Innoviz Technologies Ltd.

Good morning. I would like to welcome you to our Q1 2024 earnings conference call. Joining us today are Omar K. Love, Chief Executive Officer, and Eldar 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 has been recorded and will be available on the investor relations section of our website at ir.innovis.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 a discussion of some 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 March 12, 2024. Omer, please. Thank you, Maja.

And good morning, everyone. Thank you for joining us. First quarter was a strong start for the fiscal year for Innoviz. We achieved revenues above our guidance range for the second consecutive quarter. Once again, expanded our relationships with key partners and customers, made significant progress on our strategic realignment and continue to build on our RFI and RFQ pipeline. We had another busy quarter full of activity with our teams traveling globally throughout Japan, China, Korea, Europe, and the US to meet with existing and potential new customers. Meanwhile, we've been super focused on supporting RFQs across multiple programs. The team also made significant progress in continuing to develop and test our technology in line with our commitment to provide best-in-class technology to our customers. Beginning with our top-line performance, we delivered revenues of $7.1 million, up from $1 million in Q1 2023, and above the guidance range of $5 to $6 million we provided last quarter. Driven by a combination of NREs, samples, and product shipments, these results demonstrate the potential power of this three-pronged approach to growing future revenue streams. I'll now pivot to a few customer and partner updates. As we shared last quarter, the BMW i7 has launched in Germany and we expect BMW to share user experience feedback in the coming weeks. While other LiDAR companies have reached SOP allowing level two, we believe that as of today, we're the only pure play LiDAR company to reach SOP with level three, with vehicles already on the road using our LiDARs and perception software. During the quarter, we continued supporting software development specific to the deployment of InnoVis 1 on BMW 5 Series vehicles in China. We continue to see China as a catalyst to accelerate the use of ladders in the move towards level three autonomy. And we are working closely with the BMW and Magna teams, which are performing the on-road testing specific to the Chinese market. We believe once China approves Level 3 autonomy, the reaction will be similar to what we saw happen with EVs. In fact, at least 12 global and local brands, including BMW, have Level 3 testing licenses across seven locations in China. with Volkswagen. As you know, we secured the series production award in 2022 for Cariad for different VW brands, which is a passenger vehicle level three, high volume program based on Qualcomm platform. We also previously disclosed that our second program with the VW group is the ID Bus, light commercial vehicle program. It will be a level four program with multiple long range lighters per vehicle planned to launch in 2026. In previous quarters, we discussed additional opportunities for expansions. I'm pleased to share that we are working on yet another expansion through our collaboration with Mobiline Volkswagen Group on an additional high volume level three program with a similar timeline. In parallel, we continue commercial discussions with VW Group. This progress may add significant additional volume with more development platforms and sample shipments, which will help fund our efforts toward volume ramp-up. Meanwhile, we are actively working on several exciting new opportunities within the Volkswagen Group, in addition to the three opportunities I just mentioned. Regarding Mobileye, during the quarter, Mobileye announced another win with our future customer, Volkswagen. Specifically, they announced that they will offer certain production-ready functions for the new Level 3 chauffeur platform. Mobileye also announced that they will supply their software and hardware to Volkswagen for the implementation into the Level 4 drive platform ID.Bus. Their goal is to bring self-driving ID.Bus vehicles for ride-hailing services to series production in 26. We have a close relationship with both Mobileye and Volkswagen Group. Our products are already integrated into both of their platforms through the IDBuzz program, which we believe allows us faster integration into additional opportunities, such as the Level 3 program mentioned earlier. Overall, we are pleased to see one of our key partners and one of our key customers deepen their relationship. We continue to see long potential runways for growth with both Volkswagen Group and Mobil. And as I said earlier, we are working with the Qualcomm platform for the VW Carriel program, and we are working with the Mobileye platform for the ID.Bus and the additional Level 3 program. We are hopeful that we will benefit from these collaborations across other programs with additional OEMs. And I would like also to update that we are making progress on our collaboration with NVIDIA, and we are working with OEMs on several NVIDIA-based RFQs in our pipeline. We believe that our collaboration with NVIDIA and these OEMs could present another opportunity for growth and expansions. I'll now touch on our RFI and RFQ pipeline. Our pipeline is very active and we are continuing to mature 10 to 15 programs in the pipeline. Most of these are level three passenger vehicles, I'm happy to share that about 50% of our pipeline is in the RFQ stage and we're deepening relationships with existing customers while working towards additional programs with potential new customers. Last quarter, we shared that there were two programs for a global deployment of level three vehicles where the decision timelines were pushed into 2024. We continue to work closely with these OEMs and are confident in our position within these RFQs. In addition to the level three opportunities, we would like to highlight two level four opportunities in the pipeline that progressed well during the quarter. Those opportunities are with two leading level four platform companies in the tracking and ride hailing spaces who are working with various OEMs. Certainly, there is a lot to be excited about. Importantly, for each potential program we are quoting, whether it's with a new customer or an expansion with an existing one, we're quoting with NREs. This is significant because with the cash we have on hand, together with these potential new business opportunities, we feel confident in our ability to execute our strategy within the remainder of the market capture window. I'll now share a few recent observation on the lighter sector. We are very optimistic as we are seeing continuous progress with various platforms and programs. As a result, we believe that the meaningful percentage of vehicles in the market will be equipped with LiDAR by 2030. To that end, according to the S&P Global research, in 2030, approximately 10 million LiDAR scanners across various autonomy levels are expected to be sold globally in the automotive market. They also expect the number of LiDAR scanners sold in 2035 to be more than double that. Now pivoting to a recent industry development. At the end of last month, the US National Highway Traffic Safety Administration, NHTSA, announced a new motor vehicle safety standard that will require all new light vehicles to have automatic emergency braking system as of September, 2029. This requirement standardizes the crucial safety feature It is intended to save lives and prevent injuries by automatically breaking a vehicle when a crash with another vehicle or pedestrian is imminent. What is important to highlight here about the new publication is the fact that NHTSA rule adopts testing requirements of emergency braking systems, which will include compliance in both daylight and dark conditions. As part of their commentary received by NHTSA, their other coalition stated that the Insurance Institute for Highway Safety found that in darkest conditions, camera and radar-based pedestrian emergency braking system fail in every instant to detect pedestrians. Automatic emergency braking systems use sensors to detect objects in front of the vehicle. And we believe LiDAR could provide the technical capabilities to successfully meet this requirement in any weather and lighting conditions. We believe that OEMs work to comply with new regulations and as the entire automotive industry raises its standards, OEMs will move to implement new capabilities and features, many of which would probably be supported only by LiDAR. At InnoVis, we are optimistic about our ability to position ourselves to capitalize on future opportunities for LiDAR. Now moving to the latest update from our winter testing of the InnoVis 2 B sample with our second generation custom ASIC and our computer vision AI software in Europe. As we recently announced, we reached a key milestone after our team successfully completed the winter testing for InnoVis 2. The test spent 18 days of driving across 10 countries, demonstrating the robustness and reliability of our technology in the harshest winter conditions. InnoVis2 is reaching maturity and is approaching its design freeze stage for automotive grade applications, as supported by the results of this winter testing. We believe only the most mature and well-developed technologies are able to perform safely and effectively in such strenuous testing. Innoviz2 showed resilience in different weather conditions and to potential blockages including rain, snow, and dirt. We believe that this could be a distinct competitive advantage for us in the industry. The data and insights accumulated during the testing are being used to improve Innoviz's proprietary AI-backed software and hardware solutions. With the successful completion of the advanced winter testing, we've overcome a big hurdle that is challenging for any automotive component producer. We're excited to move our technology to the next stage of development. I want to briefly touch on the progress we've made on the strategic realignment of our operations announced last quarter, and I will provide more color on this shortly as well. As of today, we implemented nearly all of our initiatives of our realignment plan. In line with our plan, we have reduced our investment in the development of InnoVis 1 and are reallocating part of the savings toward the development of the InnoVis 2 sensor and perception software platform. This includes different configurations of the InnoVis 2, such as the level 3 long range, short range, and trucks, and as well as the implementation of our sensors at lower height and behind the windshield if the inner is too slim. We've also integrated our hardware and software development units into a combined R&D department. Taken together, we delivered a decrease in cash burn compared to the first quarter of 2023. Wrapping up with our guidance for the second quarter of 2024, as a reminder, we have reverted providing quarterly revenue guidance instead of annual revenue guidance. We expect second quarter of 2024 revenue in the range of $4 to $5 million compared to $1.5 million for Q2 2023. We continue to expect full year 2024 revenues to be more back half-weighted based on channel fill and customer activity. We also expect there will be continued lumpiness due to the typical cadence of NREs. Last quarter, we were also guided to two to three additional programs from both existing and new customers and $20 to $70 million of new NRE bookings in 2024. Giving our strong style to the fiscal year and the momentum we're building in our pipeline, we continue to believe that we are on track to meet those targets this year. And with that, I'll turn the call over to Eldao to review our Q1 2024 financials.

