Innoviz Technologies Ltd.

Good morning and welcome to Innovee's fourth quarter 2021 earnings conference call. Joining us today are Omer Kailaf, Chief Executive Officer, and Eldar Segla, Chief Financial Officer. Following the former remarks, we will open the call for your questions. I would like to remind everyone that this call is being recorded Before we begin, we would like to remind you that our discussions today will include forward-looking statements that are subject to risks and uncertainties relating to future events and the future financial performance of Innovis. Actual results could differ materially from those anticipated in the forward-looking statements. Forward-looking statements made today speak only to our expectations as of today and we undertake no obligation to publicly update or revise them. For discussion of some of the important risk factors that could cause actual results to differ materially from any forward-looking statements, please see the risk factors section of our Form 20F filed with the SEC on April 21, 2021. I will now turn the call over to Omer. Please go ahead.

Hi everyone, and thank you very much for joining us. I'm happy to host our fourth quarter earnings call. And with us today, I have Eldar Segla, as usually, joining me, our CFO. And today we have a special guest, which is Oren Buskila, who is one of the founders and is the chief R&D. And he will talk about our R&D progress today. With that, I will start the presentation. Sorry, one second. Sharing with someone, okay. I want to start with talking about how Innovees have met our 2021 targets. We had a design win with level four with an automotive company. for a shuttle program using multiples of our LIDARs. A shuttle program that is still due to launch end of this year or beginning of the following months. This program is making good progress and we are very happy to be part of it. This program is using Inubis One. Last March, we announced a new product, InnoVis2, with a very significant performance improvement and cost reduction, and we told the market that we're going to have first samples by the end of the year, and we have managed to meet that target. We were qualified as a dive supplier for one of the largest cow makers in the market. As part of us competing on the program, which we are still expecting decisions to be made soon, And we are following the same process with other car makers today. We ramped up a first automotive grade high volume production of InnoVis One with our partner, Magna, to support the BMW program and the Shuttle program for automotive grade volume. Additionally to that, we talked about having to reach a design freeze of InnoVis One. I'm happy to say that we have managed to meet that target. Now moving our efforts to the production validation and prepare to the launch of the programs. Additional to these efforts, we've included new capabilities in the company. In opposed to the InnoVis 1 effort where we did the design for volume manufacturing with a partner, with InnoVis 2 and now InnoVis 360, we do the design for manufacturing ourselves and we have our own NPI introduction line for small volume production of the InnoVis2 in our own facilities, which gives us the ability to move very, very fast. That's what allowed us to have first samples so fast. We've announced several announcements on new partners and customers through the entire year of 2021, and we will continue to do so. Last earnings call, we talked about the many efforts that we're doing to meet our targets to have InnoVis2 available and show it for the first time in the Consumer Electronics Show in Vegas. And I'm happy to show you now a video of the InnoVis2 first sentence. We have a working product. This is amazing. Hi, I'm Omer Kelaf, CEO and founder of InnoVis. I'm excited to invite you to our first demo car of InnoVis 2, our groundbreaking technology that is going to revolutionize the autonomous driving industry. Let's jump in. This is InnoVis 2, our next generation. I'm excited looking at this. We are in the middle of Tel Aviv, seeing the product in live. There are many car makers who are trying to make a decision for a LIDAR for their vehicles for 24, 25. Having the ability to show them a product that already meets all of their requirements and price point is a big advantage. They don't need to take any risks. They can start collecting data and build their algorithms with a product that already meets everything they need. There is no other LiDAR that meets this performance by far. Innobis is coming with a lot of experience in developing LiDARs for automotive. We've done so for the last four and a half years. I don't think there is any other LiDAR company that spent so many years in developing a LiDAR for autonomous vehicles. And all of that learning is now baked into this amazing product. Makes me excited that we are already able to provide the product that the customers are looking for today. And I can actually imagine how the world would be, you know, full of these kind of sensors and will allow autonomous