WeRide Inc. (WRD) Earnings Call Transcript & Summary

Good morning, and good evening, ladies and gentlemen. Thank you for standing by, and welcome to the WeRide Second Quarter and First Half 2026 Earnings Conference Call. Please note that today's event is being recorded. [Operator Instructions] Please note that Chinese interpretation is for convenience purposes only. In the case of any discrepancy, management statements in the original language will prevail. Joining us today are WeRide's Founder, Chairman and CEO, Dr. Tony Han; and CFO and Head of International, Ms. Jennifer Li. Before we continue, I would 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 BY's strategies and future plans. These forward-looking statements are made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. The company's 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 the company's Form 20-F filed with the SEC and announcement of the website of the Hong Kong Stock Exchange for a full disclosure of these risk factors. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Please note that all numbers stated in the management's prepared remarks are in RMB terms and will be discussed non-IFRS measures today, which are more thoroughly explained and reconciled to the most comparable measures reported in the company's earnings release and filings with the SEC and the Hong Kong Stock Exchange. The company's unaudited financial and operating results were released earlier today via Newswire and can be found on the company's IR website. With that, we will now begin with the company's video presentation. [Presentation]

Now I would like to pass the floor to the company's Founder, Chairman and CEO, Dr. Tony Han. Please go ahead, sir.

