indie Semiconductor, Inc.

Good afternoon, and welcome to Indy Semiconductor's second 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 second quarter 2024 earnings call. Joining me today are Dalma Kleinman, Indy's co-founder and CEO, Raja Bal, Indy's acting CFO and chief accounting officer, and Mark Tindall, head of corporate development and investor relations. As a reminder, our CFO, Tom Schiller, is currently recuperating while on medical leave of absence. That will provide opening remarks and discuss business highlights, followed by Roger's review of Indy's Q2 results and Q3 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 about views 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 can affect our financial results, please review our risk factors in our annual report on the 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 gap measures certain or the following items. Depreciation and amortization, surface compensation, acquisition-related expenses, gain or loss from change in fair values, non-cash interest expense, and income tax benefits or expenses. For complete reconciliation of the gap and the definition for the above items, please see our Q2 earnings press release, which was issued in advance of this call and can be found on our website at www.indiesemmy.com. I'm now turning the call over to Donald.

Thanks, Ashish, and welcome, everybody. I want to start by welcoming Mark Tindall, our new Head of Corporate Development and Investor Relations to Indy. Mark is looking forward to meeting all of you over the next months. Let me first briefly cover our revenue performance in the context of the overall automotive market environment. before focusing on the technical and business achievements. During the second quarter of 2024, Indy achieved total revenue of $52.4 million, coming in flat from Q1 at the lower end of our previous outlook. Our results were generally in line with the automotive market, where unfavorable global macroeconomic conditions impacted vehicle production, with consensus forecasts currently projecting approximately 88 million units for 2024, in comparison to just over 90 million units in 2023. Additionally, given lower consumer pricing thresholds for vehicle purchases and reduced global electric vehicle stimulus programs, automotive OEMs have been prioritizing de-featured vehicles, which has led to reduced semiconductor content. These factors, coupled with ongoing inventory consumption, which persisted in the second quarter, negatively impacted our revenue against our prior outlook, We now anticipate this trend will spill over into the second half of 2024, as reflected in most recent analyst estimates, which project essentially flat to low single-digit negative growth for the automotive semiconductor industry in 2024. Despite these headwinds, we believe that with our new product launches and current customer status, Indy is poised to deliver modest growth in the third quarter growing above the market to reach outsized growth levels as we move through the second half of 2024 and into 2025. Now, looking closely at our business progress in the second quarter, in the ADAS sector, I want to point out that Indy is unique and differentiates itself from its competitors as being the only chip vendor offering all four of the key ADAS sensors, radar, vision, lidar, and ultrasounds. which gives us the unique ability to offer any combination of these sensors. This will enable the scalable ADAS processing architectures that car makers are demanding for deployment across their portfolio. This gives us the ability to fuse multiple modalities into a single chipset solution. We are now in discussions with key OEMs to define the specifications for our next generation AI-centric sensor fusion products. I will continue to keep you updated in upcoming quarters as we progress. Starting with our flagship 77 gigahertz radar program, since sampling our millimeter wave and DSP products to our lead customer, I'm extremely happy to now share that we have achieved the important milestone of full functional verification in our labs, including the all-important range Doppler performance, which surpasses current industry benchmarks. This technical evaluation has also been completed by our lead customer, and the radar is currently being tested in live automotive application environments. which is the final stage of testing before volume production. I want to stress here these advancements keep INDIE firmly on track to bring this radar program to production within the 2025 timescales previously communicated. Furthermore, samples of our 120 GHz radar front-end IC developed for high-resolution in-cabin vital signs monitoring and vehicle dynamics sensing have been received in our labs, and I'm delighted that functionality for this challenging RF application has also been validated. This demonstrates Indy's clear leadership in the market for next generation radar solutions, which is a cornerstone of Indy's high growth trajectory for 2025 and beyond. Moving on, vision-based sensing in particular has received key industry focus recently as a result of two major regulatory directives, which will play nicely in Indy's favor. First, in the U.S., the road safety regulator, the National Highways Traffic Safety Administration, or NHTSA, announced that automatic emergency braking, or AEB, would become mandatory for all passenger cars and light trucks in 2029. While many new vehicles today are already equipped with AEB, the progressive aspect of NHTSA's mandate is that it is the first global regulator to stipulate that pedestrian AEB requirements be extended to nighttime conditions. This is significant because none of today's commercial radar or camera sensors have the required performance to deliver such features. Long and mid-range radar sensors operating at 77 gigahertz lack the required resolution and performance for reliable pedestrian detection. And the image sensors and image signal processing deployed in today's