Q4 2021 Innoviz Technologies Ltd Earnings Call
Conference call I'm joined.
Joining us today are <unk>, Chief Executive Officer, and in Dallas, Sigler, Chief Financial Officer. Following the formal remarks, we will open the call for 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 web.
Site at IR Dot interface Doc Tech.
Before we begin we would like to remind you that our discussions today will include forward looking statements that are subject to risks and uncertainties relating to future events and the future financial performance of interface 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 of the 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 April 21, 2021, I will now turn the call over to <unk>.
<unk>. Please go ahead.
Hi, everyone. Thank.
Thank you very much for joining us.
Happy to host our fourth quarter earnings call.
With us today.
Joining me.
Useful.
And today, we have a special guest.
Okay.
Sure.
One of the founders.
The 270 <unk>.
He will talk about the progress.
With that I would.
So the presentation.
The drums.
Sure.
Okay.
Okay.
I want to start with talking about our interviews have met.
2021 targets.
Yes.
A design win.
Level, four with sort of automotive company.
Shutoff program using multiples of all items charter program that is still do launch end of this year or beginning August one.
This program is making good progress.
Very happy to be bonuses.
The program is using and it was one.
Last March we announced a new product.
With a very significant performance improvement and cost reduction and we told the market that we're going to have first samples by the end of June .
And we have managed to meet that target.
We will quantify the Dar supplier for one of the largest call me do those in the markets.
As part of us competing on the program, which we are.
Expecting decisions to be made soon.
And we are growing we are following the same process with other comment just with it.
We ramped up.
First automotive grade high volume production of <unk> with our partner Martina.
To support the BMW program and start the program automotive grade.
Additionally, that we talked about having to reach a design freeze a cleaner environment happy to say that we have managed to.
To meet that target.
Now moving our efforts to the production validation.
The launch of the programs.
Additionally to these efforts.
Included new capabilities in the company.
And opposed to the one before we did the design manufacturing designed for volume reduction with Bob.
<unk> two and now we move to 60, we do the design for manufacturing ourselves and we have our own.
NPI introduction.
<unk> production line four.
Small volume production.
In our own facilities, which gives us the ability to move very very fast that's what allows us to have first step of surplus.
We've announced several announcements on new partners and customers smooth the entire Europe 31, and we will continue to do so.
Last earnings call, we talked about.
Many efforts that we're doing.
To meet our targets to have enormous two available and so its for the first time in the consumer electronics show in Vegas.
And I am happy to show you now is video.
This too.
Yes.
We have a working product this is amazing.
Hi, Mark.
Kayla.
And finally, our fingerprint and <unk>.
I would invite you to our first demo Carl.
Our groundbreaking technology that is going to reverse and I thought it was.
Driving industry, let some of them.
This is <unk>.
Generation I'm excited and looking at this we are in the middle of Tel Aviv.
Seeing the product in line.
No I'm going to call me in terms of trying to make a decision on a formula for.
Older vehicles for 'twenty, four 'twenty five having the ability to show them our products already meets all of their requirements and price points.
Big advantage, they don't need to take any risks that can start collecting data and algorithms with a product thats already meets everything they need.
[music] Theres no other laser.
This performance placed upon.
We're just coming with a lot of experience in developing Liza for automotive we've done so for the last four five years.
I don't think there is any other company that spent so many years in developing and either for autonomous vehicles and all of that learning is now baked into this amazing products.
It makes me excited as we are already able to provide the product that the customers are looking for today.
And I can actually imagine how the world would be.
Full of this kind of sensors.
And will allow us on on what's driving that.
[music].
We have a war.
We're working products.
With that I want.
To talk about what we managed to accomplish in the last quarter. We are now.
New contracts for preproduction deals and I will elaborate on that site.
We continue to work on several other fires and other skus in the market and we are.
Very good momentum.
One of the programs that we were hoping to announced end of last year.
Goodbye.
But the customer pool of these days.
As to make some changes in the requirements we have responded.
Garments and we are now waiting for their decision.
We are very confident in our ability to secure very meaningful business. This year. There are additional skus coming along and with our portfolio I believe that we will be able to announce this year.
We increased our order book by $200 million.
Following progress we have in the charter program.
Isn't it.
Includes mobile either.
And the maturity of the program allows us to increase our expected revenues in this quarter.
We have our first samples of the students that allow our customer to.
To test.
The product and make it a season.
We announced a new product very innovative one <unk> 360, it's.
The new category, which allows.
As a base and compete on many additional programs and I will elaborate on it.
We had a webinar for level, three standardization, where I introduced the white paper.
We created to talk about what are the requirements for lidar to meet level III.
Performance and we see <unk>.
Strong pillar that can actually help in.
And consolidate and the requirements of this market, we had the system and my T course for deep learning.
The progress of our subscriptions.
We were awarded with the IHS indications of production quality.
Other than that we announced on new partners and customers.
Just recently.
On the five contracted pre production deals we announced.
A new customer of IFC, one of the largest construction companies in the world.
Using our <unk> automated driving.
Another customer is Syracuse, who is also using our lidar sort of method.
