Q4 2020 Xpeng Inc Earnings Call
Hello, Ladies and gentlemen, thank you for standing by for the fourth quarter and fiscal year 2020 earnings conference call for extra volume.
At this time all participants are in listen only mode. After.
After the management's remarks, there will be a question and answer session.
Today's conference call is being recorded.
I'll now turn the call over to your host Mr. Charles Chung managing director and a strategy of the company. Please go ahead Mr. Chong.
Thank you Hello, everyone and welcome to the fourth quarter and the physical year, 2020 earnings conference call and all sorts of I mean.
The company's financial and operating results were issued a bottle and newswire services earlier today and are available online.
And also view the earnings press release by visiting the IR section of our website at Argos shopping and dotcom.
Participants on today's call will include our co founder Chairman and CEO, Mr shopping for life.
Vice Chairman and President and Dr. Brian go.
<unk>, President and finance, Mr. Danny simple and then myself.
Management will begin with prepared remarks, and the call will conclude with a Q&A session.
As a reminder, this conference is being recorded and webcast and replay of and gets conference call will be available on the IR section of our website.
Before we continue please note that today's discussion will contain forward looking statements made under the safe Harbor provision of the U S. Private Securities Litigation Reform Act of 1995.
Forward looking statements involve inherent risks and uncertainties and as such as the company's results may be materially different and from the views expressed today.
Further information regarding these and other risks and uncertainties is included in the relevant public filings and solve the company as far away and the U S. SEC.
The company does not assume any obligations to update any forward looking statements, except as required under the applicable law.
Please also note that <unk> earnings press release, and this conference call include the disclosure of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures.
Excellent earnings press release contains a reconciliation of the unaudited.
Non-GAAP measures to the unaudited GAAP measures.
And I'll turn the call over to our co founder Chairman and CEO and Mr. Shuffle and so please go ahead.
Hello, and thank you all current and should go away and Josh album, and she has her the RDR and Union city to interest and yet you feel hopefully.
Hello, everyone. Thank you for joining <unk> fourth quarter and fiscal year, 2020 earnings conference call today.
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And the fourth quarter of 2020, we achieved another quarter of record high vehicle delivery, which reached 12964 units up 303% year over year and 61% quarter over quarter.
Vehicle deliveries for the full year of 2020 increased by 112% year over year to 27041 units driven by strong delivery growth, we increased our revenue and 2020 by 151, 8% just line 8 billion RMB more excitingly, we achieved a poster.
Full year gross margin for the first time and the company's history, marking a significant milestone.
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I believe that 2020 figures by the beginning of a new era and China's smart even development during the year all consistent execution of the past 60 days a full stack in house R&D strategy bolstered our ability to provide customers with differentiate and smart EDI product and lead the technology innovation of Smarty vs and China.
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In October 2020, we released our second generation Smart income operating system, two O T. A which features the first of its kind or voice in car system.
This is one of our key proprietary technologies that allow customers to interact with all vehicles and natural language and continuous dialogues and.
In January and February 'twenty, 'twenty, one the average daily utilization rates or our AI voice assistant and exceeded 90%.
Illustrates the disruptive changes all self developed smart in current operating system is bringing to traditional in current directions.
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One we have released the first and see a X policy point out all force back in house developed audits autonomous driving system, which includes our navigation and assisted highly autonomous driving solution or navigation guide and pilots and G. P M.
And J P has been activated and approximately 20% of all piece.
Delivery and marked the end of February and has assisted our customers and driving from more than one 3 million kilometers.
Leveraging field data from all customers and I'll close with data capability, we can continuously train our algorithms and implement faster iterations and providing our customers with an evolving autonomous driving system that is capable of handling complex low conditions in China.
In fact, Mary E N G P assistant knowledge penetration rate, which refers to the mileage assisted by the N G. P and if he sent cage and also drivable mileage and thank you P exceeded 50% amongst those P. Seven did activate a D and you paid.
This is a very exciting sekhri.
And it continues events and engine autonomous driving capabilities with confidence that autonomous driving features will be a key consideration of our customers' purchasing decisions.
And just months will also kick off and G. P expedition.
From Guangzhou to Beijing to showcase the disruptive experiences a cutting edge autonomous driving system can offer to the customers.
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In addition to that we're also planning to release multiple O T. A younger age of ex pilot people and out in 2020, one including memory parking and a further improved version of the Yankee P. M. P. G to enhance our vehicles in terms of safety functionality and performance.
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Well deploy automotive grade Lidar technology, and I'll start smarty, the model, which we plan to deliver it and the second half of this year, we believe I'll start and model will be the first mass produced Marty equivalents rider in the world.
Leveraging our video base perception capability complemented by later, we plan to rollout X policy size, which will support and G. P. A major urban growth.
We also plan to introduce ex pilot full point out built on our next generation autonomous driving hardware and software plus one to be deployed on a fourth model, which will be launched in 2020 two.
And the confidence that ex pilot and we'll find out we will provide our customers with a new level of autonomous driving experiences.
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H aforementioned technological advancement underpins, our mission to drive smarty, the transformation with data and technology shaping the mobility experience of the future.
Looking forward as we upgrade all ex pilot and X smart in core operating system, we're committed to investing and smart technologies and leading technology innovation.
