PONY

Ladies and gentlemen, thank you for standing by and welcome to Pony.ai Inc.'s first quarter 2026 earnings conference call. 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. 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. I would now turn the call over to your host, George Shao, Head of Capital Markets and Investor Relations at Pony.ai. Please go ahead, George.

Thank you, operator. Hello, everyone. We appreciate you joining us today for Pony.ai's first quarter 2026 earnings call. Earlier today, we issued a press release with our financial and operating results, which is available on our investor relations website. An earnings presentation, which we'll refer to during the conference call, can also be accessed and downloaded on our investor relations website. Joining on the call are Dr. James Peng, Chairman of the Board and CEO, Dr. Tiancheng Lou, CTO, and Dr. Leo Wang, CFO of the company. They will provide prepared remarks, followed by a Q&A session. Before we begin, please refer to the safe harbor statement in our earnings release, which applies to this call, as we'll be making forward-looking statements.

Please also note that we will discuss non-GAAP measures today, which are more thoroughly explained and reconciled to the most comparable measures reported under GAAP in our earnings release available on the investor relations website and filings with the SEC and the Hong Kong Stock Exchange. I will now hand it over to our Chairman and CEO, Dr. James Peng. Please go ahead.

Thank you, George. Hello, everyone. Thank you for joining our earnings call. We kicked off 2026 with an amazing first quarter. This strong start defines our growth momentum for the whole year. Let me start with the highlights. I'm proud to report that in Q1 2026, our total revenue grew by 145% year-over-year, and we also achieved record high quarterly robotaxi revenue. Specifically, our robotaxi revenues grew nearly 400%, powered by a more than 450% surge in fare-charging revenues. Our operational momentum is accelerating across the board. We have scaled our robotaxi fleet to exceed 1,700 vehicles and amplified this expansion through a massive surge in user adoption. Now, our registered users grew more than 200% year-over-year in China. In fact, our weekly average paid orders so far in May grew more than 100% compared to the beginning of the year.

Lastly, we continue to expand our operating area, currently broadening our service footprint into downtown Guangzhou. Globally, we have been advancing our operations in the capital of Croatia, realizing Europe's first commercial robotaxi service. Looking at our overall Q1 results, I'm thrilled that our strategic and execution moats translated directly into our exponential growth in robotaxi and fare-charging revenues. By scaling our fleet, user base, and paid order volume, we have achieved consistent month-over-month growth this year. This is a remarkable achievement, as spring typically is a low season for ride-hailing. Our dual-engine strategy, that is focusing on both China and global markets, and the joint deployment model started unlocking new and diversified revenue streams. China market remains our primary growth engine, where we have secured a dominant lead. We are steadily ramping up our domestic fleet while simultaneously broadening our operational footprint.

We expanded our operation in Guangzhou from Nansha and Panyu districts into Haizhu District, which is the heart of Guangzhou that covers high-demand areas like Canton Tower, the Pazhou CBD, and the Canton Fair Complex. In Shenzhen, we have been continuously increasing the size and the density of our fleet in Nansha and Baoan District, the city's two busiest areas. For key transportation hubs, we are now providing comprehensive airport transfer services across Beijing, Shenzhen, and Guangzhou. Our international expansion is also gaining traction. We have now established a presence in nine countries and started services to the public in four overseas markets, including Croatia, Qatar, Singapore, and South Korea. In the capital of Croatia, Zagreb, we realized the first robotaxi commercialization in Europe. In the Middle East, our footprint in Dubai and Qatar continues to expand, currently initiating driverless deployment in Dubai.

These achievements serve as proof that our model can be applied smoothly across multiple regulatory and operational environments, ultimately creating solid revenue streams. As for the joint deployment model, we consistently make significant strides. Because of our technology leadership, our operational success, and our commercial maturity, partners increasingly recognize us as their preferred collaborator. We have seen more partners from both domestic and international markets join forces with us, starting to contribute sizable revenue in Q1. Our Robotaxi success is continuously driven by our innovation and execution, which helps us to achieve a large-scale fleet, excellent technology and operation, and a superior user experience. Moving forward, we will focus on reinforcing these areas to expand market share and cement our industry leadership. Operating a scaled fleet with consistent stability is a powerful testament to our technology and operational maturity. As we scale, we are supercharging our growth engine.

We continue to build competitive barriers, earn trust from policymakers, and fortify our brand position at the forefront of user mindshare. Currently, we are accelerating the rollout of Gen-7 vehicles across Toyota, Beijing Auto, and Guangzhou Auto, exceeding 1,700 robotaxi vehicles. At the Beijing Auto Show last month, we debuted our 2027 version of the robotaxi for domestic markets. This upgraded version will achieve further BOM cost optimization to less than 230,000 RMB. This competitive pricing facilitates rapid scaling of the robotaxi fleet for the years to follow. Safety has always been the foundation of our company, which is ensured by our technological and operational advantages. Our industry-leading L4 technology, vehicle-level intelligence, and resilient fleet management help us to maintain uncompromised safety. This proven mastery of highly complex scenarios enables our robotaxis to navigate peak rush hours, dense urban areas, and bad weather conditions, satisfying surging user demand.

We have moved beyond a novel experience into a go-to daily transportation choice. The results speak for themselves. Our robotaxi fares maintain a premium over the entry-level ride-hailing services. Despite this premium pricing, demand remains exceptionally robust, particularly during peak hours. Notably, our weekly average paid orders so far in May increased by more than 100% compared to the beginning of the year, significantly outpacing industry-wide growth. Beyond that, we are continuously optimizing ground operations from charging efficiency to dispatching algorithms. This, in turn, boosts our fleet utilization and reduces operational costs. Now let me move to our robotruck business. Our Gen-4 robotruck is slated for mass production in the second half of the year, with pre-production vehicles currently rolling off the production line. I'm also pleased to share that in Q1, robotruck revenues were up 31% year-over-year. This was driven by scaling up long-haul operations.

We also strive to expand our addressable market across multiple fronts, particularly in intra-city urban logistics. To this end, we launched our L4 autonomous light truck in April, leveraging our fully automotive-grade and fully redundant Level 4 robotaxi architecture. In terms of intelligent solutions, a business we recently renamed from licensing and applications to better reflect our expanding business in this segment. Q1, the ADC, essentially the autonomous domain controller shipments in this segment surged by over 500% year-over-year. This was mainly driven by domain controller deployment in low-speed delivery applications. 2026 is off to a strong start for Pony. We have achieved supercharged revenue growth in all three business lines without any compromise in safety. Since the first day of our funding, we have been committed to provide safe and reliable autonomous driving services.

It is our deepest moat, and it's now the perfect stage for Pony.ai to demonstrate what a decade of rigorous engineering looks like. Our fourfold Robotaxi revenue growth is fueled by accelerated user adoption in domestic tier-1 cities and revenue contributions from our joint deployment model, both domestically and globally. Reflecting this powerful commercial momentum, I'm now raising our 2026 annual target that we forecasted earlier this year. First, an upgraded fleet target. We are now on a clear path to surpass a fleet size of 3,500 vehicles, which is an upward revision from our initial 3,000 target. Second, accelerated revenue growth. We are now lifting our Robotaxi revenue target higher to more than 3.5 times from our previous target of tripling. Third, scaling our domestic and overseas presence.

As we continue to accelerate the scaling up in our existing markets, we are firmly confident to expand our footprint to over 20 cities, both domestically and globally. As an industry leader, our mission goes beyond our own growth. We are here to lead the development of autonomous driving that has sustainable societal benefits. By providing a safe driverless technology that is safe and profitable at scale, we are building the future of mobility that the world can trust. With that, I'll hand it over to our CTO, Tiancheng Lou, to go over the technology that's powering our leadership. Tiancheng, please go ahead.

Thank you, James. Hello, everyone. This is Tiancheng. Our strong start in 2026 fully proves our solid technology foundation. Looking at our scale, our robotaxi fleet now surpasses 1,700 vehicles, and the Q1 robotaxi revenue skyrocketed by nearly 400% year-over-year, hitting an all-time high. Building on this robust growth momentum, we are raising our full-year target to over 3,500 vehicles and revenue growth to 3.5x from the level of last year. This scaling up is driven by our proven capability to expand rapidly in high-value markets. By successfully entering the downtown core of Guangzhou Haizhu District and launching Europe's first commercial robotaxi service, we demonstrated our true technology leadership. Only a tech leader can deploy fleet so quickly into these high-value, ultra-complex urban areas.

