Arbe Robotics Ltd.

Good morning everyone and welcome to the Arbe Robotics fourth quarter and full year 2024 financial results conference call. All participants will be in a listen only mode. Should you need assistance please email a conference specialist by pressing the star key followed by zero. After today's presentation there will be an opportunity to ask questions. To ask a question you may press star and then one on your touchtone phone. To draw your questions you may press star and two. Please also note today's event is being recorded. At this time I would like to turn the floor over to Mary Segal CEO of MSIR. Please go ahead.

Thank you operator and everyone for joining us today. Welcome to Arbe's conference call. Before we begin I would like to remind our listeners that certain information provided on this call may contain forward-looking statements and the safe harbor statement outlined in today's earnings release also pertains to this call. If you have not received a copy of the release please view it in the investor relations section of the company's website. Today we are joined by Koby Marenko, Arbe's co-founder and CEO who will begin the call with a business update. Then we will turn the call over to Corinne Pinto-Flomenboim, CFO who will review the financials. Finally we will open the call for the question and answer session. With that I would like to turn it over to Koby Marenko. Koby please go ahead.

Good morning everyone and thank you for joining us. I will begin by reviewing some of our recent business highlights. Throughout the year we focused on driving a radar revolution by innovating and delivering cutting edge solutions that set new industry standards. Our commitment to pushing the boundaries of radar technology with our industry leading solutions remains strong. We take pride in the progress we have made in both product development and customer relationships expanding and enhancing our offerings. Many top car manufacturers are actively selecting their radar suppliers this year and we are confident that our chipset will play a key role in those discussions. In 2024 one of the top 10 global auto OVLs selected our chipset for its next generation imaging radar. Zensack, a Swedish AI and software company and RST1 Sensorad have announced a joint exploration of 4G high resolution imaging radar to enhance safety in automated driving. We were thrilled to announce a collaboration with NVIDIA where together we are revolutionizing vehicle safety and autonomy. We are proud to showcase this groundbreaking technology at the CES exhibition in Las Vegas in January. Our high resolution radar integrates with NVIDIA's in-vehicle computing platform to transform radar based free space mapping. These technologies combine to redefine vehicle perception and decision making paving the way for what we believe will be safer and smarter mobility solutions. We look forward to future collaboration with NVIDIA. In September, Hyren Technologies, one of our key team ones, announced that it is in fast tracking of the development of an ADAS system for a Chinese auto manufacturer using our chipset, effectively replacing the lidar from the current system. The ADAS system is anticipated to enter serial production by Q4 2025 pending final approval from the OEM. Additionally, in 2024, we announced a collaboration with the leading European truck manufacturer to integrate our automotive grade imaging radar technology into its next generation central suit. This mounts a significant milestone in the manufacturer's transition to an advanced implementation stage. It is important to mention that our radar technology addresses the unique challenges of the trucking market, such as larger size of trucks, longer braking distances, and higher impact potential. Moving on, Fenswold announced that it has signed a framework agreement worth an estimated $7.3 million to supply 4D imaging radars powered by Arvids technology to Tianhe Transportation Technology in China for vehicle world cloud integration technology. This framework agreement follows an extensive year-long evaluation of our advanced chipset technology. We believe that there are significant opportunities for growth in the non-automotive market, and we are happy to support Sensorat in delivering unparalleled radar solutions and driving innovation forward in such key markets. While the decision-making process and development timelines are longer than initially expected, we have not received negative responses or missed any opportunities, and the total addressable market continues to expand. Based on our current engagement and our ability to secure and execute contracts with leading OEMs, we estimate that by 2030 we can ship around 5 million imaging radar chipsets to our customers. I'd like to elaborate on our successful fundraising initiatives, which resulted in a total amount of nearly $70 million. This includes 33 million raised through an underwriting registered direct offering, which included the exercise of a 4 million over-enrollment option by the underwriters closed in January 2025 led by Panacotin Unity. $21.5 million released to the company in January 2025 from the Esco account following the conversion of convertible bonds issued on Tel Aviv Stock Exchange in 2024. $15 million raised in underwriting public offerings that closed in November 2024 led by Panacotin, along with $0.5 million raised in January 2025 from the exercise of Warren, issued as part of the November 2024 offering. We're delighted to share that AWM Special Situations Fund, one of our largest shareholders, has invested in our recent fundraising grant for the third time. In addition, we are happy to welcome the new investors who participated and believed in the future of Arbe. This funding provides the financial support needed to accelerate our growth, enhance the development of the next generation of our radar solutions, and reinforce our market leadership. With a strong balance sheet that helps ensure our financial stability, we believe we are in a great position to grow our global presence and gain more OEM and tier 1 relationships. In conclusion, we are pleased with the progress we've made over the past year, along with the achievement of our tier 1 partners and recent collaborations with key players like Nvidia. We look forward to sharing more as we continue to move forward. Now, I'd like to turn it over to our CFO, Corinne, to go over the financial.

