Q4 2024 Pony.ai Inc Earnings Call
At this time all participants are in a listen only mode.
Operator: At this time, all participants are in a listen-only mode. After the management's prepared remarks, there will be a question and answer session.
After the management's prepared remarks, there'll be a question and answer session.
As a reminder, today's conference call is being recorded and a webcast replay will be available on the company's investor Relations website at IR Dot Pony Dot AI.
Operator: As a reminder, today's conference call is being recorded and a webcast replay will be available on the company's investor relations website at ir.pony.ai.
Speaker Change: I will now turn the call over to your host George Shao head of capital markets and Investor Relations at Pony AI. Please go ahead George.
George Hsiao: I will now turn the call over to your host, George Hsiao, Head of Capital Markets and Investor Relations at Pony.ai. Please go ahead, George.
Speaker Change: Thank you this is George speaking.
Speaker Change:
George Hsiao: Thank you, this is George speaking. Hello everyone, we appreciate you joining us today for Pony.ai's fourth quarter and full year 2024 earnings call. Earlier today, we issued a press release with our financial and operating results, which is available on our IR website.
Speaker Change: Hello, everyone.
Speaker Change: We appreciate you joining us today for our fourth quarter and full year 2024 earnings call.
Speaker Change: Earlier today, we issued a press release with our financial and operating results, which is available on our IR website.
Speaker Change: Joining with me today on the call are Dr. James Kong Chairman of the board.
George Hsiao: Joining with me today on the call are Dr. James Peng, Chairman of the Board, Co-Founder and Chief Executive Officer. Dr. Tiancheng Lou, Director, Co-Founder and Chief Technology Officer. and Dr. Liu Wang, founding member and chief financial officer. They will provide prepared remarks followed by a Q&A session.
Speaker Change: <unk> founder and Chief Executive Officer.
Dr. D'Angelo: Dr D'angelo director co founder and Chief Technology Officer.
Speaker Change: And Dr Leal one.
Speaker Change: Funding member and Chief Financial Officer.
Speaker Change: They will provide prepared remarks, followed by Q&A session.
Speaker Change: Please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995.
George Hsiao: Please note that today's discussion will contain four looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forelooking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Further information regarding these and other risks and uncertainties is included in the relevant public filings of the company as filed with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statements except as required under applicable law.
Speaker Change: Forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations.
Speaker Change: Further information regarding these and other risks and uncertainties is included in the.
Speaker Change: Public filings of the company as filed with the U S Securities and Exchange Commission.
Speaker Change: The company does not undertake any obligation to update any forward looking statements.
Speaker Change: As required under applicable applicable law.
Speaker Change: Please also note that pone as earnings press release, and this conference call include discussions of both unaudited GAAP information.
George Hsiao: Please also note that Pony.ai's earnings, press release, and this conference call include discussions of both unaudited GAAP information and unaudited non-GAAP financial results. For a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures, please refer to Pony.ai's disclosure document available on our IR website.
Speaker Change: And unaudited non-GAAP financial results.
Speaker Change: For a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures. Please refer to pone as disclosure documents available on our IR website.
Speaker Change: I will now turn the call over to our chairman co founder and CEO Dr. James Paul.
James Peng: I will now turn the call over to our chairman, co-founder, and CEO, Dr. James Pong. Please go ahead. This is James Peng, Founder and CEO.
Speaker Change: Go ahead.
Speaker Change: George.
Speaker Change: This is James founder and CEO.
Speaker Change: We can see that.
Speaker Change: Exciting time for Pony AI as we report our first earnings results as a public company.
James Peng: We consider this is an exciting time for Pony.ai as we report our first earnings results as a public company. Our NASDAQ listing marks a significant milestone and is timed perfectly with the imminent mass commercialization of our robo-taxi services. with ample financial resources now available. We are well positioned to lead and capitalize on the upcoming large-scale rollout of RoboTaxi. making this year an inflection point for the widespread adoption of autonomous transportation solutions. We are taking RoboTaxi first, China first, and the Tier 1 cities first approach.
Speaker Change: Our last at least <unk> marks a significant milestone and is timed perfectly with the imminent mass commercialization of our global taxi services.
Speaker Change: With ample financial resources now available.
Speaker Change: We are well positioned to lead and capitalize on the upcoming large scale rollout of robo taxis.
Speaker Change: Making this inflection.
Speaker Change: The inflection point for the wide spread adoption of autonomous transportation solutions.
Speaker Change: We are taking a robo taxi first China first as the tier one cities.
Speaker Change: Approach.
Speaker Change: Hey, guys.
Speaker Change: Our current focus is on scaling robo taxi operations in China.
James Peng: Thank you. Our current focus is on scaling Robotaxi operations in China, which not only generates sizable recurring revenue but also offers a solid foundation for further expansion into various global markets. China's online ride-hailing market is exceptional. The country's Tier 1 cities, namely Beijing, Guangzhou, Shanghai, and Shenzhen, offer a unique combination of demand, consumer readiness, and regulatory clarity. making them ideal for large-scale robo-taxi deployment. We estimate each city can easily support a fleet of over tens of thousands of robo-taxis. With technology that meets regulatory standards and backed by the fully driverless, fair charging licenses we have already secured.
Speaker Change: Which not only generate sizable recurring revenue, but also offers a solid foundation for further expansion into various global markets.
Speaker Change: Yeah.
Speaker Change: China's online ride hailing market.
Speaker Change: <unk>, the country's tier one cities, namely Beijing, Guangdong, Shanghai and Shenzhen.
Speaker Change: Sure.
Speaker Change: The combination of demand.
Speaker Change: Revenue and the regulatory clarity.
Speaker Change: Making them ideal for large scale robo taxi deployment.
Speaker Change: We estimate each city can easily support a fleet of over tens of thousands of global taxes.
Speaker Change: With technology that meets regulatory standards and backed by the fully travelers are charging licenses we have already secured.
Speaker Change: We are already for quake scale up.
James Peng: We are all ready for quick scale up. Launching large fleets in Tier 1 cities will enable us to validate our business model, optimize our operations, and establish this market as a benchmark and a scalable framework for future growth. either into other Chinese cities or extends to international markets.
Speaker Change: Launching large sleep in tier one cities will enable us to validate our business model optimize our operations and establish.
Speaker Change: This market is.
Speaker Change: As a benchmark.
Speaker Change: The scalable framework for future growth.
Speaker Change: Either into other Chinese cities or expense to international markets.
Speaker Change: Next I will explain why we anticipate our global taxi service.
James Peng: Next, I will explain why we anticipate our global taxi service will soon achieve mass commercialization. First and foremost, we have achieved technological readiness for mass commercialization. Our operational records prove that our RoboTaxi has achieved level 4 driverless operation 24x7 in all weather conditions. Make it commercial ready. Our technology is empowered by virtual driver and the world model. The Virtual Driver is a comprehensive full-spec system with proprietary software and hardware. This enables us to collaborate effectively with automakers and transportation network companies, we call them TNCs. to create a scalable RoboTaxi business model. Additionally, our generative Pony World model trains our virtual driver to be much safer and better than an expert human driver through advanced reinforcement learning.
Speaker Change: We will soon achieve mass commercialization.
Speaker Change: First and foremost we have achieved technology called readiness for mass commercialization.
Our operational records proved.
Speaker Change: That our robo taxi has achieved level of fall driverless operation.
Speaker Change: Four seven in all weather conditions.
Speaker Change: Mccain commercial ready.
Speaker Change: Our technology is empowered by virtue of driver and what model.
Speaker Change: How much of a driver is a comprehensive full stack system with proprietary software and hardware.
Speaker Change: This enables us to collaborate effectively with automakers and the transportation network companies.
Speaker Change: We call them plc.
Speaker Change: To create scaled.
Speaker Change: Scalable global taxi business model.
Speaker Change: Additionally, our generating pone word model.
Speaker Change: Our virtual driver to be much safer and better than our expert human driver flu advanced reinforcement learning.
Speaker Change: Our pony word stimuli.
James Peng: Our Pony World simulates a wide range of scenarios, including extreme cases and long-tail events. by employing a training method called Learn by Practicing. Our virtual driver does not just know what to do. It actually understands the reasons behind its actions. This is quite different from imitation learning that is widely used for the typical L2 system. because the L2 systems imitate the driving patterns of human drivers. they can only reach human level safety. In contrast, Pony World has improved operator-driver safety by 16 times, while at the same time significantly improving its comfort and driving efficiency. Our city record enables our commercial insurance costs per robo-taxi to be reduced.
Speaker Change: Stimulates a wide range of scenarios, including extreme cases, and the long tail events.
Speaker Change: By employees.
Speaker Change: Massa.