camera systems exhibit insufficient low light sensing capability. These sensor shortcomings, particularly the vision sensors, accelerate an exciting and significant opportunity for our recently launched computer vision solution, the IND880, which features our newest proprietary image signal processing and can perfectly address NHTSA's requirements. Last quarter, we shared that we were preparing to sample the SOC to customers, and I am excited to now confirm that the IND880 has not only been sampled to key customers with extremely positive feedback, It has also been selected for high-volume production programs by a number of global OEMs scheduled to ramp in late 2025. Some of these wins for the INDI 880 include applications as diverse as OMS, occupancy monitoring systems, additionally a demanding non-passenger vehicle application which will use up to 36 cameras per vehicle, leveraging to the maximum the multi-channel ISP and high dynamic range capabilities of the INDI 880, And finally, the IND 880's high performance but low power and tiny footprint is also proving the perfect solution for surround view and e-mirror applications, with the first design win successes at two major European OEMs achieved also in the second quarter. These wins, so quickly after the availability of the IND 880, are a clear indication of the potential of this product as a major revenue contributor for IND going forward. The second impactful regulatory initiative is the European Union's Intelligence Speed Assist requirement, ISA, which is now mandatory in all new European cars as of July this year. Studies have indicated that ISA may reduce road fatalities by up to 20%. In combination with GPS for positioning, ISA leverages the vehicle's front view camera for speed sign detection to warn a driver of exceeding local speed limits. This European ISA mandate further underscores the need for superior low-light vision sensing capabilities, and we are seeing a strong pull-through impetus for Indy's latest generation computer vision systems, including the IND880. Our design wind momentum for our previous generation GW5 family of vision SOCs also continues unabated, particularly for driver monitoring applications. In the second quarter, we started volume shipments for two mass production programs at the Hyundai Kia Group, Additionally, in the second half of this year, we expect to begin volume production shipments to multiple Chinese OEMs, including Geely, BYD, NIO, Cherry, and Audi China. Turning to in-cabin user experience, or UX, our discussions with OEMs globally reveal a consistent request for SOC solutions or custom ASIC solutions that can deliver more. More wired and wireless charging power delivery for personal devices, more bandwidth and improved signal integrity for reliable networking and multi-screen video delivery, and lighting solutions that can deliver more light output and thermal stability under changing environmental conditions. These OEM requirements are incredibly difficult to deliver in cost, power, and BOM-efficient SOC implementations, and they're often underserved by our competitors with limited ASIC capability. In contrast, This is an area of mixed signal design where Indy excels and continues to expand our customer design wind pipeline. For example, in Q2, we secured major new lighting design winds with two of North America's largest OEMs for in-cabin lighting applications, such as overhead console, doors, and dashboards. These programs will commence volume production later this year and ramp quickly as these OEMs launch multiple models in quick succession. Additionally, we continue to solidify our lighting leadership position at practically all Chinese OEMs, and we have also secured multiple new design wins with multiple Korean brands that will begin shipping early in 2025. For UX, we continue to see strong OEM demand to enable the latest standards for in-cabin wired and wireless charging to meet the insatiable consumer demand for higher power and faster charging of personal devices. Here, I'm pleased to share that the wireless charging OEM win in India we alluded to last quarter leveraging our systems capability was for Volkswagen, and will be delivered through their local tier one for a 2025 production round. There have been multiple similar examples this year where our systems design prowess has allowed India to shorten the typical long design-in cycle. I'm also pleased to announce that we recently achieved the significant milestone of shipping 400 million chips cumulatively to our broad and global customer base. This is an achievement that I am incredibly proud of, which clearly reflects the differentiation that our products bring to our customers, as well as the tireless innovation and dedication of the Indy Global team. In summary, despite the current muted automotive environment, the actual mid- to long-term opportunity remains bright with S&P Global projecting total automotive semiconductor value to exceed an incredible $100 billion in 2026 and surpass $130 billion in 2029. India remains extremely well positioned to capitalize on these trends, with the strategy we are currently executing for the three automotive megatrends not only in product development, but also in securing key design wins and partnerships with the major global OEMs. This together with the progress we have made in our key 2025 radar and vision programs just outlined makes me confident that we will deliver sequential quarterly growth in the second half of 2024, accelerating into 2025 when we anticipate a return to an industry-leading growth trajectory. While India has experienced some temporary short-term delays to the start of production of some programs, created as a knock-on effect of the overall macro conditions, I want to stress across the portfolio that we have not lost any designs. And in fact, our growth trajectory has simply shifted modestly. I'll now turn the call over to Raja for discussion of our Q2 results and Q3 outlook. Thanks, Donald.