WeRide Q1 Unveiled: Robotaxi, Global Reach, and Key Takeaways!

$WeRide Inc.(WRD)$ jumped over 21% after releasing its 25Q1 earnings report. Overall, 35% gross margin leads the industry, and Robotaxi's revenue share has increased significantly.Recent institutional investor entries have also increased investor confidence.

Performance and Market Feedback

• Revenue Performance: Wenyuan Zhixing realized revenue of $72.42 million in Q1 2025, a slight increase of 1.7% year-on-year (from RMB71.2 million in Q1 2024).The market has not seen clear expected figures before, but based on industry dynamics, the growth is slightly conservative, reflecting the company's steady progress in the commercialization process.

• Revenue contribution from Robotaxi: Revenue from Robotaxi amounted to RMB16.1 million (US$2.2 million), accounting for 22.3% of total revenue, a 10.4 percentage point increase in year-on-year share, demonstrating the high growth potential of this business line.

• Gross margin performance: Q1 gross margin reached 35%, leading the industry, indicating improved operational efficiency. However, net loss data was not disclosed, so it is presumed to be still in a loss position, with reference to Q4 2024 net loss of $81.2 million.

• EPS and market expectation: EPS data is not disclosed, so it is difficult to compare with the market expectation, but combined with the historical performance, it is expected to remain negative, and the industry is generally concerned about the progress of its loss narrowing.

• Stock price and investor sentiment: After-hours on May 21, 2025, WRD's stock price rose slightly after the Q1 earnings report (up 2.96% as mentioned in pre-market), with the market reacting positively to commercialization expansion plans (e.g., the addition of 15 new cities), but reacting more divergently to the limited revenue growth.

Investment highlights

1. Commercialization accelerates, Robotaxi becomes growth engine

   Q1 Robotaxi revenue share increased to 22.3%, up 10.4 percentage points in year-on-year share, showing the breakthrough of this business line in 30+ cities operations globally.The addition of 15 new cities to the expansion plan, combined with Uber's $100 million investment, strengthens market expectations, and Robotaxi may become a key variable in valuation repricing.

   Causal logic: Robotaxi's high gross margin (35% industry-leading) and scale effect superimposed, or to promote unit economic improvement, potentially reducing net loss pressure, but need to pay attention to the execution risk.

2. Operational efficiency improvement, gross profit margin performance is outstanding

   Gross margin of 35% is well above the industry average, reflecting WeRide's optimization of the balance between hardware sales (e.g. Robotaxi, Robobus) and service revenues.Emphasis on "industry-leading", but the lack of net loss data limits the full assessment.

   High gross margins may lay the foundation for future profitability, but high R&D and administrative costs (cf. Q4 2024 expense spike) may drag down overall profitability.

3. Global Layout and Competitive Landscape Impact

   Fleet size expanded to 1,200+ units, L4 driverless license in France and other internationalization progress, strengthening its global first tier position.However, competition in the industry is intensifying (Waymo, Pony.ai, etc.), and the market is concerned about its technical barriers and cost control ability.

   Valuation impact: international expansion will enhance long-term growth, but short-term valuation may be suppressed by high investment, Q2 guidance should be observed.

4. Signal of capital operation, increasing shareholders' confidence

   The board of directors authorized a $100 million share repurchase program (~4.5% of market cap), showing management's confidence in valuation and future cash flow.The move is likely to stabilize share price and attract long term funds, but need to be wary of potential diversion of R&D investment from buyback funds.

5. Market expects changes in boundaries, guidance is not clear

   Earnings report did not disclose clear Q2 guidance, combined with historical performance, the market may focus on the progress of loss narrowing and the pace of Robotaxi commercialization.Mentioned that revenue was +22% YoY (suspected to be Robotaxi data), but total revenue only slightly increased, showing that the market's expectations for overall growth are divergent.

Key variables and valuation repricing

• Robotaxi commercialization progress: 15 new cities expansion with Uber may trigger valuation upside, but execution risks (e.g., regulation, cost) need to be watched.

• Gross margin and loss narrowing: 35% gross margin is the highlight, if Q2 net loss narrows significantly, it may drive valuation repair.

• Internationalization and competition: global layout strengthens the moat, but competition in the industry is intensifying, requiring continuous verification of technology leadership.

• Capital operation: share buyback to enhance shareholders' confidence, but need to balance cash flow and R&D investment.