Summary of Key Points
Momenta is a company that develops autonomous driving software and recently went public in Hong Kong, generating significant interest from investors (with subscriptions exceeding 400 times its offering amount and a market value of over HK$70 billion). It holds a substantial market position: it occupies 64.5% of the global independent city autonomous driving (NOA) market share and collaborates with 24 automakers, including 9 of the top 10 in the world. Its software has been installed in 68 vehicle models, totaling over 730,000 units. However, it faces significant challenges. The company has incurred losses of HK$9.2 billion over the past three years due to a concentration of its customer base, which weakens its bargaining power. Additionally, research and development (R&D) expenses account for nearly 80% of its revenue, and Robotaxi, its potential growth area, has not yet contributed much to its profits. In short, although Momenta is a leading player in autonomous driving software, being widely needed does not equate to generating substantial profits; profitability remains to be proven.
I. The High Demand for Its Market Presence: Large Scale, but Dramatic Losses
The enthusiasm surrounding Momenta’s IPO was well-deserved:
- Leading Market Share: With a 64.5% market share among global independent city NOA suppliers, its software is used in approximately 6 out of every 10 vehicles equipped with autonomous driving systems.
- Wide Customer Base: It collaborates with 24 major automakers, including 9 of the top 10 globally.
- Rapid Commercialization: Its software has been adopted by 180 vehicle models, with 68 of them already in mass production, indicating that its technology is not just in the laboratory but has made it onto production lines.
On the other hand, the company’s financial performance is alarming:
- Protracted Losses: It lost HK$923.4 million from 2023 to 2025, with losses increasing each year (from HK$2.57 billion to HK$3.458 billion). This means it incurs a daily loss of over HK$8 million. The contrast between its large scale and substantial losses is a major issue.
II. Concentrated Customer Base: Automakers as Dominant Players
Momenta’s main customers are automakers, which are not ordinary buyers but rather powerful partners:
- High Customer Concentration: The top five customers account for 62% to 86% of its revenue (62.6% in 2025), indicating that its income is highly dependent on a few key clients.
- Weak Bargaining Power: Automakers can influence pricing, demand discounts, and extend payment terms. For example, the prospectus mentions that customers may impose significant pricing and delivery requirements, affecting profits.
- Risks from In-house Development: Many automakers, such as BYD and Tesla, are developing their own autonomous driving systems, which could reduce their reliance on third-party software in the future. Even with a high market share, Momenta could be replaced if these companies switch to their own solutions.
In summary, although its software is widely used in vehicles, pricing, delivery timelines, and other aspects are determined by the automakers, limiting its ability to generate profits.
III. Improving Revenue Structure, but R&D Expenses Are High
Momenta’s revenue has grown rapidly (from HK$740 million in 2023 to HK$2.41 billion in 2025), and gross profit has increased from HK$130 million to HK$1.727 billion. This change reflects a shift in its business model:
- Shift from Project-Based Revenue to Per-Vehicle Licensing: It previously relied on project-based fees, which were unstable. Now, licensing services account for 40.1% of revenue, providing a more stable source of income.
- R&D Expenses Remain High: In 2025, R&D costs amounted to HK$1.869 billion, accounting for 77.5% of total revenue. Autonomous driving software requires continuous adaptation to new vehicles, hardware, and road conditions, making it difficult to reduce R&D spending.
- Operating Losses Narrowing, but Still in the Red: Despite a decrease in net losses (from HK$345.8 million to HK$303 million after adjusting for non-cash items), the company is still operating at a loss.
IV. Robotaxi: A Promising Future, but Not Yet a Profit Driver
Momenta is investing 20% of its funds in Robotaxi, as this area holds significant potential due to its role in autonomous driving’s future development. However, the reality is that:
- Limited Revenue Contribution: Robotaxi revenue is currently minimal and in its early stages.
- Mass Production as the Main Source of Income: Momenta’s current profits come from software installed in mass-produced vehicles, with Robotaxi being more of a long-term goal. While the market values this potential, it has not yet generated significant revenue.
In conclusion, while Momenta’s revenue structure is improving, the high cost of R&D remains a major obstacle to profitability.
V. The Dilemma of Momenta
Momenta faces a dilemma: despite its large scale and numerous customers, it struggles to turn a profit due to the dominant position of automakers and the high costs associated with R&D. Its future profitability depends on several factors:
- Improving Revenue per Vehicle: It needs to negotiate higher fees from automakers for its software.
- Efficient R&D: It must improve the efficiency of its R&D efforts to maintain a competitive edge with lower costs.
- Commercialization of Robotaxi: Successful commercialization of Robotaxi is essential for generating substantial profits.
In summary, Momenta is a leading player in autonomous driving software, but it still has a way to go before it can become profitable.