Because our technology navigates this environment safely, more users choose to call our robotaxis, and more partners want to collaborate with us. It is this demonstrated capability that gives us the confidence to upsize our scale. Another clear testament was our performance during a series of concerts held in Guangzhou early this month. This event attracted tens of thousand attendees around the stadium. I'm very proud that Pony.ai's robotaxi officially became a government-recommended transportation choice for the peak post-concert crowds. We pulled this off because we can master this level of extreme localized demand seamlessly. Being integrated into an official local traffic plan proves that authorities highly trust our safety and operational capability. Ultimately, mastering this dense, high-traffic environment demands a leap in top-tier engineering by orders of magnitude.

It comes down to three core technical pillars: an exceptional training paradigm, robust fail-operational redundancy, as well as safe and efficient fleet management. Many years ago, we realized a critical truth. The public demands a much higher safety standard for L4 driverless Robotaxis than for human drivers. This means when human drivers make mistakes, society accepts it as a normal part of daily life. If an AI driver makes a mistake, the public trust will be negatively impacted. This understanding shaped our tech stack years ago. We knew we could not achieve true L4 by simply learning from human driving data. More importantly, we knew we could not solve L4 through a simple scaling law like that of a large language model, meaning just increasing parameter size and data volume. Learning from human driving data and scaling up parameters can give you a decent L2 driving system.

That level of AI is only good enough for L2 assistant driving when a human acts as a backup. It can never work for large-scale L4 robotaxis because it cannot significantly beat human safety level. Driving is very different from AI coding. In coding, the AI does not need to make decisions with ultra-low latency, and the first output does not need to be perfect. The AI can try, fail, and fix errors multiple times using an agent framework, competitors, and test environments. Humans expect to see a final result except multiple rounds of trial and error. For AI driver, the model output must be instant and correct on the first try. Therefore, we started using reinforcement learning and world model years ago. Today, this approach allows our robotaxi to drive much safer than humans, especially in complex areas.

This early bet gave us a massive first-move advantage, allowing us to rapidly deploy our Robotaxi in high-value markets globally. However, for a true L4 vehicle, achieving safety just at the algorithmic level is not enough. If a system downgrades and causes an accident, or simply stops dead on a high-speed road to wait for rescue, the public will not accept it. That is why every single Pony.ai's Robotaxi features a full-stack, multi-layer redundancy architecture for both software and hardware. This gives us fail-operational capability. If any component fails during a trip, the system stays fully functional. The car will continue to drive safely, choose a secure spot, and pull over, avoiding traffic congestion and rear-end crashes. Furthermore, our car can drive normally even when there's no network or GPS signal, both of which can easily drop in urban environments. We also do not rely on high-definition maps.

For example, even when road layouts or lane markings change significantly, or even if we need to drive in the opposite lane, our system adapts and navigates safely based on real-time road detection. We also detect any event instantly. Our car is equipped with impact sensors, so the system knows immediately if a collision occurs or stops the vehicle right away. We also detect hardware faults, software failures, and network instability instantly to ensure driving safety. We even have specialized water-wading sensors to make sure our cars do not enter deep puddles that could cause damage. At our operation extent, keeping the entire fleet safe becomes just as critical as a single robotaxi's safety. To achieve this, we scale our intelligence into city-wide safety net, protecting our large-scale operation through 3 strong lines of defense. The first line is prevention.

We have a dedicated safety team to systematically eliminate risks from the very beginning. We use technical design to stop safety issues before they happen, including risks from human errors or cyber attacks. For example, our remote assistance only provides high-level guidance. They do not control the car. The onboard module on the vehicle is responsible for any collision or accident avoidance. This ensures our remote assistant cannot cause an accident through wrong input or network delay. The second line is detection. If demand spikes and our vehicles end up heading in the same direction, our smart detection system ensures they don't arrive at the same intersection all at once, but rather arrive one after another. If a road is blocked or congested, our system will also detect it instantly and notify the whole fleet to avoid making the traffic worse. The third line is response.

We establish dedicated ground support teams. If a vehicle encounters any issue on the road, our rescue personnel will arrive at the scene within minutes to handle the situation immediately. In short, our technology makes our operations safe, and this large-scale operation builds our ultimate moat. Because we chose the right foundation from day one, and we now have a unique capability and a first-move advantage to rapidly expand in high-value markets. By the end of this year, we target to expand our fleet to over 3,500 vehicles across more than 20 cities. This massive scale will allow us to unblock even greater commercial value while continuing to deliver the world's most trusted L4 Robotaxi service, both domestically and globally. This concludes my prepared remarks. I will now pass the call to our CFO, Dr. Leo Wang. Leo, please go ahead.

Thank you, Tianchen. Hello, everyone. This is Leo. I will focus on year-over-year comparisons for the first quarter of 2026, unless otherwise noted. For detailed financials, please refer to our earnings release. 2026 is the year where our commercialization strategy translates into remarkable financial performance. This quarter, total revenues reached a record of $34.3 million, representing a 145% increase from $14 million in the same quarter last year. The triple-digit top-line growth was driven by Robotaxi revenue growth of 395% and the intelligent solution growth of 246%.

We are also capturing compounding benefits as we extend our autonomous driving technology from Robotaxi into robotruck and other partners along the value chain. Diving deeper into Robotaxi, this segment continues to serve as our core growth engine. This quarter, we reached a record high Robotaxi revenue of $8.6 million, grew by nearly 400%, compared with $1.7 million in the first quarter of 2025.

As James mentioned, three key elements have helped Pony to achieve a leadership moat in robotaxi operation. These are scaled fleet, excellent technology and operation, as well as superior user experience. Pony's robotaxi has become a popular service that has captured user mindshare, and this is now reflected in our financial numbers. Specifically, our fare charging revenues delivered exceptional growth of 456%. This impressive increase was driven by several compounding factors. We continue to add more vehicles and expanding into more regions, especially to core downtown areas with higher economic values. Operating metrics reflect our growing capacity and the strong user demand. For example, our weekly average paid orders so far in May grew more than 100% compared to January. Registered users increased more than 200% year-over-year, and our daily order growth rate continued to outpace the industry average.

What makes this strong growth trajectory even more remarkable is our pricing power. Even after discount, our effective fare rate per kilometer remains above entry-level pricing on ride-hailing platforms and is on par with the standard Express tier. Our demand remains robust and is growing at a very fast speed. We believe this is a clear reflection of the superior ride experience and the robust technology we deliver, especially during peak hours and in traffic-heavy downtown areas. On the cost side, we continue to make good progress on both operating costs and the BOM cost front. Pony's combined depreciation and operating costs per vehicle are already among the most competitive globally, and this is achieved while operating in the busy downtown area during the morning and evening peak hours, and under most demanding traffic conditions.

By leveraging operational efficiency, we continue to drive operating costs even lower and are also on track to bring Robotaxi BOM costs below 230,000 RMB by mid-2027 in the domestic market. Together, these two levers, declining operating costs and the lowering BOM costs, will further enhance our Robotaxi margin as we scale the fleet. Aside from fare charging revenues, our joint deployment model has started to contribute meaningful revenues with both domestic and overseas partners. Such a model will enable more efficient use of capital in fleet deployment. Specifically, as a global technology enabler, we successfully launched the first commercial Robotaxi service in the city center of Zagreb, Croatia, together with our local partners. Combined with our expanding operations in China, this is a strong testament to the execution of our dual-engine strategy. Turning to Robotruck.

Robotruck service revenue grew 31% to $10.2 million this quarter, up from $7.8 million in the first quarter of 2025. This growth was driven by the addition of more trucks and the expansion of our diversified client base, reflecting increasing demand from downstream logistic clients in the long-haul business. We continue to see our industry-leading autonomous driving technology expanding into wider use cases. For example, long-haul trucking and intrastate logistics. Looking ahead, with the launch of Level 4 autonomous light truck and the Gen-4 robotruck, we're firmly on track to deliver even better autonomous driving trucks with lower cost, superior driving performance, and wider use cases expanding into a wider addressable market. Our Intelligent Solution Segment, formerly the Licensing and Application Segment, delivered a remarkable growth of 246%, reaching $15.5 million in the first quarter of 2026, up from $4.5 million in the first quarter last year.