Train control you can see here the video they created and.
Using England.
It's an Israeli company, we're very happy to work with.
Well the dynamics of the company, we announced a quarter ago about our calibration and now reaching an agreement.
We're supporting their efforts to bring platforms, it's almost level four plus supermarkets.
We are also agreed to.
Reached an agreement with an Asian company to bring automate automation.
<unk>.
And with this one and tweener to support.
Of course in automation in the fixed.
Again using universe.
We are working to increase.
Customer.
Right.
Work through the majority of these volumes through most of the schemes.
Our funnel. So we have until today, we have two series production programs was too big.
Most of the companies one.
Thank you.
Host.
And which allow last quarter talking about August .
<unk>.
And.
More details will be shared.
Throughout the year about the launch program.
And the southern program, which either.
We increased our preproduction program by five deals.
Club earlier, we have currently.
Oil companies.
In stages with other slides in our Skus.
And many of them with <unk>.
Very meaningful opportunities.
Thanks.
Our target for 'twenty, two which 10 pre production program that will allow us to meet our revenue targets.
And at least one more automotive program.
This will allow us to increase our order book.
70%.
Now I would like to talk with you about <unk> strategy relates to our business development.
Automotive and beyond.
The way <unk> has operated these assets every point of time.
We look at the total addressable market of license there are different markets that <unk> could be used but it's always very important to identify which of the markets.
More likely to go through an avalanche sooner we.
By doing that study requirements understand.
Frictions that requires the needs and.
And we'll.
This chipset you would say all the building blocks that allow us to be.
The best.
We industrialize those platforms and we continue to improve them and also provide the right.
Yes.
So given examples of that today, there are different markets fall, either but the fastest growing markets for lidar today.
L. Three you'll see the different car companies that are doing.
Now looking for a lighthouse or launching level two level three and we see that as the most interesting lies our opportunity in the coming years. It's also interesting to understand that the decision making of those programs.
These days the next year or so that most of the decision for this market will be taken and the car companies that will make decisions following that.
Would rely on the decisions that.
These car makers have done.
We have started to announce three very thorough.
We just introduced the white label.
So housekeeping.
Healthy.
Our understanding and dispute and you can actually find that on our website.
And for that we introduced in August .
To meet all of their requirements, we've got from our customer alongside with our perception software, which comes with a lot of maturity a lot of experience coming from <unk>.
One has hundreds of thousands of kilometers already driven.
To find any issues that might come along the ability to show that experience.
For any carmaker that was once we make a decision to date.
On a technology that can allow them to launch safely with gulfport in between the best.
The next market that we identify is an interesting one is delivered floor.
There are actually different other skus.
It's starting to come along with the different customers and prospects of this market could be shuttles and robo taxis on trucks.
And that is expected to launch in 'twenty six 'twenty seven and we are working with those customers.
The requirements for level four is slightly different than level during the three.
Yes.
The pension for industrial design, because its not not only one lidar for booking multiple like us around it because it's very important to which zero blind spots configuration.
For that application, we introduced <unk> 360 design, although the last the course of the last deal and we did just a couple of months ago.
And we see that is it.
The right combination.
Within those markets.
Using our perception software on top of it provides our customers to grow from level two level three and now delivered.
Beyond automotive and of course automotive aggregate very very different applications.
Also military and.
Civilians and construction sites.
And those aggregated opportunities will eventually surpass the automotive okay.
Every application today that is using today, including sensors will eventually.
<unk> two <unk>.
And as such we are learning the requirements of this market, which is much more fragmented.
It requires much better seamless integration no longer of automotive.
Process.
Integration for several years.
Several analytics tools.
We're looking in both markets in which we are learning what additional platforms and lidar are required.
We will continue to provide new product sales those very interesting.
Opportunities.
And we will have them ready for the decision, making when Easter of revenue generation.
Alright.
In terms of software development and we've been developing our perception software for about six years now.
The exception of <unk>.
Were identified the need for perception softer form differently. It was very clear to us that any customer that is requiring a lie though would not be able to use just a central is a real data, particularly require.
The object detection for certification the movement detection guardrail landmark to sit Brian that's what we offer.
The lidar and prices.
One side the liable.
That will generate revenues both offer not only as a onetime.
But also as a subscription based support all after the launch.
Two for level four level five and those are skills that we are looking at.
These are requirements that we need to build which are related to multi driving direction.
Fusion and of course supporting the <unk> and that can also come on top of the pricing of the license.
For the non automotive.
The perception software that we already developed provides us the best I would say incremental step into this market.
Having the mature automotive grade object detection classification gives us.
<unk> to penetrate this market space.
We will build additional tools.
And we will.
And the fee would be.
Several applications.
Our cash position is very strong we have $370 million just rate in 2021 was $300 million in our bank.
Bank accounts, starting this year.
We're very conservative in the way that we manage our funding.
As an example that we already foreseen planning this need to have all our build this year and so all of the components. So we're not as sensitive for the chip shortage in this year.
To summarize.
<unk> ability to succeed in this market is implemented we.