Speaker Change: Then by practicing.
Speaker Change: Our virtual driver does not.
Speaker Change: No once you do it actually.
Speaker Change: I understand the reasons behind its actions.
Speaker Change: This is quite different from imitation learning that is widely used for the typical al two systems.
Speaker Change: Because the our two systems imitate the driving patterns of human drivers.
Speaker Change: They can only reach human level of safety.
Speaker Change: In contrast, Pone War has improved our virtual drivers 65, 16 times, while at the same time significantly improving its comfort and driving efficiency.
Speaker Change: Our safety record in neighbor.
Speaker Change: Commercial insurance costs per robo taxi to be reduced to almost half that of the traditional Texas.
James Peng: almost half that of the traditional text.
Speaker Change: Second we have established strong relationships.
James Peng: Second, we have established strong relationships with local governments and secured the required policy approvals for large-scale commercialization. We have obtained all the most advanced licenses in China's Tier 1 cities. For instance, in recent weeks, Pony.ai launched paid RoboTaxi service that connects key transportation hubs such as Beijing South Railway Station, Beijing Daxing Airport, and Yizhong District. with plans to gradually expand to Beijing city center. Moreover, in February this year, we launched paid robo-taxi services in Guangzhou's city center, Guangzhou Baiyun International Airport, and Guangzhou South Railway Station. We are the first and only company approved to provide robo-taxi services on these high-demand routes.
Speaker Change: Local governments and to secure the required a policy approvals for large scale commercialization.
Speaker Change: We have obtained all of the most advanced our licenses in China's tier one cities.
Speaker Change: For instance in recent weeks Pone AI launched paid in <unk>.
Speaker Change: It's come back.
Speaker Change: Key transportation hubs, such as Beijing, Bill pay himself railway station.
Speaker Change: Cashing airport and each one district.
Speaker Change: This class to gradually expand to Beijing City Center.
Speaker Change: Moreover in February this year, we launched pay that Robo taxi services in Guangzhou City Center, Guangdong Bahrain International Airport.
Speaker Change: <unk> South railway station.
Speaker Change: We are the first and only company approved two provides robo taxi services on this high demand at Ross.
Speaker Change: Moving forward, we will gradually expand our operations in these cities.
James Peng: Moving forward, we'll gradually expand our operations in this city. Paving the way for future growth.
Speaker Change: Paving the way the way for future growth.
Speaker Change: Yeah.
Speaker Change: We have built extensive mass production partnerships to support large scale commercialization.
James Peng: Third, we have built extensive mass production partnerships to support large-scale commercialization. For example, in the first half of 2024, we established a joint venture with Toyota. As part of the deal, we will roll out mass production of the Robotech. Baseball BZ Flax as well as build the value chain of autonomous driving operations including maintenance, charging and other aspects. In addition, in the second half of 2024, we respectively reached mass production partnerships with BAIC New Energy, that is Beijing Auto, and the GAC Group, that is Guangzhou Auto. Based on the BAC ArcFox Alpha T5 models and the GAC Ion models, we carried out cooperation in the mass production of auto-grade autonomous driving vehicle model production, redundant safety design of the chassis and some other areas.
Speaker Change: For example in the first half of 2024 week established a joint venture with Toyota.
Speaker Change: As part of the deal we will rollout mass production of the Robo taxis based all busy flags.
Speaker Change: As well as build the value chain of autonomous driving operations, including maintenance charging and other aspects.
Speaker Change: In addition in the second half of 2024.
Speaker Change: Respectively reached mass production partnerships with D. A N C new energy.
Speaker Change: That is Beijing auto and GDP growth.
Speaker Change: That is Guangzhou auto.
Speaker Change: Based on the Bac <unk> all of our key five models and the GAC models.
Speaker Change: We carried out cooperation in the mass production of auto grade autonomous driving.
Speaker Change: Vehicle production redundant safety designed after taxes and some other areas.
Speaker Change: These partnerships how being.
James Peng: These partnerships have been reinforced through strategic equity investments from all these three OEMs. All three upcoming RoboTaxi vehicles are based on our 7th generation autonomous driving system. This latest generation has achieved a major breakthrough in cost efficiency. reducing unit bomb cost by over 70% compared to the previous generation. with further cost reduction anticipated and will scale up. We have fortified our operational capabilities to support the ramp-up of fleet-sized... and accommodate fast-growing yielder demand.
Speaker Change: Reinforced through.
Speaker Change: Equity investments from all this three Oems.
Speaker Change: All three upcoming Robo taxi vehicles are based on our seventh generation autonomous driving systems.
Speaker Change: This latest generation has achieved a major breakthrough in cost efficiency.
Speaker Change: Reducing union Bom cost by over 70% compared to the previous generation.
Speaker Change: With further cost reductions anticipated and with scale up.
Speaker Change: Okay.
Speaker Change: We have fortified our operational capabilities to support the ramp up of fleet size.
And I'll comment on stage fast growing user demands.
Speaker Change: We have developed our own ride hailing platform.
James Peng: We have developed our own ride-hailing platform, which is called PonyPilot. and forged strategic partnership with leading GSCs. such as On Time Mobility and Alipay. to offer driverless RoboTaxi service. In the fourth quarter of last year, we also established a partnership with Alibaba's online mapping and ride-hailing platform, AMAP. and integrated our RoboTaxi service into its mobile app and the meeting program. making our services more accessible to the public. In 2024, the average daily orders per vehicle reached 15, and in Q1 2025, we continue to see the growth of daily orders per vehicle.
Speaker Change: Which is called Pony pilots.
Speaker Change: And launched strategic partnership with leading tncs.
Speaker Change: Such as on time mobility and Ali paid.
Speaker Change: To offer driverless robo taxi services.
Speaker Change: In the fourth quarter of last year. We also established a partnership with Alibaba online mapping and ride hailing platform.
Speaker Change: Matt and.
Speaker Change: <unk> integrated our robo taxi service into its mobile App and the media programs.
Speaker Change: Making our services more accessible to the public.
Speaker Change: In 2024, the average daily orders per vehicle reached 50.
Speaker Change: And in Q1 2000, 2025, we continue to see the growth of daily orders per vehicle.
Speaker Change: With Cigna.
Speaker Change: Significant progress has been made in all the four pillars of autonomous driving.
James Peng: Significant progress has been made in all the four pillars of autonomous driving, that is, technology, regulations, mass production, and large-scale operations. We do see that a critical inflection point for mass commercialization is right in front of us.
Speaker Change: That is technology regs.
Speaker Change: Regulations mass production and largest scale operation.
Speaker Change: We do see that.
Speaker Change: Critical inflection point for mass commercialization is right in front of us.
Speaker Change: Now, let's look at our mobile truck business.
James Peng: Now, let's look at our RoboTruck. which we have also seen significant growth in 2024. We deepen our joint venture with FinalChat. transforming it into a comprehensive autonomous driving transportation as a service platform. Together, we'll continue building a smart, efficient, safe, and environmental-friendly logistics road transport network. while further expanding our RoboTruck.
Speaker Change: Which we have also seen significant growth in 2024.
Speaker Change: We deepened our joint venture with final chats.
Speaker Change: Transforming it into a comprehensive autonomous driving transportation as a service platform.
Speaker Change: Together, we'll continue building, a smart efficient safe and environmental friendly Logistics Road transport network.
Speaker Change: While further expanding our global truck fleet.
Speaker Change: A major milestone that highlights our leadership in global business.
James Peng: a major milestone that highlights our leadership in RoboTruck business. is our approval as the first company in China to conduct robotruck driver-out platonium on cross-provincial highways linking Beijing, Tianjin and Hebei provinces. with only the leading truck requiring a safety operator. and the following tracks to be fully driverless. Testing has already begun on the Beijing-Tianjin-Tanggu Expressway, making a significant step towards full autonomy. for all trucks in the platoon, which will further reduce logistics costs and accelerate commercialization.
Speaker Change: Our approval as the first company in China to conduct Robo truck driver.
Tony on cross provincial highways, linking Beijing, Tianjin and Hebei Province.
Speaker Change: With only the leading truck requiring 60 operator.
Speaker Change: And the following trucks to be fully driverless.
Speaker Change: Testing has already begun on the Beijing, Tianjin, Hangzhou Expressway, making a significant step towards full autonomy.
Speaker Change: For all trust in the platform.
Speaker Change: Which will further reduce larger.
Speaker Change: Logistics cost and accelerate commercialization.
Speaker Change: In summary.
James Peng: In summary...
Speaker Change: Our transition to a public company marks the beginning of an exciting new chapter.
James Peng: Our transition to a public company marks the beginning of an exciting new chapter. We stand at a defining moment as we move towards the large-scale commercialization of autonomous mobility and continue to gain momentum. solid foundation of technological advancements, regulatory support, and industry partnerships.