driving to a reality. We have a working product. With that, I want to talk about what we managed to accomplish in the last quarter. We announced five new contracts for pre-production deals, and I will elaborate on that in the following slide. We continue to work on several RFIs and RFQs in the market, and we have very good momentum. One of the programs that we were hoping to announce end of last year has been pushed by the customer for these days. They've asked to make some changes in the requirements. We have responded to those requirements and we are now waiting for their decisions. we are very confident in our ability to secure very meaningful business this year. There are additional RFQs coming along and with our portfolio, I believe that we will be able to announce more this year. We increased our order book by $200 million. Following progress we have in the charter program, The decision in order to include more lidars per vehicle and the maturity of the program allows us to increase our expected revenues in this program. We have our first samples of InnoVis2 that allow our customer to test the product and make a decision. We announced a new product, a very innovative one, Innovees 360. It's a new category which allows Innovees to participate and compete on many additional programs and I will elaborate on it later. We had a webinar for level three standardization where I introduced the white vapor We created to talk about what are the requirements for LiDAR to meet level three performance. And we see InnoVis as a strong player that can actually help in consolidating the requirements for this market. We had a session in MIT course for deep learning, showing the progress of our perception software. We were awarded with the IATF certification for production quality for automotives. Other than that, we announced our new partners and customers just recently. On the five contracted pre-production deals, we announced a new customer, Obayashi, one of the largest construction companies in the world, using our LIDARs for automated driving. Another customer is Syracuse, who is also using our LIDARs for automated grain control. You can see here a video they created using Enobis. It's an Israeli company we're very happy to work with. While Weld Dynamics is a company we announced a quarter ago, about our collaboration and now reaching an agreement in our supporting their efforts to bring platforms, autonomous level four platforms to the market. We are also agreed to, we reached an agreement with an Asian company to bring automation for ports and with Innobis One and Twinner to support their efforts in automation in defect detection, again, using Innobis One. We are working to increase our customer work through the maturity of InnoVis 1 and soon also with InnoVis 2. Our funnel, so we have until today, we have two series production programs with two big automotive companies. One is BMW. We host Richard Rao last quarter talking about the focus of the program. and more details will be shared throughout the year about the launch of the program and the shutter program, which I referred earlier. We increased our pre-production program by five deals, as I described earlier. We have currently 12 companies in different stages of RFIs and RFQs, and many of them reflect very meaningful opportunities of older books. Our targets for 2022 is to reach 10 pre-production programs that will allow us to meet our revenue targets and at least one more automotive program that will allow us to increase our order book by at least 30%. Now, I would like to talk with you about InnoViz strategy in relation to our business development and automotive and beyond. The way Innove is operating is that at every point of time, we look at the total addressable market of LIDARs. There are different markets that LIDAR could be used, but it's always very important to identify which of the markets are more likely to go through an avalanche sooner. By doing that, we study the requirements, understand what are the frictions, what are the requirements, the needs, and build the right chipset, you would say, or the building blocks that allow us to provide the best. We industrialize those platforms and we continue to improve them and also provide the right software tools. To give an example to that, today there are different markets for LiDARs, but the fastest growing market for LiDARs today is L2 and L3. You see the different car companies that are looking for LIDARs for Launching Level 2, Level 3, and we see that as the most interesting LIDAR opportunity in the coming years. It's also interesting to understand that the decision-making of those programs are these days. in the next year or so that most of the decisions for this market will be taken and the car companies that will make decisions following that would rely on the decisions that these car makers have done. We've studied L2 and L3 very thoroughly. We just introduced the white table that shows how deep is our understanding in this field. And you can actually find that on our website. And