Hello, everyone. Thanks for joining us today. We had a great second quarter this year. To begin, I'd like to highlight 3 key factors that define 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 3 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 margin 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 improvement in operating efficiency, EBITDA also improved with a 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 1-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+/L3 solutions, making 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 3 areas: L4, L2+/L3 ADAS and AI infrastructure to provide greater clarity into our long-term strategic planning. In second quarter, we further advanced our strategy as 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 output 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 solutions. 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 generate additional road data, accelerating L4 model development and expanding coverage of long-tail scenarios. There are 2 separate businesses. These are not 2 separate businesses. There are 2 reinforcing layers of 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 mode. 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 fess operations, we estimate the steady state annualized technology service revenue for robotaxi could exceed USD 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 our fleet ownership plus ride-hailing platform model. Their revenue is derived from fare charging at a gross level. Instead, our economics are based on a licensed virtual driver technology model. We provide regulated, locally verified and recognized autonomous driving capability and charge a recurring fee from autonomous driving technology services and knowledge-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, Green Mobility, SBB and et cetera, we are replicating -- we are replicating this proven asset-light operational model across Mid 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 and Zurich, Switzerland and Copenhagen, Denmark. In the Middle East, we continue to expand food driver age 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 fleet, 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 expand our driverless operation zones in Guangzhou to key areas of Tianhe District, including Zhujiang New Town and the Haizhou 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 ride per vehicle reached 21, up by 24% quarter-over-quarter, while peak daily rides completed per vehicle climbed to 28. As a riding-hailing platform with self-operated robotaxis, we recorded nearly 35% quarter-over-quarter growth in registered users in China. This simultaneous expansion in scale, utilization and user base drove a 140% sequential surge in our ride-hailing revenue, further demonstrating the scalability and strengthening the profitability of our operations. Looking ahead, as China's regulatory framework for autonomous driving continues to mature, we expect to further expand our robotaxi operations into more cities in near term. At the same time, we will continue to build Guangzhou as our domestic benchmark with the goal of integrating driverless robotaxi into public transportation system at scale. Together, these initiatives will provide a strong foundation for the next phase of domestic commercialization. Beyond this, I would like to take a step back and discuss our regulatory mode. The operational licenses we have secured overseas are by no means simple administrative approvals. They are a combination of years of technology adaptation, ecosystem integration and rigorous safety validation. This creates a core competitive moat that puts us 2 to 3 years ahead of the market. This mode is built on 3 core pillars. First, the technology localization and regulatory engagement. We adapt our technology to local traffic loss, road conditions and driving behaviors while working closely with regulators throughout the process. Second, ecosystem and infrastructure integration. We established deep technical integration with local operators and service providers, supported by strong on-the-ground execution. Third, rigorous field validation and safety performance. Our fleet continuously accumulate localized real-world data, while safety framework and track record provide the foundation for earning regulatory trust and securing commercial licenses. Importantly, as regulatory -- as regulatory frameworks become increasingly aligned across markets, our experience and validation in one jurisdiction can help accelerate approvals in the others. This reduced margin compliance costs, avoid redundant work and creates increasing operating leverage, allowing us to scale our asset-light autonomous driving business globally with greater speed and capital efficiency. As a growing industry consensus on L4 core barriers was also shared by the same mobility platform during its Q2 investor presentation. Technical competitiveness depends on not on total driving miles, but on the acquisition cost of rare scenarios, scenario diversity and practical data quality. Besides generic large foundation models cannot satisfy autonomous driving needs. AV systems rely on exclusive vehicle hardware and strict regulatory oversight, which demands customized models matching hardware specification and compliance requirements. Backed by our robust proprietary end-to-end data tool chain, diversified data set accumulated from long-term cross-border L4 operations and outstanding self-developed algorithms, we keep upgrading vehicle engineering safety. Our field-proven safety performance earns sustained trust from global regulators, accelerate regional expansion and build an exclusive core advantage for global layout. Then turning to our L2+/L3 business, 3 things define our progress: industry-leading technology, rapid commercialization at scale and a path towards self-sustaining cash generation. Leveraging on our leading technology advantage in L2+/L3 algorithms, we have secured 6 consecutive championships at China's Intelligent Driving Competition, reinforcing our leadership position in intelligent driving technology. Commercially, we are entering a clear acceleration phase with multiple OEM mass production programs advancing steadily. Recently, we launched an L3 autonomous driving POC program with Mercedes-Benz, making an important validation of our technology by a leading global OEM and further demonstrating strong industry recognition of our technological capabilities. As of June 30, cumulative diverse delivery of vehicles equipped with our one-stage end-to-end L2+/L3 solution has exceeded 30,000 units during the reporting period. Looking ahead, we expect the number of vehicles powered by our solution to exceed 100,000 by year-end and surpass 0.5 million units in cumulative deliveries next year, positioning us for significant scale up in our L2++ ADAS business. Finally, I will provide a brief update on our AI infrastructure. In this quarter, we officially launched the WIT model, which is a physical fact foundation large model, completing a fully -- a full capability loop spanning data comprehension, data generation and end-to-end technical stack. It delivers deep synergy with our Genesis world model. The WIT model extracts and verifies physical facts from road test data to build a cognitive foundation for machines to perceive and understand the real world, leveraging validated physical facts, Genesis reconstructs diverse extreme operating conditions and long-tail scenarios via simulation. The 2 models work in tandem to perform a closed loop covering data generation, simulation and algorithm iteration, driving continuous upgrades to autonomous driving technology. Currently, it underpins our core business lines of L4 autonomous driving and mass produced L2+/L3. In closing, in the second quarter, we delivered meaningful milestones and strong results across the business, which lead us to return to 3 key themes I highlighted at the beginning of today's call, overseas acceleration, asset-light expansion and self-sustaining cash generation. Looking ahead, our focus remains clear. On the L4 side, in overseas market, leveraging our regulatory leadership and permit advantages, we will replicate our robotaxi proven model across Europe and other markets, accelerating the transition from successful validation to scale deployment. In China, we will continue to expand our deep market strategy, building benchmark operations that are fully integrated into urban transportation system before expanding in a disciplined and repeatable manner across major cities nationwide. On the L2+/L3 side, our top priority is straightforward with more OEM partnerships, increase our market share with key OEMs and accelerate deployments at scale. Gross installed vehicles in our ultimate objective -- I'm sorry, growth is the key. We will invest where we see clear conviction and meaningful scale potential rather than pursue growth for growth's sake. At the same time, we will remain focused on both long-term cash flow generation and profitability rather than expand simply for the sake of expansion. Here, beyond the numbers, I would like to thank my team. This is a team that embraces hard problems, confront reality head-on and remain relentlessly focused on execution. That culture of intellectual honesty and operational excellence is what enables us to consistently turn vision into products, products into services and services into large-scale commercial value even in uncertain environments. Just as our physical AI foundation model, the WIT, word intelligence toward truth reminds us true intelligence must be grounded in observable, verifiable facts about the physical world. The same holds our business. What ultimately matters is not what we claim, but what we continue to deliver in the real world. Narratives may change, technologies may evolve and market cycles may come and go, but facts endure. Real-world performance endures and a proven track record remains the most powerful language of all. Next, I will turn the call over to our CFO, Jennifer, who will walk you through our second quarter 2026 financial performance in detail.