Speaker Change: We stand at a defining moment as we move towards the large scale commercialization of autonomous mobility and continue to gain momentum.
Speaker Change: Building on our solid foundation of technology called advancements regulatory support and industry partnerships.
Speaker Change: Looking ahead, our priority for this year is clear.
James Peng: Looking ahead, our priority for this year is clear. accelerating the mass production and the deployment of our 7th generation RoboTaxi. further reducing the unit bomb cost. and expanding operation areas and density in China's tier-one cities.
Speaker Change: Accelerating the mass production and the deployment of our seventh generation Robo taxi fleet.
Speaker Change: Further reducing the unit Bom cost.
Speaker Change: And the expanding operation areas and density in China's tier one cities.
Speaker Change: With that I'll now pass things over to our CEO talk to Ken to law to review our technology called progress.
Tiancheng Lou: With that, I'll now pass it over to our CTO, Dr. Tiancheng Lou, to review our technological progress. Ken Chen, please go ahead. Hello, everyone.
Ken Law: Ken Please go ahead.
Pinto: Thank you Kim Hello, Hello, everyone. This is pinto.
Tiancheng Lou: This is Tianzhen. I'm delighted to have this opportunity to share with you the latest progress of our technology. Pony's technological development is centered around enabling the mass commercialization of robotics. To achieve successful robotech and commercialization, autonomous driving technology must meet three key criteria. First, it must attain a sufficiently high standard of safety. Over-experience shows that a magnitude safer than a typical human driver is attainable and should be needed. Secondly, cost control is essential. costs should be managed across various aspects, including sensors, company hardware, daily operations, and insurance. low-cost to ensure that low-tech service remains economically sustainable.
Speaker Change: I'm delighted to have this opportunity to do share with you the maybe the progress.
Pinto: <unk>.
Pinto: Tony is technology called debarment centered around being able to either back can be tried regional builder exit.
Pinto: To achieve successful tactic of.
Pinto: A dry basin.
Pinto: Driving technology.
Pinto: Three key criteria.
Pinto: Sure.
Pinto: Martha Turner, alright sufficient to be high stand up 50.
Pinto: Oh Boy insurance showed that.
Pinto: Magnitude paper than a typical human garbage attainable and it should they need it.
Pinto: Secondly cost control is essential.
Pinto: Well, it's it should be managed across bear with aspect.
Pinto: And 10 periods accompanied me hardware they may appear.
Pinto: The insurance.
Pinto: No cough and ensure that service to be economically sustainable.
Pinto: Finally, nobody had any refurbished should cover largely know graphical area to enable accretion.
Tiancheng Lou: Finally, RoboTaxi's service should cover a large enough geographical area to enable large-scale operations. according to our operational and safety red card. Pony's technology has matured to a level that can support mass commercialization. focusing on safety, cost-effectiveness, and intensive service coverage. Through years of effort, we have been commercially operating fully groundless robotics for over two years. During this time, safety has already surpassed typical human driver by an order of magnitude. As we progress, costs are expected to decrease by 70% in next generation, which will be mass-produced in the second half of this year. Moreover, our service coverage has received regulatory approval and licenses in all Tier 1 cities in China, which are capable of operating tens of thousands of local taxis.
Pinto: According to over operations on the city that car.
Pinto: Who are these technology have matured to a level that can support in Mexico.
Pinto: Okay.
Pinto: Okay. Thank you.
Pinto: They tend to go.
Pinto: Service coverage.
Pinto: Through yield above average.
Pinto: Commercial would be operating fully scrubbed through all kinds of people over two years.
Pinto: During this time 50 had already some problems typical human driver by an order of magnitude.
Pinto: As we progress.
Pinto: I'll take a quick break 70% of the Mexican region, which will be mass produced in the second half.
Pinto: Manure Cobra coverage have received regulatory approval they license it all tier one cities in China, which are capable of bringing tens of thousands of taxi.
Pinto: Moving forward well with technical go will be a main focus on cost efficiency and operational capability, we don't come from IBM.
Tiancheng Lou: Moving forward, our technical goal will remain focused on enhancing cost efficiency and operational capability without compromising safety. In the competitive landscape of the global taxi services, only companies that can run driverless commercial operations with a significant fleet hold a position at the forefront. Years of innovation and diligence have given us a strong competitive edge. It took us four years to progress from initial jobless democratization to a fully launching commercial robot taxi service in China's Tiananmen city. So you may wonder why it took companies like Waymo and Pony almost five years to get there, from demo to commercial operation.
In the competitive landscape I'll go back to the services.
Pinto: Only companies can.
Speaker Change: Wrong, probably commercial accretion were down significantly.
Pinto: Code application at the forefront.
Pinto: Yes.
Pinto: The division has given us a strong competitive match.
Pinto: It took a full year's two programs from mutual got this application through fully launching commercial robo taxi service in China.
Pinto: You May wonder why two companies like we bought on the Pony almost five years to get there from demo to commercial operation.
Pinto: So we think that we had to move from simply matching human grabbing capability.
Tiancheng Lou: The reason is that we had to move from simply matching human driving capability to significantly extending them. This means we had to rebuild our core algorithms as older ones were designed in a way subject to human limitations.
Pinto: <unk>.
Pinto: This means we had to rebuild over corner with them at all.
Pinto: One would be about you know where you subtract consumer limitation.
Pinto: Now let me further explain why.
Tiancheng Lou: Now, let me further explain why the technology evolution that allows us to bridge the gap and the launch over a fully driverless service. The key is moving from imitation learning to reinforcement learning. A tent that is the key driver brought us a seat at the forefront. With imitation learning, which is still widely used by most of the L2 systems, the AI drivers learn by copying human behavior using data from the real-world driving. By mimicking human driving patterns, imitation learning cannot understand the reasoning behind the driving behavior. As a result, this solution is not general enough to handle ever-changing traffic scenarios.
Pinto: The technology evolution that allows us to bridge the gap and the launch over 40 drop it services.
Pinto: The key is moving from imitation learning to the Brooklyn Navy.
Pinto: That is the key driver growth has a seat at the forefront.
Pinto: What are the imitation learning, which is why do you buy both of them are consistent.
Robert: Yeah Robert.
Pinto: Burnt by copy human behavior using data from the real world driving.
Pinto: Yeah, maybe key human driving patent imitation learning cannot understand the reasoning behind that.
Pinto: That would be dealt with.
Pinto: They are producing now generally tend to average changing topic a scenario.
Pinto: We've got plenty on the other hand uses Jimmy a few virtual environment.
Tiancheng Lou: Reinforcement Learning, on the other hand, uses a generative virtual environment, called a word model, or PonyWord, as our team likes to call it. where our virtual driver teaches itself through billions or even trillions of generative acts of trial. This allows our virtual driver to understand why by analyzing the outcome of every action, equipping them to make smarter decisions in complicated scenarios. Through repeated reinforcement learning, our virtual drivers gradually learn to adapt to new situations, unexpected challenges, and corner cases, preparing them to operate safely in the real world. Over time, all virtual drivers trained under PonyWorld developed the advanced skills needed for complex tasks, such as smoothly navigating busy streets, handling unpredictable traffic scenarios, or safely operating for tens of thousands of hours without any incidents.
Pinto: Well the modal.
Pinto: Are you worried at all with him, but I can point.
Pinto: We are all a bunch of garbage T cell, killing of <unk> been treating the top agenda to act upon it.
Pinto: With a low or virtual guidebook to understand the why behind that.
Pinto: I actually think the outcome.
Pinto: Actions equipping them to make smarter decisions and complicated Mario.
Pinto: The pity the reinforcement learning or virtual Drybulk rugby learn to adapt to new titration pack is trying to do in the corner cases.
Pinto: And then.
Pinto: And to operate in the real world.
Pinto: Part of what you're driving on the Pony word the bundle.
Pinto: Maybe it will come back.
Pinto: Moving them, a gateway business, great hasn't been unpredictable topic scenario, while safely operating portends a problem I'll work without any need for that.
Pinto: There are three key component, making or are pointing toward a possible.
Tiancheng Lou: There are three key components making our Pony World approach possible. The Ability to Generate Realistic Scenarios and Sensor Data a high-fidelity simulation system. and a comprehensive set of evaluation metrics. Together, these elements allow our Pony world to effectively coach our virtual driver to handle real-world challenges. I would like to highlight our high-fidelity simulation engine here, which leverages the latest technology to create an environment that precisely replicates real-world conditions in both subtle details and dynamic responses. Unlike traditional systems that rely on human driving data, our simulation engine generates its own driving scenarios and challenging situations for autonomous vehicles to understand, adapt to, and make decisions in.
