Q2 2021 indie Semiconductor Inc Earnings Call

Good afternoon, everyone and welcome to M D semi conductor second quarter, 'twenty, 'twenty, 1 and earnings call.

This call is being recorded at this time I would like to turn the call over to pillar. The Vegas head of global corporate Communications for Indias. Thank you you may begin.

Thank you operator, good afternoon, everyone and welcome to the indie semiconductors second quarter 2021 earnings call.

Joining me today are Donald Maclay, much indeed, co founder and CEO and Tom Schiller Index, Chief Financial Officer, and Executive Vice President of strategy.

Donald will provide opening remarks and discuss business highlights from the quarter.

All of them by Tom's review of the second quarter results and third quarter outlook.

Please note that we will be making forward looking statements based on current expectations and assumptions, which are subject to risks and uncertainties.

These statements reflect our views only as of today and should not be relied upon as representing about views as of any subsequent date. These.

These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.

For further discussion of the material risks and other important factors that could affect our financial results.

Please refer to our risk factors and our recent registration statement on form S..1 and other filings with the SEC.

Additionally, the results and guidance discussed today are based on our non-GAAP financial measures for a complete reconciliation to GAAP. Please see our Q2 earnings press release, which was issued in advance of this call and can be found on our website at indie semi dot com under the news tab.

With that I'll turn the call over to Donald.

Thanks, Paula and welcome everyone.

We're excited to be kicking off our inaugural conference call of the publicly traded company as many of you know and December of 'twenty, and 'twenty, we announced our intention to enter into a definitive agreement with other bridge acquisition too.

The business combination that would result in the combined entity continuing as a publicly listed company.

On June 10th.

And we successfully closed the strategic transaction.

We start this next chapter from a position of strength and with significant secular tailwind.

Having founded India, and 2000, and and 7 we have a long heritage and history of innovation, we've established a global footprint and develop the key relationships with a dozen and tier 1 customers and multiple international Oems.

As a private company, we shipped more than 100 million units, demonstrating our ability to scale and the future.

Equally important our debut as a public company comes at a time when powerful market dynamics are playing out of the macro level specifically.

The global automotive semiconductor market is forecasted to grow from 33 billion and 2020 to 59 billion by 2025 According to IHS.

Also makers are supporting large scale investments and next generation vehicles for example.

The forward recently committed to 22 billion and Evs through 2025, and another $7 billion and autonomous cars, while Volkswagen has similarly announced plans to boost its investment in electric and autonomous technology 286 billion over the next 5 years and ultimately has publicly committed to cease selling internal.

Combustion engine cars by 2035.

With regard to indeed, our served addressable market is expected to grow from 16 billion and $2000.20 billion to $38 billion by 2025 out of 19% compounded annual growth driven by several mega trend and spanning.

The use of expedience and connected car safety systems and the electrification.

Further the average semiconductor content per car is anticipated to reach the level of multiple thousands of dollars per vehicle up from approximately 500 today.

Needless to say the automotive landscape is undergoing a massive transformation and India is at the heart of us.

And our advanced technologies are directly addressing these market needs and the step function increase and electronic performance and complexity required by our customers to help improve safety and facilitate seamless data connectivity and hence the use of experience and accelerating electrification.

Our second quarter 2021 revenue and margin results demonstrate how we are capitalizing on these opportunities and are delivering on our promises, particularly during the quarter. We won the new EV product design with the task of 1.

1 of the largest European automotive tier ones and.

We expanded shipments of our highly integrated onboard telematics solution.

Secured record orders for ultrasound automatic park assist systems.

And our advanced lighting controllers with multiple new Oems and extended our engagement with my cock the global innovator of sensor technology and support of access solutions.

India is well positioned to capitalize on the auto tech market as we singularly and intensely focus on developing innovative solutions for the automotive sector.

Create a 1 stop shop for all of sensor modalities, including Lidar vision radar and ultrasound Kantar.

The continued to drive advanced road maps of our existing product lines and expand our geographic design and development footprint to uniquely serve our customers' needs.

In short and he is excited to be playing its part and empowering the auto Tech Revolution.

I will now turn the call over to Tom for the discussion of our Q2 results and Q3 outlook.

