Hesai Group (HSAI) saw its shares climb 2.68% to $22.60 in U.S. premarket trading on Tuesday, following the release of a first-quarter profit and the announcement of a strategic partnership with Mercedes-Benz. The Chinese lidar manufacturer will supply its sensor technology for Mercedes-Benz's Level 3 autonomous driving systems, marking a significant milestone in the commercialization of advanced driver-assistance technologies.
Strong Financial Performance
Hesai reported a net income of RMB18.3 million for the first quarter, reversing a RMB17.5 million loss from the same period last year. Revenue increased by 29.6% year-over-year to RMB680.6 million ($98.7 million). The company's lidar shipments surged 140.9% to 471,723 units, driven by strong demand from both the automotive and robotics sectors. Of these, 353,441 units were for advanced driver-assistance systems (ADAS), while 118,282 units were for robotics applications.
Mercedes-Benz Partnership
CEO Yifan "David" Li confirmed that Hesai has been selected as a "strategic lidar partner and confirmed supplier" for Mercedes-Benz models equipped with Level 3 autonomous driving capabilities. Level 3 automation allows drivers to take their hands off the wheel under certain conditions, though they must remain ready to retake control. The supply agreement covers both the European and Chinese markets, with production slated for Hesai's Galileo plant in Thailand. This partnership underscores Hesai's growing scale and cost advantages in the competitive lidar market.
Market Context and Outlook
CFO Andrew Fan highlighted that the company's operating profit from lidar reached approximately RMB42 million, contributing to Hesai's fourth consecutive quarter of GAAP profitability. Looking ahead, Hesai expects second-quarter revenue between RMB850 million and RMB900 million ($123 million to $130 million), representing year-over-year growth of 20% to 27%. The company's earnings call is scheduled for 8:00 a.m. ET.
However, challenges remain. Hesai's gross margin declined to 39.1% from 41.7% a year ago, reflecting a shift toward lower-margin products as average selling prices decline. The U.S. Department of Defense has placed Hesai on its Section 1260H list of Chinese military companies, a designation the company is appealing, stating it has no military products or sales.
Broader market conditions were mixed, with the Nasdaq composite falling 0.5% and the S&P 500 slipping 0.1% on Monday, amid concerns over geopolitical tensions and oil price movements.