After the IPO, where will WeRide go?
2024-07-29
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Editor | Zhang Lianyi
WeRide's road to US IPO has seen substantial progress:On July 27, WeRide officially submitted its prospectus to the U.S. Securities and Exchange Commission. It is expected to be listed on the Nasdaq in the form of American Depositary Shares (ADS). Details such as the number of shares issued have not yet been disclosed. The stock code is tentatively set as "WRD".In fact, a week ago, Reuters' media reported that WeRide would impact the U.S. stock market before the end of August. Cyber Auto asked WeRide for confirmation but did not receive a clear answer. Now, everything seems to be traceable.If WeRide eventually succeeds in ringing the bell on the U.S. stock market, the title of "General Motors' first autonomous driving stock" will be won by WeRide.The so-called "general autonomous driving" is just as WeRide mentioned in its prospectus. It is the only company in the industry that provides full-scenario autonomous driving commercialization from L2 to L4.This is slightly different from the impression that autonomous driving companies rely entirely on financing.WeRide has achieved good performance in both revenue and gross profit in the past three years, with its gross profit margin reaching 45.7% last year. We can look forward to its potential in terms of hematopoietic ability.However, the entire autonomous driving industry is still in a stage of high-intensity research and development, and is far from forming a positive business cycle. The same is true for WeRide. In the past three years, its cumulative R&D investment has exceeded 2.2 billion yuan, and its cumulative losses have exceeded 4.2 billion yuan.Therefore, although the company still has 1.829 billion yuan in cash, listing financing is also an urgent matter.Super high gross profit, unstoppable huge lossesIn fact, the true financial situation of autonomous driving companies that enter the industry with L4 manned scenarios has always been little known to the outside world, but WeRide's prospectus provides us with a reference.The prospectus shows that from 2021 to 2023, WeRide's revenue scale will be 138 million, 528 million and 402 million yuan respectively. The revenue scale in the first half of this year ending in June was 150 million yuan.WeRide’s revenue structureRevenue mainly comes from two major business segments. One is the sales of hardware products, mainly including Robobus, Robotaxi and unmanned sweepers, as well as related sensor kits; the other is service sales, including L4 autonomous driving operation services (Robotaxi, Robobus, etc.) and ADAS software solution revenue.Before 2023, hardware product revenue accounted for the majority of the two revenue segments, accounting for more than 60% of revenue. After 2023, service sales began to account for the majority of revenue, and in the first half of this year, service revenue accounted for as much as 86%.The growth in service revenue is related to the cooperation between WeRide and Bosch. The prospectus shows that in 2023, the customized R&D services provided by WeRide to Bosch increased ADAS R&D service revenue by RMB 105.2 million.As the business expands, sales costs also increase simultaneously. The project increased from 87 million yuan in 2021 to 99 million yuan in 2023, and continued to rise in the first half of this year, reaching 96 million yuan.Compared with the revenue growth trend, WeRide's cost control is quite good, which is reflected in the gross profit margin, increasing from 37.4% in 2021 to 45.7% last year.In the first half of this year, this figure dropped to 36.5%, mainly due to the significant increase in costs in the service business segment. We speculate that this may be related to the increasingly competitive automotive market, which has spread the cold to ADAS software suppliers.However, overall, WeRide's gross profit margin is still high. In contrast, its losses remain high.Some financial data and losses of WeRideThe prospectus shows that from 2021 to 2023, WeRide's annual losses will be 1.01 billion, 1.298 billion and 1.949 billion yuan respectively. The loss in the first half of this year ending June was 880 million yuan, an increase of 160 million yuan from the same period last year.A total of more than 5 billion yuan was burned in three and a half years.Among them, high-intensity R&D expenditure is the main reason for the huge losses.From 2021 to 2023, WeRide's R&D expenditure was 443 million, 759 million and 1.058 billion yuan respectively, and its R&D expenditure in the first half of this year was 517 million yuan.In the prospectus, WeRide clearly stated that R&D expenses are expected to increase in the future as the company's autonomous driving technology is tested, trialed and commercialized.Among these, Robotaxi will be a key investment project. WeRide said that it will start commercial production of Robotaxi this year and next year and prepare for large-scale commercialization.The task is arduous, and as you can imagine, the investment will not be small.In terms of cash, WeRide had 1.829 billion yuan in cash and cash equivalents on its account as of the first half of this year. At the current rate of burning money, this amount will be almost used up within one or two years.WeRide is still in the early stages of commercialization. Although it has a certain amount of revenue, most of its funding comes from primary market fundraising. The prospectus shows that since its establishment in 2017, WeRide has raised 10 rounds of financing, with a total amount of more than US$1.09 billion (RMB 7.9 billion).After the last round of financing, WeRide’s valuation reached US$5.1 billion (approximately RMB 37 billion).WeRide’s equity situationBefore the IPO, WeRide’s equity structure was such that the board of directors and senior management team held 26.8% of the shares and 49% of the voting rights.Among them, founder and CEO Han Xu holds 7.6% of the shares and 31% of the