This exceptional performance was mainly fueled by strong sales of autonomous domain controllers. Such strong growth is yet another testament to the opportunities of our autonomous driving technology as we empower other customers along the value chain. Moving to costs and margin, total cost of revenue was $28.7 million, translating to a gross margin of 16.2%. Total operating expenses were $63.9 million, a modest increase of 9.5%. On a non-GAAP basis, operating expenses were $59.3 million, representing a 20.2% increase. Such commitment, especially in R&D, have helped us to maintain our technology leadership and will effectively drive down our BOM cost. Loss from operation was $58.3 million, remaining relatively flat compared to $56 million in the first quarter last year. Net loss was $53.5 million compared to $37.4 million in the first quarter last year.

The increase was mainly attributable to the realization of investment income that occurred in Q1 2025, coupled with a modest increase in operating expenses. Excluding the impact from this investment realization, the underlying loss amount remained broadly stable. It's worth noting that the loss from operation margin narrowed drastically from negative 401% in the first quarter of 2025 to negative 170% this quarter. Similarly, our net loss margin narrowed from negative 267% to negative 156% year-over-year. The narrowing loss margin trend demonstrate our operating leverage driven by the rapid revenue growth and the gradual realization of commercial scale benefits. Turning to our balance sheet, cash and cash equivalents, short-term investments, restricted cash, and long-term debt instruments for wealth management stood at $1.4 billion as of March 31st, 2026. This compares to $1.5 million billion as of December 31st, 2025.

We continue to maintain a exceptionally robust financial position with ample dry powder to execute our strategy. Net cash used in operating activities was $774.2 million this quarter, compared to $54.2 million in the first quarter of 2025. The increase was primarily due to an increase in the accounts receivable, resulting from substantial sales revenue, increase of autonomous domain controller, along with an increase of non-GAAP loss from operation. Capital expenditures were $12.5 million this quarter, compared to $4.9 million in the first quarter last year. The increase was primarily due to Gen-7 vehicle production for the quarter, and the procurement of vehicle components for future manufacture, and investments in data center and servers. We believe 2026 will prove to be a defining year for the industry, and we are confident in our ability to outperform the industry in operational and financial execution.

With our solid Robotaxi operational excellence, continuous BOM cost optimization, increasing partner interest, and a strong cash reserve, we are highly confident in accelerating our path towards sustainable, profitable growth for our shareholders. I will now turn the call over to the operator to begin our Q&A session. Thank you.

The first question today comes from Zhao Yi Li with Jefferies. Please go ahead.

Hi. Thanks for taking my question, and congrats on the strong quarter. Just one from me. I'd like to ask about the regulatory environment. We've seen quite a bit of movement on the policy side for the Robotaxi sector, both in China and overseas. I was hoping you could share your perspective on how this evolving regulatory landscape is shaping up, and more importantly, how you see it impacting Pony.ai's business or your competitive positioning going forward. Thank you.

This is James. I'll take this question. As far as I know, most of the policy discussions, both domestically and globally, are actually centered on the safety operation of Robotaxi As you all know, safety is the cornerstone of the autonomous driving industry. Therefore, I would consider the safety discussion and the result of standardized safety or even higher safety measures are beneficial for the long-term stable development of the industry.

At Pony, we have had many years of experience of successfully operating a large fleet and have the experience working with regulators to have a healthy, more transparent environment. Especially in China, we have built a deep trust with regulatory authorities, and we consider that we will continue to work hand in hand with the regulators to safely bring autonomous driving to the public. Back to the safety itself, as Tiancheng mentioned, we have established a full life cycle safety management, for both autonomous driving vehicle itself and also the fleet operation. Every vehicle features a fully redundant architecture with fail-operational capability.

That is, our vehicles actually will always safely pull over, even during an extreme case of system failure. Additionally, our fleet management has the capability to detect and respond to any unforeseen issues on the road. The whole system actually serves as a citywide safety net to prevent traffic jams and handle real-time road changes. This is actually how we ensure safety at scale. This highly sophisticated and robust safety system, and also the safety track record, have given us confidence to scale our business quickly. The current policy discussions and the policy updates do not have any direct impact on our business. In contrary, we are, as you see during the prepared remarks, I have actually raised our business targets for the whole year of 2026.

We are continuing to push forward with our Gen-7 deployment, and we are making smooth progress towards our target in fleet size, revenue, and operational area expansion. As I mentioned, there's no immediate impact, and I believe that in the mid to long term, actually, the current standardized regulatory environment will play directly to our advantage, as we already established as the industry leader. It highlights once again that the complexity of operating robotaxis at scale in dense urban environment, which is exactly we have proven our capability. I think ultimately, these high standards will consolidate the markets, filter out the unqualified players, and further raise the entry barrier for the new players. As a result, it will help the long-term growth of the industry. With this, I'll hand over to the operator.

The next question comes from Ming Hsun Lee with Bank of America. Please go ahead.

Hi, James, Tiancheng, and Leo. Congrats for the good results. Given you raised your Robotaxi fleet size to 3,500 by the end of the year, and also you raised revenue, could you elaborate more on the key drivers behind your upward revision for these two numbers? Thank you.

Yeah. Thank you, Ming, for asking this question. This is Leo. I will take this one. The upward revision is definitely showing that we are encouraged by our strong commercial momentum, and especially the result of Q1. To be honest, this is actually moving faster than we expected, and it is reflecting many core areas in our Robotaxi business. For example, we are seeing our domestic operations are accelerating. We are seeing the pickup in revenue in paid order volume and also in the user basis in all Tier 1 cities in China. This is really a reflection that we are providing a qualified service nonstop in Shenzhen and in Guangzhou. We are attracting more and more repeated user because we can provide a service even during peak hours with consistency, even during complex scenarios. That eventually translates into more revenues.

The other point is how we make the UE breakeven milestone in Guangzhou and Shenzhen. This also serves as a proven case for future possibility. That's why we're seeing many of the potential partners now they have the real interest, domestically and internationally, to really participate in our joint deployment business model. This could be more efficient use of our capital, but also means we could deploy more vehicles in different markets. Given all these facts and encouragement, that's why we have the confidence to push our robotaxi revenue growth Target even higher to be 3.5 times of 2025, our fleet size to be 3,500 vehicles by this year end. Now I'll get back to the operator.

The next question comes from Wei Huang with Deutsche Bank. Please go ahead.

Hi, this is Wei from DB. Thanks for taking my question. I have a question on robot truck operations. You recently launched the L4 electric at Beijing auto show. Can you explain the strategic considerations for launching this platform? Can you comment on the expansion plans? Thank you.

Thanks, Wei. This is James. I'll take this question. As you consider the company vision, since our founding has always been autonomous mobility everywhere. To us, the word "everywhere" actually has two implications. One, expanding our presence across both domestic and overseas markets. The other is scaling our technology across different vehicle platforms for both the passengers and the freight transportation. The launch of our L4 autonomous light truck actually aligns perfectly with our vision and our ambition. In the logistics sector, the value chain actually spans long-haul trucking, urban logistics, and the last-mile delivery. We already established a robo truck division that working on the long-haul logistics. For the last mile delivery, we are not directly working on it, but we actually have already becoming the leading ADC provider.

The recent launch of level 4 light truck is actually serves the purpose of completing one key segment in our full logistic portfolio. The platform for the level 4 light truck also shares a nearly identical software stack as our Robotaxi. It can also fully utilize our existing operational infrastructure, such as remote assistance, the ground support networks, and even the cleaning charging facilities. This unified architecture creates a powerful synergy. It can actually further slash out our light truck operating cost by half, compare with the human-driven light truck fleet. We can actually lower the operational overhead of our Robotaxi service because we can share a lot of the background support. In terms of the current status, we are developing the level 4 light trucks, and it's already well underway.

For example, we co-developed this level 4 electric light truck with CATL. We are establishing a solid pipeline with some of the leading logistic companies for the future application of those trucks. In addition, we also started discussing with the regulators on the licensing front and also on the fleet management. We expect the autonomous light truck to begin scaled operation early next year. With this, I'll get back to the operator.

The next question comes from Ting Song with Goldman Sachs. Please go ahead.

Thanks for taking my question. Congratulations on the result. My question is on the technology part. Regarding the VLA, Vision-Language-Action model in autonomous driving, could you please share more on Pony.ai's strategy and your future expected technology path? Do you think the language part is still necessary, as we recently noticed some supply chain players start to remove the language from their models. Thank you.