Pinto: The ability to generate to realistic scenarios in Pennsylvania.
Pinto: A high fidelity simulation system.
Pinto: And the comprehensive back off of your balance sheet metrics.
Pinto: Together these elements that low hour pony work effectively coach or virtual library to handle real world challenges.
Pinto: I would like to highlight our high fidelity simulation engine here.
Pinto: <unk> Leverages the latest technology to create that environment.
Pinto: Pretax replicated rearward condition.
Pinto: Both subtle details that make responsive.
Pinto: Unlike traditional did come down through long human driving data, Oh with diminished and get generated on driving scenario and the challenging situations I'm done autonomous vehicles.
Pinto: Understand adapt to and make decisions.
Pinto: So traffic a participant the overstimulation of engine I'd be blind to behave like a new human.
Tiancheng Lou: The traffic participants in our simulation engine are designed to behave like real humans, interacting with autonomous vehicles in a natural and human-like way. This makes our Pony World a powerful tool for coaching over virtual drivers.
Pinto: Interacting with their new vehicles.
Pinto: I made sure and accumulate.
Pinto: It makes or upon your word a powerful tool for coaching over virtual driver.
Pinto: Finally, let me share them, making progress we've made in advancing our technology for mass production and commercialization.
Tiancheng Lou: Finally, let me share the latest progress we have made in advancing our technology for mass production and commercialization. Large-scale computerization requires handling lower probability extreme cases with hardware that has lower performance. To address this challenge, we continue to innovate our Pony world. Here is how it works. We have trained an Oracle AI driver in our Pony world, a virtual environment that can be rewound. This oracle learns to predict future outcomes and then acts as a coach to train other AI drivers, helping them anticipate and respond to future events. Using similar methods, we will be able to maintain safety standards for max-produced and autogrid LiDAR domain controllers and a larger robotech fleet.
Pinto: Large scale companies that basically required can be lower probability it didn't Casey Carl.
Pinto: Hardware had lower pulp Oklahoma.
Jeff: Sure Jeff This challenge, we continue to innovate or Pone award here, how it works.
Jeff: Haven't trained and Oracle I driver or Pone award a virtual environment that can.
Jeff: Can be reworked.
Jeff: Article urine to predict future outcome and that acts as a coach to treat other drivers.
Speaker Change: Peter I anticipate that rate bumps in future you bet.
Jeff: Using similar methods, we will be able to maintain 50 tendered for Mexico, Duke and ultimately lie the domain controller and the larger go with Patrick.
Toby: Toby Award had been.
Tiancheng Lou: Pony World has improved over Virtual Driver's safety record by 16 times, while significantly improving its comfort and driving efficiency. This advancement has reduced the commercial insurance cost per global taxi to almost half of that of traditional taxis. as this is a clear objective measure by the insurers of safety of our technology.
Toby: Improved overbooking driver safety Red card by 16 time, Warner significantly improving its comfort and driving efficiency.
Toby: This advancement had with you.
The commercial insurance call for Robo taxi to almost half of that.
Toby: Additional taxes.
Toby: This is a clear objective measure by the insurers of <unk> technology.
Toby: Before I conclude I would like to highlight the creation of Croatia plenty work took years dedicated to research and development.
Tiancheng Lou: Before I conclude, I would like to highlight that the creation of PonyWorld took years to dedicated research and development, driven by a team of exceptional, talented engineers who evolved and thrived together with us over time. This journey was fueled by the belief that our pony world offers a greater potential and is critical for achieving driverless robotic commercialization. Those years we spent were the toughest for our company and for me personally. I deeply grateful for the trust and the support of our investors and colleagues along the way.
Toby: Driven by a P offer exceptional talented engineers, who are you bumping described together we've got overtime.
Toby: With this strong withdrawn with fueled by the belief that.
Toby: Our pone word Oprah greater potential and is a critical who are achieving drawbridge O'brien for commercialization.
Toby: Both years with them, where the pockets of our company and for me personally.
Toby: I deeply grateful for their trust and the support of our investors and colleagues along the way.
Toby: This concludes my prepared remarks.
Tiancheng Lou: This concludes my prepared remarks.
Leo Wang: I will now pass the call over to our CFO, Dr. Leo Wang, for a closer look at our financial results. Leo, please go ahead. Hello everyone, I'm pleased to present Pony.ai's financial results on our inaugural earnings.
Toby: I will now pass the call over to our CFO, Bob <unk> for a closer look at our financial results.
Toby: Please go ahead.
Toby: Yeah.
Toby: Thank you Ken.
Toby: Hello, everyone.
Toby: I'm pleased to present <unk> financial results.
Toby: Our inaugural earnings call.
Toby: Looking back on 2024.
Leo Wang: looking back on 2020. We've kicked off our seventh generation of TomTribe. with three OEM partners. China first, and here one did it first, strategy. We also deepen the partnership with industry. creating a robust ecosystem that accelerates the adoption of these technologies. During our IPO, Leilani We raised over 400 million U.S. dollars. which provided us with ample firepower. Looking forward, we will concentrate and accelerate our 7th generation autonomous driving technology. Development and Deployment in China's Tier 1 tends to solidify Pony.ai's position for sustainable production. Moving to our financial performance, please note, as we navigate the early stages of commercialization, we are experiencing volatility.
Toby: We kicked off our seventh generation autonomous driving system development.
Toby: Three OEM partners.
Toby: Which is critical critical to execute our global taxi first.
Toby: China first in tier one cities strategy.
Toby: We also deepen the partnerships with industry leaders, creating.
Toby: Creating a robust ecosystem that accelerates the adoption of these technologies.
Toby: During our IPO in May last year, we.
Toby: We raised over 400 million in U S dollars.
Toby: <unk> provided us with ample firepower to drive our strategy.
Toby: Looking forward.
Toby: We will concentrate and accelerate our seventh generation I'll talk driving system development and the deployment in China's tier one cities has.
Toby: Hence to solidify <unk> position.
Toby: Stable growth.
Toby: Moving to our financial performance. Please note.
Toby: As we navigate the early stages of commercialization.
Toby: We are experiencing volatility.
Toby: In our quarterly revenue and margins.
Toby: Which is expected to continue in the near term.
Leo Wang: which is expected to continue in the near future. But we are focused on executing our go-to-market strategy and achieving team milestones laid out by James and his remarks. which we expect to reduce variability in our financial performance.
Toby: But we are focused on executing our go to market strategy and achieving key milestones laid out in his remarks.
Toby: Which we expect to reduce variability in our financial performance in the future.
Toby: Now, let's take a closer look at our financial results for 2024.
Leo Wang: Now let's take a closer look at our financial results for 2020. For additional quarterly results, please refer to our earnings... which is posted online. Our full year revenue totals $75 billion. an increase of 4.3% year-over-year. RoboTaxi service's revenue was $7.3 million. The decrease was primarily driven by reduced service fee from providing autonomous vehicle engineering. Our RoboTaxi service's revenue also includes... which saw a significant year-over-year increase driven by the expansion of our public-facing fair charging of taxi operations. We expect this part of growth will continue and even accelerate. as we deploy the seventh generation of TomTravis.
Toby: Additional quarterly results please refer to our earnings release.
Toby: Which is posted online.
Toby: Our full year revenue totaled $75 million.
Toby: An increase of four 3% year over year.
Toby: Global testing services revenue was $7 3 million U S dollars down five points, 3% year over year.
Toby: The decrease was primarily driven by reduced service fee from providing outcomes vehicle engineering solutions based on our projects progressing on schedule.
Toby: Our robo taxi services revenue also include the passenger.
Toby: Which saw significant year over year increase driven by the expansion of our.
Toby: Our public facing fair charging both taxi operations in tier one cities.
Toby: We expect this part of growth will continue and even accelerate.
Toby: As we deploy the seventh generation of time driving vehicles.
Toby: Global truck services grew strongly.
Toby: Delivery $48 $4 million in revenue up 61, 3% year over year.
Leo Wang: delivering 40.4 million U.S. dollars in revenue, up 61.3% year-over-year. This robust growth was driven by the expansion of our fleet into new territories. where new demands can be fulfilled by our robot. Licensing and application revenue was $27.4 million. influenced by the recommendation schedule of project-based... Total cost of revenue would up 15.6% year-over-year. in line with revenue trend and... We achieved gross profit of $11.4 million. resulting in a growth margin of 15.2%, a decrease from 23% in 2015. The year-over-year decrease was mainly due to survey... with relatively low gross margin contributed increasingly to our revenue. Moving forward, we expect gross margins.
Toby: This robust this robust growth was driven by the expansion of our fleet into a new region, where new demand can be fulfilled by our global chocolate.
