Innoviz Technologies Ltd.

Good morning. I would like to welcome you to our Q1 2025 Earnings Conference call. Joining us today are Omer Calaf, Chief Executive Officer, and Eldar Tsegla, Chief Financial Officer. I would like to remind everyone that this call is being recorded and will be available in the investor relations section of our website at ir.inoviz.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 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 20-F filed with the SEC on March 12, 2025. Omer, please go ahead.

Thank you, Ada, and good morning to all of you joining us on Discord. Today we'll discuss our recent financial performance, tell you about some exciting new developments in our business, and outline how these position us to achieve our long-term goals. In the first quarter, Innobis reported record revenues and gross margin. Q1 revenues were $17.4 million, up approximately three times sequentially and up approximately two and a half times year over year. Gross margin was approximately 40%. Both revenue and gross margin were the highest in our company's history, demonstrating our progress in meeting our full-year targets and achieving our long-term strategic and financial goals. As we discussed last quarter, in recent months, we've taken several significant steps to strengthen our financial position. In December, we entered into an approximately $80 million NRE payment plan with our key customers. These NREs formed a significant portion of our revenues in the quarter. Just last week, we announced an extension of our NRE payment plan to approximately $95 million. with the bulk of cash payments expected in 2025 and 2026, a testament to our customers' continuing commitment to our technology. Our performance showcases the strength of our financial model. The recently expanded NLE payments plan, the registered direct offering, and our prudent cash management are expected to enable us to cross SOPs and RAM volumes in 2026 and 2027. We recently announced our strategic partnership with FabriNet to launch the mass production of our InnoVis2 platform ahead of our upcoming customer ramps. By working with FabriNet, we will be able to efficiently scale production to volume with a partner that has automotive grade manufacturing capabilities around the world. Our existing Level 3 and Level 4 programs are on track. We are delighted by the accelerating plans for Robotaxi deployments. Yesterday, we announced that we are accelerating LiDAR shipments to Volkswagen Autonomous Mobility for the ID.Bus on the Mobileye Drive platform, ahead of the deployments by Moya and Uber. Hundreds of ID.Bus shuttles will be equipped with nine Innobis II LiDARs each, in 2025 ahead of fleet launches in 2026 in Europe and the US. Holon and Verne, other Innove's customers, through the Mobileye Drive platform are both expected to break ground on manufacturing facilities for their vehicles in the US and Europe. Elsewhere, we continue to make progress with new customers. We are excited about our expanding collaboration and growing momentum with NVIDIA on the Appearance platform, as well as our progress with a major OEM evaluating the solution. We're also seeing strong and growing traction in non-automotive, where our auto-grade technology could generate significant value for customers. We are in discussions with several integrators who are interested in deploying our ladders into their customers' applications, which target smart city, ground truth, and safety. We are shipping samples and have developed a specially tuned software and hardware kit for this market. All told, we are off to a very strong year. Before I dive into the details, I'd like to take a few minutes to talk about our mission. Following a record-breaking financial quarter marked by several significant operational and business milestones, I believe now is an ideal moment to discuss Innoviz's origins and where we are headed. When we founded this company, we wanted to enable safe autonomous driving by creating the best ladder in the market, and we delivered on that commitment. With the InnoVis 1, we enabled BMW to offer safe autonomous driving in its i7 series vehicles. With the InnoVis 2, we are offering the market significantly improved performance and cost, and our customer engagements are a strong testament to the product's technical superiority. In order to truly deliver on our vision for safe autonomous driving four years ago, we set as our mission the ability to work directly with automotive OEMs as a tier one supplier. We have since achieved this goal. Now we partner directly with some of the world's largest automotive manufacturers as a trusted tier one, clearly demonstrating our ability to collaborate with them at the highest level. We've now come to the next stage in our evolution as a company and are ready to write the next chapter in the Innovee's story. Becoming the world's premier large-scale mass supplier of best-in-class ladder solutions for autonomous driving and beyond. As we forge forward, we are taking the steps needed to achieve this goal. As you saw from our recent announcement, our partnership with FabriNet should allow us to efficiently ramp up our designs to volume and meet customer demand for years to come. We have a proven record of delivering to our commitments and are excited about this next stage of our journey. Now, let me begin by telling you more about our Q1 financial results. We reported revenues of $17.4 million, which is an all-time record for Innobis. It's almost three times better than the last quarter and approximately two and a half times better than Q1 of 