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As we solidify our core strength and technology will strive to diversify our product portfolio to address additional customer needs and expand our market share.
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Later in March this year, we expect to start to deliver the Pes Evan Wang edition and there was some sales in November at the Guangzhou Auto show 2020.
This edition featuring sporty wing doors and it is also equipped with the ex policy point O system at the standard configuration and.
It provides and exclusive and exhilarating mobility experience to auto and Ccs.
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On March 3rd we announced lithium iron phosphate or LSP battery powered G suite, Suvs and pizza oven and sedans and we plan to start deliveries in April and May respectively. This year.
We expect these two models to resonate across a broader customer base.
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And the second quarter of 2021, we'll unveil and begin selling our start mass-produce vs vehicle model.
This brand new design will be the first mass produce smart E D equipped with <unk> and will support our ex pilot 3.5.
Also it will feature and innovative third generation smart cockpit connecting to connecting the vehicle to our everyday life and and even closer way Matt.
Delivery of this new model will start and the fourth quarter of this year.
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Furthermore, we plan to begin delivering the mid cycle Facebook version of the G suite and the late third quarter of 2021.
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In terms of sales and census network and soft December 31st 2020, ex physical sales and service network consistent of 167 stores and 54 service centers across 69 cities in China.
After 160 stores seven did you would you rack stores operated by us.
During 2020, we greatly increase the efficiency of all stores, especially direct stores.
By the end of 2021, we plan to increase the number of sales doors to approximately 300 covering 110 cities.
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In terms of a Supercharging network, we also accelerated our efforts to expand our coverage across the nation and.
As of December 31st the number of excellent Brendan Supercharging stations was 159, covering 54 cities to further improve our customers' charging experience, we plan to significantly expand and number of X being blended supercharging stations.
And our network to more than 500, spiky and a 2021.
Since we initiated the free charging program last year, the number of cities and this program has grown to 100 as of the end of December.
In 2021, we will strive to expand our fleet charging service network to 200 cities and provide greater and sensibility and a broader range of locations, including highways and airports and.
And the same time, we plan to substantially increase the number of excellent Brendan Supercharging stations and charging piles and selected popular destinations just facilitate more convenient and efficient charging services for our customers.
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And the fourth quarter, we also made positive progress in overseas market.
In December we fully delivered the first batch I'll take European version G suite and Norway.
In 2021, we will continue to strengthen all capabilities of international operations and areas such as organization product development, R&D branding and distribution channels.
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With the rapid growth and vehicle deliveries, we have been ramping up.
<unk> at the junction factory to prepare for a monthly production capacity of 10000 units within this year.
And while we have started construction of our Guangzhou manufacturing base and expect to commence protection and the third quarter of 2022.
Our Guangzhou and judging smart EV manufacturing base, we shore up our production capacity and allow us to further capitalize on rising demand in the EV market.
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Looking into 2020, one we remain dedicated to delivering smarter and more differentiated products to our customers and a win.
And I must strive to implement SaaS software and hardware innovation and technology innovation.
And also strategically make long term investments and branding sales and service network charging network.
Brand, new smarter vacation system powertrain technologies production and supply chain capabilities International operations, and the R&D efforts into innovative product pipeline, such as offline vehicles to support our growth over the next few years.
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Lastly, and guidance for the first quarter of 2021, we expect all smart EV deliveries to be approximately 12500 units and all total revenue to be approximately $2 6 billion RMB.
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Thank you everyone with that I'll now turn the call over to our VP of finance, Mr. Dennis Liu to discuss our financial performance for the fourth quarter of 2020.
Thank you Shannon and Hello, everyone.
We are very pleased to have achieved solid results and our first quarter and throughout fiscal year, 'twenty, and 'twenty, which demonstrates our ability to effectively capture the rapidly growing market event for compounding smart mobility experience, our top line and the first quarter and for the full year expanded year over year.
What is robust and vehicle delivery performance in <unk>.
Particulate.
We increased gross margin and so sequentially in the first quarter and posted the past the first positive full year gross margin. Additionally, we had a strong cash pretty shit to ensure Saudi financial Foundation.
Skew our business strategies and to enhance our competitive advantages.
Now I would like to walk you through our detailed financial results for the first quarter of 2020.
Total revenues were RMB, two 9 billion.
For the first quarter, representing an increase of two young and 45% from RMB 640 million for the same period of 2019, and an increase of 43% from RMB 2 billion and quota so quarter of 2020.
Revenue was from vehicle sales were RMB, two 7 billion.
For the first quarter.
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276% from RMB, seven time media and for the same period of 2019, and an increase of 44% from RMB, one <unk> and IBD and $40 per quarter of 2020.
The year over year increase was mainly due to <unk>, 7% quarter over quarter increase was primarily due to accelerated vehicle davita brief for both <unk> seven and Q3 in the fourth quarter of 2020.
Gross margin was 77, 4% for the first quarter compared with a negative six 6% for <unk> 2019, and four 6% for the third quarter 'twenty 'twenty.
Vehicle margin was six 8% for the fourth quarter compared with a negative $8 five per cent for assembly you a year ago and three two per cent for the third quarter of 2020. The implement was primary due to better product mix decreased material cost and increased manufacturing efficiencies.