Toby: Licensing and application revenue was $27 4 million U S dollars down 31% year over year.
Toby: Influenced by recognition schedule of project based revenue.
Toby: Total cost of revenue was six.
Toby: 63, 6%.
Toby: U S dollars.
Toby: Up 15, 6% year over year in.
Toby: In line with revenue trends and revenue mix.
Toby: We achieved gross profit of $11 4 million U S dollars.
Toby: Resulting a gross margin of 15, 2% a decrease from 23% in 2023.
Toby: The year over year decrease was mainly due to services.
Toby: Relatively low gross margin contributed increasingly to our revenues.
Toby: Moving forward, we expect gross margins to improve as we further scale and optimize optum.
Leo Wang: as we further scale and optimize operations over time.
Toby: Operation over time.
Toby: Total operating expenses were $296 $9 million, an increase of 85, 4% year over year.
Leo Wang: Total operating expenses were 296.9 million U.S. dollars, an increase of 85.4% year-over-year. were 169.9 million U.S. dollars, up 8.7% year-over-year. The increase was mostly driven by accelerated R&D investment. to support the launch of our 7th generation RoboTaxi vehicles in collaboration with our OEM partners. Loss from operations was $285.5 million. compared to 143.2 million U.S. dollars. Non-gas loss from operations was 158.5 million U.S. dollars compared to 139.5 million U.S. dollars in 2010. Net loss was US$275 million compared to US$125.3 million. Non-GAAP net loss was $153.6 million compared to $118.5 million. Turning to our balance sheet, our combined cash and cash equivalents, restricted cash, short-term investments and long-term debt instruments for wealth management.
Toby: Excluding share based compensation.
Toby: non-GAAP operating expenses were $169 9 million in U S dollars up eight 7% year over year.
Toby: The increase was mostly driven by accelerated R&D investment to support the launch of our seventh generation Robo taxi vehicles in collaboration with our OEM partners.
Loss from operations was 285 5 million in U S dollars.
Toby: Paired to $143 2 million U S dollars in 2023.
Toby: non-GAAP loss from operations was $158 5 million U S dollars compared to $139 5 million in U S dollars in 2023.
Toby: Net loss was $275 million compared to $125 3 million in U S policy in 2023.
Toby: GAAP net loss was $153 6 million U S dollars.
Toby: <unk> to $118 5 million in U S dollars in tonnage tonnage fleet.
Toby: Turning to our balance sheet, our combined cash and cash equivalents restricted cash and short term investments and long term debt instruments for wealth management was $825 1 million in U S dollars at the end of 'twenty 'twenty four.
Leo Wang: was 825.1 million U.S. dollars at the end of 2010.
Toby: And lastly for our business outlook.
Leo Wang: And lastly, for our business, our As mentioned earlier, we expect continuous fluctuation in our quarterly revenue as well as margins since we are at the nascent stage of commercialization. While we are not given formal guidance at this time, we are confident in our ability to scale up commercialization, drive sustainable growth, and deliver value to our shareholders.
Toby: As mentioned earlier, we expect continued fluctuations in our quarterly revenue.
Toby: Well as margin since we are at the nascent stage of commercialization.
Toby: While we're not given formal guidance at this time, we are confident in our ability to scale up.
Toby: Realization drive sustainable growth and deliver value to our shareholders.
Operator: I will now turn the call over to the operator to begin our Q&A session. Thank you.
Speaker Change: I'll now turn the call over to the operator to begin our Q&A session.
Toby: <unk>.
Thank you.
Toby: We will now begin the question and answer session.
Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. For the benefit of all participants on today's call, please limit yourself to two questions. And if you have follow-up questions, you may re-enter the question queue.
Toby: To ask a question you May press Star then one on your telephone keypad.
Toby: If you are using a speakerphone please pick up your handset before pressing the keys.
Toby: I would draw your question. Please press Star then two.
Speaker Change: For the benefit of all participants on today's call. Please limit yourself to two questions and if you have follow up questions. You may reenter the question queue.
Toby: If you ask your question in Chinese please repeat them in English.
Operator: If you ask your question in Chinese, please repeat them in English.
Speaker Change: The first question today comes from Verina Jang with Goldman Sachs. Please go ahead.
Verena Jang: The first question today comes from Verena Jang with Goldman Sachs. Please go ahead. Thank you management team. I have two questions.
Speaker Change: Thank you your management team I have two questions. My first question is about the business strategy. So what's the strategy a rationale behind your robo taxi first China firsthand.
James Peng: My first question is about the business strategy. So what's the strategy or rationale behind your robot taxi first, China first and also the tier one cities first approach? If you could share more color behind. Yes, this will be appreciated. Thank you.
Speaker Change: One cities first approach.
Speaker Change: You could share more color behind that.
Speaker Change: This will be appreciated thank you.
Speaker Change:
James Peng: I'm James Peng. I'll take the first question regarding our 3-in-1 strategy. Actually, from day one that Pony was founded, autonomous mobility everywhere has always been our company model. This model actually reflects our vision to bring autonomous transportation to all global markets and across all types of vehicles. We certainly have the ambition for other markets down the road. the fundamental reason behind our China-first, Robotaxi-first, and Tier 1 Cities-first strategy. Lacking our confidence in an imminent opportunity for mass commercialization. China has the largest ride-hailing market, with around 40% of the global market measured by the number of orders.
Speaker Change: Hum.
Speaker Change: I'll take the first question regarding our three one strategy.
Speaker Change: Actually from day, one that Tony was founded.
Speaker Change: Eponymous mobility everywhere has always been our company model. This model actually reflects our vision to bring autonomous transportation to all global markets and across all types of vehicles.
Speaker Change: We certainly have the ambition for other markets down the road.
Speaker Change: The fundamental reason behind our China first robo taxi first in tier one cities first strategy.
Speaker Change: Lighting, our confidence in the imminent opportunities from mass commercialization.
Speaker Change: China has the largest the hailing ride hailing market with around 40% of the global market measured by the number of others.
Speaker Change: This is roughly twice the size of the U S market.
James Peng: This is roughly twice the size of the U.S. market. Within China itself, Tier 1 cities represent the largest share. backed by supportive regulatory environment and growing users' demand. In 2024 and 2025, we expanded our operations of paid robo-taxi to more railway stations, international airports and city centers in Beijing, Guangzhou and Shenzhen. We also observed that China has established the regulatory framework for global tech. in a swifter and more transparent manner compared to many other regions. As a result, we believe the tier-one cities in China are ripe and ideal for mass deployment of robotech. Not only is Robotaxi representing the largest market, it is also representing the most difficult technical and deployment challenges.
Speaker Change: Leading Chinese tier one cities represents the largest share.
Speaker Change: Backed by a supportive regulatory environment.
Speaker Change: Growing yields us demand.
Speaker Change: In 2024, and 2025, we expanded our operations of paid Robo taxi two more railway stations International Airport and the city centers in Beijing, Guangzhou and Shenzhen.
Speaker Change: We also observed that China has established the regulatory framework for Robo, taxis, and swifter and more transparent manner compared to many other regions.
Speaker Change: As a result, we believe the tier one cities in China are ripe and ideal for mass deployment of Robo taxi.
Not only is robo taxi, representing the largest market. It is also representing the most difficult technical and the deployment challenges.
Speaker Change: 60 requirements in handling the.
James Peng: the safety requirements in handling the bad weather conditions such as rain and snow and other unpredictable corner cases. We have proven our capability to handle such challenges by successfully operating fully driverless global taxis in the last two years. It is from a commercialization perspective that we are currently more focused on Robotech. our know-how. can enable us to transfer to other transportation modes and also the global market in the future.
Speaker Change: The bad weather conditions, such as green and the smell and other unpredictable corner cases.
Speaker Change: Very challenging.
Speaker Change: We have proven our capability to handle such challenges by successfully.
Speaker Change: Holly operating fully driverless global Texas in the last two years.
Speaker Change: It is from a commercialization perspective.
Speaker Change: We are currently more focused on robo taxi in Chinas tier one cities.
But suddenly.
Speaker Change: Our knowhow.
Speaker Change: Enable us to test for two other transplantation mode and also on the global market.
Speaker Change: Okay.
Speaker Change: So I'll take you back to the second question.
Leo Wang: So thank you. Now back to the second question. Thank you, James. My second question is about the business model. Could you differentiate your business model against the OEM ride-hailing company and also the taxi company? And any collaboration with these companies? Thank you.
Speaker Change: Thank you James My second question is about our business model could you differentiate your business model against the O E M ride hailing company and it was sort of taxi company and any collaboration with these companies. Thank you.
Speaker Change: Well. This question I think our CFO Neil is a violent.