2024. The revenues were driven by a combination of NRE payments under the approximately $80 million payment plan that we initially announced in December and since expanded to approximately $95 million. As a reminder, the NRE payment plan is the outcome of development activities that Innoviz is performing for its key customers. NREs support our operations ahead of these customers' SOPs, and the bulk of cash payment from the plan is expected in 2025 and 2026. During the quarter, revenues also benefited from sales of lidars to new and existing customers. We reported gross margin of 40%, supported by positive contributions from NREs. This gross margin level was also a record for the company. Going forward, we'll continue to manage our spending closely and maintain our focus on profitability. We grew our cash position, ending this quarter with $85.4 million in cash and cash equivalents. Our cash balance included the proceeds of the registered direct offering that we completed in February. Bolstered by our strength balance sheet and ongoing customer engagements, we are well positioned to support the product ramps that we expect over the next two years and to pursue new opportunities. Turning now to our production capacity expansion, We believe our financial performance thus far in 2025, driven by a combination of NREs and LiDAR cells, is indicative of our customers' commitment to our products. We recently announced that to support our volume ramp, we selected FabriNet as our manufacturing partner for the InnoVis2 platform. FabriNet will provide end-to-end manufacturing for both the InnoVis2 long range and InnoVis2 short to mid-range LiDARs. FabriNet will use our production methods using the design and process flows that we developed here at Innoviz. FabriNet's expertise in automotive-grade manufacturing and its global footprint of manufacturing sites spread across the US and Asia will enable innovates to cost-effectively scale production to volume and accelerate revenue generation. Our collaboration will allow us to meet the demands of our current and future customers for years to come while providing flexibility. FabriNet's facilities have passed rigorous audits by several leading global OEMs under the German automotive VDA 6.3 standard. And our customers are very pleased with our choice of manufacturing partner. They are all familiar with FabriNet and view this as a further assurance of our ability to meet their volume ramp requirements. The FabriNet team has been at our Israel site working alongside our staff to master our product and process. We expect our capacity to increase by an order of magnitude in 2025 and the production line to be fully ramped in 2026, enabling customer SOPs and volume ramps. Moving on to our programs, we continue to be deeply engaged with our level three and level four program partners We are especially encouraged by the accelerating plans to deploy robot taxis around the world. With production ramping at our FABONET facility, we'll be able to serve these deployments with our growing capacity. As you saw in our press release yesterday, we're accelerating the delivery of our newly designed ladder platform to Volkswagen Autonomous Mobility. We're tremendously pleased with this ramp in our collaboration with Volkswagen in support of Moya's planned expansion in multiple European and US cities starting in 2026. Ahead of the fleet launch, hundreds of IDBus charters will be equipped with a newly designed suite of Innobis ladders in 2025. Additionally, Uber and Volkswagen announced their partnership to deploy a fleet of ID.Bus vehicles in Los Angeles in 2026 and more U.S. cities down the line. Recall that the ID.Bus, which is based on the Mobileye Drive platform, has nine InnoVis two-liters per vehicle, three long-range and six short-to-mid-range. Other expanding RobotX's programs include Holon and Velmet. which are customers we previously announced on the Mobileye Drive platform. Holland is breaking ground on a facility in the US to build its autonomous vehicles, which, like the ID.Bus, is planned to employ nine Innobis II ladders each. Production is slated for 2026. Werniz also started construction on a manufacturing facility for its autonomous vehicles in Europe, further highlighting the growing adoption of Robotaxis around the world. As we advance our programs with our existing Level 3 and Level 4 customers across the different platforms, we continue to see robust RFI and RFQ activity and are in various stages of sourcing process with several OEMs. Last quarter, we told you about our relationship with NVIDIA. Since then, our collaboration has expanded We are seeing growing momentum with the Hyperion platform. The benefits of partnering with a platform provider with NVIDIA's capabilities are clear, as multiple OEMs are evaluating the Hyperion for integration into their vehicles. We are extremely pleased by the recent progress we've made with major OEM on this platform. In addition to the continued traction we're seeing in the automotive space, we are now increasingly targeting non-automotive applications as well. The expanding capacity that we'll have through FabriNet has the potential to allow us to grow our available market in a segment where we believe our lighter technology likely outpaces the existing competition. We view this as a great opportunity to generate better customer value through our short to mid-range and long-range solutions, which outperform the devices currently available to the non-automotive market. Additionally, bringing auto-grade products to this market gives customers a new level of reliability. This