Horizon Robotics - FY25 results mixed; strong revenue guidance ahead
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- FY25 revenue growth of 58% y/y to RMB3.76bn was 5% ahead of estimates, on higher licensing and services revenue.
- Adj. net loss widened to RMB2.8bn, missing estimates due to gross margin pressure (-12.8ppt y/y, 2.2ppt below) and higher-than-expected R&D expense of RMB5.2bn (+63% y/y, vs est RMB4.5bn)
- Raise topline guidance to 60% CAGR for coming years on the back of HSD delivery ramp-up (400k deliveries in 2026) and the commencement of subscription revenue. Robotaxi development to kickstart in 3Q26 and expects commercial operation by 2028
- Raise FY26/27F revenue estimates by 2%/6 % to reflect a more promising business outlook. New TP of HKD13 pegged to 23x 12-month rolling EV/sales. Maintain BUY
FY25 revenue slightly ahead, growing 58% y/y to RMB3.76bn, 5% above consensus estimates. The beat was primarily driven by stronger licensing and services revenue, which grew 17% y/y to RMB1.94bn (vs est. RMB1.59bn). In contrast, product solutions revenue grew 144% y/y to RMB1.62bn but was slightly below expectations (vs est. RMB1.81bn). Total shipment volume grew 39% to 4.01mn, while high-end Horizon Superdrive (HSD) recorded 22k units in the first month of delivery in Dec 2025.
Bottomline miss on margin pressure and elevated R&D investment. FY25 gross margin came in at 64.5% (-12.8ppt y/y), 2.2ppt below expectations, primarily due to a 11.9ppt y/y decline in product solutions margin to 34.5%. The margin was mainly caused by two one-offs: 1) contribution of lower-margin products such as domain controllers (8ppt drag), which are not core to the company’s long-term strategic focus, and 2) Inventory destocking of older products (2-3ppt drag). At the operating level, company recorded a higher-than-expected operating loss of RMB3.3bn (vs est. RMB3.0bn loss), largely due to a 63% surge in R&D expense to RMB5.2bn (vs est. RMB4.5bn). Excluding RMB6.7bn in fair value losses from preferred shares and other financial liabilities, Horizon Robotics’ adj. net loss widened to RMB2.8bn in FY25 (vs RMB1.7bn in FY24).
400k HSD volume deliveries target this year, riding on new product launches. Company has delivered over 20k HSD deliveries in Dec 2025, and has currently piled up over 20 design wins from major Chinese OEMs. With the gradual ramp-up of HSD deliveries and the expected launch of its cockpit-driving fusion Agentic CAR SoC in April, which we expect to also contribute tens-of-thousands of deliveries this year, company maintains its 400k HSD volume deliveries target for 2026.
Stronger-than-expected revenue guidance. Looking ahead, management lifts revenue CAGR guidance for the coming years from 50% to 60%, on the back of: 1) Delivery ramp up of its HSD solution, 2) kick-in of subscription-based model, where management expects to kickstart once Autonomous Driving (AD) milage reaches 50% of total user milage. Management highlighted that blended ASP rose by 75% in 2025 on the back of favourable product mix, and expects the trend to continue in upcoming years on the back of continuous product upgrades.
Robotaxi and L4 Autonomous Driving development. To foster L4 Autonomous Driving and Robotaxi development, Horizon Robotics targets to a 10x improvement of its takeover milage (Milage per intervention – MPI) to large-hundreds of kilometers this year, and thousands of km next year. Company expects to kickstart its robotaxi development by 3Q26 and to begin commercial operation by 2028, once MPI reaches 10,000km. In the longer-term, management expects to reach full commercial operation by 2030, providing a second growth curve for the company.
Limited memory price surge impact. While memory shortage has caused rising COS for most NEV players, management mentioned during the call that they will suffer limited impact this year as they have entered into long-term agreement with suppliers that locked and stabilised their memory price for 2026. In the long-term, company maintains its product GPM/ blended GPM of 45%/over 60% respectively as their targets.
Spin-off of subsidiary “D-robotics”. Following several rounds of fund-raising in 2025, Horizon’s equity stake in “D-robotics” was diluted from 70% to 40%. As a result, the company announced that “D-robotics” will be spun off, which is expected to optimise Horizon's financial reporting, as “D-robotics” will likely enter a heavy R&D phase with limited revenue contribution in the coming years. In the long-term, Horizon Robotics will retain revenue rights from “D-robotics” through IP licensing and software tool royalties, providing high-margin revenue for the company.
Maintain BUY with new TP of HKD13 (prev HKD11). We lifted our FY26/27F revenue estimates by 2%/6% to reflect a more promising business outlook. We raised our TP to HKD13, pegged to 23x 12-month rolling EV/sales. Maintain BUY on Horizon Robotics, as we believe the company will continue to be a market share gainer in the high-end intelligent driving sector.
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