Thank you, Tony. Hello, everyone. Let me start with the key message from the quarter. Q2 marked an important inflection point for WeRide with strong revenue growth, continued gross margin expansion and increasing operating leverage across the businesses. Importantly, this growth was driven by 3 areas where we believe we can support a more sustainable financial model over time, the acceleration of our overseas business, the scaling of our asset-light L4 model and the rapid commercialization of our L2+/L3 business. We're increasingly seeing the benefit of the strategy in our financial results, particularly revenue growth, gross margin and capital efficiency. In Q2, we generated RMB 232 million of revenue, up 82% year-over-year and 103% quarter-over-quarter. Importantly, growth is broadening across both our businesses and geographies. Our L4 revenue reached RMB 125 million, up 47% year-over-year, primarily driven by robotaxi. Our focus remains on scaling the core L4 business, particularly robotaxi. Meanwhile, some of our other L4 businesses have natural seasonal cycle with commercial negotiation typically complete in the first half and revenue recognized as deployment takes place in the second half of the year. As those projects move into deployment, we expect stronger contribution from our broader L4 portfolio in the second half of this year. Our L2+/L3 business continued to accelerate rapidly with revenue increasing approximately 26x year-over-year and 219x quarter-over-quarter. This reflects an important transition from project development into mass production and scaled vehicle deployment. As more OEM programs move forward -- move towards mass production, we expect L2+/L3 to become an increasingly important driver of our overall gross revenue growth. Overseas market accounts for nearly 40% of group revenue and is becoming an increasingly important growth driver as well. Overseas revenue increased 164% year-over-year and approximately 170% quarter-over-quarter. More importantly, the economics of our overseas business are increasingly attractive. Our asset-light model allows us to scale through local partners and operating ecosystem without requiring a proportional increase in our own balance sheet investments. This gives us 3 important advantage: faster geographic expansion, improving margin as operation scales and lower incremental capital requirements. We believe this model is an important foundation for our long-term path towards self-sustained growth. Turning to profitability at the gross profit level. Gross profit increased 143% year-over-year to RMB 87 million, while gross margin expanded 9.4 percentage points to 37.5% compared to 28.1% in the same quarter last year. The improvement was driven by continued scaling of our high-margin asset-light overseas L4 business, rapid growth in L2++ and an overall shift towards higher-value AI service-oriented revenue. As this mix continues to improve, we believe gross profit can grow even faster than the revenue over time. Total operating expense were RMB 533 million in Q2, slightly up 9.2% year-over-year, slightly slower than the revenue growth. This is an early indication that operating leverage is taking hold. R&D expense increased 36% year-over-year to RMB 434 million, primarily reflecting our additional investment in AI infrastructure and foundation models. At the same time, a much slower growth in the total operating expense demonstrate that we are beginning to achieve greater efficiency as business scales. G&A declined significantly to RMB 69 million, mainly due to lower share-based compensation and professional fees, while selling expense only increased to RMB 29 million as we expand our commercial activities. Overall, we are seeing increasing operating leverage while operating expense growing well below the revenue. Putting all this together, our net loss narrowed 1% year-over-year to RMB 401 million in Q2 while EBITDA loss narrowed 8.1% year-over-year to RMB 335 million. This result reflects the early benefit of our asset-light model and increasing operating leverage, particularly as we sell our overseas business and reinforce our path towards sustained cash generation. Finally, as of June 30, we have approximately RMB 5.4 billion in cash and other liquid financial resource. This provides us a strong financial foundation for continued expansion. Let me close with 4 key takeaways. First, revenue growth is accelerating and become increasingly diversified. Second, our revenue mix is shifting towards higher-margin physical AI service-oriented business. Third, operating leverage is beginning to emerge with expense growing significantly slower than revenue. And fourth, our strong balance sheet and asset-light model provide a capital-efficient foundation for continued expansion. We believe Q2 demonstrate an early financial benefit of the model and we have been building global expansion, asset-light deployment, higher physical AI service revenue and increasing operating leverage. Looking ahead, our focus is to convert our commercial pipeline into scale deployment, continue improving margin and progressively translating revenue growth into stronger cash generation. We believe these are the key building blocks for durable capital-efficient growth, a leading position in global autonomous driving and a sustained path to profitability. With that, operator, we are now ready to take questions.

[Operator Instructions] And now we're going to take our first question. And the question comes from the line of Jeff Chung from Citi.

Congratulations with the great results. And my first question is that we note that WeRide currently has a diversified business portfolio spanning L4, L2++, L3 as well as AI infrastructure. And the question for me is how does management prioritize resources allocation across different business and regions? And what are your goals for the second half this year?

