Innoviz Technologies Ltd.

Ladies and gentlemen, thank you for standing by. Our conference will begin shortly.

Good morning. This is Rob Moffitt, Vice President of Corporate Development and Investor Relations at Innoviz. And I want to welcome you to our 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 to your questions. I would 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 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 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 9th, 2023. I will now turn the call over to Omer. Please go ahead.

Thank you, Rob, and good morning, everyone, and thank you for joining us. We have a lot to talk about today. Q4 was a record quarter for us. There has been some important customer progress since CES and since the quarter has ended. The first thing I want to highlight is the amazing revenue performance. Full year revenues of nearly $21 million were up 246% year over year. And even with raising guidance mid-year, we came in above the high end of the guidance range. In addition to that, we delivered Q4 2023 revenues of nearly $15 million, an increase of nearly 850% and also above the high end of our quarterly guidance range. The strong revenue performance came from a combination of production revenues, robust sample shipments, and NREs, and it validates our three-pronged approach to growing future revenue streams. We also saw positive customer developments in the quarter with BMW and Volkswagen. unveiled a new shared program with Mobili as a platform partner, and unveiled a strategic realignment to maintain our cost discipline and extend our cash runway as we position the business for rapid transformational growth. The combination of strong revenues and disciplined cost management led to an impressive cash performance with our quarterly cash burn at just $14.5 million. a record low since Innovis became a public company, which allowed us to finish the year with approximately $150 million in cash and equivalents, leaving us with a strong runway that we expect to last through the market share capture window. I'll go through each one of these topics now. Let's start with the news we shared today on BMW. In this morning's earnings press release, we disclosed that we are working on a second vehicle and geography for the Innobis One deployment. When we first announced the production award several years ago, we said that the Innobis One was tested and certified on three vehicles, the 7 Series, the 5 Series, and the iX. But to date, we've only been able to share details on the 7 Series. which is now on sale in Germany with deliveries scheduled to begin in the upcoming weeks in March of 2024. Today's news is that we are working on an Innobis One deployment on the BMW 5 Series in China, a very important geography. BMW recently received an approval to begin Level 3 testing in China, and we are working closely with the teams performing on-road testing and software development specific to the Chinese market. If all goes well, we could see the technology deployed on the locally built five series. It is still early to share a lot of details at this point, but we expect that we'll have more to say in the coming quarters. Moving on to Volkswagen. At CES, we unveiled the ID.Bus light commercial vehicle program as our second program with the Volkswagen Group. This represents an important development for three reasons. First, it shows our strength of our relationship with Volkswagen. Our progress towards SOP with our first program is tracking well, and they have confidence in our ability to bring a second program to the market within the same time frame. Second, the volumes from these programs are incremental to the award that we announced in 2022, supporting additional revenue growth and accelerating our path towards break-even. And lastly, it deepens our relationship with Mobilife, who is working as an autonomy platform partner for the VW Group. The ID.Buzz is a light commercial vehicle aimed at the mobility market. It will be a level four program with multiple IDARs per vehicle. A test suite of vehicles is being deployed in Austin, Texas, and Munich, Germany, and we expect the program to become increasingly visible to the public as we go through 2024, and the test suite grows as it progresses towards a planned 2026 commercial launch. Additionally, development with our first Volkswagen award is progressing nicely. I flew to Germany to deliver the first batches of our Innobis II B sample with our second generation ASIC, custom ASIC, and our partners at VW couldn't be happier. We are gearing up for advanced wetern testing in Germany and Sweden, and we'll remain focused on the B sample phase in 2024, before moving to the C-sample and D-sample phase in 2025, as we progress towards SOP later in the year. All in, I'm very excited with the progress we're making with this important customer. Throughout 2023, we said we believe there are additional opportunities for us at Volkswagen beyond the series production award we secured in 22. And with the IDBus announcement at CES, we delivered on that promise. But we're not stopping there. We are actively working on an additional one to two programs within the Volkswagen Group, encompassing multiple brands, multiple platforms, and multiple vehicles. It's too early to share any further details than that, but we hope to be able to disclose more as we go through 2024. Volkswagen is the world's second largest automotive OEM, capable of producing over 10 million vehicles per year. We believe that there is a long runway for growth with them. We also see a long runway for growth with Mobilite as an autonomy platform partner. As you've heard us talk about before, there are three leading autonomous driving platforms in the automotive industry. from Mobileye, Qualcomm, and NVIDIA. These partners operate the compute hardware and software that integrates the sensing and perception inputs from the various ADAS components, such as LiDAR, radar, and cameras, and play an important role in the sensor fusion and driving decision layers of software. We currently have series production awards with two of these players, Mobileye and Qualcomm. And we are working on several NVIDIA programs in our RFI and RFQ pipeline for the Hyperion platform. For Innoviz, integrating with these platforms establishes a meaningful competitive advantage that can reduce friction in the LiDAR selection process and increase our odds of winning additional business from OEMs. Being already integrated with the major compute platforms on existing programs can significantly reduce the time, cost, and risk that it takes for additional automakers to deploy the same system. We're essentially becoming an off-the-shelf solution, making it increasingly easy for OEMs, additional OEMs, to choose InnoVis as their LIDAR supply. This is further enhanced by the work that we are doing ahead of our Volkswagen SOP. In order to be ready to launch on time, we are planning our Innobis II production capacity to be prepared to ship by late 2025. There are many OEMs targeting launches in 2026, 2027, 2028, and the fastest, least expensive, and lowest risk way to prepare for this is with an autonomy platform partner like Mobileye, Qualcomm, or Nvidia. and with a LiDAR supplier that has already proven they can deliver on SOP milestones and with the technological capabilities, price point, and SOP timeline of the Elovis 2. Next, I will provide some thoughts on the global regulatory environment and discuss some important updates, both on