This is Tiancheng. I will take this one. Let me start from saying that the core of driving is the understanding of intention of other road users and the response appropriately. By putting an intention layer into our onboard model training, we generate different intention combinations, and we evaluate the possibility of all other traffic participants. This design ensure our onboard model always select the safest route and have a plan ready for any event, even for low possibility edge cases. We believe language is not the essence of driving. Also, language models take too much computer power for a car. Instead, we believe intention is the real core for driving. When human drive, they think about the intention of other cars, not natural language. Crucially, this intention data is hard to get from simple road testing. We must generate it by one model.

We believe large language models or language layers do not help on the car's inference side, where one model and the generative data essential for training. Autonomous driving and large language models do very different tasks.

A large model agent, like a coding tool, does not need to have very low latency. It does not need to be perfect on the first try. It works in a low-cost environment where it can try, fail, and fix mistakes inside a testing box. Driving has zero room for mistakes. If you make a mistake, it is an accident. Therefore, our tolerance for error alternation is zero. To solve this, we built a virtual driving environment in our world model. This allows the system to try and fail during the training stage, not on the real road. During the real-world inference stage on the car, our model does not pick the single highest possibility path. Instead, it chooses the action that ensures safety under any probability. With this, back to the operator.

The next question comes from Jeff Chung with Citi. Please go ahead.

Hey, hello. James, Tiancheng, Leo, thank you, and congratulations with your record-breaking first quarter results. How should we think about the balance between sustaining this high-growth trajectory and your increasing strategic investments, especially when you are revising of the full-year targets? Thank you.

Thank you, Jeff. This is Leo. I'll take this question. We have a very good Q1 result, which proves that our robotaxi commercialization strategy, dual engine strategy, is translating into accelerated top-line growth. As you can see, that our top-line growth is actually outpacing our expenditure, which resulted in our operating loss margin narrowed quite a lot this quarter. Given all this momentum, we are confident to raise our full-year business target so that we can achieve an even higher growth trajectory, which I think is really important for any growth company. In the meanwhile, we need to make strategic increased investment in certain areas, hence to keep our advantages in the industry.

Using an example is we are actually on track to decrease our total BOM cost to be less than RMB 230,000 in the domestic market by mid-next year through our R&D works and the deepened collaboration with our OEMs. We think this definitely will be payback for our future deployment and will attract more joint deployment business model partners. I think that this is a balancing regarding, again, the expenditure and also investment versus the trajectory of our growth. We are definitely putting the growth trajectory as our highest top priority. We will always follow a value-driven and a disciplined approach for these front-loaded expenditures. Thank you. I'll get back to the operators.

The next question comes from Purdy Ho with Huatai Securities. Please go ahead.

Yeah. Thank you. Management, congratulations on the solid results, and thank you for taking my question. I'd like to focus on your international expansion strategy, given the recent commercial traction we're seeing overseas. Could you provide more colors on your roadmap for global fleet expansion? Specifically, as you are evaluating different markets such as the Middle East, Europe, and Asia, what dictates your prioritization across these regions? Thank you.

Hey, Purdy. Thank you. This is James. Let me take this one. As my answer to the last question, our company vision is autonomous mobility everywhere. You can see that global expansion has always been part of our strategic efforts. Our dual engine strategy is rapidly accelerating our global expansion. As more international countries introduce regulations in supporting autonomous driving and also there's many more partners want to work with us. Because of these two factors, we're seeing actually tremendous growth opportunities abroad. In fact, several international markets have already started contributing sizable revenues to us in Q1. Essentially, we're capitalizing on this window because our technology and commercial operations in China's tier 1 cities have already given us extensive experience in handling the most complex urban environments, and also we have already achieved unique breakeven in Shenzhen and Guangzhou.

This proven technical capability and cost advantage, also because of the overseas policy opening, this is actually the underlying driving force for our accelerated global efforts. In terms of our international footprint, we are actually, as you mentioned, scaling quickly across all these key regions. We have now established a presence in nine countries and started robotaxi services to the public in four overseas markets, including Croatia.

Qatar, Singapore, and South Korea. In Europe, we partnered with Uber and Verne to launch the region's first commercial robotaxi in Zagreb. In the Middle East, we're advancing fare charging services in Doha and initiating fully driverless operations in Dubai. In Asia, we have deployed public robotaxi services in Singapore, and currently are conducting robust testing in Seoul, South Korea. Certainly, moving forward, we'll continue to collaborate closely with all the local regulators and our trusted partners to accelerate our commercialization. We'll certainly double down on our investment, and are fully committed to expand our footprint to over 20 cities worldwide by this year. With this, get back to the operator.

The next question comes from Eugene Chiu with Macquarie Capital. Please go ahead.

Great. Thank you for taking my question. In the earnings release, some of the CapEx in Q1 was for stock building of ADCs. I'm wondering if you could please update us on if there's any material input cost impacts for rising component costs. I think Leo mentioned earlier that we're still on track for the BOM cost reduction to reach 230,000 RMB by next year. What areas are we targeting to reach this target? Thank you.

Yeah, I'll take this question. This is Leo. Thank you for asking this question. In terms of BOM cost reduction, we have always been using a holistic approach, meaning we are looking into all aspects regarding the base vehicle, regarding the autonomous driving hardware kit, to get the overall BOM cost down along the road. I think several factors will drive down our future BOM cost. First of all, we are deploying more and more vehicles. Our vehicle total fleet size will increase. With a larger volume, especially with more and more deployment partnership coming in, we could give a more quantity order to our suppliers. Definitely, they'll help us to negotiate with the pricing from our suppliers.

Second is now we already have our Gen-7 vehicle on the street and accumulating millions of kilometers, giving us real data, showing where we can refine our system, where we can simplify our system, where we can optimize our system. Based on these real data, definitely we can do our R&D work to further cut down our BOM cost. Of course, the supply chain itself has certain uncertainty. Pony.ai has been dealing these uncertainty along the years. For this year, for example, the memory, of course, there is certain shortage. We acted quickly last year to secure the supply for memories. Again, this showing our capability on handling these shortages. That's why we're very confident to hit that BOM cost target by mid-next year. Thank you.

As there are no further questions, I'd like to turn the call back over to the host for closing remarks.

Thank you once again for joining us today. If you have any further questions, please feel free to contact our investor relations team. We look forward to speaking with you in the next quarter.

This concludes today's conference call. You may now disconnect your lines. Thank you.

Hello, ladies and gentlemen. Thank you for standing by, and welcome to Pony AI Inc. American Depositary Shares Fourth Quarter and Full Year 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management’s prepared remarks, there will 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.pony.ai under the News and Events section. I will now turn the call over to your host, George Shao, Head of Capital Markets and Investor Relations at Pony AI Inc. American Depositary Shares. Please go ahead, George.

Thank you, operator, and hello, everyone. We appreciate you joining us today for Pony AI Inc. American Depositary Shares’ fourth quarter and full year 2025 earnings call. Earlier today, we issued a press release with our financial and operating results, which is available on our Investor Relations website, and an earnings presentation, which we will refer to during the conference call, can also be accessed and downloaded on our IR website. Joining me today on the call are Dr. James Peng, Chairman of the Board and CEO; Dr. Tiancheng Lou, CTO; and Dr. Liu Wang, CFO of the company. They will provide the prepared remarks followed by the Q&A session. Before we begin, please refer to the safe harbor statement in our earnings release, which applies to this call as we will be making forward-looking statements. Please also note that we will discuss non-GAAP measures today, which are more thoroughly explained and reconciled to the most comparable measures reported under GAAP in our earnings release available on our Investor Relations website and filings with the SEC and Hong Kong Stock Exchange. I will now hand over to our Chairman and CEO, Dr. James Peng. Please go ahead.