Okay. Thanks for the question. So first, let me start with a detailed -- a little bit explanation about our financial information model. As you have noticed like these days, I think almost every industry have their capability boost like back to 5 years ago, with our large language model and AI progress. And I don't think any company in this world can do L4 and L2++, L3 and AI infrastructure simultaneously. But recently, we noticed like with our boost in AI model, especially our Genesis and WIT, and we found certainly like we can build a lot of technology into data synergies. That is by the way, I want to explain a little bit about the name of the WIT. This model WIT, we announced in 2026 AI World Conference. It is a solution to a famous German philosopher. I think the greatest philosopher, Ludwig Wittgenstein. His meaning -- his famous words like the limit of my language is the limit of my world. It's exactly what we just learned. We can segment every video into what we call so-called minimal fact units. And we basically can effect every video and analyze every video into a very atomic fact. And combined with our Genesis model, we finally find out we can generate all kinds of data as we desired, just like in the matrix one day, Leo just noticed he see the nature of the world. So we have this kind of feeling. And so drastically, we reduce the resource we need. And we can just -- with one investment, we can do 3 things, that is L4 and L2+/L3 ADAS and AI infra. So we build up our infra very, very strongly and generate data from L4 and also generate data from ADAS and make these 2 things complement each other, build up what we call it double data flywheel. Actually, this flywheel is why we are the only company globally that has achieved driverless vehicle operation at large scale. At the same time, we have many car OEMs adopt our ADAS system. For the goal of our second quarter, we have several aspects. One is like we want toward accumulated 0.5 million installation goal to work. And we want to really push forward to have lots of car OEMs adopting our ADAS system. And hopefully, in the fourth quarter, Tesla FSD may enter China, and we want to do a direct head-to-head comparison against FSD because I'm a heavy FSD user in California, and I drove our own ADAS system, our own cars based on ADAS system WRD 3.0. I think these 2 things are comparable. So, I want to see more car OEMs adopt ADAS system. And meanwhile, we will continue to expand our robotaxi fleet. And thirdly, for our AI infrastructure, we want more companies in the robotic industry, humanized robot industry to adopt our infrastructure. That's the goal. Here, I conclude my answer.

Now we're going to take our next question. And the question comes from the line of Tim Hsiao from Morgan Stanley.

This is Tim from Morgan Stanley. First of all, congratulations on the robust top line growth and the global expansion during the quarter. Just a quick question about the overseas business. I think on the call, the management has highlighted accelerating overseas expansion and large-scale commercialization. So just wondering, could you share more detail? How should we view your overseas strategy? And in the meantime, can it be replicated across different regions? That's my question.

Thank you, Tim. So, like we just mentioned, overseas market is an important growth driver engine for us, and it's already contributed approximately almost 40% of the group revenue. And we do believe there is significant room to run. And the software case is very compelling. Those markets we're entering into, they're all facing acute labor shortage and rising labor costs, which creates a strong natural demand for autonomous mobility. So let me give you a sense of the pace. So for the Q2 in the past quarter, we launched 3 new robotaxi deployments and in Spain and in Switzerland and in Denmark, and in the Middle East. Our robotaxi fleet has roughly doubled to around 400 vehicles since last quarter. So if you recall from the Q1 like earnings, so at that time, we have like around 200. And like even given, considering the recent geopolitical tension in the region, and we have doubled the fleet in the quarter. So the momentum is real and it's accelerating. So also on the rapid capability. So this is where we think our model generally differentiated. So we operate overseas. We don't own any of the vehicles in operation. So what we do is we handle the localized tax adaptation and regulatory compliance. Then we license our digital AI driver to local partners. So we captured recurring technological service revenue especially as our operation scales. So this can lead us to, let us expand very quickly without having heavy capital and also we can maintain a good margin and good cash flow. And what's more important is we're looking at on the unit economics, the annualized recurring revenue per vehicle it exceeds USD 40,000 to USD 60,000. So and it also has meaningful upside as density builds up in each city. So for us, our primary goal is just to increase the fleet size in cities where we already operate. We're very disciplined about where we go next. Really, we pick the market with proven like commercial potential and a reasonable regulatory barrier to entry. And the playbook is well established. Everywhere we go, we secure the permits, we adapt the technology locally. We set up like a benchmark project in the region and flagship project in the region and then we replicate at a lower marginal cost. So we generally believe this is going to be repeatable at scale. And today, we have active 4 operations across 12 countries, all well on track. We are confident in the model and in our pipeline, and we look forward in serving passengers in more markets.

Now we take our next question. And the question comes from the line of Paul Gong from UBS.

I have 2 questions. The first question is regarding the ADAS. Can you please update the latest progress and future plan for your business? And given the relatively small size of team on this front, what is your competitive advantage in this highly intensive competition? My second question, if I may, is how do you see the OEMs and also the ADAS companies that they can build robotaxi by leveraging the data accumulated to the ADAS. How do you see the trends? Does this a threat to your robotaxi?