globally and in China, and how we see these developments shaping the LiDAR industry. As many of you know, the United States Department of Defense continues to be very active in terms of identifying companies that may have ties to the Chinese military. To the extent that the DoD places specific ladder companies on its 1260 age list, it could make it more difficult for these companies to win business with global OEMs that sell into the US market. Conversely, if similar actions were to be replicated within the Chinese regulatory environment, it could make it difficult for the US LiDAR companies to be deployed on vehicles aimed at the domestic Chinese market. This is where Inoviz has another competitive advantage. As an Israeli company, we are not caught up in the politics on either side of this debate. I like to say that Inoviz is the Switzerland of LiDARs. We are neutral and can serve customers globally. We have plans to operate in China with both BMW and Volkswagen. We're actively quoting multiple RFIs and RFQs with global OEMs that plan to sell into the US and the Chinese market with the same technology stack. Level 4 program to the market is substantial, and it will be extremely expensive for OEMs to run duplicated tech stacks in different markets with different LiDAR vendors. They need to absorb those costs across as many units as possible with a global LiDAR platform. And with that, let's segue into what I think is some very positive news out of China. In addition to BMW, multiple other OEMs have received permits to begin Level 3 testing in China in late 2023. To date, China has been a Level 2 market. What we are seeing on the ground is a rapid pivot towards accelerating the development of Level 3 autonomy. The Chinese automotive market moves very fast, as does technology. If regulators there decide to embrace Level 3 autonomy, it can be done in a very short order. And similar to the prior topic, this could have implications globally. Chinese OEMs have proven themselves as very competitive manufacturers of highly capable vehicles at affordable prices, particularly when it comes to EVs. And while Chinese exports haven't found their way to the US market, they are starting to have an early impact in some parts of Europe and the rest of the world. This is a topic that OEMs are paying close attention to. If China rapidly pivots towards embracing level three autonomy in the same way that it rapidly pivoted towards embracing EV technology, this could add another layer to the global competitive environment. At the high level, we foresee Western OEMs accelerating their level three autonomous platform timelines in order to get ahead of incremental competitive threats from Chinese OEMs. This has the potential to accelerate Level 3 timelines globally that could create a Level 3 gold rush. Next, I want to talk a little bit about the strategic realignment we announced at the end of January. As we have talked about in the past, with both the Innovis 1 and Innovis 2 programs in the development stages, we have been running two parallel cost structures. But as the InnoVis 1 sensor and perceptions software shifted into series production late last year, much of that development work was completed. With InnoVis 1 workstream winding down, we initially reallocated headcount towards development projects like the LiDAR-based minimum risk maneuver, or MRM software, and the InnoVis Core AI compute model. In discussing these technologies with new customers, it became clear that most OEMs are hyper-focused on more mature solutions like the InnoVis2 sensor and perception software and bringing those technologies to the market as soon as possible before focusing on other products. With that in mind, we made a decision to concentrate the majority of our Go Forward investment on the InnoVis2 sensor and perception software platform and bringing that to the market with the rich RFI and RFQ pipeline that we already have. We allocated as much of our staff as possible to Innobi's two focused projects, but the transition offered an opportunity to train some planned expenses to help reduce our burn and extend our cash runway. As a result of these changes, roughly 13% of the company headcount was reduced, along with some related OPEX and CAPEX. The cost actions are expected to be fully completed by the end of the first quarter and are expected to reduce our planned cash outlays by 22 to $24 billion on an annualized basis. We also use the transition as an opportunity to integrate our hardware and software development departments into one unified R&D unit, which had been running separately. The new combined group will be led by Abishai Buscovici, who has served as our head of software reporting to me for the past several years. As part of that transition, Oren Buskila, our current chief R&D, will be moving on to pursue a new opportunity outside the ladder industry. We thank him for his many years of service and wish him the best of luck. Avishai has already begun his work on integrating the two departments and reorganizing the work streams in a more efficient way that allows for faster product development and simplified customer planning across both hardware and software. This is not just a reorganization of a few teams. It's about entirely different workflows and processes aimed at positioning the company for rapid transformative growth across multiple customers. It's an important reset of our organizational structure that will allow us to serve a much larger number of clients in the coming years. One example of how we are focusing our go-forward investment on the InnoVis2 sensor and software platform includes a new slim design sub-variant the team developed. We have a customer in the pipeline that is focused on going to the market with behind the windshield light resolution. It would sit in the area around the rear view mirror. A deployment like this requires a very slim profile as there are already other sensors and technology in the same part of the car. And because it's easier to integrate it into the windshield due to the curve of the glass. The customer is a top 10 global automaker with the potential of meaningful ladder volumes. So the team worked hard to develop a hardware solution that could meet their strict physical requirements without sacrificing performance or requiring a meaningful re-engineering of the interior components. This part was critical from our perspective, as we want to share as much of the interior engineering across customers as possible to reduce bespoke hardware work, driving volume-based costs lower and incremental margins higher. It took some time to solve for, but ultimately there were several creative solutions that overcame the challenges. In the end, it resulted in a new exterior design that reduced the height of the sensor from 45 millimeter to potentially as small as 25 millimeter. The customer was impressed with our solution and we have continued to move forward in the billing process. And this work isn't specified to just one customer. We think it can be broadly relevant to future program interested in behind the windshield or slimmer roofline deployments where the new profile could be appropriate. This is just one example of how concentrating our time, focus and investment and leveraging the strengths of the Innobis2 platform can result in solutions with a broad market fit, an earlier potential payoff and likely higher overall return on investment. And with that, I will turn the call over to Eldar to review our Q4 23 and 23.3 financials.