Thank you, George. Hello, everyone. Thank you for joining our earnings call. 2025 is an amazing year for us. This was defined by multiple remarkable milestones. First, our top-line growth significantly accelerated. Looking at Q4 last year, our robotaxi revenues surged 160% year-over-year and fare-charging revenues skyrocketed by over 500%. Second, since our Gen-7 robotaxis’ debut last April, we moved straight into mass production and commercial deployment. Our fleet has now surpassed 1,400 units. Third, we are expanding our footprint, launching services in new cities, in both China and globally. This has massively broadened our reach. In fact, we have now crossed the 1,000,000 user mark in China alone. Fourth, we have proven our business model actually works. We achieved UE breakeven in both Guangzhou and Shenzhen, and we will replicate this success in more markets. Looking ahead at 2026, it will be a year of hypergrowth for Pony AI Inc. American Depositary Shares. We are riding a perfect wave of industry momentum built on five pillars: fully driverless technology, policy support, mass production, large-scale operation, and ecosystem maturity. Last year, we used China’s tier-one cities as a strategic blueprint to deploy Gen-7 robotaxis. From official debut to mass production, regulatory validation, and rigorous testing, we achieved commercially fully driverless operations within just six months. Last quarter, we set our robotaxis fleet target to over 3,000 units for this year. Bolstered by the financial firepower from our successful Hong Kong IPO, and also with Toyota bZ4X Gen-7 model already in SOP, we now have greater visibility and are confident in even exceeding this target. Our excellent virtual driver is the key to support this confidence. Proven mastery of highly complex urban scenarios and a superior safety record have earned deep trust from policymakers and partners, driving rapid user adoption. This directly translates into positive UE. Since we hit UE breakeven in Shenzhen last month, growth momentum continues. This March, we are seeing peak daily revenues of RMB 394 per vehicle and daily orders at 25 per vehicle. We will certainly replicate this success globally. By year-end, we plan to deploy robotaxis in over 20 global cities. As the go-to partner, we have forged strategic alliances with industry leaders like Tencent and Uber. Together, we will propel global expansion, powering accelerated top-line growth and more than tripling our robotaxi revenues for 2026. Let me elaborate on how we will drive this hypergrowth. We are executing a dual-engine strategy. That means we are all in on both China and global markets. Our proven business model in China gives us a solid foundation to replicate success internationally, and we are already seeing great results that position us for our next growth phase. In China, we have earned clear leadership across tier-one cities, scaling further and pushing deeper into busy downtown areas. Take Shenzhen, for example. Our robotaxis satisfied surging demand in traffic hubs such as Nanshan and Baoan during Chinese New Year. The paid orders in the first two months this year alone have already surpassed that of the whole year 2025 in Shenzhen. We also entered University Town in Guangzhou, the business campus zone in Southern China. This sets the stage for more launches in multiple cities across the Greater Bay Area. In March, we also entered Hangzhou and Changsha, top tier-two cities. This is just the start, and we will have more cities to follow soon. Now turning to overseas markets. Our presence in Europe, the Middle East, East Asia, and Southeast Asia now covers a population of 100,000,000. We are aiming for nearly half of our 20-city target to come from overseas by the end of this year. Recently, we teamed up with Uber and Verne, which is a Rimac Group company, to enter Croatia, working together to launch Europe’s first commercial fare-charging robotaxi service. In the Middle East, we rolled out our first fare-charging service with Karwa in Doha, and we are gearing up for fully driverless operations after approval later this month in Dubai, UAE. In Singapore, we have launched the public debut of autonomous driving services with ComfortDelGro. We are confident overseas revenues will grow rapidly in 2026. Ecosystem maturity is a critical pillar in executing our dual-engine strategy. Our successful business model makes us a go-to partner. Partners are now lining up to join our joint deployment model. Essentially, it is a model where they will fund the vehicles and we can share success together. This will empower us to achieve fleet acceleration, reduce cost, and improve capital efficiency. We have a robust pipeline of new partners ready to jump on board. Toyota is the first to adopt our joint deployment model. Their bZ4X Gen-7 robotaxis will account for a significant portion of our 3,000-vehicle target in 2026, and we have already secured 1,000 units. As a long-standing strategic partner, our collaboration with Toyota extends far beyond just manufacturing. Together, we will commercially deploy robotaxis to drive market penetration by leveraging our OEM partners’ mature supply chain and extensive after-sales service networks. Our enhanced partnership with both Beijing Auto and Guangzhou Auto further reduces our vehicle cost. In addition, we will jointly deploy robotaxi vehicles into more overseas markets. To reach a broader user base, we also partnered with Tencent by integrating with WeChat Mobility, unlocking access to hundreds of millions of users to call our local taxi services. We are also deepening strategic partnerships with OnTime Mobility in Guangzhou and ATB in Beijing to accelerate adoption of our joint deployment model. Overseas, our global partnership with Uber enables us to access users across multiple continents starting from Europe. Our regional alliances strengthen our market penetration with partnerships established with ride-hailing platform Bolt and also automaker Stellantis. Now let me turn to robotruck. Over the past few years, we made huge technological leaps by using our proven L4 tech stack. It has been translating into commercial breakthroughs. We are now covering major logistic routes connecting industrial hubs, ports, and consumption centers across China. To seize the opportunity, we introduced our Gen-4 robotruck in 2025, reducing the ADK BOM cost by 70%. We target mass production of Gen-4 robotrucks and deployment this year. In 2025, we have deployed fully driverless robotrucks at the Jiangmen Port in Guangdong Province and tested the 1+N driverless platooning in extreme weather conditions in Northwest China. With this proven stack, we will deploy robotrucks in more ports and mine-haulage scenarios. Lastly, our licensing and applications business delivered robust growth. Last year, autonomous domain controllers (ADC) sales actually reached sixfold the level of 2024. We have also expanded our application scenarios to low-speed deliveries, robust sweepers, logistics, and humanoid robotics. Strong customer demand and growing market recognition of our technology will continue to drive growth. In summary, we have hit a major inflection point, as we validated our business model through 2025 achievements such as fleet expansion, new city launches, and UE breakeven. 2026 is poised as a year of hypergrowth. We are confident we will triple our robotaxi revenues, grow our fleet to over 3,000 vehicles, and deploy robotaxis in more than 20 global cities. Powered by our dual-engine strategy, we are speeding towards autonomous mobility everywhere. I firmly believe every effort we make today will not only reshape the future of human mobility but also drive a revolution in transportation. This will be a revolution where safety, efficiency, and accessibility redefine how the world connects, commutes, and thrives. I will now turn the call over to our CTO, Dr. Tiancheng Lou, who will go over our technology strategies. Tiancheng, please go ahead.

