indie Semiconductor, Inc.

Good afternoon and welcome to Indy Semiconductors' first quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference call is being recorded. I will now turn the call over to Ashish Gupta, Investor Relations. Mr. Gupta, please go ahead.

Thank you, Operator. Good afternoon and welcome to Indy Semiconductor's first quarter 2024 earnings call. Joining me today are Don McClimat, Indy's co-founder and CEO, and Tom Schiller, Indy's CFO and EVP of Strategy. Don will provide opening remarks and discuss business highlights, followed by Tom's review of Indy's Q1 results and Q2 outlook. Please note that we will be making forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. These statements reflect our views only as of today and should not be relied upon as representative above these as of any subsequent date. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For material risks and other important factors that could affect our financial results, please review our risk factors in our annual report on Form 10-K for the fiscal year ended December 31, 2023, as well as other public reports filed with the SEC. Finally, the results and guidance discussed today are based on consolidated non-GAAP financial measures, such as non-GAAP gross margin, non-GAAP operating income loss, non-GAAP net income loss, and non-GAAP EBITDA. These metrics may exclude from its corresponding GAAP measures certain of the following items, depreciation and amortization, share-based compensation, acquisition-related expenses, inventory cost realignments, gain or loss from change in fair values, non-cash interest expense, and income tax benefits or expenses. For complete reconciliation to GAAP and the definition for the above items, please see our Q1 earnings press release, which was issued in advance of this call. It can be found on our website at www.tindysemi.com. I'll now turn the call over to Donald.

