Innoviz Technologies Ltd.

Good morning. This is Rob Moffitt, Vice President of Corporate Development NIR at Innoviz, and I want to welcome you to our third quarter 2022 earnings conference call. Joining us today are Omer Kalev, Chief Executive Officer, and Elder Segla, Chief Financial Officer. Following their opening remarks, we will open the call for your questions. I'd like to remind everyone that this call is being recorded and will be available on the investor relations section of our website at ir.innoviz.tech. Before we begin, I would like to remind you that our discussion today will include forward-looking statements that are subject to risks and uncertainties relating to future events and the future financial performance of Innoviz. 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 important risk factors that could cause actual results to differ materially from any forward-looking statements, please see the risk factor section of our Form 20F filed with the SEC on March 30, 2022. I will now turn the call over to Omer. Please go ahead.

Thank you, Rob, and welcome to the team. Good morning, everyone, and thank you for joining us. I'm excited to provide another update on the meaningful progress we've been making at InnoVis. This has been another fast-moving quarter with new design wins, new technology partnerships, significant upgrades to our manufacturing throughput, and a big step forward in our move into the non-automotive market. Let's start things off. with a look at our most recent new customer win. After our Volkswagen announcement last quarter, we said that we had two to three additional OEMs that could make a decision in the next six months. Proving true to our word, we announced in September that we secured yet another production award with a new Asia-based customer. Not only is this our fourth production win and our second win as a Tier 1, it also signals an exciting acceleration in our momentum, delivering back-to-back production wins just one quarter out. We will dig a little deeper into our pipeline later in the call, but let's first take a look at this most recent deal. The new contract is with an Asian OEM who we cannot name yet, but is on a fast path to becoming an emerging global EV leader. There are some very important parts of the deal that I want to touch on. First and foremost, this is an extremely tech forward OEM. They took a close look at our technology and the platform partners that we can integrate with, and they decisively chose our solution over any other competition. And in that process, they also concluded that we are well positioned as a tier one direct supplier. Additionally, they are currently targeting a fast ramp-up of lighter installation on two models, with a quick turnaround to SLP, with production revenues expected already to begin in 2024. And this deal articulates our long-term strategy extremely well. Very large deals like the Volkswagen deal we announced last quarter are going to bring the volumes that will rapidly drive our unit cost economics lower. And lower volume deals will bring our higher contribution margins. And with each new deal we win, we are growing our pre-production NRE revenues and securing increased funding of production machinery and tooling. Over time, each deal will move us closer and closer to our long-term margin targets. From a global standpoint, this is our first automotive win in Asia. expansion efforts and highlights the incredible progress we'll be making on this front. Combined with recent progress on the non-automotive side, Asia is evolving into an increasingly important geography for Innobis, and we hope to have additional news to share in the coming quarters as this market is rapidly developing for us. Last but not least, there is one more very important part of this deal, and it has to do with the technology partner that we are working with for this customer. As many of you know, there are three leading autonomous driving platforms in the auto industry that operate the hardware and the software stack that integrates the sensing and perception inputs from the various ADAS components, such as LiDAR and radars and cameras. With this deal announcement, we are excited to share that Now we have production awards, not demos or partnerships, but actual production awards with two out of three main platforms in the industry. Integrating with these platforms can be an important barrier to entry. We believe that once you are on the platform and you have the working relationship with the partner, future business wins for both parties. I want to encourage investors to not underestimate this aspect of the deal. Several of the RFQs that we are currently competing on have already decided to use this platform. We believe that having this working relationship can increase our odds of winning additional business in the near term. Needless to say, we are very excited about this development. Now, let's spend a little time on why we are winning in the automotive market. I've picked up from some of my conversations with investors that there is a belief that the success in the lighter industry is going to come down to one thing, like range or resolution. but that is obviously not enough. In our experience with customers, you cannot simply win by checking one or two boxes. You have to check all of them. You have to be strong on each of these categories, price, performance, automotive grade, manufacturing and company maturity. And the feedback that we've gotten from customer is that we aren't winning these deals by one or two points. We are winning across the board on multiple fronts. But don't just take it from us. We wanted to share quick video from the event we hosted in September, celebrating the opening of our new headquarters with a large group of investors and customers from all over the world. It's not only a big building that who knows what we'll do with it, it's actually going to allow us to meet our targets.

of all the places that I've been to, I was so impressed by the vigor and the creativity and the technology.