We have two significant.
The customers that gives us a very large order book and a very large pipeline ahead of us that we see a very good chances to predict.
We have a cutting edge technology.
Proven capabilities and a mature one that allows carmakers to have.
Zero risk in taking that technology, we have the perception software probably more.
With more mileage and anyone.
In this category with the capital to execute our strategy, we'll have the industrialization experience and yesterday three production lines.
<unk>.
And we have the automotive experience that is baked into everything.
Of course, we have also the production of our product line, which will allow all of our customers to grow with us from level two level three delivered for them.
And with that we're going to grow the company and continue.
I will handover.
So all in muscular presents.
Vehicles.
Thank you Omar.
Glad to be here and really excited to share this update.
On the R&D progress in the past quarter.
Right now.
And.
I'll start with taking a step back and looking at the six years. Since <unk> started now we started back in 2016, we're the only ladders available towards the automotive market. We have a very poor performance very far from reaching the requirement of the automakers or self driving that.
Back in 2016, and since then we've made exceptional progress with the <unk> one and.
In 2020, we launched the first.
Students of the end of this month.
Which provided.
Unprecedented levels of performance both in terms of range in terms of resolution.
Making the larger finally.
Suitable for automotive self driving on public roads.
During that time, we did not reflect any of the requirements dictated by the auto industry for reliability quality cost et cetera, and now in 2022, just six years from inception of the company, we're ready to take it to the next level with deep into this too.
<unk> two will be a much improved version.
Improved generation axles A&M is one which will have a dramatic boosted performance while at the same time, we will have a dramatic cost reduction in terms of performance and <unk> will help.
Twice the resolution and each of the of the access so point of filed by point or five degree in X and y.
Access it will have a wider shoulder view and policy review.
'twenty by 40 40 degrees.
All of the same time, it will have a longer range, which is only more difficult. Once the resolution is finer and this will come at the dimensions and Vic and the price point.
Fourth our level two consumer cars through level five.
Now for some more details on <unk>.
What has been doing.
In the project of the <unk> during the last quarter. So as Omar mentioned, we actually met the objective of delivering the first <unk> samples back in January that was at CES Vegas.
We presented the <unk> zero samples the preliminary samples also anniversary.
We haven't really as they are they met most of the performance.
Objective targeted fall at the end of his through already in the first Apple, including the field of view of <unk> by 40 degrees. The resolution appointing a further four to five and the range of more than 200 meters or a very dark 10% risk activity target that was achieved with a framework of 10 frames per.
Second which is going to improve in the next versions of the product speaking of the next versions of <unk>.
Next one is to be one <unk> one will be available in Q3 of this year and it will feature.
A massive decrease in the size so.
I'm holding in my hand, and I Hope you can see them. This is the interface to zero. That's now sampling this is Dana <unk>.
B one coming up later this year and you can see both from the presentation and maybe from the video that we have reduced.
At the height of the PD, one dramatically versus the zero with the target of making it suitable for more diverse mounting positions on the car, including the roof.
Well the vertical pipe is a critical dimension.
The view was adjusted in Chile.
The field of view.
Oh, yes.
Thank you for reminding me this is.
Try and find the right over here.
This is right here in the in the <unk> mix with the suggested concept design.
From a universe of how to integrate the latter with the current design and you can see a very.
CMS very sleek.
Integration with the cars exterior.
The full review of the B one was adjusted in order.
To accommodate the sooner.
Hi dimension.
The frame rate.
We've been able to meet peak production intense framework wins that would be one which is 20 frames per second while not sacrificing neither of the resolution or the range off the zero there'd be one also is designed for manufacturing, meaning that all of its parts components are already.
Two are designed to be made and volume with high yields and low cost and empowered to developing the b, one also developing and bringing up the production tools.
<unk> for the.
Our production line of the B one of course this is a low volume production.
Later to be replaced by the mass production line of the future versions on the top right you can see a point cloud taken with zero.
Just I think yesterday and.
And this is very recent and those of you all used to looking at point clouds, I think will probably admire.
The resolution.
<unk>.
Good accuracy. This is really a spectacular performance.
We are already seeing from the <unk> zero.
And this is only going to improve with the B one.
Caleb as two will also be the first product from interface to include onboard.
<unk> software and this means that we are now completing the coverage of both common perception architecture.
Of course, the first one being distributed processing architecture and the second one is centralized processing architecture in the distributor architecture every sensor processors its own raw data locally and outputs.
Just an object list.
What it takes.
So the <unk> two will run this software this compute.
Computer vision software on the on the Lidar box itself inside it.
Thus, eliminating the need for any.
Exterior processing of the points.
We will nevertheless output both the object list and the raw pointed out in case. This is of use to our customer.
Now this local processing.
Reduces the compute loads on a central computer of the car simplify some data at the face and reduces the latency all making the integration of <unk> into the car system.
Much simpler and also reduces the overall cost of.
Of parts in the car the second architecture.
Which we've all supported also in the past is a centralized architecture, where all the sensors and.
The call, including the <unk> items do not process their data locally, but rather transported into the central computer, which does the processing and the fusion of the perception.