Research and development expenses were RMB $460 million for the third quarter 'twenty.
29% from RMB 652 million for the same period and in 19, 2019 and down 28% from RMB 600, and certify media for the third quarter of 2020, the year over year decrease was mainly due to higher expenses relating to the development of our P. Seven a year ago.
The quarter over quarter decrease was mainly due to reduced share based compensation expenses in the first quarter compared with one of larger amount recognized in the third quarter.
Selling general and admin expenses and being $918 million for the fourth quarter, representing an increase of 133% from RMB 395 million for the S&P with a year ago and a decrease of 24% from RMB, one 2 billion for the third.
Water <unk> and 'twenty.
Year over year increase was mainly due to number one and higher marketing promotion and advertising expense to support vehicle sales and number two the expansion of our sales and they work and associated associated personnel costs. These expenses, our Frisco sales and service Center and also the commission for your franchise stores.
The quarter over quarter decrease was mainly due to the reduced amount of share based compensation expense.
Compared with a one of larger amount recognized in the previous quarter.
Offset partially by increase and Maxine promotional and advertising expense.
Personnel costs these expenses and commission as mentioned above it is.
Crude and the share based compensation expenses, the year over year and quarter over quarter increase with many resulted from higher marketing promotional and advertising to support new vehicle sales and also the expansion of our sales and they work and associated personnel costs and also the increased commission paid to alpha.
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Cash from operation was RMB, one 1 billion for the fourth quarter compared with RMB, One 1 billion for the San Pedro 2019, and RMB. One 7 billion 40 of the same quarter of 2020, excluding the share based compensation and non-GAAP loss from operation was RMB 1 billion.
And.
And our first quarter compared with RMB, one 1 billion for the same period of 2019, and also RMB 823 media for that quarter upon in 'twenty.
Net loss was RMB 787 million for the fourth quarter compared with RMB 1 billion and for the period, a year ago and RMB, one 1 billion for the third quarter for 2020 is.
Excluding share based compensation expenses net fair value change out the relative liabilities do day to day to day redemption dry up pretty per shares there now.
Non-GAAP adjusted named loss was RMB 713 median for the fourth quarter of 2020, compared with RMB, one four and 1 billion 40 and <unk>.
<unk> thousand 19, and also RMB 865 million for the third quarter of 2020 net.
Net loss attributable to ordinary shareholders of Shelton was RMB $787 million for the first quarter compared with RMB, One 3 billion and 40 <unk> period, a year ago and also the RMB 2 billion 40, <unk> quarter of 2020, excluding the share based compensation expense and fair value change.
And they really don't keep diabetes the day to day to day retention by a preferred shares and also the accretion of people share to redemption value non-GAAP net loss attributable to ordinary share holders of Sharepoint and was RMB $713 million for the first quarter of 2020 compared with <unk>.
The $1 1 billion loss for the same period 2019, and RMB 865 million 43rd quarter of 2020 basic and diluted net loss per ads were both RMB one <unk> for the first quarter of 2020 non-GAAP basic and diluted net loss per ads.
Both the Opco and 95 for the fourth quarter of 2020, each Ats and represents two class a ordinary shares.
It is worthwhile to non lapped the calculation of Ani per share.
But pretty a b S a space and the weighted average number of the 80 S. For example, surmount and 47 media a D. S were used for the first quarter of 2020, one or 377 million and Ats has been used for the fiscal year 2020.
And all year and <unk> com with 10 out of the 89 media and you end up a year.
Turning back to the balance sheet at the end of 2020. Our company has the cash and cash equivalents restricted cash and short term deposits and also the shorter and investment in total RMB 35, 3 billion compared with $2 8 billion.
As of December 31st 2019.
To be mindful already there and stop all earnings call for either.
Our financial results I will encourage listeners to refer to our earnings press release for further details.
This concludes our prepared remarks, we will now open the call to questions. Operator. Please go ahead.
Thank you.
This time I would like to remind everyone in order to ask a question first from the number one on your telephone keypad.
The benefit of all participants on today's call. If you wish to ask your question to management and Chinese. Please immediately repeat your question in English.
For the sake of clarity and order. Please ask one question at a time management will respond and then feel free to follow up with your next question.
Your first question comes from Tim Hsiao of Morgan Stanley. Your line is open.
Okay.
Hum interest.
And from Morgan Stanley Congratulations on a strong and reach out and thanks for taking my questions.
So my question and Cisco to their guidance.
Because based on the latest guidance.
We are looking for around 5%.
Sequential price erosion and first quarter.
So could you please and luxury more about underlying factors, especially.
Especially I think previously the management.
And song of X pilot three points from a revenue will be recognized in first quarter.
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Why was that.
Why are we still expecting the ASP to be down quarter over quarter. He takes.
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Yeah sure.
She and I wish them, well and he can share you and you may ask your question.
Okay. Thank you for your question.
And I think in quarter, four week deliberate and careless to 13000 units.
In the first quarter because of the seasonality issue the fabry with which he was very slow PV coating.
Lowest amongst you and a year so our guidance for the moment is toilets out there and find the units. So you can see that's a 500 units.
Volume and mix impact and yeah, Youre right, we have in Q <unk> three <unk> four those real close those cuts.