Thanks, Ashish, and welcome, everybody. Indy continues to significantly outpace our industry peer group and is capitalizing on technology deployment momentum in the auto tech market. Despite the contracting vehicle end market, we produce 29% year-over-year top-line growth to a record first quarter level, albeit slightly below our guidance. Our innovative product portfolio continues to gain design wind traction across ADAS, user experience, and electrification applications, positioning Indy to benefit from outsized growth through new program ramps in the second half of this year and over the longer-term planning horizon. In the meantime, global automotive markets are facing transitory headwinds following strong growth in 2022 and 2023. According to S&P Global, in 2022, light vehicle production was up 7% year over year and up 9% in 2023, while for 2024, production is expected to be flat to down year over year at under 90 million vehicles. This forecast reflects weaker demand stemming from persistently higher interest rates and inflationary pressures, and in turn has led to consumers opting for more economical, de-featured car models which typically carry lower semiconductor content. In particular, the EV market has been exhibiting precipitous decline in consumer demand of late. The International Energy Agency, in their 2024 Global EV Outlook, highlighted higher EV costs as one of the top consumer concerns impacting adoption in the current environment. This, coupled with reduced EV subsidies in some markets, range anxiety due to a slower-than-anticipated rollout of charging infrastructure, and some regulatory relaxation in the phase-out of combustion engines, have led to OEMs prioritizing a more affordable ICE and hybrid model in the near term, which tend to contain legacy silicon versus newer feature-rich EV vehicles. This slowdown in global vehicle sales and this shift in mix towards lower silicon content vehicles, coupled with the ongoing inventory correction of our Tier 1 customers, is pressuring the addressable market in real time. Specifically, S&P Mobility recently trimmed their 2024 growth forecast for the automotive semiconductor dollar TAM to the low single digits, a notable deceleration from the 23% posted in 2023. Nevertheless, We believe much of this short-term negativity has been overblown, given the regulatory imperatives for level 2 plus active safety, which features heavy indie content and the recurring fundamental that new functionality has always transitioned from high-end models to lower tiers since the beginning of the automotive industry. Further, our strategic growth trajectory is completely independent of the adoption of electric, hybrid, or internal combustion powertrains. Harking back to Henry Ford, He once said that if he asked customers what they really wanted, they would have asked him for a faster horse. In any event, the Indy team remains intensely focused and continues to drive relentless innovation and win exciting designs across our differentiated product portfolio. The long-term automotive megatrends, including driver safety and automation, best-in-class in-cabin user experiences and drivetrain electrification, will ultimately foster demand and substantially boost addressable silicon content. In fact, a recent McKinsey report highlighted that automotive semiconductors are expected to have the fastest 10-year growth rate across all semiconductor sectors. And given our broad array of products, underlying patent portfolio, and demonstrated scalability, Indy is uniquely positioned to capitalize on this opportunity. To that end, we are executing to a highly differentiated sensor fusion strategy to address the growing needs for ADAS solutions, leveraging key sensing technologies such as computer vision, radar, lidar, and ultrasound. This multimodal approach creates redundancy and compensates for the limitations of individual sensors, enhancing system robustness and reliability, which is ideal for challenging driving scenarios and changing environments where precision and timely response are safety critical. We believe this holistic sensor strategy at scale ensures the highest level of driver and passenger protection, and effectively meets the diverse and increasingly complex needs of ADAS implementations across the entire spectrum of use cases, from basic driver assistance features to higher levels of vehicle automation. As automakers and consumers alike demand ever higher levels of safety and functionality, SensorFusion positions Indy to be the partner of choice in delivering these increasingly sophisticated yet cost-effective solutions. Specifically, in terms of our radar initiative, I'm pleased to report that we have successfully sampled our highly integrated radar mimic and baseband solutions and are on track to commence our program ramp next year. On the computer vision front, during the quarter, we secured a major program win that will deploy our technology at Honda for blind spot detection, using both side and rear camera feeds for unprecedented visibility and safety. This will be a multi-model deployment at Honda, with first vehicles on the road with our technology as soon as next year. Additionally, we recently captured a key camera design with Vallejo, further expanding our vision-based sensing footprint across leading Tier 1 suppliers. And leveraging our image signal processor algorithms, we enabled augmented reality navigational systems within Cadillac's 2025 Escalade models, and anticipate this breakthrough technology will cascade down throughout the GM vehicle lineup over time. Again, speaking of GM, we are thrilled to share that our next-generation vision processor has been selected for their occupant monitoring system, with deployment starting in 2026. This combined with the North American OEM OMS win that we alluded to last quarter, which I can now share is with Ford, and other leading OEMs, including BMW, position Indy to seize a first mover advantage in this rapidly emerging application. This development validates Indy's best in class technology and demonstrates our relentless focus on innovation and product roadmap execution. Further, we're preparing to sample our next generation flagship SOCs, the Indy 880 family, for automotive camera applications that will usher in unprecedented features to the automotive industry. This chip can process several cameras simultaneously at ultra-low power, reducing the system bond while addressing the unmet needs of ADAS applications. At a higher level in our discussions with leading global OEMs and tier 1s, it's becoming increasingly clear that the previous one-size-fits-all central compute architecture is fast losing mindshare. The industry needs a more distributed intelligence, zonal processing-enabled approach that can efficiently scale across vehicle segments. By doing more processing at the edge and zones and intelligently fusing and partitioning sensor data, we can dramatically reduce system cost, complexity, and power consumption. S&P Mobility sees this distributed ADAS zonal processing as a $2 billion standalone silicon opportunity by 2029, and we intend to lead it. Indy is developing a new generation of distributed processing solutions that will incorporate sensor fusion to meet underserved market needs, for cost-effective and power-efficient ADAS functionality up to the level 2 plus segment. In support of this, we recently announced a minority investment in AI processing leader Expedera. We intend to integrate custom neural networking processing IP from this exciting collaboration into our future sensor fusion solutions, allowing high-performance ADAS AI processing to be driven into mass market vehicles. Scaling ADAS from feature-rich down to entry-level vehicles is an industry fundamental. and one that INDI is firmly committed to realizing. According to the United Nations, 1.19 million people die in car crashes every year around the world. That's 3,260 people per day. It's a staggering human toll, not just for the victims, but for their surviving family members. INDI is uniquely positioned to help mitigate and ultimately prevent these tragedies via our cost-effective, innovative ADAS technologies. Turning to user experience, we continue to launch new products that enable our customers to redefine the in-cabin experience. Leading automators such as Audi are leveraging interior and exterior lighting as a core pillar of their brand identity, while consumers are demanding seamless integration and charging of their personal devices. Indy is leading the way in enabling these experiences with highly integrated solutions that set the standard for performance and efficiency. This quarter, we introduced a new family of smart connectivity solutions that enable high-speed networking of displays and controllers throughout the vehicle with best-in-class signal integrity. In fact, a leading North American e-vehicle OEM is planning to ramp this technology into their mainstream platforms in 2025. At the same time, we've achieved production readiness for our highly integrated mixed signal solution that enables advanced ultrasonic intrusion detection, leveraging piezoelectric transducers at Volkswagen. In addition, we continue to capture key design wins for our wireless charging technology. During the quarter, a major Tier 1 selected us for use across multiple vehicle models with another leading OEM targeting the booming Indian market with production slated to ramp in 2025. And more recently, I'm delighted to report that we've been awarded wireless charging design wins in support of a leading North American OEM. Our innovative solutions have been winning across multiple applications within the cabin, including with the newest flagship SU7 from Xiaomi, which includes more than 10 indie chips, serving as yet another testament to our degree of innovation. In short, we continue to demonstrate tremendous design wind momentum, setting the stage for outsized growth. I'll now turn the call over to Tom for a discussion of our Q1 results and Q2 outlook.