voting rights, and co-founder and CTO Li Yan holds 6.3% of the shares and 10.8% of the voting rights.WeRide's business, one set of technologies to cast a wide netIn the prospectus, WeRide labels itself as: the only company that provides full-scenario commercial autonomous driving solutions from L2 to L4 city-level.The label that WeRide gives itselfThe attributive statement is long, but not difficult to understand. WeRide's autonomous driving business focuses on a set of technology stacks for multi-scenario and multi-level application implementation.Among them, Robotaxi is its first scenario to enter the autonomous driving industry. In 2019, WeRide launched the first Robotaxi fleet in a first-tier city in China, officially started operating services in Guangzhou, and started unmanned testing in 2020.As of now, the prospectus shows that the company's Robotaxi fleet is one of the largest in the world. In the next two years, WeRide plans to start commercializing Robotaxi (which we understand as pre-installed mass-produced Robotaxi models) and prepare for large-scale commercialization.After the initial success of Robotaxi, WeRide began to focus on driverless minibuses.Yutong BusAt the same time, the two parties reached a business cooperation to promote the application of autonomous driving in micro-circulation buses, public buses and other commercial scenarios.By 2022, Robobus will be open to the public. The latest information is that WeRide Robobus has been commercialized in 25 cities including China, the Middle East, Southeast Asia and Europe, and has 2,000 Robobus orders.WeRide's businesses and implementation timelineIn the following years, WeRide has gradually moved into other segments. At the beginning of 2021, WeRide acquired the autonomous driving freight company Muyue Technology, and released China's first L4 autonomous driving light passenger car (Robovan) a few months later.Jiangling Motors, downstream and sceneZTO ExpressCooperate to implement autonomous driving in intra-city freight scenarios.This part of the business is currently operating on a small scale and generating revenue. As of the release of the prospectus, WeRide also has an order for 10,000 Robovans.In the same year that Robovan was developed, WeRide began to deploy in the field of autonomous driving sanitation scenarios and launched the autonomous driving sanitation vehicle WeRide S6 in 2022. According to WeRide, this vehicle is the world's first unmanned sweeper for open roads and is currently in operation in Guangzhou.In April 2024, WeRide launched the WeRide S1 small unmanned sweeper. It is reported that this unmanned sweeper has received orders worth millions of dollars.In addition to high-level autonomous driving in different scenarios, WeRide also reached a cooperation with Bosch in 2022, providing Bosch with high-end intelligent driving assistance software solutions as a Tier 2. This solution has been installed on two Chery models.At the same time, as mentioned above, the ADAS business is becoming the main booster of WeRide’s revenue growth.WeRide One autonomous driving technology platformThe technical capabilities behind this are based on a universal autonomous driving technology platform, WeRide One. WeRide stated in its prospectus that this platform is designed for all kinds of conditions centered on cities and in all weather conditions.A platform that integrates intelligent models, comprehensive software algorithms, modular hardware solutions and cloud platforms to provide infrastructure for the implementation of autonomous driving at different levels and scenarios.According to the information in WeRide's prospectus, the modular perception kit of this platform can share more than 90% of the hardware in different scenarios.This way of implementing technology is also understood by the outside world as "general autonomous driving."With a simple analysis, we can partially get a glimpse of the logic behind WeRide's implementation of autonomous driving, which is that after completing basic technical verification in the most difficult scenario (Robotaxi), it uses a set of underlying technologies to gradually implement it from difficult to easy, from high speed to low speed, from large scenarios to small scenarios, and from unmanned to manned.WeRide accelerates the scale-up of RobotaxiWeRide has planned four directions for the use of funds raised from the IPO, including:1. 35% will be used for the research and development of autonomous driving technologies, products and services;2. 30% will be used for the commercialization and operation of autonomous driving fleets and marketing activities to expand into more markets;3. 25% to support capital expenditures;4. 10% will be used for general corporate purposes and working capital.The commercialization and operation of autonomous driving fleets are almost equivalent to Robotaxi in WeRide’s business segment. So we can interpret it to a certain extent, or WeRide has stated in its prospectus that it will prepare for the large-scale commercialization of Robotaxi in the next two years.The ultimate value of players like WeRide still lies in this place, just like the goal when it was first established.However, is it really time for large-scale commercialization of Robotaxi?In fact, this issue has been discussed since the autonomous driving industry fell into a trough, and most of the time the answers given are not very positive.But recently, some players have begun to try to respond to this issue with practical actions.BaiduWang Yunpeng, head of IDG, said that Wuhan's revenue will break even this year and enter a profit period next year. This is a reflection of this. Baidu will copy Wuhan's experience in other cities in the future.Of course, there are still many controversies, but what is certain is that in the near future, domestic Robotaxi players will try to set off a wave of commercial "city opening" based on cities.This is the case with Baidu, this is the case with WeRide, and perhaps Pony.ai will do the same.