Hello, everyone. Looking back at our journey in 2025, it was a landmark year. We proved the commercial viability of our robo-taxi, achieving positive unit economics in Guangzhou and Shenzhen. Today, our sites have surpassed 1,400, with large growth throughout the year. Robotaxi is the first commercial application of physical AI validated by real-world operations and user adoption. Overall, our amazing tech architecture, built on years of R&D, has earned the trust of policymakers and established first-mover advantage to capture multiyear growth. As highlighted in the previous quarter, world models are now the widely recognized tech path, a domain where we hold a firm leading position with the Pony world model. But technology is only the foundation. The key to success is who can deliver reliable driverless robotic service at scale. I will walk you through how our technology drove commercial results in 2025 across three dimensions: scale, efficiency, and user experience. First, scale. Through strong execution on mass production, we surpassed our 2025 fleet target, and this momentum positions us to reach over 3,000 units by 2026. Since mid-2025, we began mass production of two Gen-7 models with Guangzhou Auto and Beijing Auto, both now ramping up to full capacity. In February, the bZ4X Gen-7 robotaxi co-developed with Toyota rolled off the production line. This strong generalization of our overall car-driving stack enables us to efficiently adapt across different vehicle platforms. This multi-OEM network enables rapid scaling while strengthening local partnerships and broadening our robotics vehicle offerings. This scale is backed by a comprehensive ODD that validates our technology’s stability to generalize across diverse urban environments. Today, our fully driverless fleet operates 24/7 in many cities across the globe, serving the public during peak rush hours and severe weather conditions. Achieving this required rigorous engineering validation, and the breadth of our fleet and ODD reflects the maturity and robustness of our autonomous driving stack. Our overseas expansion further validates its generalization capability. In Zagreb, we are operating across a large area in the city’s urban core, handling complex urban traffic rather than limited low-complexity routes. Such ability to deploy in demanding environments from day one demonstrates both the relevance of our technology and the commercial potential of our global expansion. This gives us strong confidence in reaching our target of more than 20 cities worldwide. Second, efficiency. We have established a clear cost advantage, driving a twofold improvement. On hardware, we optimized the design in Gen-7 robotaxis, effectively lowering BOM costs through adopting more cost-effective components. Our operations and safety record create significant leverage, dramatically reducing insurance fees and improving remote efficiency. Altogether this enables us to scale positive unit economics. Beyond that, our tech is building a powerful operation model. We have developed a highly generalized AI driving capability to build comprehensive and scalable operational workflows. This deep know-how makes us the go-to partner across the mobility ecosystem. It perfectly positions us to execute our joint deployment model, allowing us to scale fleet much faster with better capital efficiency. Third, user experience. Our technology enables robotaxis to serve consistently in high-value, high-difficulty scenarios, exactly in high-frequency ride-sharing hotspots where demand peaks and users are willing to pay a premium. This differentiates our service, supports our pricing strategy, and directly drives UE improvement. For example, in Shenzhen, our 24/7 driverless robotaxi covers high-traffic urban zones such as the Nanshan high-tech area to fulfill daily commuting needs. During rush hours, our AI virtual driver navigates not only major main roads, but also narrow streets where commuters actually need to pick up and drop off, providing convenient portal coverage that truly addresses real-world commuting needs. In Beijing, during a heavy snowstorm in early March, getting a ride became a major pain point for users, with long waiting times and limited availability. Despite the extreme conditions—snow-covered sensors, reduced visibility, and unpredictable road conditions all demanding significantly high driving capabilities—our robotaxis continued operations throughout the snowstorm, capturing substantial order volume growth during that period. Beyond handling extreme conditions, we have significantly improved ride comfort. Our Gen-7 robotaxi delivers smoother acceleration, braking, and signaling, significantly reducing motion sickness—a pain point that users care about most. This underscores the fundamental point: technology leadership is not just an engineering milestone; it is the core engine of our commercial success. Outstanding user experience earns user preference and repeat usage organically without relying on discounts. Beyond the robotaxi business, our proven L4 technology enables us to capture commercial opportunities across the broader autonomous driving industry. Our platform’s generalization enables 80% of the tech stack to be shared between robotruck and robotaxi. We have achieved true full-scenario, all-weather, 24/7 operational capability. Our operations now span from complex highway segments to unique scenarios like port logistics, with cumulative mileage exceeding 60,000,000 kilometers. We also unlock synergy in the licensed application segment through leveraging our advanced autonomous driving domain controller design, capitalizing on the rapid growth trend in low-speed delivery, robust sweepers, logistics, and robotics. We effectively fulfill our customers’ demand in robotics. Looking ahead to 2026, we will increase our investment in R&D and AI talent to strengthen our competitive position. Specifically, we are focused on advancing our Pony world model to further strengthen our top driving capabilities, reducing cost through continued hardware and software optimization, and improving operational efficiency to lower per-vehicle operating cost. These improvements are designed to fuel faster commercialization, expanding our robotaxi operations to more than 20 cities globally by year-end and delivering faster revenue growth. We will more than triple the robotaxi revenue versus 2025. As we have demonstrated already, technology leadership directly drives commercial performance, and this investment will further widen our advantage. This concludes my prepared remarks. I will now pass the call over to our CFO, Dr. Liu Wang, for a closer look at our financial results. Liu, please go ahead.

Thank you, Tiancheng. And hello, everyone. This is Liu. I will focus on year-over-year comparison for the fourth quarter unless otherwise noted. For full year 2025 and fourth quarter detailed financials, please refer to our earnings release. 2025 marked an inaugural year of large-scale commercialization for our robotaxi operations. The robotaxi segment continues to act as the core growth engine for the group, delivering exceptional top-line growth. In the fourth quarter, robotaxi revenues surged 160% to $6.7 million. For full year 2025, robotaxi revenues reached $16.6 million, growing 129%. This remarkable acceleration was primarily driven by our fare-charging service, where we saw Q4 fare-charging revenues skyrocket by 501% with a full-year growth rate of nearly 400%. More importantly, within just four months of Gen-7 robotaxi launch, we are thrilled to see consecutive UE turn positive in both Guangzhou and Shenzhen, the two most valuable cities in China. This milestone was built on two unique pillars that are exceptionally difficult to replicate by others. First, our clear cost advantages in both vehicle and robotaxi operations. Second, our exceptional AI driving capabilities. Being capable of navigating highly complex urban environments 24/7, we deliver a consistent, reliable, and high-quality service which helped us capture robust user demand. With the foundation of positive UE, and as vehicle density improves, we are seeing a clear network effect. Improving fleet density shortens wait time, boosts utilization rates, and drives the number of orders per vehicle. This in turn enhances overall passenger experience and further stimulates ride-hailing demand. Specifically, year-to-date of 2026, our users have nearly tripled year-over-year and reached 1,000,000. In February, we successfully delivered unit economics positive in Shenzhen, with an impressive average daily orders of 23 and RMB 338 average daily net revenue on a per-vehicle basis. As a matter of fact, this strong upward trend is continuing right now. In March, we hit a new daily peak of RMB 394 net revenue and 25 orders per vehicle. More excitingly, our paid orders in the first two months of 2026 in Shenzhen have already surpassed the entire order volume for the full year of 2025. Looking ahead, we remain highly confident in the growth trajectory of our robotaxi business. As James mentioned, our dual-engine strategy will drive rapid expansion into more than 20 cities in China and overseas. We are confident that our robotaxi revenues will at least triple this year. Simultaneously, we are enhancing our revenue quality by adding high-margin recurring revenue streams through robotaxi joint deployment with our partners such as OnTime Mobility. This model will lower the CapEx requirement on initial fleet deployment from our end and also gives us leverage to expand faster and more efficiently into new regions. From a technology perspective, as Tiancheng mentioned, our advanced AI driver capability directly empowers a premium user experience, providing safe, reliable, smooth, and efficient rides for passengers. This superior experience strengthens our pricing power and deepens user mind share, which can further boost top-line growth. On the cost side, we have proactively secured procurements for critical vehicle components and hardware, including high-demand memory modules. Therefore, we expect minimal impact from supply chain pricing fluctuation. Meanwhile, with greater fleet scale, continuous tech reiteration, and deepening OEM collaboration, we have high confidence in continuously reducing our vehicle BOM and further improving operating efficiency. Together, the high gross margin profile of the robotaxi segment is fundamentally elevating our revenue quality and actively contributing to the group’s future profitability. Now let us move on to robotruck. By leveraging our proven robotaxi stack, our next-gen robotruck achieves a 70% cost reduction. Furthermore, our transition to EV trucks will continue to drive down per-kilometer operating cost. Looking ahead to 2026, our shared expertise in robotaxi will accelerate our robotruck mass production, enabling us to begin deployment within 2026, as we aggressively deepen our route coverage across major logistic corridors and expand into more scenarios such as dedicated lines and port operations. We expect to see accelerated growth in revenues beginning in 2025. We are seeing strong client demand for our autonomous domain controller (ADC) product, with the ADC volume growing to six times the level of 2024. Looking ahead, we are seeing a solid order pipeline from existing customers and are actively expanding into new use cases. On the overall profitability front, we achieved a historical financial milestone in the fourth quarter by achieving our first-ever quarterly GAAP-level net profit. This historical pivot to profitability was primarily driven by gains from our strategic equity investments, which strengthen our broader ecosystem positioning and unlock business synergies. In 2025, our expenses were slightly widened. This was a deliberate front-loaded investment to accelerate Gen-7 mass production, expand into new cities, and strengthen our tech stack. Such investments are already starting to drive strong top-line growth. In the era of AI, we anticipate continuous investments into AI technology and talent to help us secure a long-term competitive edge. Beyond the technology benefits, our joint deployment model will also be a powerful lever for CapEx efficiency. By collaborating with partners to share the initial investment, we are able to scale our fleet rapidly while maintaining a lean balance sheet. Looking ahead, we expect revenue growth to outpace the growth of operating expenses as we capitalize on our fleet scale and capture the virtuous cycle of positive UE. Finally, we closed the year with a highly robust balance sheet with substantial cash reserves of over $1.5 billion following our successful Hong Kong IPO. This solid capital position gives us the firepower to invest decisively into R&D, SG&A, and go-to-market capabilities. We are confident that the stepped-up investment will accelerate our pace on large-scale commercialization and deliver faster revenue growth in 2026. Looking ahead, we are crystal clear on our strategic priorities: tripling our robotaxi revenue, expanding our fleet target to over 3,000 vehicles, and deploying robotaxis to more than 20 cities globally by 2026. We have ample dry powder to support these initiatives, and we will drive progress through our dual-engine growth strategy combined with our joint fleet deployment model that optimizes capital efficiency. We are well positioned to accelerate these targets and turn our operational momentum into sustained, profitable, and long-term growth for our shareholders. I will now turn the call over to the operator to begin our Q&A session. Thank you.

