Five Consecutive Quarters of Profitability: Hesai Still Needs to Balance Scale and Profit

On August 18, Hesai disclosed its unaudited financial results for the second quarter of 2026. Revenue reached RMB 860.8 million, a year-on-year increase of 21.9%. Net profit under US GAAP amounted to RMB 70.55 million, up 60.0% year on year, marking the fifth consecutive quarter of profitability.

In contrast to the growth in net profit, Hesai's operating profit in the second quarter was only RMB 2.195 million, a 90.4% decrease from RMB 22.852 million in the same period last year.

In the second quarter, Hesai's gross profit increased to RMB 345.2 million, a year-on-year increase of approximately RMB 44.77 million. However, the gross margin declined from 42.5% to 40.1%. The company stated that this was mainly due to an increased proportion of revenue from products with relatively lower gross margins. During the same period, LiDAR shipments grew by 78.4%, significantly higher than the revenue growth rate, while the decline in average selling price offset part of the shipment volume increase.

Changes on the expense side were more direct. R&D expenses in the second quarter rose to RMB 231.2 million, a year-on-year increase of approximately RMB 31.95 million, primarily related to investments in strategic growth businesses. Sales and administrative expenses combined increased by approximately RMB 10.51 million.

Meanwhile, other operating income dropped from RMB 27.62 million to RMB 4.66 million, a decrease of approximately RMB 22.97 million. These changes exceeded the increase in gross profit, resulting in a year-on-year decrease in operating profit of approximately RMB 20.66 million.

Segment data further highlighted the impact of new business investments. In the second quarter, the LiDAR business generated revenue of RMB 815.9 million and an operating profit of RMB 66.24 million. The strategic growth business recorded revenue of RMB 44.94 million and an operating loss of RMB 64.04 million, nearly offsetting the operating profit from the LiDAR business.

The continued growth in net profit was mainly supported by income items below operating profit.

Interest income in the second quarter increased by approximately RMB 37.98 million year on year, and new investment gains of RMB 36.57 million were recorded. Foreign exchange gains/losses shifted from a gain of RMB 6.94 million in the same period last year to a loss of RMB 23.18 million. Interest and investment gains offset the impact of the decline in operating profit. Therefore, consecutive profitability and changes in core operating profit need to be observed separately.

Moving forward, LiDAR remains Hesai's primary source of revenue and profit. The company disclosed that it has secured design wins for multiple models from Volkswagen Group's joint venture in China. Mass production for Great Wall Motor's ETX project is expected to begin by the end of 2026, and Li Auto's multi-LiDAR solution has expanded from the L8 and L9 models to the L6. In the second quarter, robot LiDAR shipments reached 142,400 units, a year-on-year increase of 193.4%, becoming a new driver of shipment growth.

Beyond LiDAR, Hesai is advancing its spatial intelligence platform, Kosmo, and robot actuator modules.

Kosmo prototype deliveries began in July, and the company expects it to start contributing to revenue in the third quarter. The robot actuator production line has already commenced operations, with over 10,000 units delivered by the end of the second quarter. Hesai has raised its 2026 revenue guidance for strategic growth businesses from RMB 100 million to RMB 200–300 million, and expects this business to achieve approximately USD 100 million in revenue and break-even in 2027. These targets remain company forecasts.

Hesai expects third-quarter revenue to be between RMB 1.1 billion and RMB 1.15 billion, representing a year-on-year growth of approximately 38% to 45%. As new businesses expand, whether the losses in strategic growth businesses can narrow will directly affect the extent of improvement in its operating profit.