Who have activate PD and the.
And the functionality we have included in our first quarter. Many in the January and part in February but due to the above and a mix impact we have seen it.
And some minor impact on the overall revenue compared with quarter four last year.
Okay. Thanks, Mike.
My second question is about.
And.
And more like to take and past, probably the components and supply tightness.
So we.
We're going to launch the LSP version piece happened and second quarter. So just wanted to note that with the increased battery variety and helped to use the battery bottleneck and second quarter or would you either way around.
In the meantime, peers and other traditional year and highlight today and petsmart and hiccup caused by a couple and and tightness. So what's our assessment and also potentially impact to expand.
The company's second quarter shipments. Thank you.
And while the data when Tina ship on you want it that way and I. Thank you.
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Thanks, and let me assure that we like.
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Yes, Indeed, I think for the coming six months battery supply will remain very important flow with OEM sales out there and for all new models of <unk> and G fees for their Q2 deliveries I think.
That would be very challenging in terms of battery suppliers, because we are adopting this new Lps berries.
And we're working very closely with all day every suppliers to solve this challenge I belief and the long run we will be facing ramp up in terms of all solar and battery supply and by Q3, and Q4 and the coming here and we'll be able to sales the supply issue and with our past experience of successful delivery of the.
500 kilometers version.
The range of perishing from Q3, we have give me confidence that we can source and that these kind of challenge of adopting L. P and L. S. P. S. A new battery for our vehicles in the coming year.
Tim This is Brian let me just to add to what shall phone just said on this L. P battery.
Version of our products and we were seeing actually very healthy and very strong demand for that product as we see actually just since we just recently launched and we already see.
Up to like 20% of our PCM and actually have that healthy Peep version and battery orders, which is actually very interesting and very exciting.
Issue I think.
You also mentioned I think we actually expect this to gradually sort of resolve as we actually head towards the second half of the second quarter and I think that this volume will at night and it will be picking up as we see so for the second quarter actually we are very confident that we can see actually quite healthy growth over the first quarter.
Overall for the deliveries.
Got it all right. Thank you very much Mr Ho upright and Dennis Thanks for the answers.
And by likes to take away from that he go away.
Your next question comes from citizen of Deutsche Bank. Your line is open.
Hi, Thanks for taking the questions.
First kind of more near term.
And you just said <unk> should see sequential growth can you give us kind of an idea of not only <unk>, but and the second half as well and obviously not trying to pin you down and to a number but just assuming demand is there what kind of low.
<unk> sales run rate could we see.
And is there any sort of limitations due to the semiconductor shortage.
That was share so I think guys, yet and sort out what GT went out with and where you go and ETT. Thank you Wendy and I will make and Iot bound that we don't know Betsy the woman gel, which you said that you got from topic as you can see what's coming out.
Yes, putting kinchinjunga, Tito and I'm Gonna do women, and Chico and shop and Andy.
You could chi and that that woman yet to connect you could and should you not cashing meal that that you wouldn't have that Jean Dominique I should hold triage woman and say, Jeff Photoshop alcohol and that maybe you could I think you day social day, because he teaches from me Yeah Farquhar Punjabi from me that going quickly through them and that should hold it you sound like you're you sound milk.
And so Edison and this is Bryan again.
Obviously, you don't want to give out.
And long range guidance as per company policy, but what we can see shuffle described in the opening remarks that we actually have new product introductions every quarter for the next three quarters. So we actually see growth.
Picking up and.
Sequential basis fairly healthy and in terms of supply constraints right now we have visibility for about two to three months of <unk>.
Semiconductor supply, which I think are in that.
A long range basis, we are monitoring them very closely as to whether that will impact our.
Supply chain overall, so far and in the foreseeable period, and we don't see and its impact, but that's something we actually pay and a lot of focus on at the same time I think we given our volume is relatively small compared to some larger Oems that's facing much bigger crisis I think we are more nimble to address.
This issue, but this is definitely something we will be monitoring very closely.
Great.
The second question.
Unrelated so wanted to ask about pilot.
Pilot so as we think about the next generation offering would you consider moving to a subscription only model for the features and.
And if not would you expect the pricing of it to go up since now you're equipping it with lidar. Thank you.
And they say you went through and I can tell you from that kind of question for it to be at that wasn't a ways out Glenn you X pilot from me and thank you when do you have them and when I say, it's good to see by day pilot Vishal Playboy copies here, you got things equal team get a shelf and Washington as you can.
We're pushing on the how low quick quick how do we think about that.
I think you got the dot shall we kick on the email, but it seems like you got my dad, he gets issue and get that evening.
And well.
Well no wait and do you put on Panther and Golden and its patent will notably tighter you couldn't goldenseal Sophie number and.
That's what took a sofa and it sounds like you're pushing on day, one for the year, that's all available hook and G City, though Jay cope with it sounds like a woman and the so called RGD and desert didn't hear that kind of Canadian Jetblue and you got to the wind fleet.
Yes based on our newer generations effects pilots will definitely increase the pricing for different configurations, but whether or not it's a subscription model or any one else Pima model. It will depends on our customer's feedback and also our overall strategy, but generally speaking definitely DSP will.
The law for higher versions of X pilot.
Thank you.
Yeah.