Thank you so much for the very 2 important questions. Let me answer them one by one, okay? The first question is about our latest progress and plan for our L2+/L3 ADAS system. So to make it short, I will just use the ADAS to be our business, so including both L2++ and L3 systems. And also the question is about our currently competitive edge. So first of all, I think I have to say the competition in ADAS system in China and also globally is quite intensive. And now everybody is trying to compare their ADAS system to the FSD 14 -- version 14. And according to our internal evaluation, I think we are currently definitely in the urban scenario in China, we are on par with FSD. I'm not sure whether you have noticed or not. Just last week, I did a live stream with our ADAS experience in Zhujiang New Town i.e., the Pearl Harbor New Town, which is the central CBD area in Guangzhou. And I drove the N60 based on our WRD 3.0 ADAS system. At the same time, I do the live stream answering the questions from all audience from my live stream room. And I do this live stream for 2 hours and just driving rush hour in Guangzhou without any intervention, okay? The video is online. You can check it. I think according to my best knowledge, this is the first time a founder of an ADAS company or autonomous driving company do a live stream in Russia or in first-tier city without any intervention and answering questions. That shows the breakthrough of our technology. And in terms of the installation units, right, our revenue grows by 2,600%, 26x year-over-year and 220% quarter-over-quarter. And we have in a very short time, we have already had like 30,000 units installed in a quarter. But our goal this year is to get 100,000 units installed. And next year, cumulatively, we want to get to 0.5 million and this is by far the fastest speed I have ever noticed in the ADAS growth in terms of the installation unit. And this is actually why can we do that? Thank you for your high like we are doing with a very relatively small team. The key secret sauce is our 2 important large language model, Genesis model and the WITT model. And I do believe, as you guys already noticed with AI, people sometimes call people can form a one-person company. And with our very good AI infrastructure and foundation model, we can actually build the best ADAS solution in China and in the world with a team of 200 or 300 people. That's the power of AI, okay? So that is what I want to mention about our current progress. The second question, thank you. It's an outstanding question. That is we can -- we have seen like many OEMs what car OEMs or some company with ADAS solutions claim like in a very high tone that we are entering robotaxi sector, and we will do great things, lots of PR. So my answer to this kind of claim or this goal is , actually, first of all, we welcome this kind of competition. And because this competition will make us stronger, we write as the leader and the first mover in robotaxi industry, we expand globally. And we know we also have a very strong background in ADAS. We know the big difference. We know the requirements for redundancy for the reliability. There is a 1,000x difference. So I just want to -- as I mentioned at the beginning of this year, I proposed a qualification threshold for robotaxi. That is a company needs to operate at least for half year with a fleet of 100 driver robotaxi without any significant accidents, without severe accidents, they can claim themselves a robotaxi company. Otherwise, it's just a claim. People may claim every day. And I don't need to respond to this kind of claim. But I just want to mention like there's a big difference between ADAS system and L4 robotaxi. And people will say, okay, with this progress in large language model, we can solve the problems like previously, it takes like 10 years of your efforts, we can solve probably half year. Now I make another claim that is hallucination in digital AI may be entertaining, but it is fatal in physical AI. So in physical AI, you can -- our society, our public roles cannot stand a fatal accidents if we can avoid it. But in digital world, you can just -- you can just restart the computer or just do it again. But in the real world, a life lost is lost. You can never get it back. So with this kind of philosophy, with this kind of priority on safety, we know that we have very, very strong competitive edge. We have very deep moat for our L4 business. Okay? Here are my answers to your 2 great questions. Thank you.

Now we're going to take our next question. And the question comes from the line of Tianyu Lu from Citic Securities.

I have only one question. How about management view the overall trajectory of future operating expenses, particularly R&D spend?

Tianyu, I'll take your question. Well, so like we just explained our financial results, you can see the operating leverage is already emerging. So revenue grew 87% this quarter and R&D only increased like 36%. And our R&D is largely shared like the technology platform supporting L4, L2++, L3 and all the other product categories. So it does not really scale linearly with revenue or the vehicle deployment. So as we can see like as we scale across different business, the R&D cost per vehicle will continue to decline. We have also moved past the peak investment phase for the AI infrastructure buildup and where the steady deployment costs taper significantly once operations are established. So looking ahead, we think we will remain very disciplined in R&D spending and continue to invest in the technology mode, let's say, for the foundation model like on the Genesis on what Tony just described. As our asset-light L4 business scales and L2+/L3 enter into mass commercialization, we expect the operating leverage to accelerate. So we remain very well on track to achieve a positive cash flow in a single quarter by 2028, and we aim to have like a breakeven in the full year 2029.