Thank you, Colby, and hello, everyone. Let me review our financial results for the fourth quarter of full year 2024 in more detail. Total revenue in the fourth quarter was $0.1 million compared to $0.35 million in the fourth quarter of 2023. For the full year of 2024, total revenue was $0.8 million compared to $1.5 million in 2023. Backlog as of December 31, 2024, is $0.3 million. Growth margin loss for Q4 2024 was similar to the growth margin loss in Q4 2023 at a level of $0.2 million loss. Growth margin for the full year of 2024 was $0.8 million loss compared to a $0 growth margin in 2023. -over-year growth margin reduction is mainly related to a low level of revenue and to the increase in labor costs. Moving on to expenses, in Q4 2024, we reported total operating expenses of $12.6 million compared to $11.9 million in Q4 2023. Operating expenses for the full year of 2024 totalled $48.9 million compared to $46.8 million in 2023. The operating expenses increase was primarily a result of non-cash shared base compensation expenses. In addition, the increasing production ramp-up related costs, the doubtful debt provision, and to a lesser extent the increase in labor costs were assessed by a decrease due to the generalization of costs related to our advanced production stage and the savings in our B&O insurance. The company maintains a strong focus on research and development, ensuring continuous innovation and technological advancement. With R&D expenses totaling $9 million for Q4 2024 compared to $8.4 million in Q4 2023. R&D expenses for the full year of 2024 were $35.1 million compared to $34.1 million in 2023. Operating loss for the fourth quarter of 2024 was $12.8 million compared to a loss of $12.1 million in the fourth quarter of 2023. Operating loss for the full year of 2024 totalled $49.7 million compared to $46.9 million in 2023. Looking at adjusted EBITDA, a non-gap measurement which excludes expenses for non-cash shared base compensation and for non-recurring items, in Q4 of 2024 was a loss of $9 million compared to a loss of $8.2 million in the fourth quarter of 2023. Adjusted EBITDA for the full year of 2024 amounted to a loss of $33.3 million, slightly below 2023 adjusted EBITDA with a loss of $32.5 million. Net loss in the fourth quarter of 2024 was $12.2 million compared to a net loss of $9.3 million in the fourth quarter of 2023. Net loss for the full year of 2024 was $49.3 million compared to a loss of $43.5 million in 2023. Net loss in 2024 included financial income of $0.3 million compared to a financial income of $3.4 million in 2023. 2024 full year financial income resulted from interest deposits and warrants revaluation income, partially upset by bond financing expenses. Moving to our balance sheet. As of December 31, 2024, Arbe had $24.6 million in cash, cash equivalents, and short-term bank deposits. During January 2025, we raised gross proceeds of $54.5 million, $33 million of which related to underwritten public offerings, and $21.5 million were related to the portion released from escrow due to the conversion of our convertible bonds, thus providing us with a robust balance sheet. With respect to our guidance, Arbe's leading radar technology remains a top priority for key decision makers in the automotive industry. Recent cash infusion totaling $17 million further underscores investors' confidence in our market potential and growth trajectory. While broader economic shifts have led to short-term delay in automakers' rollout of advanced driver assistance systems, decision timelines have been extended. As a result, Arbe continues to engage closely with industry leaders, advancing through RFQ stages, and strengthening its position for adoption. We continue with our goal to pursue four design-ins with automakers in 2025. 2025 annual revenue are expected to be in the range of $2 million to $5 million and will be weighted towards the end of the year. Adjusted EBITDA for 2025 is projected to be in the range of $29 million loss to $35 million loss. Now we will be happy to take your questions.