We will now begin the question-and-answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed, for the benefit of all participants on today’s call, if you have more questions, please reenter the question queue. If you ask questions in Chinese, please repeat them in English. The first question today comes from Ming-Hsun Lee with Bank of America. Please go ahead.

Hi. This is Ming from Bank of America, and thank you for giving me the opportunity to ask a question. My only question is that since you already have a target of over 3,000 robotaxi fleet by 2026, can you share your production ramp-up and deployment plan? Now that you have achieved the UE breakeven in Shenzhen and Guangzhou, how do you think about the future UE trajectory? Thank you.

This is James. I will take this one. In my opinion, hitting the UE breakeven is a huge win for the whole industry, not just for us. It proves that our technology actually works in the real world. It also shows that robotaxi is not just feasible, but profitable at scale. Right after the UE breakeven in Guangzhou, we did it again in Shenzhen. This shows that our model is replicable, and we achieved this breakeven by focusing on service value, not discounting. What we have seen is that on the regulatory front, we see a policy tailwind to support the whole industry. In China, there are coordinated efforts between the central and local governments to bring robotaxi services to many cities. In our existing markets of the tier-one cities, we have seen more licenses issued to facilitate a larger fleet. Globally, many countries learn from the progress in China and the U.S. to clear the policy hurdles and come up with regulations to support accelerated deployment. So the regulatory momentum gives us confidence to replicate our current success in many more markets both globally and in China. Therefore, to capture the market, two things we are focusing on this year: one is ramping up production, and the other is launching robotaxis in many more markets. On the fleet ramp-up, over the last two months, we have been focusing on producing the Toyota bZ4X, and we are also continuously producing more vehicles with Beijing Auto and Guangzhou Auto. With all three vehicles, we are confident we will hit over 3,000 units by year-end. Then on the ODD extension, we are pushing deeper into downtown hubs, and we are also expanding into new cities such as Hangzhou, Changsha, and many cities across the Greater Bay Area. In terms of UE, since fares in China are relatively low compared with many global markets, and in China we already deliver positive UE and are continuing to improve UE, we expect better earnings in our existing markets and definitely a lot better margins overseas. We plan to expand this year into 20 cities, which will give us a very strong first-mover advantage. Our joint deployment model will also lower our CapEx expenditures, which can help us accelerate fleet growth and at least triple our robotaxi revenues this year. With this, I will get back to the operator.

The next question comes from Tim Tsao with Morgan Stanley. Please go ahead.

Hi. This is Tim from Morgan Stanley. Thanks for taking my questions. I just have a follow-up question about Pony AI Inc. American Depositary Shares’ latest operation. Based on the dual-engine strategy management just mentioned, regarding expansion strategy to enter over 20 cities this year, could you share details about which cities you plan to enter and what is the split between China and the overseas market? Separately, with geopolitical tensions escalating in the Middle East, are you seeing any challenges or headwinds to your operation? That is my question. Thank you.

This is James again. I will take this one. Strategically, we are using our success in China as a blueprint for our global expansion. Because our technology and business model are proven, we can replicate quickly and broadly in global markets. In fact, we expect nearly half of the 20 cities we are targeting this year to be overseas, spanning Asia, Europe, and the Middle East. In terms of go-to-market strategy, we are teaming up with industry leaders to improve our joint deployment model, which can greatly reduce our CapEx expenditure. This helps us scale efficiently while at the same time building strong local networks. We are already launched in Zagreb, Doha, Dubai, and Singapore, partnering with global giants like Uber, Bolt, and Stellantis. One example is that together with Uber and Verne, we have launched the first commercial robotaxi services in Europe. Looking ahead, we are exploring more European cities and also doubling down in Asia, such as South Korea and Singapore. Regarding the last part of your question, our efforts in the Middle East—first and foremost, risk mitigation remains our high priority. So far, we have not seen any material impact to our business from the current geopolitical tensions. We are still charging along with our efforts in the GCC region. We expect to roll out fare-charging services with Mowasalat in Doha, Qatar, and we are getting ready for fully driverless operations in Dubai after approval later this month. Back to the operator.

The next question comes from Liu Yu with CLSA. Please go ahead.

Hi. Good evening, management. My question is on technology. So the world model and autonomous driving stack are now operating in multiple cities across different countries. Could you please tell us more about how the technology generalizes to new environments where the conditions could be very different from China? And what role does the world model play in accelerating your expansion plan? Thank you.

This is Tiancheng. I will take this one. First and foremost, the key insight is that driving is about interaction and negotiation with the agents around it. There is no difference whether you are in Guangzhou, Shenzhen, or Zagreb. Different cities and countries are essentially different combinations of similar scenarios. What varies is the probability distribution, not the fundamental nature of the challenges. Some example corner cases are reckless lane changes without checking mirrors or a fallen bicycle in the road. These corner cases occur everywhere. Our technology has already been validated in the most demanding conditions, operating at scale across all peak hours and all weather in dense urban cores in China’s major cities. This means that when we enter a city like Zagreb, we are not starting from scratch. We are deploying our system that has already mastered a superset of the scenarios it will encounter. This is why we can operate directly in Zagreb’s urban core, which carries significant commercial value. Regarding the second part of your question, our world model plays an important role in accelerating this process. It enables us to model the interaction and negotiation dynamics between our vehicle and the surrounding agents, and to generate large-scale simulated scenarios that reflect the specific traffic patterns of our new markets. By reinforcement learning within this simulated environment, our system continuously improves its driving policy, allowing us to validate and fine-tune efficiently without needing to collect massive amounts of data in a new city. The enablers for reaching 20 cities are clear. Our multi-OEM network provides locally suitable vehicle platforms. Our operational playbook—from remote assistance to fleet management—is highly standardized and repeatable. Our technology’s broad ODD coverage means we can operate in complex urban environments, not just limited to low-difficulty routes. Together, this gives us strong confidence in achieving our target of deploying robotaxi services in more than 20 cities worldwide by year-end 2026. With that, back to the operator.

The next question comes from Xinyu Feng with UBS. Please go ahead. Xinyu, your line is open. You may now ask your question.

Hi. Can you hear me? Hi. Yes. Hi. Thank you for taking my question and congrats to the solid results. My question is about the joint deployment model. For vehicles Pony AI Inc. American Depositary Shares plans to add this year, can you elaborate a bit more on how you will apply the joint deployment model? And how should we think about the benefit of this model for the company and our value chain partners? Thank you.

This is Liu. I will take this question. As you can see, we have hit the critical milestone of UE breakeven in Guangzhou and Shenzhen. After that, we have seen a lineup of partners in the whole ecosystem that want to join the robotaxi market, and we are their go-to choice. In this joint deployment model, our partner funds the vehicle CapEx and starts to tap into the whole robotaxi value chain—for example, ground operations, vehicle maintenance, and charging. We consider this a win-win situation for both of us. Our partner gets growing revenue from deployed vehicles, and we essentially are in an asset-light model to expand our fleet rapidly. In this year, we expect nearly half of our new vehicles to come through this model, led by Toyota. Not only do we improve our capital efficiency in our expansion through this model, but it also creates an additional revenue stream through recurring direct income in the form of revenue sharing or AI driver license fees. This revenue stream, combined with our self-owned fleet fare-charging revenues, will help us to achieve more than triple robotaxi revenue in 2026. Beyond that, with the current lineup of our partners such as Toyota, OnTime Mobility, and ATB, we expect even more partners will jump on board this year. I will get back to the operator.

The next question comes from Purdy Ho with Fubon Securities. Please go ahead.

Thank you for taking my questions and congratulations on your results. Regarding the 1,000 robotaxis already contracted with Toyota, how are you planning to deploy these vehicles? And do you expect any future scaling up or strategic initiatives with Toyota down the road? Thank you.