Our features now in or is that just output the point cloud even in this case, but also provides the perception software to run on the central compute platform.
Meaning on a different ship than what resides inside the store the output is a row point cloud and the software running on a central compute is responsible for detecting objects on the road as you can see in the image to the right now.
Now we support most of the.
Our processors from various automotive grade dependent today, and we intend to increase.
<unk> expense.
Further vendors.
Now I'd like to show a quick video of her favorite business to be zero gearing.
In a beautiful tailored view this was also thinking that vary.
Not only in the Gulf.
It's not even the most up to date pointed out we are making progress everyday recently, but once you can already see here is the exceptional resolution and range.
That is <unk>.
Visible here and this is very important to note that this does not include any sort of aggregation of frames. Each frame here that you see was taken.
Currently with.
Live laboratory from the.
Lidar.
So that was how it is.
Is disrupting the automotive lidar space, but.
The other segments other than automotive well up to today underserved by <unk>.
Relatively low performance ladders, which are also.
High cost and typically quite big and this is <unk>.
Going to be changed with the <unk> 360, the first platform.
Which will have a 360 degrees coverage of surround view coverage of the off the lidar.
The vertical.
We'll also be very high 64 degrees.
And all of this will come in a very small package you can see you can see.
Actually a mockup at this point right here, which is very small compared with other lighthouse available today.
And the cost will also be.
Exceptional competitive with.
With any other competitor today, the way that we're able to offer both this performance.
This cost and be very aggressive timeline towards samples is by leveraging the same components. The same optical engine that we have in the end of his too we're going to integrate that into the <unk> hundred 60, we're designing the <unk> 360 around it.
Only adjusting the scaling mechanism.
60 coverage.
Now, it's really important to understand why the resolution is so important and why it matters.
The <unk> 360 will have.
That resolution, which is higher than the full high definition, so let's assume that on the right in the last or actually the same theme.
But capture and stimulation by two different items on the left is.
Probably.
<unk> best in class lineup available to date, a spin of Lidar and on the right you can see the future pointed out of the <unk> III 60.
Which is a factor of 10% in the same time.
Thank you almost 10 times the number of lines and why is that why is that important so when looking just at the center of the field of view.
<unk>.
Whether it be liable dense even the compatible lidar than most objects are quite visible in the <unk>, but as we look towards the edges of the field of view you can see that with few scan line.
There is large very large spaces between the lines, making it possible to.
Miss small objects, which might be critical for the cost to detect so on the right you can see.
And the cat simulated ones of course.
Detectable by the coverage at the end of the store, while whereas on the left you.
You can see that the very hard to detect actually.
Im not seeing.
Thanks.
And it was working not only on VR on the system level, but also on the underlying components.
Such as the ones that now are driving Dana is one we are now working on the next generation of those components, which will drive the future of products the <unk>.
First one being the next generation ASIC, which will support an increase based on weight and increased maximum range of up to 500 meters and we will also have supported additional interfaces and future security standards.
With regard to be adopted in the auto industry samples of the ASIC is going to be available in 2023 and will support both the future product and the existing products business.
<unk>.
Backwards compatible with the current allowance for many of US the second.
Importantly, we are working on is the next generation detector, which will have the best in class sensitivity of all of Texas of its kind, enabling increased range improved resolution and some other benefits, but most will not expand on now engineering samples are also going to be available in 2023.
Okay.
Less <unk>.
Okay, let's update is on the perception of software.
We are now at this stage.
Without the stage of.
<unk>.
It's hold Srs of safety related scenarios.
Stage six emulating actual roads.
It seems that caused our customer sales might encounter and the purpose is to validate both the point cloud performance and the performance of our perception features.
The other.
A major effort, we were not working on it in the area of perception is the endurance run. This is a massive massive worldwide campaign for collecting hundreds of thousands of driven miles and.
In several countries towards the validation of again, the point cloud et cetera, and features in real world conditions. This only began once we've met the kpis the performance necessary for production now we are ready with our customer to start racking up the miles.
Of these August recording campaign.
To summarize.
The <unk> R&D objectives for this year are first to complete the product validation of the <unk> towards the beginning of the volume production of it.
Second is to deliver the <unk> sample of <unk>, which is designed for manufacturing third is reached the first engineering samples of Airbus 360, and lastly to maintain and increase in of its technology leadership with our components and perception software.
And with that I wish to thank you and pass on the presentation to <unk>, our CFO , who will present, the 2021 financial results.
Thank you very much and good morning, everyone.
In a moment.
Right.
Second silicon.
Okay.
Yes.
So.
Okay.
Yes.
So for 2020.
1020, <unk> successfully close a business combination with respect which provided over $370 million in gross proceeds.
At year end, we maintain a high liquidity level of $304 million in cash short term deposits and marketable.
Securities our operating cash flow during 2021.
Within the planned budget.
Free cash assets enable it to execute.
2022 plant.
Revenues for 2021 were $5 $5 million, while 20 direct fee revenues minus nine $4 million.