Your next question comes from Jeff Trunk of Citi. Your line is open.
Uh huh.
Hi.
And so my first question is.
And how should we see the sales mix.
Between RFP and and she empower the BV going forward and the differences in March and outlook.
And any guidance on the changing the full year sales target. So this is my first question.
And your house you handle the tailwind to issue later when I Women's day.
Social demand and Alcon and put on that day and should help Aqua Jacob.
And to ensure high AUM and that you've got been funded yet.
Got it thanks, and he didn't show you have abandoned without it.
And social debt too huh.
You said something beyond that Aqua day, something you said, hey, when you get that lump tissue wouldn't it be just wanted to you mentioned.
For the L. P battery, we are seeing the.
Obviously, it's still recent day.
And on the PT seven version.
You know the LP version and actually close to 20% of the new orders and then beyond the tier three I think is around 10% of the new orders that the L. P. Battery, we believe that that mix will probably kind of increase as we.
Continue the.
And promotion and introducing these new.
LP batteries are products, another very interesting I would say mix on ASP.
P battery versions of that.
Since we got rid of the low low and configuration without the autonomous driving and assisted driving systems actually the percentage of these and battery version seven.
Thats, incorporating our <unk> three point, though our hardware is actually much higher interest percentage than the entire piece seven population, which also can potentially translate to higher software penetration for this product, which is actually quite exciting in terms of a growth for March and the full year.
And I already gave the comments earlier I don't know whether you are looking for anything specific.
And just.
The March and all of them if we take off the software portion just considering the hot where the vehicle portion could you give us some the roughly level between the margin trend on the vehicle power bi <unk> and non vehicle power SCM.
Because it is from some oh, yeah, and actually can achieve a higher margin from the RF power.
So I just wanted to know what the company is thinking about the long term market trend.
Thanks, Jeff This is Dennis.
The margin and actually the instruction of the Elk and RFP.
<unk> part that there are two purpose one is to improve sales. The allo. One interest is to reduce cost. So definitely this product will improve sales as well as well in per our margin I cannot give you the basically the number or amount of margin improvement balanced per hour.
And us better margin for these two products.
P seven at G III.
Okay. Thank you and my second question and this on the auto pilot are revenue and income.
So considering the previous <unk>. The P 70 quipped before the pilot three zero is a software income and also the first quarter income would be combined together.
And the first quarter earnings this year.
But a while ago the management seems to give a.
Rather conservative guidance from the software and income so I just wanted to know why.
Why and secondly.
Could you give us some color on the attach rate or the autopilot three zero right now and all.
And also going forward.
And that's why it's a three pronged autopilot and three five the penetration level in.
And the future and thank you.
What did you say you go when do you think why you women autopilot from either he does so little Hallam and should have 82, net one auto Expo and Sunday evening we.
Tyler Radke sales when they get away without necessarily mad dash and elements out yet and he said occasionally you guys sounded partially yugo, what's after that and then lots of reliable and then seek out ex palace and you what changed with your whole net time into women day, you guys show real question cash amount of younger we like ex palace and dealing with the part had a simple.
And I guess, it's it just yet.
Hey, Jeff This is Bryan again, so as I think I mentioned earlier.
The entire piece seven the.
Activation of our pilot three point O represents over 20% of the entire piece and population, which we have delivered over 20000 units already and upon introduction otas.
And GP in January we saw actually the penetration slightly going up which is very encouraged and we also saw the utilization rate of that product is at a very high level of over 50%. So we actually are very confident that as we go into a more and more.
Product, that's having the pilot group on its own.
Architecture embedded in the in the vehicle, we see the penetration we will continue to increase that's the trend that we are 14.
It's difficult to predict the X pilot three five the penetration rate, but for the third product that we can and introduced and the fourth quarter, we actually kind of half the product mostly and configurations.
Three zero or three five X pilot capabilities, which means that the majority, let's say over 80% of the models for the third product will be able to.
Charge software revenue.
And because they have their hardware configuration. So we anticipated the penetration rate for that product will be higher than <unk>.
She also with Omidria and kill the Shaw She's a woman.
And put on our synergy womens, finishing the tuition and email and more quite true.
And I know, it's dependent and the dual band.
And women to have that day.
And so this union mutual fund.
Sales of Mayo.
And now.
And the Chambal doses and getting where you sell the full freedom day.
Total Tony minute syndrome, and so youll expand a skinny.
And there you got six patents and all Jessica Michelle.
Shanghai and shave sitting on cash.
And a lot and G&A children in need of T call EG and gin.
Jake let's say, the Greenwood and tissue.
Adjusted I shut you John I want more weighted to the total get John and I looked it up J Lo and Buda Squishy and when the dog currently tied to the trimble to them and and Jetsam chunk line of inkjet and you talked about and <unk> sulfate accounts.
<unk>.
So I would just like to add to that basically right. Now if you look at our current and ex pilot upgrading you will notice the trend that we've been operating them quite aggressively and rapidly basically and the future new.
Models launched by explained all of them will be equipped with newer version of ex pellets and we plan to and move all of the old operations for example, all day.
Upcoming starts modeled and that's kind of.
And you'd be launched by exiting booby clips with ex pilots to fly for a buck so all of those will be.