has been a pain point. We are in serious discussions with several integrators around specific projects in areas such as smart city, ground truth, monitoring, and safety. We have started shipping samples and launching a version of our product markets as well as software and hardware kit. Several of our partners are already showcasing products featuring innovative sliders to their customers. We are very optimistic about our opportunities for growth in this segment, given the strength of our solution and look forward to updating you as the year progresses. I'd like now to take a few minutes to share some updates on our technological advances, which are underpinning the success we're seeing with customers. We've reached point cloud freeze and are building our first sea sample at FabriNet. We have frozen the design of the Innobis II with specs that meet or exceed the requirements of the automotive OEMs. We've been able to demonstrate unprecedented performance compared to our previous products, such as range performance of 300 meters at 10% reflectivity under full sun conditions. This is a testament to our ability to continuously improve our product and maintain our technology leadership. We are now focusing on higher level KPIs related to image quality, uniformity, accuracy, reliability, always on availability and resilience that are required to enable mission critical performance in level three and level four applications. These are the KPIs that our customers are now targeting. And when we demonstrate our capabilities around these next level KPIs, customers are deeply impressed. As you know, we never stay put and are already making progress on our next generation slim design, the InnoVis 3. We will share more with you later this year. Now let's move on to our outlook. Driven by the NRE payments that we expect in 2025, Combined with sales of flighters, we continue to expect more than two-fold increase in our revenues year over year for 2025, at $50 to $60 million. For the full year, we expect revenues to be back-end loaded due to the lumpiness of customer timelines. We also expect to see some fluctuations in margins, Our continued focus on tightly managing expenses, as well as the actions we took in the first quarter, is expected to drive down our cash burn over the course of the year. On the operational front in 2025, we continue to target one to three new programs. Last quarter, we noted that we expect $20 to $50 million in additional NRE bookings. As you saw, we already locked in a nice portion of that. Before I turn it over to Edao, let me briefly touch on the subject of the US tariffs. The situation remains very dynamic around how and when, and even if the tariffs will be applied. What we can tell you is that at this time, we expect the tariffs impact to be limited. We are continuing to closely monitor the situation and have the flexibility to adapt as needed given the timing of ramps, our relationship with FabriNet, and there are multiple manufacturing locations. And with that, I'll turn it over to Adar to talk about our financials.

Thank you, Omer, and good morning, everyone. As we noted last quarter, in the past several months, we have strengthened the financial foundation of our company and have made meaningful strides on our path to break even and profitability. The results we reported for the first quarter demonstrate the impact of the NRE payment plan on our revenues And our balance sheet reflects the proceeds of the registered direct offering of our security that we closed in the first quarter. We ended Q1 with approximately $85.4 million in cash, cash equivalents, short-term deposit, and marketable securities on the balance sheet. For Q2, we expect strong cash inflows reflecting robust trade receivables with cash expected in the single digits. We look forward to continued balance sheet strength, further aided by the effects of our operational realignment in Q1. Gross margins in the quarter was approximately 40%, a dramatic improvement over 8.9% in the previous quarter. Going forward, we expect margins will continue to be rather lumpy. This is due to the product ramp timelines and NRE fluctuation based on our customer's milestone. For the full year, we continue to expect gross margins to be positive. Looking into the remainder of 2025 and beyond, we remain confident in our ability to manage our expenses effectively and keep our burn rate down on the annualized basis. Now turning to the income statement, our Q1 revenues of $17.4 million set a record for the company, driven by the contribution of NREs as well as sales of Leidos. Our operating expenses for Q1 were approximately $21 million, a decrease of 34% from $31.7 million in Q1 2024. This quarter's operating expenses included $3 million of share-based compensation compared to $5.9 million in Q1 2024. Research and development expenses for Q1 were $14.8 million, a decrease from $23.8 million in Q1 2024, largely related to the allocation of direct costs to COGS under the NRE payment plan. The quarter's R&D expenses included $1.9 million of share-based compensation compared to $3.8 million in Q1 of 2024. To conclude, Q1 represents a record quarter of robust performance for both revenues and profitability perspective. We are encouraged by the ongoing strengths of our expense management and ability to consistently meet or exceed our revenue guidance. Looking into Q2, we are focusing on our future ramping in of these two and securing additional design wins as we reduce cash burn and maintain a strong balance sheet. And with that, I'll turn the call back to Omar for a few closing remarks.