Where did the money go? Horizon with an average annual salary of 1.32 million yuan per employee posted losses exceeding 10.4 billion yuan

Author | Yu Xing                           Editor | Gao Yan                       Source | Ye Ma Finance

As automakers fiercely compete in intelligent driving, Horizon Robotics (9660.HK), the company building the “brain” for smart cars, has become the first to bleed.

On March 19, Horizon Robotics (hereafter “Horizon”) released its 2025 annual report. The financials show that last year, the company’s revenue soared to 3.758 billion yuan, a 57.7% increase year-over-year; but its annual loss reached 10.469 billion yuan, turning from profit to loss.

The report indicates that the most direct reason for the loss is a sharp increase in R&D investment.

Horizon founder and CEO Yu Kai stated at the earnings conference that this was a strategic choice. The 5.15 billion yuan spent on R&D was heavily directed toward cloud AI training, the next-generation BPU “Riemann architecture,” and future-oriented physical AI foundational models. Yu emphasized, “We are not afraid of high R&D costs; we believe this will lead to future technological advantages.”

In the spring of 2026, amid the fierce competition in the smart automotive sector, Yu Kai is leading the company in a “big gamble” over future dominance.

As of March 20, Horizon’s stock closed at HKD 7.34 per share, with a total market value of HKD 107.5 billion.

From Profit to Massive Loss

Where did the problem come from?

Looking only at revenue, Horizon is almost textbook-level fast-growing company. In 2025, revenue reached 3.758 billion yuan, up 57.7% year-over-year, with a gross margin of 64.5%. Of this, automotive business accounted for 94.6%, with a high gross margin of 67.2%.

This growth is driven by the rapid development of the industry. Financial data shows that in 2025, China’s passenger car market made significant breakthroughs in intelligent transformation. The penetration rate of passenger cars equipped with intelligent assisted driving features hit a record high of 67.6%.

Notably, in terms of new car sales, the proportion of vehicles equipped with mid-to-high level intelligent assisted driving features jumped from 21.6% in 2024 to 42.6% in 2025. As a result, in 2025, two out of every three passenger cars sold in China were equipped with intelligent assisted driving, nearly one of which had a mid-to-high level system.

Meanwhile, in 2025, Horizon maintained its leading position in the basic assisted driving solutions (ADAS) market for mainstream brands, with a market share of 47.7%. It also ranked first in the emerging mid-to-high level intelligent assisted driving market with a 14.4% share; in the mainstream vehicle market under 200,000 yuan, Horizon’s mid-to-high level intelligent driving solutions held a 44.2% share, ranking first.

However, despite the rapid market growth and dominant market share, Horizon reported a massive loss of 10.469 billion yuan, a sharp decline from the net profit of 2.347 billion yuan in 2024.

The culprit behind the increased revenue but decreased profit is primarily R&D spending. In 2025, Horizon’s R&D expenditure reached 5.154 billion yuan, up 63.3%, accounting for 137.1% of revenue. This means that for every yuan earned, Horizon invests 1.37 yuan in R&D.

The growth in R&D spending is driven by three main factors: first, increased costs for cloud services and technology procurement for full-scenario urban NOA solutions HSD and the high-end ADAS chip Journey®6; second, rising salaries (including stock-based compensation) for R&D personnel; third, higher costs for chip tape-outs and materials. Despite continuous R&D investment, its proportion of revenue remained stable, at 132.4% in 2024.

In addition to R&D, Horizon’s sales and marketing expenses grew 54.2% to 632 million yuan in 2025, mainly due to increased marketing, brand promotion, and employee benefits (including stock-based compensation). However, the sales and marketing expense ratio slightly decreased from 17.2% in 2024 to 16.8% in 2025.

Average Annual Salary of 1.32 Million Yuan

It’s clear that the increases in R&D and sales & marketing expenses include rising salaries and employee benefits.

Horizon’s employees have long been envied by many workers. Even compared to peers, Horizon’s salary levels are highly competitive.

The prospectus shows that during the 2023 IPO, Horizon had 1,478 employees, with total compensation of 1.435 billion yuan, averaging 971,000 yuan per person annually. This ranks second in the industry, just behind Hesai Technology listed on Nasdaq (993,000 yuan).

By October 2024, when Horizon was listed on the Hong Kong Stock Exchange, the company had 2,078 employees, with an average annual salary of about 1.1778 million yuan, a rise of over 21%.