Arguable portion of X pilot and for our upcoming model as you buy a lunch to be launched by our company.
It will be equipped with ex pilots for pointed out so and as always falls with the development and advancement of our software and technology and also.
And this kind of investment and R&D effort and to autonomous driving and with future a reduction and cost of these hardware preparation and to support such ex pilot technologies and we believe in the future all of them all of the new vehicles launched by Henk will be equipped with the hardware and <unk>.
Architecture that are able to support them and build.
Refreshes of ex wireless, but also we will force has more and more revenue income from the software next pilots. Thank you.
And thank you and minutes and have no more questions from me. Thank you.
He said and what you gave me a windshield.
Your next question comes from Ben Wong of Credit Suisse. Your line is open.
And just take opening day.
And equally Joshua and it would be nothing you guys see a cautious Donnie could you and do the hotshot.
<unk> seen that they're going through and tougher and.
And you didn't teach and he made the club channel.
And so once you're in talks with two pieces and Sandy can you give us okay.
And GP, so Judas for that simple.
And so on one no sounds low.
It seem to you and a T cell and you can now send you an astounding and.
And should that hung anya, so and when can you tell us and Hawkins senior debt and even saw two and got to Sheila I'll call me.
And the city of new units.
Suddenly hashanah incident and Scott.
Anya, so which I'm trying to I suppose.
Thank you Shannon.
<unk> put on a few simple.
Sure Paul and Sean do you want me that until Christmas and so got tens of thousands low interest on Sunday and then.
And so we saw that and can be resources are not only a few minutes and interest.
And just lastly on your screen and so can you.
And I don't know TTM simple switching and indeed increased total cases.
And just thoughts on line.
And you guys should be Netherlands, and from each element and attribute and a complaint did you sign them and but that wouldn't impact hydrous ammonia would go up and that you could take on Google and the testimony from the two weeks after you and Bob.
Bill do you want to repeat it in English for the other people to understand the question.
Sure.
And just want to know whether you actually be up your R&D flow.
Tom study, because if you compare to your plan and not in the not the October and actually.
And kind of three five and actually we are holding that.
And in 2022, and it seems that and hopefully the market you mentioned maybe end of this year.
Shipment.
And a $3 five bullet you should actually you also and not.
And then.
And our footprint in 2022, new things to be linear compared to Europe and NAFTA.
And I want to take on in 2023, so and that's actually kind of a junior will be up and up and the capability and Meanwhile, actually and that.
Driving net actually.
<unk> means you can already achieved net.
80 degree and tuning and the vehicles and also.
Look price check Tonight, and lots of you actually.
If you're doing it.
And we do have a big jump and expense from the upcoming two or three years. Thank you.
Yeah.
She has stood up and.
And in your industry that will expand and Sunday.
A woman.
And he and expanding on Sunday and when we're sitting and he says is Joan and good evening.
And we'll then talk and values, finishing and.
Chad can you can jazz and <unk>.
And I know that Johan <unk> seal between you and John and Women's C V or T J and a 200 and.
And Sunday, only messaging and that kind of home and quite Sotoudeh people moving to Ohio to Gen. Two and G suite and ICU, almost 90 and insertion that Jay fetal and thought NFC on the shortly that usual salaries and so the conditions and not to the day Eagle and a more challenging and.
And so you're going to eat up and.
Couldn't go out and try and neither soon and she took place as it related to the adjusted of El P. J is that you're going to get on and go cheap and homey bought it off so let's say on Kona and changing how the non beauty golf and how the unchanging and look good and China, Chinese Huntington's and power tool and then and what that change so the Egypt and not without art.
Michael and little to no change without your growth and choices.
And then should without and with them and then when he won't go iden churn and go and how.
Joe would you go onto to your attitude and subtle adjustment and does it was challenging to go out.
And Jonathan said zone.
Cool and couldn't walk you either since without fail when adjusted to see all kinds of Australia and you're done.
And then Peter Thomas as yet and that's the total you could do and so.
And yes, it will be challenging and flip you and Michelle she and I have been quite weak.
Ashish.
Thank you for your question, Indeed, and 'twenty 'twenty based on our efforts, our R&D effort and <unk>.
<unk> into X pilot to point out, we actually gained confidence and drive future R&D effort and feature launching of ex policy five 4.0, and even slight point out. So yes, we plan to bring up done per year.
The schedule of launching fewer.
And the future.
More higher version of X pilots and all of those comes from current R&D.
And also the data that we collected from our customers, which is really which has been very positive. So that's the first part of your question to the second part of your question and I believe that in the future weighted.
Technology, and the right technology and how much will be part of the center configuration of the hardware architecture that supports a safer driving experience would be and true autonomous driving technology in general because that will give us a better.
Computing power and that allow us to not only navigate amount and level one level two.
But also in a broader sense I'll be urban votes in across China, and other regions of the world.
We believe that in order to achieve our full level of autonomous driving and there is still a long way to go not only and trying to put all over the world, but we definitely have confidence that this will come sooner.
And expected thank you.
And Macquarie.
Total song to the women's and young would be treating it.
Sheldon W D those people and talent.
And Chad So I was I'm, sorry couldn't sit on cash.
And I'm glad and from our bulk water and chatted a lot Tien Fuji Shanghai, you digital and just what's your clock E J D J.