for that, we introduced InnoVis2. InnoVis2 meets all of the requirements we got from our customer, alongside with our perception software, which comes with a lot of maturity, a lot of experience coming from InnoVis1. Innobis One has hundreds of thousands of kilometers already driven to try to find any issue that might come along. The ability to show that experience reduces the risk for any carmaker that wants to make a decision today on a technology that can allow them to launch safely would go for Innobis Two in the best way. The next market that we identify as an interesting one is the level four. There are actually different RFQs that we are starting to come along with the different customers, different prospects of this market could be shuttles or robot taxis or trucks. And that is expected to launch in 26 or 27. And we are working with those customers. The requirements for level four is slightly different than level two and level three. There is a lot of attention for industrial design because it's not a LiDAR from plucking multiple LiDARs around the vehicle. It's very important to reach a zero blind spot configuration. For that application, we introduced Innovis 360. We designed it over the course of the last year, and we introduced it just a couple of months ago. And we see that as the right combination of Innovis 2 and Innovis 360 to serve those markets. Using our perceptions software on top of it, provide our customer to grow from level 2 to level 3, and now to level 4. beyond automotive, and of course automotive aggregates very, very different applications. Also military and surveillance and construction sites. And those aggregated opportunities will eventually surpass the automotive market. Every application today that is using today 2D sensors will eventually would transition to a 3D sensor. And as such, we are learning the requirements of this market, which is much more fragmented, which requires much better seamless integration. It's no longer an automotive process of integration for several years and requires several analytics tools that we are building. We are looking at those markets and we are learning what additional platforms and LIDARs are required and we will continue to provide new products to sell those very interesting opportunities and we will have them ready for the decision making when this S-curve of revenue generation will arrive. In terms of software development, and we've been developing our perception software for about six years now, from the inception of Innobis, we identified the need for perception software from the first day. It was very clear to us that any customer that is requiring a LiDAR would not be able to use just a sensor as a raw data, but will require the object detection classification, the movement detection, guardrails, landmarking, et cetera, and that's what we offer with the LiDAR and price it alongside the LiDAR. That will generate us revenues for software, not only as a one-time fee, but also as a subscription-based support for after the launch. for level four and level five. And those are RFQs that we are looking at. There are additional requirements that we need to build, which are related to multi-driving direction and sensor fusion, and of course, supporting the zero blind spots. And that will also come on top of the pricing of the LiDAR. For the non-automotive, The perception software that we already developed provides us the best, I would say, incremental step into this market. Having a mature automotive grade object detection classification gives us an ability to penetrate this market very fast. We will build additional tools and the fee would be defined per application eventually. Our cash position is very strong. We have $370 million just raised in 2021 with $300 million in our bank accounts starting this year. We are very conservative in the way that we manage our funding. As an example to that, we already foresee all of the planning that we need to have for our bill this year and sourced all of the components so we'll not be sensitive for the cheap shortage in this year. To summarize Innove's ability to succeed in this market and to lead it, we have two significant customers that give us a very large order book and a very large pipeline ahead of us that we see very good chances to take. We have a cutting-edge technology with the proven capabilities and a mature one that allows carmakers to have zero risk in taking that technology. We have the perception software probably with more mileage than anyone in this category. We have the capital to execute our strategy. We have the industrialization experience, and we have today three production lines to support it. And we have the automotive experience that is baked into everything we do. Of course, we have also the production, our product line, which will allow all of our customers to grow with us from level two, level three, to level four and five. And with that, we are going to grow the company and continue our efforts. I will hand over to Oren Buskila to present the R&D efforts.