Thanks Donald.

And the delivered solid top and bottom line performance and the second quarter ahead of analyst expectations.

Revenue was up 148% year over year to a record $9.2 million, reflecting increasing demand for our highly integrated auto Tech solutions.

Gross profit was $3.9 million translating into a 42, 1% gross margin up 140 basis points from the same period a year ago.

Operating expenses were $13.4 million and increased from 6 million and the June 2020 quarter as we more than doubled down on R&D and SG&A to accelerate product development.

Extend our market reach and implement public company infrastructure.

Operating loss was $9.6 million versus analysts' consensus estimates.

For a $10.2 million dollar loss.

Interest and other expenses were 300000, yielding a net loss of $9.9 million.

Turning to the balance sheet, we closed our merger with Thunder Bridge acquisition..2 on June 10, with gross proceeds of 400 million comprised of $250 million from cash and trust plus 150 million and pipe investment.

We exited Q2 of $354 million, reflecting retirement of and these long term debt and settlement of the vast majority of transaction expenses.

Now to our Q3.2021 outlook.

Despite global supply chain tightness, we anticipate top line outperformance to a record in the sales level with sustained gross margin expansion in the third quarter of 2021.

Specifically, we expect 30% sequential revenue growth as we approach a 50 million dollar annualized revenue run rate and gross margin of roughly 43%.

We are also planning for operating expenses to be $20 million as we further increased product development and investment in response to pent up customer demand.

Accordingly.

No other net expense or taxes below the line and 135 million shares outstanding we expect the net loss of approximately <unk> 11 per share.

Finally, and perhaps most importantly solid bookings coupled with new program ramps are setting the stage for indeed, and nearly double revenue and 2021, demonstrating 1 of the highest immediate growth trajectories within the auto Tech.

On that note I'll turn it back to Donald first closing comments.

Thank you, Tom and clothing, we couldnt be more excited about in the future we of market leadership positions and several of the highest growth automotive segments and.

And our innovative portfolio of serves several key megatrends, namely Adas and autonomous vehicle connected car and user experience and the electrification with.

And with past success, and delivering leading edge technologies, we plan to apply the same core principles and follow the cultural values that got us here to continue building the world class organization, and and absolute auto Tech powerhouse.

That concludes our prepared remarks.

Operator, let's open the call for Q&A.

Thank you and he would like to ask the question. Please press star 1 on your telephone keypad and confirmation tone will indicate your line is and the question queue. You May Press star 2 if he would like dream of your question from the queue.

And for participants using speaker equipment, and it may be necessary to pick up of your handset before pressing the star of keys.

Ask that you limit yourself to 1 question and 1 follow up question.

Our first question is from Sue G T cell the yeah.

Your line is open and please go ahead.

Oh, Hi, Tom Congratulations on the the strong start here so.

The problem and so then the customer base once you give a sense Tom of Donald how it's grown maybe and the last 3 of 6 months of whether the incremental growth is coming from more program wins of the existing customers just to give us a sense of how that dynamic is playing out well.

Well the simple answer is it's both.

We include the new customer.

Through the quarter, but also U R.

Get the best return, sometimes from additional business of the existing customers and so and chart is really both.

Okay, Great and then the old you had a lot of product announcements during the quarter of all very impressive opportunities lighting and the other things what and maybe if you could tell us which of the which of those represent perhaps the highest unit volume runners today. If that's a helpful thing to understand and which ones might be on the comm and 12 months to kind of see how the layer on.

Well.

You can assume that we're seeing growth in all areas of at this point, we're not really breaking out the exact contribution of each product set at this point as of as a policy but.

But for sure and all of the products that we announced.

And are deploying and are beginning to generate revenue. So I mean, the the demand for all of them has been has been very strong.

Okay helpful and we'll watch those closely and then lastly, maybe the competitive landscape you could talk about just saw announcements or discussions of something like the combination between the year on year and Qualcomm and just maybe you can kind of reset us on the on the competitive landscape and what those kind of actions may mean to someone like you are weather.

India is differentiated enough that that those are of different area than and he's target.

Yes.

And we're a pretty unique company and the space.

I believe strongly we're really the only company that's totally focused on automotive.