Ladies and gentlemen, at this time we'll begin the question and answer session. To ask a question, you may press star and then 1 using a touchtone telephone. To withdraw your questions, you may press star and 2. If you are using a speaker phone, we do ask that you please pick up the handset before pressing the keys to ensure the best sound quality. Once again, that is star and then 1 to ask a question. We'll pause momentarily to assemble the roster. And our first question today comes from Suji Da Silva from Roth Capital. Please go ahead with your question.

Hi, Kobe. Hi, Kareem. Congrats on the funding and the position here. As we look at the 2025 revenue forecast, toward the end of the year, which program do you think will drive the million plus revenue quarters that you're expecting to go 26 ramp?

Sorry, Suji, you were breaking. Can you repeat?

Oh, so which programs, Kareem, are you expecting to help drive a million plus revenue quarters toward the end of the year?

Well, as we said, there are two or three leading projects that are in the final stages of maturing. One is Tianhe, the non-automotive. One is the trucks in Europe. And the third and most important one is with the hiring with the Chinese car manufacturer. All of them we expect to start shipping chips as soon as we will have the full production.

Okay, that helps. Great. I just need to update on the, I guess, as opposed to the end for Q, the current cash balance and the share count.

Yeah, so what was the question, Suji? What is the current cash

balance? Current

cash balance, current you mean now post the raising?

Correct, post the raise, yes.

So currently it's above 70 million, about $73 million.

Okay.

And the current cash count is 85.7 million.

Share is count. Share

is count.

85.7 million.

85.7, okay, got it. And then lastly, maybe Kobi, the China EV market, can you update us on the opportunity there? We know that market's doing well. Where might you see initial traction there? Thanks.

So I think, as you said, the Chinese market is, especially on the EV, is doing well. And I think all of the Chinese car manufacturers that were focusing on launching third generation of self-driving services, which is more or less advanced adaptive cruise control, are now looking into achieving kind of hands-free eyes of driving. And for that they are looking for radar, like an imaging radar, together with the camera to solve the problem.

Okay, all right, thanks.

Our next question comes from George Gianaritius from Canaccordionuity. Please go ahead with your question.

Hi, everyone. Thank you for taking my questions. Kobi, could you just sort of describe to us a little bit of what's happening within the OEMs that you're having discussions with? To what extent are they evaluating other offerings from OEMs, or do you feel like you're already on the front path to converting these discussions into wins over the next 12 months? Thank you.

I think let's divide it between China and the rest of the world. On the rest of the world, all of the evaluations are in the final stages. We are shortlisted in most of them with one competitor, in some of them with two competitors. Again, it's not that, of course, it's Magna or T01. And the other chipsets that are available in the market is the NXP that the radar is done by Continental, and Valeo that the chipset is done by Mobilize. We know that we have an advantage on both of them in terms of performance or price. So with Continental, we have a better performance and more or less the same price. With Mobilize, we have the same performance more or less and a huge advantage on price.

Thank you. And maybe for Corinne, you've obviously given your 2025 EBITDA look. Could you just help us understand the glide path for OPEX to the extent you can over the next couple of years? Thank you.

So as we mentioned, it's between 29 to 35 guidance, which is middle range, is about $33 million of OPEX. We expect this to be quite similar for the next couple of years, and maybe just to add additional investments which we carry in our next generation and related costs associated with it. So additional increase in investments between $5 million to $15 million over those two to three years coming in addition to our ongoing OPEX expenses.

Thank you very much.

And ladies and gentlemen, at this time, in showing no additional questions, we'll be concluding today's question and answer session. I'd like to turn the floor back over to Arbe CEO, Koby Marenko, for closing remarks.

We are so pleased to have you join us today. To our employees and partners, your continued dedication is deeply appreciated. We look forward to updating you further on Arbe's progress in the coming months. Look out for updates as we prepare for several Investor events, including the ROT conference in Dena Point, California on March 17. We'd love to meet you in person for further discussions. Please contact us at investors at arbererobotics.com or visit our site to schedule a meeting. Thank you all.

And ladies and gentlemen, with that, we'll conclude today's conference call. We do thank you for attending today's presentation. You may now disconnect your lines.