Thank you, Omer. I'm very glad to be here and really excited to share this update on the R&D progress in the past quarter. Grab the mouse. And I'll start with taking a step back and looking at the six years since Innova started. Now we started back in 2016 where the only lighters available for the automotive market were of very poor performance, very far from reaching the requirements of the automakers for self-driving. And that was back in 2016, and since then, We've made an exceptional progress with the InnoVis 1. In 2020, we launched the first students of the InnoVis 1, which provided unprecedented levels of performance, both in terms of range and in terms of resolution, making the ladder finally suitable for automotive self-driving on public roads. And during that time, we did not neglect any of the requirements dictated by the auto industry for reliability, quality, cost, et cetera. And now in 2022, just six years from the inception of the company, we're ready to take it to the next level with the Innoviz 2. The Innoviz 2 will be a much improved version or much improved generation after the Indivis 1, which will have a dramatic boosted performance, but at the same time will have a dramatic cost reduction. In terms of performance, the Indivis 2 will have twice the resolution in each of the axis, so 0.05 by 0.05 degree in X and Y axis. It will have a wider field of view and taller field of view of 120 by 40 degrees. At all at the same time, it will have a longer range, which is only more difficult once the resolution is finer. And this will come at the dimensions and the price point fit for level two consumer cars through level five. Now for some more details on what we've been doing in the project of the Innovis2 in the last quarter. So as Omar mentioned, we actually met the objective of delivering the first Innovis2 samples back in January, that was at CS Vegas, where we presented the B0 samples, the preliminary samples of the Innovis2. Preliminary as they are, they met most of the performance objectives targeted for the INNOVIS II already in the first sample, including the field of view of 120 by 40 degrees, the resolution of 0.05 or 0.05, and the range of more than 200 meters for a very dark 10% reflectivity target. That was achieved with a frame rate of 10 frames per second, which is going to improve in the next versions of the product. Speaking of the next versions, the next one is the B1. The Innovis 2 B1 will be available in Q3 of this year and it will feature a massive decrease in the size. So here I'm holding in my hands and I hope you can see them. This is the Indoviz 2 B0 that's now sampling. This is the Indoviz B1 coming up later this year. And you can see both from the presentation and maybe from the video that we have reduced the height of the B1 dramatically versus the B0 with the target of making it suitable for more diverse mounting positions on the car, including the roof where the vertical height is a critical dimension. The field of view was adjusted. The field of view. Oh yeah. Thank you, Omar, for reminding me. Try and find the ladder here. This is right here in the roofline. This is a suggested concept design from Innoverse of how to integrate the ladder with the car design. And you can see a very seamless, very sleek integration with the car's exterior. The field review of the B1 was adjusted in order to accommodate the thinner height dimension. The frame rate, we've been able to meet the production intent frame rate with the B1, which is 20 frames per second, while not sacrificing neither the resolution or the range of the B0. The B1 also is designed for manufacturing, meaning that all of its parts, components are already designed to be made in volume with high yield and low cost. And in parallel to developing the B1, we're also developing and bringing up the production tools required for the production line of the B1. Of course, this is a low volume production line, later to be replaced by the mass production line of the future versions. On the top right, you can see a point cloud taken with the B0 just, I think, yesterday. And this is very recent. And those of you who are used to looking at point clouds, I think will probably admire the resolution and the angular accuracy. This is really spectacular performance that we're already seeing from the B0. And this is only going to improve with the B1. The Innoviz2 will also be the first product from Innoviz to include onboard perception software. And this means that we are now completing the coverage of both common perception architecture of cars. The first one being distributed processing architecture, and the second one is centralized processing architecture. In the distributor architecture, every sensor processes its own raw data locally and outputs just an object list of what it detects. So the Innoviz2 will run this software, this computer vision software, on the LiDAR box itself, inside it, thus eliminating the need for any exterior processing of the point cloud. We will nevertheless output both the object list and the raw point cloud in case this is of use to a customer. Now this local processing reduces the compute load on the central computer of the car, simplifies the data interface, and reduces the latency all of the Interface 2 into the car system much simpler and also reduces overall costs of parts in the car. The second architecture, which we've supported also in the past, is the centralized architecture, where all the sensors in the car, including the light out, do not process their data locally, but rather transport it to the central computer, which does the processing and the fusion of the