The Investor
19 May 2026, 18:27
Hesai Shares Fall 8% as Margin Compression and Slowing Growth Outlook Overshadow Profit Turnaround
Hesai Group dropped 8% today despite reporting its fourth consecutive quarter of GAAP profitability and a dramatic improvement in year-over-year earnings, with investors apparently focused on gross margin compression and a Q2 revenue guidance range that implied a deceleration from recent growth rates.
Net revenues for Q1 2026 reached RMB 680.6 million ($98.7 million), up 29.6% year over year, driven by total lidar shipments of 471,723 units, up 140.9% from 195,818 units in Q1 2025. ADAS lidar shipments surged 141.9% to 353,441 units while robotics lidar shipments grew 137.8% to 118,282 units. Net income swung to RMB 18.3 million from a net loss of RMB 17.5 million a year ago, and non-GAAP net income jumped 452.9% to RMB 47.7 million.
The pressure point was gross margin, which contracted to 39.1% from 41.7% a year earlier, primarily due to a higher revenue mix from lower-margin products and declining average selling prices — a familiar tension for hardware companies scaling rapidly in competitive markets.
The Q2 guidance may have done the most damage. The company guided for revenues of RMB 850 million to RMB 900 million, implying year-over-year growth of 20% to 27% — a step down from the 30% delivered in Q1, which the market may have read as a sign of near-term momentum softening.
The strategic highlights were genuinely impressive. Hesai was announced as strategic lidar partner for Mercedes-Benz L3 autonomy programs, maintained a 55% share of China's long-range automotive lidar market for 14 consecutive months, and unveiled Picasso, the world's first 6D full-color ultra-sensitive lidar chip. The company also launched Kosmo, a spatial intelligence device targeting robotics simulation, immersive media and physical AI infrastructure, with SGI revenues expected to contribute around RMB 100 million this year.
The 8% decline reflects a market that found the margin trajectory and decelerating guidance more pressing than the strategic milestones, at least for now.
Hesai Group dropped 8% today despite reporting its fourth consecutive quarter of GAAP profitability and a dramatic improvement in year-over-year earnings, with investors apparently focused on gross margin compression and a Q2 revenue guidance range that implied a deceleration from recent growth rates.
Net revenues for Q1 2026 reached RMB 680.6 million ($98.7 million), up 29.6% year over year, driven by total lidar shipments of 471,723 units, up 140.9% from 195,818 units in Q1 2025. ADAS lidar shipments surged 141.9% to 353,441 units while robotics lidar shipments grew 137.8% to 118,282 units. Net income swung to RMB 18.3 million from a net loss of RMB 17.5 million a year ago, and non-GAAP net income jumped 452.9% to RMB 47.7 million.
The pressure point was gross margin, which contracted to 39.1% from 41.7% a year earlier, primarily due to a higher revenue mix from lower-margin products and declining average selling prices — a familiar tension for hardware companies scaling rapidly in competitive markets.
The Q2 guidance may have done the most damage. The company guided for revenues of RMB 850 million to RMB 900 million, implying year-over-year growth of 20% to 27% — a step down from the 30% delivered in Q1, which the market may have read as a sign of near-term momentum softening.
The strategic highlights were genuinely impressive. Hesai was announced as strategic lidar partner for Mercedes-Benz L3 autonomy programs, maintained a 55% share of China's long-range automotive lidar market for 14 consecutive months, and unveiled Picasso, the world's first 6D full-color ultra-sensitive lidar chip. The company also launched Kosmo, a spatial intelligence device targeting robotics simulation, immersive media and physical AI infrastructure, with SGI revenues expected to contribute around RMB 100 million this year.
The 8% decline reflects a market that found the margin trajectory and decelerating guidance more pressing than the strategic milestones, at least for now.