Leo Wang: For this question, I think our CFO, Neil, is the right one. Thank you, James.
Speaker Change: Thank you James.
Leo Wang: I'll take this question. So for our RoboTaxi air charging service, actually it's focusing on providing a virtual driver who takes charge of the driving in the transportation. And if you look at the traditional transportation service, that's actually provided by a human driver to take charge of. and we charge our passenger based on the... During the ride, actually, we provide a more private and safer experience to the passengers. So if you look at this business model, you can regard that as an upgrade to the current right-heading business model, not a disruption. from a ride-hailing platform company perspective.
Speaker Change: Take this question so for our Robo taxi Bill charging service actually it's focusing on providing a virtual driver who takes charge offs are driving it.
Speaker Change: In the transportation services and if you look at the traditional transportation service, that's actually provided by a human driver to take charge of the driving.
Speaker Change: And we charge our passenger based on the distance driven by our virtual charter.
During the right actually we provide a more private and safer experience to the passengers.
So if you look at this business model you can regard data to make upgrades to the carbon right heating business model not a disruption.
Speaker Change: From a ride hailing platform company perspective.
It's business still will be matching passenger demand will drive our resources.
Leo Wang: If business still will be matching passenger demand with driver resources in which you can consider our virtual driver to be part of the driver. Automakers or OEMs on the other hand, they get revenues from selling purposely built vehicles. that are co-developed. And these vehicles will be sold to RoboTaxi operators. For example, Pony itself. In a nutshell, actually each party in the value chain in the ride-hailing business will still play its role in the transportation. We consider this will be a win-win concept. And because this concept is not only supported by us, but also supported by our partner, you can see that we have secured a mass production plan.
Speaker Change: In which you can consider our eventual target to be part of the driver pool.
Speaker Change: Automakers Oems on the other hand, they get revenues from selling purpose debuted vehicles that are co developed with pony.
Speaker Change: And these vehicles will be sold to robo taxi operators.
Tony: Example, Tony yourself.
Speaker Change: In a nutshell.
Speaker Change: Actually each party in the value chain in vital heating business will still play its role in the transportation.
Speaker Change: The service sector.
Speaker Change: We consider this will be a win win concept.
Speaker Change: Because this concept not only supported by US, but also supported by our partner you can see that we have secured a mass production plants with OEM partners, such as Toyota Beijing Auto and Guangzhou auto.
Leo Wang: with OEM partners such as Toyota, Beijing Auto and Guangzhou Auto. We have also integrated it into different traffic map components. such as AMAP, Alipay, OnTime, etc. So this is my answer to your question.
Speaker Change: We have also integrated into different traffic net companies such as a map already pay on time and et cetera.
Speaker Change: So this is my answer to your question now I will come back to the operator.
Leo Wang: Now I will turn back.
Speaker Change: The next question comes from Mig <unk> with Bank of America. Please go ahead.
Ming Sun Lee: The next question comes from Ming Sun Lee with Bank of America. Please go ahead. Thank you for giving me the opportunity to ask a question.
Speaker Change: Thank you for giving me the opportunity to accretion.
Speaker Change: My first question.
James Peng: So my first question, do you foresee any challenges before mass commercialization? Maybe we can elaborate more in terms of the user acceptance, technology maturity, and the regulation. Thank you.
Speaker Change: Do you foresee any challenges before.
Speaker Change: Commercialization, maybe we can elaborate more in terms of the user acceptance.
Technology maturity.
Speaker Change: Regulation. Thank you.
Speaker Change: I'm James I'll take this one first <unk>.
James Peng: I'm James Pung. I'll take this one first. Thanks, Vincent. As I described in my opening remark, I'm very confident that the four key pillars for the mass production of Robotaxi, namely the technology, regulation, mass production, and the large-scale deployment, are actually all in place for Pony. I particularly want to emphasize that our technology has advanced the safety of our Robotaxis to a level that actually allows us for the large-scale commercialization of Robotaxis. We do not foresee any insurmountable challenges that prevent us from achieving Eskimo. Thirdly, we work hand-in-hand with OEMs and supply chains to launch a new generation of cost-effective robotech.
Speaker Change: As I described in my opening remark.
Speaker Change: Very confident that the four key pillars for the mass production of robo taxi, namely that technology.
Speaker Change: <unk> mass production and the large scale deployment.
Speaker Change: Actually all in place for Pony.
Speaker Change: I, particularly want to emphasize that our technology has advanced the safety of our robo taxis to a level that actually allow us for the large scale commercialization of global taxes.
Speaker Change: We do not foresee any insurmountable challenges that.
Speaker Change: That upfront.
Speaker Change: Achieving that is coming from.
Speaker Change: Firstly, we work hand in hand, with Oems and the supply chain.
Speaker Change: Launch a new generation of cop in factory Robo taxis.
Speaker Change: Successfully reducing our unit cost by 70%.
James Peng: successfully reducing our unit cost by 70%. along with continued improvements in operational efficiency, we are now on the right track to achieve break-even at the individual vehicle level. In other words, we will have a positive contribution margin from the 7th generation Robotech. In general, we have seen supportive regulatory environment from both the central and the local government. We take pride in being among the first companies in China to secure licenses for operating fully driverless global taxis across all four Tier 1 cities. Furthermore, we are the only autonomous driving technology company that has obtained all the necessary regulatory permits required to offer commercial, public-facing, global taxi services in Tier 1 cities.
Speaker Change: Along with continued improvements in operational efficiency, we're now on the web chat to achieve breakeven at the individual vehicle level.
Speaker Change: Afterwards, we will have a positive country that contribution margin from the seventh generation global taxes.
Speaker Change: In general we have seen supporting regulatory environment from both the central and local governments.
Speaker Change: We take pride in being among the first companies in China to secure licenses for operating fully driverless car protection across all four tier one cities.
Speaker Change: But the mall.
Speaker Change: <unk> are the only autonomous driving technology company that has obtained.
Speaker Change: All the necessary regulatory permits required to offer commercial public facing mobile techs and some business in tier one cities.
Speaker Change: Moving forward, our main priority will be expanding our fleet operational areas and the vehicle density to scale out revenue and enhance our profitability.
James Peng: Moving forward, our main priority will be expanding our fleet size, operational areas, and vehicle density to scale up revenue and enhance our profitability.
James Peng: So that's the answer to your first question. Thank you, James.
Speaker Change: That's the answer to your first question.
Speaker Change: Thank you Tim.
Tiancheng Lou: So my second question, what are the key technological milestones that need to be achieved to enable your mass production of robot taxi service in 2025? Thank you. I think this one is related to technology.
Speaker Change: Second question.
Speaker Change: The Q2.
Speaker Change: Logical milestones that need to be achieved.
Speaker Change: To enable your Ms protection.
Speaker Change: The robot taxi service in 2025, thank you.
Lisa: Thank you Lisa I think this one is related to technology.
Speaker Change: <unk> learnt in kitchen to answer.
Speaker Change: Yeah sure this is pinto.
Tiancheng Lou: Yeah, sure, this is Tiancheng. So as I described in my remark, so Pony's technological development is centered around enabling mass composition of technology. To achieve successful robo-taxi commercialization, autonomous driving technology must meet the three key criteria. They are safety, cost-effectiveness, and intensive service coverage. So through years of effort, we have been commercially operating Pony Driverless Robotaxis for over two years. During this time, safety has already surpassed typical human driver by an order of magnitude. And the cost-wise, as we progress, costs are expected to decrease by 70% in the next generation, which will be mass-produced in the second half of this year.
Speaker Change: As I described in my remarks.
Speaker Change: Pony technological development is centered around enabling match competition book taxes.
Speaker Change: To achieve a successful global.
Speaker Change: Commercialization autonomous driving technology, maybe the three key criterias.
Speaker Change: Coffee at Barclays.
Speaker Change: <unk> service coverage.
Speaker Change: So through years of effort, we were have been commercial operating fully drumbeats robo taxi for over two years.
Speaker Change: During his time safety has already <unk>.
Speaker Change: Magnitude.
Speaker Change: And the white and Blue program constantly tempted to decrease by 17% in the next generation, which will be matched.
Speaker Change: Half of this year.
Speaker Change: Manure.
Tiancheng Lou: Moreover, over 70% coverage has received regular approval and licensing in all Tier 1 cities in China. which are capable of operating tens of thousands of Robotics. So according to our operational and safety record, we believe Pony's technology has matured to a level that can support mass commercialization. And moving forward, our technical goal will remain focused on enhancing cost efficiency and optional capability without compromise. Yeah, thank you.
Speaker Change: The coverage have received regulatory approval in the 19 cities tier one cities in China.
Speaker Change: Richard capable of operating tens of thousands of Robo taxis.
