Hesai Group Q3 Earnings Call Highlights

Key Points

• Revenue rose 34% year over year to CNY 1.068 billion, with gross margin at 41% and a sixth consecutive quarter of GAAP profitability. Robotics-related growth helped offset weaker automotive demand.
• Hesai expects fourth-quarter revenue of CNY 1.1 billion to CNY 1.15 billion as softer auto production weighs on ADAS lidar shipments; the company is targeting a full-year gross margin close to 40%.
• Newer growth businesses are gaining traction: third-quarter revenue from strategic growth initiatives, including actuation modules and the Kosmo 3D-data platform, more than doubled sequentially. Management targets about $100 million in SGI revenue in 2027 and sees actuation shipments potentially reaching six figures that year.

Hesai Group NASDAQ: HSAI reported a 34% increase in third-quarter revenue as growth in robotics-related businesses helped offset softer automotive demand, while management said its newer actuation and 3D-data products are gaining commercial traction.

The lidar maker posted revenue of CNY 1.068 billion ($159 million) for the third quarter of 2026, its 10th consecutive quarter of year-over-year revenue growth. It shipped nearly 730,000 lidar units and more than 23,000 robotic actuation modules during the period.

Gross margin was 41%, and GAAP net income was CNY 81 million ($12 million), marking a sixth consecutive quarter of GAAP profitability. Non-GAAP net income was CNY 119 million ($18 million).

Chief Financial Officer Andrew Fan said the year-over-year decline in net income reflected CNY 185 million in one-time gains a year earlier from the disposal of an equity investment and transfer of intellectual property. Excluding those gains, GAAP net income rose 14%, he said.

Automotive Weakness Shapes Outlook

Hesai expects fourth-quarter revenue of CNY 1.1 billion to CNY 1.15 billion, citing more moderate downstream demand. Fan said the broader automotive market was softer than expected, with lower production volumes at some customers affecting shipments of lidar for advanced driver-assistance systems, or ADAS.

Robotics lidar revenue remained broadly on track, he said. Stronger shipments for robotaxis, robovans and humanoid robots helped offset weaker demand from a robotic lawnmower customer. Lidar products used in those other robotics applications generally carry higher average selling prices and margins than lawnmower products, Fan said.

The company is targeting a full-year gross margin close to 40%. Fan said contracts signed for 2027 support expectations for relatively stable pricing and margins for Hesai’s cost-efficient ATX lidar, as competition becomes more rational. He also expects a relatively stable group gross margin next year, although quarterly results can vary with product mix.

Total operating expenses rose 46% year over year in the third quarter, driven by investment in the company’s Strategic Growth Initiatives, or SGI. Fan said operating expenses for the core lidar business declined excluding SGI. For the full year, Hesai expects group operating expenses to rise approximately 20%, with most incremental spending going toward SGI research and development.

Lidar Growth and Overseas Programs

The lidar segment generated CNY 978 million ($146 million) in quarterly revenue, while segment operating income rose 88% to CNY 145 million ($22 million). Total lidar shipments increased 65% year over year.

Chief Executive Officer David Li said Hesai held 43% of China’s long-range ADAS lidar market in September, citing Gasgoo data. He also cited Yole Group figures showing Hesai held 62% of the global robotaxi lidar market.

Fan said robotics lidar represented approximately 50% of total lidar revenue this year. Shipments of robotics lidar more than doubled year over year in the first nine months, while revenue from premium robotics lidar products grew more than 60%, he said. Hesai expects shipments of its JT128 lidar, used by humanoid robot makers, to reach six figures next year.

For overseas growth, Li said Mercedes-Benz’s Level 3 programs with Hesai remain on track. He also said Hesai has secured design wins with seven Chinese automakers, including Chery, for potential export vehicle programs. Programs with 10 global automakers through their Chinese joint ventures are expected to ramp up in greater volume next year, he said.

Actuation Modules and Kosmo Expand

SGI revenue, which includes robotic actuation modules and the Kosmo 3D-data platform, reached CNY 91 million ($13 million) in the third quarter, up 101% sequentially. The segment posted an operating loss of CNY 83 million as Hesai invested primarily in research and development.

Year-to-date SGI revenue reached CNY 135 million, surpassing the CNY 100 million full-year target initially set at the start of 2026. Hesai reaffirmed its more recent full-year SGI revenue outlook of CNY 200 million to CNY 300 million. For 2027, management continues to target approximately $100 million in SGI revenue and sees a potential path to breakeven.

Actuation module shipments rose 97% from the second quarter to more than 23,000 units, bringing cumulative shipments above 35,000. Li said monthly production capacity has reached 10,000 units and, based on the current pipeline, annual shipments could reach six figures in 2027.

Sharpa remains Hesai’s anchor actuation customer and the largest contributor to current shipments, Li said. Hesai’s modules power Sharpa’s D01 full-body humanoid robot and W02 dexterous hand. Li disclosed that he co-founded both Hesai and Sharpa.

Kosmo generated its first revenue in the third quarter before its global launch in October. The platform converts real-world spaces into editable 3D environments, with revenue from hardware, software subscriptions and usage fees, and asset licensing. Li said hardware will account for most Kosmo revenue in 2026, while software and asset-related revenue is expected to grow meaningfully in 2027.

Li highlighted partnerships with robotics companies Galbot and Dexmal, as well as a collaboration with Pixar’s RenderMan rendering platform. Hesai also has an initial program with Alibaba Group’s Amap covering 1,000 pilot locations.

About Hesai Group (NASDAQ:HSAI)

Hesai Group is a lidar technology company founded in 2014 and headquartered in Shanghai, China. It designs, develops and manufactures lidar sensors and related solutions for automotive and robotics applications.

The company's products support advanced driver-assistance systems and autonomous driving, and are also used in applications such as mobile robotics. Hesai serves automakers and autonomous-driving developers, with customers and business activities in China and international markets.

Hesai is led by co-founder and Chief Executive Officer David Li.

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