sales, which is 345.1 million yuan, and this business segment accounts for 95.6% of the total revenue. RoboSense currently has four LiDAR platforms, M platform, E platform, R platform and F platform, and the F platform is under development. The R platform is a traditional mechanical LiDAR, and the M and E platform products are currently mainly used for ADAS applications. The M platform is the main LiDAR, the E platform is the blind spot LiDAR, and the F platform will support ultra-long-distance detection.

It can also be seen from the financial report data that the sales volume of laser radar products for ADAS applications accounted for the largest proportion, with sales of 116,200 units, a year-on-year increase of 542.0%; sales also increased from RMB 71.6 million in the first quarter of 2023 to RMB 305.9 million, a year-on-year increase of 327.0%.

As of May 17, 2024, RoboSense has received mass production orders for 71 models from 22 global automobile OEMs and Tier 1s. Among them, one of the world's largest automobile manufacturers in terms of sales in 2021-2022 is also considered an important milestone in the global development of its business. In terms of implementation, as of the end of the first quarter, RoboSense has achieved large-scale mass production of 25 models for 12 of its customers. As of the end of the first quarter of 2024, the total cumulative sales of LiDAR exceeded 460,000 units, of which the total cumulative sales of automotive LiDAR exceeded 400,000 units. According to the configuration database of Gasgoo Automotive Research Institute Intelligent Driving , from January to March 2024, RoboSense's installed LiDAR reached 116,000 units, ranking first with a market share of 51.6%.

It is worth noting that the average unit price of ADAS lidar products has decreased from RMB 4,000 in the first quarter of 2023 to RMB 2,600 in the first quarter of 2024, which has offset part of the revenue increase due to the increase in product sales. Sales revenue of robots and other products has increased, but overall revenue has decreased.

It decreased from 43.1 million yuan in the first quarter of 2023 to 39.2 million yuan in the first quarter of 2024, a year-on-year decrease of 8.9%. RoboSense said that although the sales volume increased from about 3,500 units in the first quarter of 2023 to about 4,200 units in the first quarter of 2024, the average unit price of the product decreased from 12,300 yuan to 9,300 yuan. "This is mainly due to the increase in sales of the lower-priced Helios series and Bpearl in the first quarter of 2024, while the sales of the higher-priced Ruby series decreased." The same situation occurred with the revenue of solutions.

In the first quarter of 2024, RoboSense's revenue from sales solutions was RMB 15.4 million, a decrease of 48.0% from RMB 29.6 million in the same period of 2023. However, the number of delivered solution projects has increased, from 54 in the first quarter of 2023 to 108 in the first quarter of 2024. However, the average selling price of each project has decreased from RMB 548,400 in the first quarter of 2023 to RMB 142,500. "This is mainly due to the decrease in customer demand for customized perception solutions and the intensification of market competition."

02. Gross profit margin improved and scale effect began to emerge

Although product prices have fallen across the board, RoboSense has improved both in terms of gross profit margin and losses. It can be understood that technological progress and economies of scale have achieved certain results. In the first quarter of 2024, thanks to the continued growth in the production scale of lidar products for ADAS applications, RoboSense achieved a gross profit of 44.5 million yuan, a gross loss of 5.9 million yuan in the same period of 2023, and a gross profit margin of 12.3% this quarter, up from a gross loss rate of 4.1% in the same period of 2023. Among them, the gross profit of products used for ADAS applications was 32.5 million yuan, and the gross loss in the same period of 2023 was 41.9 million yuan. The gross profit margin of this product category has significantly increased from a gross loss rate of 58.5% in the same period of 2023 to a gross profit margin of 10.6% this quarter.

When talking about the reasons for the increase in overall gross profit margin, RoboSense said that it was mainly due to economies of scale. Under the guidance of the trend of accelerating large-scale mass production, both car companies and LiDAR manufacturers have embarked on the path of "trading price for volume". LiDAR has also experienced a wave of price cuts in just three years. RoboSense is no exception. The average unit price of its ADAS application products has dropped from about 10,000 yuan in 2021 to about 4,300 yuan in 2022, and then dropped to about 3,200 yuan in 2023, and fell to 2,600 yuan in the first quarter of this year.

When asked whether product prices will drop further this year, Qiu Chunchao said that the prices of main products are relatively stable at present. "But it is not ruled out that some models sell well or undergo modifications, and car manufacturers will negotiate further on prices." Qiu Chunchao said, "If some OEMs want to cooperate more deeply with us, or have long-term ties with us, and hope that we make some concessions on prices, we may support such demands."

There are two ways to maintain continuous improvement in gross profit margin while prices continue to fall. Previously, Qiu Chunxin gave the answer: First, ensure a stable supply of raw materials and consumables, and reduce material costs through chip- based development and substitution. Second, based on the existing sufficient number of customers, expand production scale and yield , reduce production losses, and optimize production structure. As for when to achieve a break-even point. He still puts the time point at 2025.

Qiu Chunchao responded to this question earlier, saying that he had calculated the situation during the IPO and that 1.2 million or 1.3 million units had a chance to turn a loss into a profit. This was based on the proportion of previous AI and chip investment, as well as the fact that the investment in laser radar hardware R&D did not increase significantly this year. "With such a big change in the market, price cuts are inevitable. We also saw prices going down at the beginning of the year. Now it is possible to make a profit only when the sales volume reaches 1.5 million to 2 million units, but the market is constantly changing, and this number is uncertain."