Speaker Change: So according to our operational and our CTO Greg car, we believe Pony technology has matured to a level that can support mats mats commercialization.
Speaker Change: And moving forward or technical go we will remain focused on enhancing coffee efficiency and the option to accountability when he's going to compromise.
Speaker Change: Yes, thank you and back to the operator.
Operator: And back to the operator.
Speaker Change: The next question comes from Ben Wong with Deutsche Bank. Please go ahead.
Ben Wong: The next question comes from Ben Wong with Deutsche Bank. Please go ahead. Thank you. I just have one question about technology. How do you achieve a very high safety level compared to human driver? And why do you believe the level for autonomous driving technology depends on more your generated high-quality data rather than the massive data you gather from the street? Thank you.
Ben Wong: Thank you actually just one question.
Speaker Change: Technology.
Speaker Change: How do you achieve pretty high on a city level compare to humor Trevor.
Speaker Change: <unk> will enable phone comes driving.
Speaker Change: It depends on more generated high quarters of data.
Speaker Change: And massive data Joe.
Speaker Change: From the street. Thank you.
Speaker Change: Excellent.
Speaker Change: New York.
Speaker Change: Sure Yeah. So this is pinto.
Tiancheng Lou: Sure, yeah, so this is Tian Cheng. So yeah, good point. Let me re-emphasize that the L4AI driver is trained using reinforcement learning in a virtual world where data is generated. So as a result, reinforcement learning does not require a huge amount of real-world data. Let me further elaborate on why using real-world driving data to mimic human driving behavior cannot meet L4 safety requirements. The fundamental reason lies in the double standard applied to human drivers versus AI drivers. So Celerity holds AI to a much higher standard than human drivers. People are far less tolerant to AI mistakes, where AI is perceived as a machine, except to attack it to eliminate human shortcomings.
Speaker Change: Good point, let me reemphasize that Oh boy, our driver training the European reinforcement learning.
Speaker Change: Reward right.
Speaker Change: Data is generated.
Speaker Change: We don't Green learning does not require a huge amount of real world data.
Speaker Change: Let me further elaborate on why using view, what's driving data to mimic human driving behaviour cannot meet.
Speaker Change: Apartments.
Speaker Change: The fundamental reason lies in the double standard applied to human driver.
Speaker Change: Yeah.
Speaker Change: Alrighty coach.
Speaker Change: To a much higher standard than human drivers.
Speaker Change: People are far not common mistakes, where are you are you the pretreatment machine, except to a package to eliminate human shortcomings.
Speaker Change: This creates a paradox.
Tiancheng Lou: This creates a paradigm. L4 system must meet safety expectations far beyond that human driver can achieve. Imitation learning, by its nature, is limited by the feeling of human performance, and thus cannot satisfy the safety requirements. So although the amount of data used for imitation learning driving is extremely large, it still cannot ensure that the driving capability can surpass that of a human. Another important factor is that leveraging real-world data cannot understand the reasoning behind driving behavior. because it only mimics the driving parts of a human driver. There's a common saying that describes this phenomenon. One knows what it is, but doesn't know why it is so.
Speaker Change: We'll hear from Mark mid 50 accreditation far beyond human driver account cheap.
Speaker Change: Imitation learning nature is limited by the feeling on procurement procurements and it sounds cannot satisfy safety requirements.
Speaker Change: Although the amount of Baker Hughes.
Mooney driving alright.
Speaker Change: The launch is still cannot ensure that youre driving capability cancer Doc on procurement.
Speaker Change: Nothing pardon me, if I kind of doubt.
Speaker Change: Leveraging real world data cannot understand the reasoning behind driving behavior.
Speaker Change: Because it only mimics the driving past human drivers.
Speaker Change: There is a common theme to this phenomenon.
Steve: One note what Steve here.
Speaker Change: No White stone.
Steve: Merely mimicking the action of human Broadway the mouth guarantee I understand the reason behind this action.
Tiancheng Lou: Merely mimicking the action of human drivers does not guarantee understanding of the reasoning behind this action. So, in summary, compared to most L2 systems, L4 systems use a different data solution, where generative data is the key, not the real one. Thank you.
Steve: So in summary, compared to most of the Iot systems, and therefore system use a different data solution. We are attending to the data at the mountain rewarded.
Speaker Change: Thank you.
Speaker Change: Thank you thank.
Speaker Change: Thank you.
Speaker Change: The next question comes from Purdy Ho from <unk> Securities. Please go ahead.
Purdy Ho: The next question comes from Purdy Ho from Hoi Thai Securities.
Purdy Ho: Please go ahead. 99.99999999.99.9999999999999.99999999999999.88 Vince initial. And my questions are from you, I guess, because most of them are on cost and revenues.
Speaker Change: Yeah.
Greg Car: This is Greg.
Speaker Change: Just one quick question.
Speaker Change: Hum.
Speaker Change: No question.
Speaker Change: Most of them are on comps revenues, so would you mind, giving some color on why 2020.
Leo Wang: So, would you mind giving some colors on why your 2024 costs and expenses were higher year over year? And also, any guidance on costs going forward that you can provide?
Speaker Change: Forecast.
Speaker Change: Thank you.
Speaker Change: And it's all based on cost.
Speaker Change: Right.
Speaker Change: So I'll take this question so as I mentioned in my earlier remarks.
Leo Wang: So I'll take this question. So as I mentioned in my earlier remarks. Actually, excluding share-based compensation, our non-GAAP R&D expenses were $137.8 million. compared to $120.9 million in 2020. That's mostly because since the second half of 2024, we have been working on three vehicle models of our seventh generation Elcometer. This incurs the corresponding R&D expenses. We consider this ongoing development is very critical to implement our RoboTaxi First, China First, and Tiananmen City First strategies. and much of this development work will be accomplished. So on the other hand, during our IPO late last year, we raised over 400 million US dollars.
Speaker Change: Actually excluding share based compensation, our non-GAAP R&D expenses were 137 8 million in U S dollars.
Speaker Change: It represents an increase of 14% compared with $120 9 million in 2023.
Speaker Change: That's mostly because the second half of 2024, we have been working on three vehicle model itself, our seventh generation I'll come trading system.
Speaker Change: This incur the corresponding R&D expenses growth.
Speaker Change: We consider this ongoing development is very critical to implement our robo taxi first China first in tier one cities strategy.
Speaker Change: And much of this development work will be accomplished this year.
Speaker Change: So on the other hand, the doing our IPO late last year.
Speaker Change: With over 400 million U S dollar.
Speaker Change: Now we have a strong balance sheet with a total of $825 1 million dollar.
Leo Wang: Now we have a strong balance sheet with a total of 825.1 million U.S. dollars combined with cash, cash-exchange. short-term investment and long-term debt instrument for wealth management. As of December 31, 2020 It provides amplified power to execute our strategy, but also as a startup. We still need to carefully manage our resource allocation. and the investment to seek for the best efficiency and the...
Speaker Change: With cash cash equivalents restricted cash and short term investments and long term debt instrument for wealth management.
Speaker Change: As of December 31, 2024.
Speaker Change: This provided ample firepower to execute our strategy, but also as a startup we still need to carefully manage our resource allocation and investment to seek for the best efficiency and returns.
Speaker Change: So we will continue and even accelerate our seventh generation system development as our top priority.
Leo Wang: So we will continue and even accelerate our 7th generation. development as our top priority. Therefore, we expect the corresponding expenditure will continue.
Speaker Change: Despite these vehicles in tier one cities from hundreds to solve it.
Speaker Change: Therefore, we expect the corresponding expenditure will continue this year.
Speaker Change: I will get back to.
Leo Wang: We'll get back to you. Okay, sure.
Speaker Change: Yeah, I've got a follow up so yeah, we offer nowadays bad revenue.
Leo Wang: Yeah, I got a follow-up. So, yeah, we also noticed that revenues in the entire year 2024 was up, but for the quarter, the fourth quarter, revenue was down. So, any comments on that and any guidance going forward? Thank you.
Speaker Change: The entire year 2024 with a.
Speaker Change: For the quarter.
Speaker Change: Fourth quarter revenue was down so any comments on that.
Speaker Change: Guidance going forward. Thank you.
Speaker Change: So I'll continue to take this question.
Leo Wang: I'll continue to take this question. So, if you look at our current revenue, it consists of recurring revenue, such as we provide a robo-taxi fare charging service to the public. We also provide robo-truck logistics service to our business partners. and we also have so-called project-based revenue. For example, launching a proof-of-concept robot. with our partner for a certain amount of time in certain markets. Given we have a portion of revenue that is tied to so that revenue will be recognized upon delivery of contractual obligations. Revenue recognition naturally would fluctuate across different quarters. This is very common for this type of revenue.