One related revenues in 2021 increased by 28% to $4 3 million compared to $3 3 million of total unearned revenues in 2020.
The company expects.
One on sales to continue to increase this year and we are also targeting to sell the first samples.
Two.
Operating expenses for 2021 were $152 $6 million, an increase from $66 $2 million in 2020 operating expenses in 2021 included $64 7 million of stock based compensation compared to.
With $3 2 million of stock based compensation in 2020, the increase in operating expenses compared to 2020 was primarily due to the increase in stock based compensation and <unk> related expenses. Additionally, research and development expenses for 2021.
$93 $3 million, an increase from $57 million in 2020 research and development expenses in 2021 included $25 $5 million.
Stock based compensation compared to six.
$6 million attributable to stock based compensation compensation in 2020.
To conclude we will continue to focus on developing groundbreaking technology and product for the automotive market and beyond we believe that we are well positioned to execute our strategy and growth plan this year and with that I'll return the call back.
Over to O'meara for closing remarks, thank you.
Yes. Thank you hold up so we've done thank you very much for joining us.
Sure.
It is working.
Rumbly.
Yes.
Working very hard.
To succeed we have I think the best setup wishful.
Turning promising products and portfolio and our team is working very hard to make it up.
With that I would like to.
Invite you to ask questions and happy to answer them.
Thank you in order to ask a question.
Raise your hand, using your mobile or desktop application and wait for your name to be announced.
One is related to announce it promptly.
Got it.
Please raise your hand, using your mobile or desktop application.
Our first question today is coming from advisors, Mark Delaney from Goldman Sachs. Please go ahead.
Right.
Yes.
Good afternoon, and thank you very much for taking the question I was hoping first if you could talk a little bit more around the top line trajectory for 2022, I realize you're not giving specific guidance, but maybe you could talk about whether or not you think there's potential to begin serious production this year.
You have the BMW program that I thought you had the potential to start in 'twenty. Two. So you guys were thinking about revenue in 2022 is that something we should be contemplating in the latter part of this year.
I'll start and maybe Doug can continue.
So.
The launch of the programs.
Due to the announcement of our customers, which we obviously cannot talk about we expect.
<unk>.
Under the assumption that the launch of the program is done this year in DFW ICD to them, So announced and I believe that in the near future you'll get more information about that.
There are several customers that we're serving beyond.
Both of those programs and some of those that will describe today will allow us to meet a big portion of targets and we're going to continue and bring those deals.
Given the fact that we have in one now more mature and being able to design.
For ease of design and bring up the production volume helps us to have.
More customer in their hands the products to make a final decision and move to an older which will allow us to meet our targets I think generally speaking.
The programs that we've been competing on.
We're actually expecting them to be made decision.
Of last year were pushed to this year I think that about six months of delay that was.
In the market is pushing the revenues by about six months, but the ramp up in the growth of the revenues are expected to be in the same minimum that we initially.
So.
Adding to that.
Our focus is on market share we think the market share is almost said there is a shift.
Revenue from last year to this year.
Once we win those.
Hopefully be able to windows programs and they will generate additional.
Additional revenues, we also plan to have one.
Samples of <unk>, starting to roll out into the market.
I want to add.
Not that we included now in office 360.
So our portfolio is opening a new Tam for us and new opportunities.
We expect to be able to penetrate the non automotive markets in the following year and grow our potential.
Okay.
Okay. That's helpful. Just to clarify I realize we need to hear from BMW on when they would start serious production, but would <unk> be ready to support them. This year, if they do choose to begin later in 'twenty two.
Okay.
That's helpful. My follow up question is on that.
As <unk> III program with a big OEM customer you talked about on the last call and you said today there.
They've asked for some changes and you guys are working to address that feedback and still feel good about winning it maybe you could elaborate a little bit more on that in terms of timelines and.
How long do you think this may take and you mentioned a new variant of the interface to the B, one that will be ready in the third quarter is that the.
The very end of <unk> that you guys would need in order to potentially win that until we're really thinking is not until <unk> that perhaps.
We'll get more of an update on that front. Thank you.
I'll start actually with the second question, because I think it's actually.
You assume correctly, we designed into these two following discussions with our customers and the customer that we expect to make a decision.
Soon.
<unk> has a very.
I would say short timeline to make a decision and launched a program and we are trying to make sure that we are going to follow all of their requirements throughout the year and supporting them with the product, they're looking for and Thats. What the changes that we've made also the one central versus the placebo.
And to your first question, yes, we have very good confidence in.
In that program.
Over a year and a half I think I think even more than that today.
Very close discussions beyond the negotiation.
And the technical and we feel still very in a good position.
So possibly win it.
In regards to when it's going to happen.
<unk>.
It's bill.
Basically we are waiting for a decision.
It's going to be made.
Not in my.
I cannot tell but we're hoping to see.
Isn't it.
So.
Okay, I guess, if the sample of the <unk> in the third quarter, if I heard that correctly could you get a decision from that customer be before they sample it in <unk> or do they need to have that in hand in the third quarter before they make that decision now.
This euro is already meeting there.
In order to make a decision.