perception data. Now, InnoViz does not just output the point cloud even in this case, but also provides the perception software to run on the central compute platform, meaning on a different chip than what resides inside the InnoViz 2. The output is a raw point cloud. and the InnoVis software running on the central compute is responsible for detecting objects on the road, as you can see in the image to the right. Now, we support most of the processors from various automotive-grade vendors today, and we intend to expand the support to further vendors. Now, I'd like to show a quick video of the Innoviz 2 B0 here in beautiful Tel Aviv. This was also taken not very, not late ago. It's not even the most up-to-date point cloud. We are making progress every day recently, but what you can already see here is the exceptional resolution and range. that is visible here. And this is very, very important to note that this does not include any sort of aggregation of frames. Each frame here that you see was taken separately with live recording from the LiDAR. So that was how Innoviz is disrupting the automotive ladder space. But the other segments other than automotive were up to today underserved by relatively low performance ladders, which are also high cost and typically quite big. And this is soon going to be changed with the Innoviz 360, the first 60 degrees coverage, a surround view coverage of the LiDAR. The vertical field of view will also be very high, 64 degrees. And all this will come in a very small package. You can see actually a mock-up at this point right here, which is very small compared with other LiDARs available today. And the cost will also be exceptional compared with any other competitor today. Now, the way that we're able to offer both this performance, this cost, and the very aggressive timeline towards samples is by leveraging the same components, the same optical engine that we have in the InnoVis 2. We're going to integrate that into the InnoVis 360. We're designing... the InnoVis 360 around it while only adjusting the scanning mechanism for 360 coverage. Now it's really important to understand why the resolution is so important, why it matters that the InnoVis 360 will have that resolution which is higher than full high definition. So what you see on the right and the left are actually the same scene, but captured in simulation by two different LIDARs. On the left is probably the best-in-class LIDAR available today, a spinner LIDAR. And on the right, you can see the future point cloud of the Innovis 360. which is a factor of 10% in the number of lines. And why is that important? So when looking just at the center of the field of view, where the lines are dense, even in the competitor LIDAR, then most objects are quite visible in the center of the field of view. But as we look towards the edges of the field of view, you can see that with few scan lines, there is very large spaces between the lines, making it possible to miss small objects, which might be critical for the car to detect. So on the right, you can see a dog and a cat, simulated ones, of course, easily detectable by the coverage of the Universe 2, whereas on the left, you can see that they're very hard to detect, actually quite not seen. InnoViz is working not only on the system level, but also on the underlying components, such as the ones that now are driving the InnoViz One. We are now working on the next generation of those components, which will drive the future products. The first one being the next generation ASIC, which will support an increased pixel rate, an increased maximum range of up to 500 meters, and will also have support for additional interfaces and future security standards, which are going to be adopted in the auto industry. Samples of this ASIC are going to be available in 2023 and will support both the future products and the existing products. This is all backwards compatible with the current LIDARs from Innovis. The second Component that we're working on is the next generation detector, which will have the best in class sensitivity of all detectors of its kind, enabling increased range, improved resolution, and some other benefits which we will not expand on now. Engineering samples are also going to be available in 2023. Last update is on the perception software. We are now at the stage of, it's called SRS, of safety-related scenarios. These are stage scenes emulating actual road scenes that our customers' cars might encounter. And the purpose is to validate both the point cloud performance and the performance of our perception features. The other major effort we're now working on in the area of perception is the endurance runs. This is a massive, massive worldwide campaign for collecting hundreds of thousands of driven miles in several countries towards the validation of, again, the point cloud and the perception features in real-world conditions. This only began once we've met the KPIs, the performance necessary for production. Now we are ready with our customer to start racking up the miles of this recording campaign. To summarize, The Innovis R&D objectives for this year are first to complete the product validation of the Innovis 1 towards the beginning of the volume production of it. Second is to deliver the B1 sample of the Innovis 2, which is designed for manufacturing. Third is to reach the first engineering samples of the Innovis 360. And lastly, to maintain and increase Innovis technology leadership with our components and perception software. And with that, I wish to thank you and pass on the presentation to Eldar Segla, our CFO, who will present the 2021 financial results. Eldar.