This is James. I will take this one. In terms of Toyota, I consider them not just a partner; they have been with us since 2019 as our largest strategic shareholder. The relationship between us goes way beyond just an auto supplier. It is a deep, strategic, long-term collaboration. In terms of the mass production of robotaxi vehicles, we have jointly launched several robotaxi models on Toyota platforms since 2019. In 2026, we are adding 2,000-plus new vehicles, and nearly half will be the new Toyota bZ4X Gen-7 vehicles. This model is jointly developed with Toyota Motor Company and GAC Toyota. The mass production is already live on Toyota’s assembly lines. There is great synergy between us. Their manufacturing capability and top-line platforms blend perfectly with our L4 technology and operational know-how. Besides jointly developing vehicles, Toyota is also the first partner to adopt our joint deployment model, funding the fleet to help us scale capital-efficiently. This shows their incredible confidence in Pony AI Inc. American Depositary Shares, and together we are rolling out commercially starting from China’s top-tier cities. With this, I will get back to the operator.

The next question comes from Yuchian Ding with HSBC. Please go ahead.

Thank you. This is Yuchian from HSBC. I have two. The first question is about the competition dynamics. How do you see the automakers getting into the robotaxi segment? And the second question is about the competitive edges. The market narrative is shifting more into scaling with more entrants getting in. What is Pony AI Inc. American Depositary Shares’ most unique leading advantage? Thank you.

I will take the first one, and I will hand over to Tiancheng for the second part. Certainly, we have seen that especially lately there are many announcements about new players already entered or planning to enter the robotaxi business. Those new entrants include automakers, ride-hailing companies, tech giants, and startups. In general, I think this new entrance to the robotaxi space validates the long-term potential for our industry, and I very much welcome the new players. Essentially, they can make the whole ecosystem even larger. But in reality, L4, especially robotaxi, is such a complex system that it requires an integrated solution. As I mentioned in my prepared remarks, there are five pillars for the robotaxi industry—technology, policy, mass production, operation, and partnerships. These five pillars are intertwined; simply throwing resources at them will not accelerate the development process. Over the years, we have developed a unique advantage across all aspects of the robotaxi industry. Regarding some of our competitive moats, I will hand over to Tiancheng to elaborate.

Thank you. Technically, I do not think automakers have an advantage in L4 robotaxi just because they are strong in manufacturing or in L2 systems. The key point is that L2 and L4 are fundamentally different. They are not just two points on the same path. In L2, as the mild system intervention increases, the accident rate can increase. Partial automation can create a false sense that the system is almost good enough until it fails in a situation where the human is no longer ready to take over. That is why the L2 path does not naturally lead to L4, especially when we are talking about a driverless fleet at scale. One unique advantage we have at Pony AI Inc. American Depositary Shares is our long-term investment in our world model and our L4-native virtual driver training approach. The reason this matters is that L4 robotaxis need to be significantly safer than human drivers, and that cannot be achieved by simply imitating human driving behavior. To reach that level of safety, the system has to keep improving through large-scale trial and error in a virtual environment, which is why our world model is essential. In other words, the key to training an L4 virtual driver is building a virtual environment with strong enough sim-to-real capability, especially when it comes to interaction between vehicles. That is also why the L4 approach requires many years of investment in AI, and it does not improve mainly by collecting more real-world data. The second unique advantage is that we have a real robotaxi fleet in operation, and those fleets continuously help us see where the world model is still different from the real world. The hardest part of L4 is not the first 99%. It is the last 1%: the long tail of rare, critical corner cases. We handle those cases safely, but it is not enough to look at the well-recorded trajectory. What really matters is understanding how the other vehicles may behave across many different intentions with the AI driver. This is exactly why the world model is so important. Only a world model can give you enough coverage of the full combination space of different intentions in the corner cases, and that kind of coverage is what L4 safety ultimately requires. At the same time, only fully deployed robotaxis can keep narrowing the gap between the world model and the real world. Real-world robotaxi operations let us observe and understand the actual behavior patterns of vehicles and pedestrians in those scenarios, where human driving data cannot observe interaction with robotaxis. This is also aligned with the fact that new players typically can only start with a very small fleet. Regulators understand this logic as well, so they are naturally very cautious about granting permits at early stage. To summarize, automated entrants confirm the size of the opportunity. But L4 robotaxi is not something you get by extending L2. Pony AI Inc. American Depositary Shares’ unique advantage comes from two things: a world model built for L4 and a real robotaxi fleet that continuously helps to improve it. Together, they create a closed loop that keeps both the model and the product moving forward. With this, back to the operator.

The next question comes from Joel Ying with Nomura. Please go ahead.

Thanks for taking my question. This is Joel from Nomura. I would just like to understand how management views the impact of NVIDIA launching their open-source model for smart driving as Level 4, which we just saw at GTC this year. Thank you.

For this question, I think the key is to distinguish between a model and the real product. An open-source autonomous driving model can be a good starting point but not the end product. There is still a very big gap between a model and a robotaxi fleet that is commercially deployed, safety-proven, government-approved, and operating at scale. Closing that gap is exactly where our core advantage lies. At Pony AI Inc. American Depositary Shares, our strength comes from years of full-stack in-house development and real L4 deployment at scale. That includes not just the software or the model, but also the vehicle architecture, sensor redundancy design, domain controller, operating system, validation, and the commercialization capability needed to run actual robotaxi services. For example, sensor customization, redundant design, direct functional safety, manufacturability, and BOM cost. Our OEM partnerships are also very different from a plug-and-play approach; they give us better system integration, higher reliability, and lower overall system cost. We view progress from NVIDIA as moving the ecosystem forward. At the same time, we believe the real barrier to entry remains very high. And, of course, NVIDIA is an important partner of ours on domain controllers. We maintain a strong collaborative relationship. With this, back to the operator.

The next question comes from Tianyu Liu with CITIC Securities. Please go ahead.

Hi, this is Tianyu from CITIC Securities. Thanks for taking the question and congratulations on rapid growth in your robotaxi service. I have one question. How do you plan to allocate your Hong Kong IPO proceeds? And given your accelerated development targets, do you expect any upward revisions to the 2026 cost and expenditures?

This is Liu. I will take this question. As I mentioned earlier, we have ample cash reserves, about $1.5 billion as of December 2025, which was driven by our Hong Kong IPO proceeds. We received proceeds of more than $800 million. This definitely secures long-term capital to fuel multiyear growth. For us, the 2025 achievements in terms of Gen-7 deployment and UE breakeven made us a clear industry leader. Looking forward, we look for accelerated top-line growth to widen our leading position and push the whole industry towards the next stage. Hence, we need to strategically increase our investments. We have significantly scaled up the number of robotaxis operating across China’s tier-one cities, especially in Shenzhen and Guangzhou. We also recently entered new cities in China such as Hangzhou and Changsha, and internationally in Croatia, and plan to deploy in more than 20 cities by this year. In order to support the multiple market expansion, we will invest in business development, operations, and marketing. As we scale our robotaxi deployment, we are expanding our robotaxi fleet through joint deployment models as well as investing in self-owned vehicles. We would also recruit AI talent and invest in AI infrastructure to further improve our virtual driver capability. We think this will allow us to consistently meet the public’s high expectations for safety, reliability, and quality to offer a trusted robotaxi service. James already mentioned that this is a critical period to expand market share, which we think requires necessary investment to solidify our technological and operational moats. We believe the strategic increase in investment is a value-driven trade-off to secure long-term market leadership. With disciplined capital allocation and the benefits from the joint deployment model, we believe this will pay off with much faster growth, city expansion, and fleet size, and will also lead the whole industry into a much advanced phase. Thank you. I will now get back to the operator.

The next question comes from Kai Shao with CICC. Please go ahead.

Thank you. This is Kai from CICC. I have one question regarding raw materials information such as memory. Could you share your view on how inflation impacts your production plan and cost items? Thank you.

This is Liu again. I will take this question. Thank you for asking this important question. As I mentioned earlier, the impact on both vehicle and ADK BOM cost is very limited. We think this resilience is driven by our proactive supply chain strategy and inventory management with our ADC domain controller business. Through this approach, we secured our memory even before the market went into price inflation and shortages. We are very confident that we can fully support this year’s robot production target of over 3,000. Thanks to the supply chain measures and our continuous scaling, we remain on track to achieve a 20% reduction in ADK BOM cost for 2026 compared to Q2 2025 levels. We will carry out ongoing hardware and software optimization, and this will further reduce our overall cost down the road. Thank you, and I will get back to the operator.

There are no further questions at this time. I would like to now turn the call back over to the company for closing remarks.

Thank you once again for joining the earnings call 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.

This concludes today’s conference call. We thank you all for attending today’s presentation. You may now disconnect your line.