Jake show you guys that you have hit on just the tissue hook and central Jeff The Shanghai underlying Gen should only engender P and Gucci and quite a tissue a woman and those that don't fit in and out of total.
And yes, we are going to significantly increase our R&D spending this year and for upcoming years as well mainly will be focusing on all of the areas surrounding autonomous driving including the software upgrade Takeda and non computing and also leads and the internationalization of autonomous driving and also and explore.
Louis and into the level four autonomous driving strategy and also tell them to the hardware upgrades in relation to supporting beyond software update.
Thank you.
Excuse me.
Your next question comes from Ming Li with Bank of America. Your line is open.
Hi, Good evening Hot no Oh, what's gonna wind he knows what I'm. So glad you do go well how is it sounds like I don't know and especially in college and toolkit and digital.
This is buffalo to go and play.
And of sales facility Yao Hao Goldman.
Now from a pool.
Yes.
Judicial and Guangzhou to Belgium.
So don't want someone to assets have been delivered you know xiaomi LG that's useful.
And the bulk was young for good times weighted.
Towards the growth.
And Jonathan the hogs from.
HD map and Ohio, and she had to.
You should run dual engine soon.
And to go and.
And so on the chute zone.
And quite just JAK, one and infotainment.
And the system.
And Joe it sounds like quite a woman.
Changsha and myself and LG is useful to get that once you have from here.
And the Utah somebody on the top line.
And PV.
So no change no additional shelf and why is it due to the fact that she was designed and I'm sort of the thoughts and I'll jump off.
And it sort of dependent Brooklyn, when they're at home boom line as usual.
And as you know and how you should choose you mentioned this usual kind of high school English opinion.
And as you can.
<unk> technology.
And yourself so.
My question is regarding the international expansion.
Especially in Europe.
Countries, because from some how weird or HD map.
Our mission and the security reasons.
We need to change and the vendor or changes software et cetera, and so what kind of challenger and a bottleneck or do you see.
And for your international expansion, especially.
The smart cabin and Tom.
And driving our U S trends tissue.
And.
What are your highway Susana castle and moat.
Our eating and what these what's wrong and if those located at towards Asus Highway and what we'll do what it says on the phone should go and kind of Hudson and daughter. She is the time for us to put her young and.
How it is I'm sure you can say downtowns agenda, each for the full day hydrocodone and so that you can treat others Chile.
And so.
The woman tie correlate about that goodwill and that's how a lot of other and Thompson T and Melissa from Louisiana, and women's and she wants to.
And these are the wassa weighted towards <unk>.
And I'm not sure about your own EDA tools, Etame and Shin and Darla.
E G one day.
And in each zone and equally shown two questions.
And put them and what that's done and just what are you off from it.
And expanding and it's usually the January.
Current quarter at all kinds of that changing your and project, though however, M&A Spanish cytidine them, a woman who don't wait that also.
First of all Jeff and Peter Uhm.
I don't want and the highway number thats and until Tony you wish upon its sense without a shutdown pools and the dosage.
Total churn policy and the woman that high why shouldn't that Transunion Ollie Army Navy and <unk>.
You didn't know tons and put.
And what our phase one data and use of time doing that.
And so yeah and more.
Yes.
And each with a cotton canola and mind, you and Konishi I'll share.
And since you couldn't boarder Gianni Versace and does.
And he died down for that your growth picture, how to teach auto home and of course on the Shaw to reach at some day to Sheldon and for faith and I'll see.
So a woman that highlight and Josh.
Yes, sure and towards.
I told him the opinion high bottom.
Bottom and knee woman doses that region, no sugar and there were no way.
Dogwood, Yeah, you thought of which outweighed the pachuco now occupy J O 2000, and food you all know about Saddam quantum and you'd see and trends and all that much.
And it looks a whole women's had challenging okay.
And just hold off highway and tell them and then go quite so there's no question and tender tissue.
Yeah.
Yes, actually I used to have many I've had many years of experience and expanding into the overseas market I've been doing that since my first.
And you bring neuro project, which was back in 2010.
So my opinion on overseas expansion is may be quite different from that.
Other counterparts and there I think it takes a lot of time and efforts to build a solid foundation in order to grasp the international opportunities right, Gary and the future our strategy and overseas expansion is in general will be very similar to ours and domestic market. One basically we will focus on our product portfolio and off.
And and organization.
And those three areas I think.
It would be very similar in our domestic market and international market, So that we and.
And the future it can speed up that process.
Internationalization and basically after X pilot two five will be April two and synchronized watching future X pilot progression both in the domestic market and a day overseas market as well and we plan to have lunch from maybe in Europe.
P and market and also in some very developed and market ex pilot for Plano and Boston and the feature at the same time as we launch it in the domestic market now in terms of all of our smart cockpit right. Now we were doing everything in house and we all had dedicated a large team of R&D people and.
And this week and disregard any of the come and yet we're going to build and Baker team and focus on the R&D smart cockpits and usually it will take maybe a longer time, such as the 12 months to build a good solid technological foundation that allows us to really play it and all of our products and allow us to have a good foundation.