Okay. Thank you I'll turn it over.
Thank you.
Our next question comes from the lineup of Michael.
Please go ahead.
Hey, guys can you hear me yes.
Great. Thanks for the presentation and for taking my questions. So first one just branching off of Mark's questions.
In relation to that that large OEM youre engaged with right now.
I think you previously said you were competing against one other supplier for that business.
Has that changed at all is there is there a change in sort of the competitive dynamics with that particular engagement.
Oh well.
The requirements have changed.
Since the end of last year.
And as far as we understand it.
And the other competitor was not able to fulfill them.
I am not aware of.
Of the situation right now is whether there is another.
Competitors are out there that is.
Able to fulfill it.
Our assumption.
We don't have the full corporately, we don't have the full visibility of the landscape.
Okay understood and looking at your guidance to potential order book growth of 30% or more.
Yes.
If you assume that you did win another OEM program, whether it's this one we were just discussing where another one I guess I would've thought that a win with another large OEM would impact the larger the order book up to a larger degree than maybe 30% just given the size of the BMW order book. So maybe you could just talk a little bit about that is there an assumption of an OEM win in that order book growth of 30%.
Or is that without an OEM.
Well.
And OEM win would make that much higher.
We did like weighted average of different opportunities.
But yes, I mean, they're not.
Great.
The program win would be higher than that.
Okay, Great and then again I know you haven't even talked about BMW sort of launch timing, but let's just say hypothetically. If you were on an OEM program that was going to launch in maybe early 2023, I mean would you start to see revenues from that program.
2022, I guess would there be some some preproduction revenues associated with that program will ramp up in revenues associated with that program in the quarters preceding launch.
We are already making revenues from the BMW program as you say.
The preproduction.
Testing requires validation of hundreds of units.
We'll generate revenues per year.
So the answer is yes.
Okay, Great and just one more.
In terms of we talked about this one OEM program that you're engaged with now but it sounds like there are several others. How many are you engaged with right now and sort of maybe RFP process or late stage negotiations.
How many do you think will be decided this year, if you had to guess.
There are currently about six.
Six Oems in.
In discussions.
The 12 that we mentioned.
And I would say that this year, we expect to have at least half of them.
<unk> decision.
Or.
All in the second half of next year, but.
Other than the one that.
We're talking about.
Okay, great. Thank you guys. So much I appreciate it.
Sure.
Sure.
Our next question comes from the line of Anders Schaeffer from Canaccord. Please go ahead.
Hey, guys can you hear me okay.
Wonderful. Thank you for taking my question and congrats on the quarter.
A lot of the questions have been answered maybe one quick follow up is you've mentioned.
The 10 preproduction programs Youre expecting secure in 2022.
I'm wondering can you quantify those salute bit further in terms of what those could mean for both top line revenue and maybe how many of those are in late stages middles stages early stage.
So.
There are several customers.
We're already in discussions as you said as I mentioned earlier.
<unk> customers six of them are in the market six of them are nonvoter motive.
And I would say that most of those.
Rich those 10. This deal we are already in I would say late discussion stages.
And we see those are as important in order to fulfill our targets for <unk>.
In terms of generating revenues.
At least.
A big portion of what we expect is revenue generation.
Thanks.
Got it. Thank you very much and maybe one last follow up for me.
On <unk>.
Your liquidity status right. So.
Sure.
If we just look at cash cash alone I think that number decrease.
Rather.
<unk> for the quarter and so do you anticipate too.
Having to go into the market to raise additional funds.
Does that this is new cash position does that change the previous strategy any any color around that.
Yes.
So the cash level decreased by roughly <unk> 20 of $21 million, which is.
Within our plans.
<unk>.
Not more than what we have thought for.
Yeah.
Additional capital raise.
Has to come with the context.
Stand alone.
Meaningful business, if there is meaningful transaction that creates value for us or our shareholders.
A point of business that we are bringing that might be an option, but currently at this current stage. We have raised significant amount of cash last year and we are.
Fully.
Fully prepared to execute our strategy this year.
Got it and then maybe a quick follow up there if I can so.
That makes sense, but if we just look at cash and equivalents right. I think we went from $140 million in Q3 to about $25 million in Q4.
And so what is a comfortable level of just cash and equivalents that you feel comfortable going forward and is there a threshold that you wouldn't want to get.
Obviously, you don't want to have negative.
Are you comfortable with the $25 million cash.
Going forward.
Yes.
Im not im not sure I followed the question.
Total amount of cash that is in the short term that drove the market, but the markets above the securities $304 million.
Yes.
And without any debt.
And last quarter in Q4.
Spend around $20 million.
And then $20 million so in terms of cash levels, we feel very comfortable.
I.
I hope I'm answering your question.
Yes that answers the question and thanks a lot.
I'll turn it over.
Thank you.
Our next question comes from a line of Mark Delaney from Goldman Sachs.
Scott.
Mark.
We can't hear you.
Yes. Thank you for taking the follow up I was hoping to dig in a little bit more on that last topic of cash flow do you have any expectations for cash used in 2022 that you're able to share with us.