Thank you, Omer, and good morning, everyone. Starting with cash, we ended Q1 2024 with approximately $128 million in cash and cash equivalents, bank deposit, marketable securities, and short-term restricted cash on the balance sheet. As Omar mentioned, our continued solid revenue performance plus the efficiencies achieved from our operational realignment led to a decreased level of cash burn compared to Q1 2023. With cash dues in operations and capital expenditure coming in at $23 million compared to $29 million in Q1 2023. And with InnoVis 1 now in serious production, all quoting and bidding activities in our RFI and RFQ pipeline are focused on InnoVis 2 platform. As we remain in this critical market capture windows you have heard us talk about in the past, we are maintaining the appropriate level of flexibility to demonstrate we can meet customer evolving needs. The realignment has made Innoviz a more efficient company and we are laser focused on the Innoviz 2 platform. Moving to the income statement, revenues in Q1 2024 were $7.1 million, which is approximately 18% higher than our guidance range. This is a significant increase compared to Q1 2023 revenue of $1 million, demonstrating the positive financial trajectory we are delivering. Our operating expenses for Q1 2024 were $31.7 million, a decrease of 5% from $33.3 million in Q1 2023. This quarter's operating expenses included $5.9 million of share-based compensation, compared to $5.2 million in Q1 2023. Research and development expenses for Q1 2024 were $23.8 million, a decrease from $26.1 million in Q1 2023. The quarter's R&D expenses included $3.8 million attributable to share-based compensation compared to $3.5 million in Q1 2023. As you can see, we have maintained decreased levels of operating and R&D expenses. We expect to keep our expenses at these levels in the coming months. To summarize, we are pleased by the continued strength of our financial performance and moving forward, we will remain disciplined and run an efficient organization with the goal of optimizing our competitive positioning while maintaining a healthy cash position. And with that, I'll hand it back to Omer before we open up the calls for Q&A.