And then to overseas, but once the foundation is built we believe that and the future development is going to be very impressive in terms of the speed of expansion and the reduction of costs and also the core technological and high quality does that logical foundation and the quality of our AR smart coffee products and so in the future.
Our strategy is that we are going to be a very powerful platform.
EBITDA in April to lunch.
Rich product line.
That has been that you saw that autonomous driving capability and also we.
We are going to have a very strong and powerful sales and marketing team to support our overseas markets and expansion into future. Thank you.
Thank you I don't have no question.
And would you be and they went through that system.
Your next question calls comes from Paul Gong.
UBS Your line is open.
Hi management. Thanks for taking my question. My first question is regarding on the R&D head count.
And I recall during the IPO.
It sounds like 1500 on day people roughly one starts on the autonomous driving.
And now you have more financial resources from April.
And so I think shelf also mentioned to you are going to increase the R&D significant this year.
And there are pockets of the head count for the R&D and into what's on May 10 of this year, what the political winds you don't want just shortly.
<unk> hundred one and doing well, let you do some sort of somewhat obviously and you shouldn't what price went down they plug and from quantum since I'm here.
And he was telling to you so is that something that Susan and Joseph from here.
On a go shop and you don't shoot.
Oh and Oh.
And Jonathan and puzzle quite soon.
Sometimes you'll schwartz from Taiwan.
And they go to zero and I suppose the only a dozen or so which are a little too neutral from Sean just $1 billion hotline and doing some what sounds like you've got some want agreements also once a day <unk>.
Yeah.
Yeah.
So the two of us.
And.
Stay tuned.
And yet because of the shovel and say yes.
Let's see shows over 40 shield and Dolby audio feed her question, whether it's income.
I see.
Well, thank you Chi.
And are you Alright Union and Union deal and the yen.
And any initial Gil and Tal.
Total and then since you and that you paid.
Total woman halfway that willingness and titration humanity and for <unk> and it's usually a modern day Lee and hunting yet.
And indeed, we plan to greatly increase the head count and not only the R&D, but also our sales and service team as well so by the end of this year, we forecast that the R&D team will double and its size and also work on a also increased the R&D people that are that will be.
And it around our ecosystem as well thank you.
Sure.
What will that you aren't going to you, so corn and mutual shear zone.
So don't Justice and quest us and she was one channel and your content.
<unk> of course from annoying.
And function and I saw the home center, and the Isobutanol and cool aren't and so we feel so it sounds like do the horn and I can say peaches, Colombia total youre talking from Thomson.
Oh, I'm, so for yourself and gross Youll show, a total attenuation per channel with some aren't and wasn't immune syngenta chocolate chunks. So you almost have some decent gagnon Denis and good chunk of your almost on Houston.
Houston to Shaw meal, or Sunday, and investing to bump and the argument and so you shouldn't and Chonko downhole and surface at Gmail Dot William Jones from vehicles ones, yet and what Youll see.
And that's always one simple kind of off of your own policy and concluding the.
Total <unk> and store associates on that shoot you get you'll come to onshore conventional transmission, but youll share shrink or two and Shin young.
Total gross couch.
Couch. It also doesn't chances from there once again share our children and so and then you've got sort of huge and let me translate and my question.
Quick questions regarding the monetization of the autonomous driving and given the price cap between Panama and two five and three zero. The penetration is just 20% so far from <unk> seven on the ex parte and Austria zero, you can feel and you'll have more spend from fixed costs from the R&D of the software.
And so it gives it worsening for you to complete those two narrowed from the price gap between the two five and three.
Zero and try to monetize mist, and <unk> talked about harvest more day, Utah to fitting into their software and further improve that.
And women female Tasman, John Force Seaway, Shiel, Shiel, I'm familiar with them and need and goods that usually have sunshine and with little change with either the total justification for you.
And then what would you say at home.
Momentum Squishy and Chicago. She notes wishing you meant two general Keytruda total, Jeff I'm gonna tissue.
And so that you don't see young women and condo cogent.
Cogent since you Didnt and Jeff This is Joe and Roland and longevity.
And the woodlands and adjusted the Baton to the Chin Rush average was yet right and carefully.
So and just feeling for why we're shouting dolf and machine doesn't hike and she may pull that is hungry and you'll see.
And Thats it hits and you can call out.
But you won't put out here.
But he and conclude the heart and soul.
Yes.
And actually we don't have any current plans to shorten or narrow the price gap between now and different versions of X pilot software offerings, because we are dedicating our R&D efforts and to the court a technological developments and we believe that in the future, we're only going to have newer and newer or hiring.
Versions of ex pilots and and the future older versions Carnival, and first and stuff ex pellets will be and boost from our product portfolio and we believe and as we advance into.
Flourish and into higher level off a detailed rajiv actually not only we will be able to upgrade to our alright P and fee for software a high level software, but also across the ecosystem. We are going to have so many opportunities across different so nobody else I didnt allow us to really provide a better experience.
Things for our customers and also a lot of monetization opportunities in the future. Thank you.
Thank you very much.
Thank you.
And there are no further questions now I'd like to turn the call back over to the company for closing remarks.
Thank you once again for joining us today, if you have any further questions. Please feel free to contact us. Thank you. Thank you everyone.
This concludes this conference call you May now disconnect. Your line. Thank you fine. Thank you.
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