I can maybe talk about this so I would say that.
Our plans for 'twenty to 'twenty two.
Splitting too.
I would say four main activities.
And there are split I would say.
About one third comes from efforts to bring in August one.
Two.
Complete the production validation and testing and ramping it up readiness for the launch of the program's expected end of the year.
Another third.
Later, two activities in bringing up to volume production for 2023.
The preferred stock.
Start to ramp up volume in half.
Additional volume sales in 'twenty, three chemicals will come into the store.
And then.
I would say out of the.
Third I would say that 80% of it comes from.
Expenses related to the perception software and software development.
And the rest is related to activities in the bring up of.
60.
Additional I would say.
Innovation.
And the CTO office and the innovation team.
Roughly speaking.
Got it yet in any sort of overall quantification around cash use in 2022, you're like well what does that add up to a cash use of 100 million $150 million that youre trying to get a sense for the cash usage. This year, if youre able to give some some rough ranges on that.
So we are not.
We are not talking about the.
Forward looking cash use but 70%.
The offer.
Expenditure.
R&D so.
You saw that the amount of cash that we used last quarter.
Some there will be some increase obviously.
And again we.
As said, we are very well positioned in order to be able to execute our plans for this year.
The R&D fully funded and execute.
The main targets that Omar mentioned, maybe I can add to this market I think the reason that we are hesitant.
Keeping right now it's just the numbers because there are several programs that we're competing on.
Those are very big ones.
Based on the activity that we would need to bring up the different teams to support the different programs would require us.
So as differently and Thats kind of why we were going to be very efficient in the way that we.
Manage our expenses.
But we are really looking for a very exciting year.
So with that we.
We were just we will manage it to bring our best results.
Okay that makes sense. Thank you.
Thank you.
Next question comes from a line of Michaels.
<unk>.
All right.
Hey, I just have another follow up.
<unk> on the line I figured I would asking the questions.
You talked about.
Update to the ASIC chip.
And to the receiver right that would be expected in 2023.
With those updates b be built into whatever products that you are now offering potentially offering to customers such as large OEM youre engaged with rate with dose be retrofitted into the design.
Or would that be on sort of a next generation product that you would be you would be competing with.
So these two components mostly target towards the.
The next generation products, meaning that the <unk>.
Upcoming products of <unk> and the end of its 360 are not dependent on those.
Importantly, also meet there.
Performance requirements and schedule.
However, they will be able to benefit from them in the future. So we may have versions of the end of its two and the 360 with even enhanced.
Performance.
We will not rely on them in the short term <unk> hundred 60 can be can reach the market even without those projects.
It's always related to the <unk>.
Zane for is that you have core system.
Paul.
<unk>.
Once you reach a certain point you can't change anything in the harbor.
We've met that points towards the BMW program.
We're about <unk>.
A year ago.
And basically once you reach that point you want me to.
Make sure that to finish all of the design validation and make sure nothing needs to be changed but you are not allowed to change any any meaningful components.
So it really depends on the timing of the program and by that we will be able to decide whether this chip is relevant or not specifically for the program.
Offering today for launching 24, we're not assuming those are required.
Really dependent on the launch of the program and the timing of the program and the flexibility of the customer or the nonautomotive markets those will be able to leverage on those advantages.
Obviously much quicker.
And I hope that answers question.
Yeah, Yeah understood and just one more on the software so you touched on it today.
Are you guys are you just doing the perception.
Software basically price.
This is Ron Lidar point cloud data.
You offering some sort of holistic perception stack that maybe tier ones or Oems, who will use and you talked about sort of licensing that software is that included in sales and a $500 ASP that you referred to you for the University or sub 500 oriented or was that on top of that and what would that that software licensing revenue opportunity today.
Sure I'll start with the second question's easy.
So that comes on top of the pricing of the lineup.
And.
There are two liners and until then.
Lowest pointed pricing once it depends on the application.
And then you have the subscription fee for support whether there are requirements for us both in adding additional features.
Most of the production.
So that's also something to conclude.
Also the capabilities of the software and what the author.
So there.
There is not developing driving decisions.
Well done by our customers.
We are offering the perception software, which allows our customers to have a seamless integration of object detection and classification.
Basically what you can think about in terms of what the author carmakers wants to have a platform that has.
Computer vision capabilities of the camera and the same interface the exact really copy exact capabilities.
Other essential that provides its redundancy just steps it essential that does not think rates when they come along.
Meaning that the.
<unk> is I would say almost.
Yeah.
You cannot ignorance of what's behind it.
Thats, an object detection Dystrophication movement detection drivable area coming from a little feel for that.
The package that we provide and reprice it.
Top of the later.
And that's what's allowing our customers to which level III or higher.
And Thats price on top of that I hope that answers your question. Please.
Can you quantify the software.
Opportunities like the dollar content or about $50.
Okay.
Yes.
Our assumption is that use a very similar business model of.
<unk> at the time were I mean, basically what <unk> provides for the market is theres not a camera.
Offering computer vision cameras is done by the tier one mobile I'd provides a chip with the computer vision, which.