And to that and we don't really feel that we have direct competition for the opportunity that's out there today the.

<unk> com and via and your.

Projected combination if they if they get it closed is interesting because it's kind of a.

A vendor buying and so and customer and we'll have some interesting dynamics, but from our side.

Largely neutral to anything we might be doing.

Our next question is from Anthony Stoss with Craig Hallum. Please proceed.

Hey, Donald he addresses all of the strong growth Donald and I wanted to follow up on you know and item in the press release are you talking about record orders for parking. It says I'm curious if you can elaborate a little bit more of that and maybe love to hear if there's new customers being added for that product and then.

1 for Tom on the higher.

Higher Opex for September the $20 billion is there any particular programs that you guys are keyed in on is that Lidar is the kind of across the board of any help you could give us on where that is directed to be helpful. Thanks.

Yeah, so with respect to the parking assist that refers to our <unk>.

Ultrasound src's.

We've had and the market for a little while but as you know it takes a long time to ramp and automotive and we have added new sales from customers through our existing tier ones and to the Oems by sales true I mean OEM customers.

And that is that is driving our our order book today quite simply and.

And then on the latter part of your question.

It is more of R&D oriented and particularly in the Adas product area.

As well as it is the first full quarter, we will have of public company infrastructure costs.

Got it and then maybe at the follow up just Big picture Wise now that you'd have this cash.

Donald I'd love to hear of theirs.

And we're all Oems that we're kind of waiting of the wings waiting to see if you guys would be able to survive and not yet cash clearly you can.

And just love to hear your thoughts on kind of new engagements or the strategic backlog now that you've got plenty of cash.

Yeah, I mean, the response has been phenomenal the.

The customer base.

Strong before and to some extent, we were quite limited by our balance sheet as a private company and with that off the table no. The.

The programs that we have access to that we can beddoe and and have very strong chance to turnover or are phenomenally larger than than what we had in place before.

So yes, I mean, it's been a it's been a huge around the tourism and in terms of that.

The strategic backlog, obviously, as we announced design wins here has increased.

We won't really quantify that at this point, but.

It's kind of the thin and of the wedge and watch the space for 4 more to come.

Our next question is from Ross Seymore with Deutsche Bank. Please proceed.

Hi, guys echoing the other is giving you congrats.

And the store.

The first quarter and guide.

You mentioned about the shortages in your press release, despite the global well I think you guys are still delivering growth and you just wonder Donald if theres any update are you guys seeing any direct and patients on your side or even any indirect parts, where you could ship your components, but something else and the supply chain was the gating factor or any of the quarter guide.

So and then I didn't catch the first part Ross.

I just wanted to see if the the shortages across the industry were impacting you either indirectly or directly.

I mean, not at present I mean, the supply chain is very tight.

It does.

And careful controls and and management from our side. So it's not a trivial problem to solve at the moment, but we are navigating it pretty well I would say.

I would say, there's not much inventory and the channel and so far we haven't really been strongly hit by.

Perhaps the factories being sheltered because of the other component and an availability. So I would say generally speaking so far so good.

At and <unk>.

It is a there's an ongoing situation, which we have to manage but.

And so far I would say, we're reasonably happy with the situation.

Good to hear on that and I guess for my follow up you mentioned and the press release about and EV product design win it. So I think he said 1 of the largest European automotive tier 1.

Can you just talk a little bit about the timing of when that would ramp and some of the functionality of I know you talked about charging controllers and diagnostic solutions et cetera, I assume it's fair that functionality, but the.

Any additional color, even and the timing or size of that and it seems like the opening up a new area of that.

Not really I mean, that's a.

And we'll keep that confidential for the time being until we're closer to the Mark obviously.

Automotive ramps take several years, so it won't be next quarter or the quarter after that.

It isn't actually directly related to the 2 application areas that you mentioned, but it is germane to the directly to the propulsion aspect of the vehicle platform.

And that concludes the Q&A session I will now turn the call back over to Donald May claim it.

Well, thanks, everybody for joining us today look forward to seeing you at the upcoming investor conferences and the non deal Roadshows. So looking forward to continuing the story.

Thank you. This does conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

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