Speaker Change: So if look at our current revenue that consist of.
Speaker Change: Recurring revenues such as now we provide a robo taxi fare charging service to the public. We also provided global truck logistics service to our business partners and we also have some project based revenue.
Speaker Change: Example, launching a proof of concept for a robo taxi fleet with our partner for a certain amount of time in certain markets.
Speaker Change: Given we have a portion of revenue that is tied to milestone based projects. So.
Speaker Change: Revenue will be recognized upon delivery of contractual obligations.
Speaker Change: Revenue recognition naturally fluctuate across different quarters.
Speaker Change: This is very common for this type of revenues.
Speaker Change: But look we are focusing our seventh generation autonomous vehicle development and the deployment and these new in a more cost effective vehicle will be put into global taxi fare charging operations later this year.
Leo Wang: But look, we are focusing on our 7th generation autonomous vehicle development and the deployment. And these new and more cost-effective vehicles will be put into global taxi fare charging operations later. starting from hundreds to thousands. So as such, I think it will increase the recurring revenue portion. and graduates need to change our values. Hence, we think we can mitigate the fluctuation in the revenue stream. And we also expect our open revenue will graduate today to grow in the near term.
Speaker Change: Starting from hundreds to thousands.
Speaker Change: So as such I think it will increase the recurring revenue push.
Speaker Change: And Brad you need to change our revenue mix.
Speaker Change: Since we think we can mitigate the fluctuation in the revenue stream in the future.
Speaker Change: And we also expect to our overall revenue will gradually today to grow in the near term.
Speaker Change: Following the revenue trajectory in the recent years.
Speaker Change: So this is my answer to your question cut back to the operator.
Leo Wang: So, this is my answer to your question. Get back to the office.
Speaker Change: Yeah.
Speaker Change: The next question comes from E. L E. Lee with Jefferies. Please go ahead.
Xiaoyi Li: The next question comes from Xiaoyi Li with Jeffreys, please go ahead. Thanks for taking my question. I have two questions. My first question is from the technology perspective. Given a recent emergence of disruptive technologies like DeepSeek, how do you see these play out in the development of L4 autonomy from the industry level? Will they have a positive or negative impact on your technology roadmap? And also, will they impact Pony's timeline for the mass deployment of robotics? This is my first question. Yes, thank you.
Speaker Change: Thanks for taking my questions I have two questions. My first question is from the technology perspective.
Speaker Change: Given our recent emergence of disruptive technology like <unk>, how do you see these play out in the last month.
Speaker Change: Paul autonomy from the industrial level.
Speaker Change: They have a positive or negative impact on your technology roadmap.
Speaker Change: Uh huh.
Speaker Change: Well, they impact pone timeline or the mass deployment of robot taxi.
Speaker Change: My first question.
Speaker Change: Yes. Thank you you bet. This is Tim so I can take this one.
Tiancheng Lou: This is Tian Cheng. I can take this one. First, I would say let's broaden the topic a little bit. In the past few years, many disruptive technologies have emerged, including end-to-end architecture, transformers, and also other technologies used in the deep state. They all are giving companies like Pony a greater advantage. For example, the integration of the end-to-end technology has significantly enhanced Pony's service coverage. More importantly, the successful commercialization of robotics involves multiple factors. The destructive technology can only impact wealth. For instance, the factors include number one, driving capability, such as safety, comfort, and efficiency. Number two, cost, such as sensors, computing operations.
Speaker Change: Obviously, not broaden the topic a little bit in the past few years.
Speaker Change: <unk> disruptive technologies.
Speaker Change: Include the end to end architecture transformer and other technology using the dipstick.
Speaker Change: They all are Gabriel keeping companies like the Pony agreed have been greater advantage.
Speaker Change: For example, the integration of the entry and the technology has significantly you can coordinate service coverage.
Speaker Change: More importantly.
Speaker Change: Perfect for commercialization Robitussin, both multiple factors.
Speaker Change: The disruptive technology only impacted Walther.
Speaker Change: Sure.
Speaker Change: The factors include number one driving capability such as <unk> com.
Speaker Change: Kurt and the efficiency.
Speaker Change: Number two comp.
Speaker Change: The computing operations.
Tiancheng Lou: And lastly, partnership, such as OEM suppliers, TNCs. The key to success for a successful commercialization of global taxis is ensuring that all these factors meet a certain standard. Disruptive technology can only affect one of them, well, can only affect one aspect. and any singular breakthrough only provides marginal help for the entire autonomous driving system. Yeah, thank you and back to you. Thank you. That's very helpful.
Speaker Change: And then lastly partnership.
Speaker Change: OEM suppliers TMT.
Speaker Change: The key to that.
Speaker Change: We will compare our reach on robo taxi.
Speaker Change: Truth to that.
Speaker Change: All of these factors meet certain standards.
Speaker Change: This technology not only to offset.
Speaker Change: Yeah.
Speaker Change: Thanks.
Speaker Change: And the singular breakthrough only provide margin look out for the year.
Speaker Change: <unk> gathering system.
Speaker Change: Okay. Thank you and thank you.
Speaker Change: Thank you that's very helpful and my second question is regarding your cooperation we Oh, yes could you please share more details about.
Tiancheng Lou: And my second question is regarding your cooperation with OEMs. Could you please share more details about the current progress? How does such partnership help you to achieve your mass production goals? This is regarding partnerships, so I'll take it. So our deep collaboration with OEM is one of the keys to actually ensuring our RoboTaxi commercialization at scale. We work closely with OEMs to co-develop and produce autonomous vehicles. across various vehicle platforms. Most importantly, as I mentioned earlier, scale will be instrumental to enabling us to achieve positive unit economics at a quicker pace. Our collaboration with OEMs is set to significantly reduce unit costs, slashing the bomb by 70% compared to our 6th generation robotics.
Speaker Change:
Speaker Change: Progress how does that partnership helping to achieve mass production goes.
Speaker Change: This is regarding partnerships so I'll take it.
Speaker Change: And <unk>.
Speaker Change: So our deep collaboration with OEM is one of the keys to actually ensure ensuring our robo taxi commercialization at scale.
Speaker Change: Sure.
Speaker Change: Closely with Oems to co develop and produce autonomous vehicles.
Speaker Change: Cost various vehicle platforms.
Speaker Change: Most importantly, as I mentioned earlier scale will be instrumental to enabling us to achieve positive unit economics at a quicker pace.
Speaker Change: Our collaborations with Oems are set to significantly reduce unit cost slashing the bomb by 70% compared to our six generation global type thing.
Speaker Change: In 2024, we have reached agreements with three Oems Toyota, leading auto and Guangzhou auto to produce three new vehicle models.
Tiancheng Lou: In 2024, we have reached agreement with three OEMs, Toyota, Beijing Auto, and Guangzhou Auto, to produce three new vehicle models. Our collaboration with BAIC and the GAC will also endow us with more robust government support in our key markets. So in summary, I think our partnership with OEMs actually also goes beyond manufacturing. For example, the joint venture we established. Toyota last year is actually have a more comprehensive partnership. provide capitals for vehicles, operate as a fleet company to burden the capex, and also utilize the existing Toyota data network for the vehicle maintenance. So that's the answer to the question, back to the author.
Speaker Change: Our collaboration with <unk>.
Speaker Change: The AIC and the GAC will also in us with more robust government support.
Speaker Change: Our key markets.
Speaker Change: So in summary, I think our partnership with Oems.
Speaker Change: Actually also goes beyond manufacturing.
Speaker Change: Example, the joint venture we established with.
Speaker Change: Toyota last year.
Speaker Change: Actually have a more comprehensive partnership.
Speaker Change: And well.
Speaker Change: Provide capitals for vehicles operate as a fleet company to burden the Capex and also utilize existing.
Speaker Change: Existing Toyota dealer network for the vehicle maintenance.
Speaker Change: So that's the answer to the question back to the operator.
Speaker Change: There are no further questions now I'd like to turn the call back over to management for closing remarks.
Operator: There are no further questions.
George Hsiao: Now I'd like to turn the call back over to management for closing remarks.
Speaker Change: Hi, This is George Shao again.
George Hsiao: Hi, this is George Hsiao again. Thank you everyone once again for joining us today. If you have any further questions, please feel free to contact our IR team. We look forward to speaking with you in the next quarter.
Speaker Change: Thank you everyone once again for joining us today.
Speaker Change: If you have any further questions. Please feel free to contact our IR team.
Speaker Change: Look forward to speaking with you in the next quarter.
Speaker Change: This concludes the conference call you May now disconnect. Your lines. Thank you and have a great day.
Operator: This concludes the conference call. You may now disconnect your lines. Thank you and have a great day.