WeRide Inc. American Depositary Shares 2026 Q2 Earnings Call

Thanks for joining us today. We had a great second quarter this year. To begin, I'd like to highlight three key factors that defined our strong performance in the second quarter, and emphasize the exciting progress we are making today. That is overseas acceleration, asset light scaling, and a clear path to self-sustaining cash generation. We made strong progress across all three areas during the quarter, positioning the company for the next phase of growth. Turning to our financial performance, total revenue delivered robust growth, nearly doubling year-over-year and more than doubling quarter-over-quarter, with growth of 103%. Overseas revenue increased 164% year-over-year and approximately 170% quarter-over-quarter. Meanwhile, gross margins reached a record high of 38%, representing an improvement of approximately 10 percentage points compared with the second quarter of last year.

Benefiting from continued improvements in operating efficiency, EBITDA also improved, with the loss narrowing by 8% compared with second quarter of 2025. On operational metrics, our L4 fleet reached approximately 3,400 units, up 22% since earnings release in April. Within that, our Robotaxi fleet grew by 500 units to more than 1,800 vehicles, making a 40% growth over the same period. Furthermore, our one-stage end-to-end L2+/L3 solution has progressed from securing design wins to full-scale mass production. Revenue from this business surged nearly 2,600% year-over-year and increased 219% quarter-over-quarter in the second quarter. During the quarter, we delivered approximately 30,000 units of our L2++ solutions, marking the beginning of a scaled high-growth commercialization for our L2+/L3 business. Across the industry, we believe we are uniquely positioned with both mature technology stacks and large-scale commercial deployment for both product lines.

The multi-sensor fusion L4 autonomous driving solution and the proprietary one-stage end-to-end L2+/L3 solution for mass production. Turning to our strategy, this quarter, we segmented our business into three areas: L4, L2/L3 ADAS, and AI infrastructure to provide greater clarity into our long-term strategic planning. In the second quarter, we further advanced our strategy as a physical AI company built on proprietary infrastructure and foundation models, with autonomous driving representing the most commercially advanced application of physical AI. Our physical AI infrastructure enables us to distill the capabilities of large foundation models into efficient, lightweight onboard models. The key lies in our ability to transfer the underlying knowledge and the representations learned by large-scale models, not merely their outputs, into smaller models, while preserving the intelligence, generalization, and decision-making capabilities required for real-world autonomous driving.

This enables us to bring increasingly powerful AI capabilities to cost-efficient onboard systems, supporting both the scaling of our L4 business and the continuous evolution of our WRD 3.0, i.e., our L2+/L3 solution. More importantly, this creates a powerful technology flywheel. Our real-world L4 operations generate high-value data that continuously improve safety, robustness, and generalization, while our growing L2+/L3 fleet generates additional raw data, accelerating L4 model development, and expanding coverage of long-tail scenarios. These are not two separate businesses. They are two reinforcing layers of one physical AI platform, where every vehicle deployed and every mile driven makes our technology smarter, safer, and more capable. Next, I will walk through our specific progress this quarter across technology development and commercial deployment. Starting with our L4 business, specifically Robotaxi. Our core themes are asset-light overseas acceleration and strengthening regulatory modes. Our overseas operations are built upon an asset-light model.

We do not own operating vehicle assets. Vehicle serves as a hardware entry point for market expansion, while we work with local partners to deploy and operate the business. This model allows us to scale our footprint with significantly lower capital requirements and greater operational flexibility. Based on optimal utilization under normalized driverless operations, we estimate the steady-state annualized technology service revenue per Robotaxi could exceed $50,000. As our fleet scales, we expect increasing benefits from the data network effects, cross-market learning, and algorithm generalization, which should further improve vehicle-level economics and create meaningful operational leverage. I would also like to clarify how we define unit economics. Our overseas UE is not based on a fleet ownership plus ride-hailing platform model, where revenue is derived from fare charging at the gross level. Instead, our economics are based on a licensed virtual driver technology model.

We provide regulated, locally verified, and recognized autonomous driving capability. We charge a recurrency from autonomous driving technology services and mileage-based fees. Because our positioning and our business model differ fundamentally, the same term UE carries very different operational and financial implications from those in traditional ride-hailing platform. Backed by partners like Grab, Uber, GreenMobility, SBB, et cetera, we are replicating this proven asset-light operational model across Middle East, Europe, and Southeast Asia. This marks that our overseas expansion is now entering a phase of large-scale commercialization. To put into more details, in second quarter, we announced new Robotaxi commercial partnerships in Madrid, Spain, Zurich, Switzerland, and Copenhagen, Denmark. In the Middle East, we continue to expand the full driverless Robotaxi operations in Abu Dhabi and Dubai this quarter, now covering over 70% of the core urban areas.

In Riyadh, our Robotaxi operation zone has expanded to the airport terminals and surrounding central business districts. By the end of 2026, we will be fully entering a phase of meaningful growth supported by secure licenses, expanding fleets, recurring orders, solid revenue, and profitability in overseas markets. This will demonstrate the successful execution of our overseas acceleration and asset-light expansion strategies. For the domestic market, we continue to strengthen our operational capabilities and extend our driverless operation zones in Guangzhou to key areas of Tianhe District, including Pearl River New Town, and Haizhu District, including the Canton Fair Complex. This represents a nearly threefold expansion in our ODD compared to the end of 2026. More importantly, our operating efficiency continued to improve meaningfully during the quarter. Average daily rides per vehicle reached 21, up by 24% quarter-over-quarter, while peak daily rides completed per vehicle climbed to 28.