Basically translate that to the image to object detection specification used by customers. They don't want to use the road to the data they want to use the object detection insights sensor will provide.
So thats.
I think the industry have converged to a certain point the willingness to pay for such a product which is object detection classification over at <unk>, which is about $50 and you have the assumption that the same willingness to pay is going to be above the line.
Right, so the $50 come from.
The option says simplification that we provide only that is done on our own central which is the <unk>.
Understood and then just you seem to take rate I mean, do you assume like BMW using that software or what would you expect other Oems that youre engaged with right now to be much I'll be using that software or what's the most likely all of our almost all of our customers are relying on the ability to get our perception software performance.
Understood Alright, Thank you guys so much.
Welcome.
Our final question for today comes from the line of Kevin Cassidy from Rosenblatt Securities. Please go ahead.
Thank you and congratulations on the progress.
Just to expand on that.
<unk> software.
Well, you'll be opening that up for third party software.
Write software to your Lidar.
Okay.
Yes.
Well, our customers have the option to either use our own perception sort of all to use.
They own all third party software, so some customers, especially in the I would say Rob.
Robo taxi vertical for example, do choose to use their own software all some integration with third parties. So we've not blocking any one from using.
Using our <unk> cloud.
With their own.
As such in Stockholm.
Third party actually encourage yet, but many customers, especially in the in the OEM space do a preferred together as a package solution together with perception, maybe I'll just add.
No.
In automotive.
Perception software also needs to go through a very.
Process.
Page five which means that obviously you cannot just.
Anyone too cold.
In your <unk>.
<unk>.
Has can be managed to be very.
Very good way.
And therefore, most of I think very less likely that you will be able to host any processing code in our processing unit.
But as <unk> said once the date that we do provide the raw data.
<unk> centralized computing.
<unk> runs on the main computer off the call then someone can take the raw data and try to extrapolate features.
Even if it's done in parallel.
Our software that runs on those.
On the centralized platform, which we are doing so we have that perception software, which is embedded in the lidar.
<unk>.
But we also are putting those algorithms for example, we announced Nvidia collaboration in terms of.
Holding all of algorithms performed from the chip that you have in the light.
Two the Nvidia platform because there are platforms that are doing centralized computing in the interfaces will data so we have to port.
Processing into.
So we're not blocking any.
But of course when it comes to automotive is much more conservative investment.
Thank you for that.
Maybe just to understand the magnitude of this.
But what.
What percentage of your engineers are software engineers working on this.
So I would say.
Well.
Software engineers in general than the pure software.
<unk> I would say the street perception organization is roughly.
Fourth to a third of the R&D head.
Head count.
So boats almost almost 100.
Almost 100 people working on the perception software.
Finally, because it does.
It's very known for the Lidar.
Yeah.
But.
Very strong I would say.
Both as expected from our software capabilities.
And we have a very strong team is developing it is.
Less.
Easy to identify I think that we're showing that the product the lighter and I think that the perception of sort of as it's much more difficult to kind of demonstrate and possibly that's why people are less aware of it but the big part of what is.
Developing is the perception of software.
We believe that in three to four years. The majority of the company will become much more software oriented rather than just the.
The bricks.
Yes.
So I think it's one of the qualities that we have here at <unk> and.
And we will continue to grow.
Just like to add that <unk>.
Has seen as identified perception as a strategic goal since the beginning of the company.
First team recruited we had we had.
<unk> software engineer as soon as Dennis Omni groups. So we actually probably the latter company with the most extensive experience and perception.
For many years, we've been the only one that's developing perception software for the Lidar.
That's something that some others have started just a couple of years ago.
We're very satisfied with the progress we've made and the majority of the product and that's also the feedback we're getting from the customers.
So well done.
Yes.
Yes.
Good answers.
Maybe going back to the use of cash and tying that in.
You hired 35 people this year as their plans for hiring as many people are more people next year during.
During this year I should say last year.
We hired 35 people last quarter Thats correct.
Over the past year grew quite a bit.
It depends as Omar mentioned before it depends on the.
The projects that we win we are very controlling our budget very tightly very efficiently.
The growth will be expected.
You bet.
Programs.
Business is coming in now maybe I'll add sure Thats, all and didn't have much time to.
So his organization.
Nation is building is early I would say smart way.
We have the.
The core engineering alongside one engineering and then you'll have the two programs supporting the two customers and going to launch and then you have these two and building blocks and other teams that are now working to support different.
Activities. So I think that we are built in a way that is I would say.
The efficient so we don't need to do.
Our teams in order flow supporting multiple programs.
But as I said, it's <unk>.
Going to be amendments.
<unk>.
The acquisition of two programs.
Great. Thank you congratulations again.
You have no further questions.
Yes.
Okay.
So we are actually expecting very exciting times now I mean, we see a lot of progress also from the LNG, but also from the business side.
We are looking forward to exciting second year, I think is going to be a great deal fully movies.
Huge confidence in what we do.
And I'm very proud of what we managed to achieve.
Was that growing the company very successful.
Thank you very much.
Thank you.