By 2025, employee salaries increased again. The annual report states that as of December 31, 2025, Horizon employed 2,215 full-time staff, with total salary expenses (including stock-based compensation) of 2.918 billion yuan.

This means the average annual salary per employee in 2025 was approximately 1.3172 million yuan, nearly 12% higher than the previous year.

Can Losses Make Room for Growth?

At the earnings conference, Yu Kai appeared quite calm. He explained the massive losses as a proactive “investment” in the future: “We have actively increased R&D investment, especially in cloud service training costs. We are not afraid of high R&D costs; on the contrary, we believe that continuous R&D will improve Horizon’s AI foundational models and build a strong moat.”

This “losses for future space” logic has convinced most investors. After the earnings release showing huge losses, the stock price actually rose 1.24% on March 20.

But clearly, Horizon’s pressure isn’t just financial. Over the past few years, Horizon has burned over 10 billion yuan in R&D, achieving process node breakthroughs from 14nm to 7nm. However, compared to international giants like Nvidia and Qualcomm, which are advancing with more cutting-edge processes (4nm/5nm), Horizon faces a tough challenge. Even more “lethal,” former allies are now going their own way—BYD adopting a “Horizon chip + self-developed algorithms” hybrid model, and Li Auto’s self-developed smart driving chip “M100” already in road testing.

Customers turning into competitors have severely squeezed Horizon’s market space. To sustain intense technological competition, Horizon has had to frequently seek market funding. In 2025, through Hong Kong IPO and subsequent placements, Horizon raised over 15 billion yuan, but even so, a single 5.8 billion yuan financing caused its market value to evaporate by 11.3 billion yuan in one day.

During the earnings conference, Yu Kai tried to reassure the market about profitability concerns. He said that although the average chip price in 2025 was less than $60, with high-end solutions like urban NOA (HSD) entering mass production, “the increase in product unit price will contribute more to revenue growth than shipment volume in the coming years.” He revealed that HSD shipments are expected to reach 400,000 units this year, and they plan to trial Robotaxi operations with partners in the third quarter.

1.55 Billion and the Founder’s “Refusal to Play”

To understand why Horizon dares to lose so much, it’s related to founder Yu Kai’s entrepreneurial philosophy.

Rewinding to 2015, 39-year-old Yu Kai left Baidu and plunged into the then-quiet, nearly desolate smart driving chip sector. A scientist who had built Baidu’s Deep Learning Research Institute, Yu had an “unconventional” ambition from the start: to build a “chip + operating system” for robots, aiming to become a foundational infrastructure company like Intel or Qualcomm.

The first five years of entrepreneurship, Yu described as “dark days.” At that time, smart cars had not yet exploded, and his team relied on AIoT businesses like smart city and smart retail to sustain automotive chip R&D. In 2019, facing bloated business lines, Yu made a painful decision: cut all non-driving-related businesses, reducing the team from 1,200 to 700. Looking back, Yu believes that without that cut, they would have “definitely died.”

A turning point came in 2020. At that time, Li Auto faced difficulties because Mobileye couldn’t meet the algorithm needs for specific Chinese scenarios, with only 8 months before the launch of the Li ONE facelift. Yu led hundreds of Horizon engineers to move directly into Li’s R&D center, providing open “white-box” solutions and 24-hour support, completing what normally takes 18-24 months in just 8 months.

After Li ONE’s launch, monthly sales exceeded 10,000 units, and Horizon became famous. Yu later recalled in an interview with “China Business Leaders” that the purpose of their work was to create value—“making customers more successful because of your products and services.” Subsequently, investments from Volkswagen of 2.4 billion euros and cooperation with over 40 automakers pushed Horizon to the top of China’s smart driving chip industry.

Yu Kai once famously said: “Not playing at the table is more important than quick success.” At a media event in early 2026, he reiterated, “Horizon doesn’t want to be someone who shows off; what really matters is to stay undefeated.”

Today, with Horizon, Yu Kai’s wealth has skyrocketed. The 2025 Hurun Rich List ranks him at 430th place with 15.5 billion yuan, up 64 places from the previous year.

For Horizon, the 10+ billion yuan loss in 2025 is not the end of the story but a stage in a “big gamble” for future dominance in intelligent driving. Will Yu Kai lead Horizon to the final victory in this long “game”? Share your thoughts in the comments.