Q1 2022 Innoviz Technologies Ltd Earnings Call

2022 Earnings Conference Call.

Inc Conference call.

Joining us today are Omer Kailov, Chief Executive Officer, and Eldar Seghla, Chief Financial Officer. Following their former remarks, we will open the call for your questions.

Joining us today are o'meara Caliph Chief Executive Officer, and then Dara Sigla Chief Financial Officer. Following their 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 website at ir.innovies.tech.

I would like to remind everyone that this call is being recorded and will be available on the Investor Relations section of our website at IR Dot interface Dot 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 InnoViz. Actual results could differ materially from those anticipated in the forward-looking statement.

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 <unk>.

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.

forward-looking statements made today speak only to our expectations as of today and we undertake no obligation to publicly update or revise them.

For discussion of some of the important risk factors that could cause actual results to defer materially from any forward-looking statements, please see the risk factors section of our Form 20F, filed with the SEC, on March 30, 2022. I will now turn the call over to Omer, please go ahead.

Differ materially from any forward looking statements. Please see the risk factors section of our form 20-F filed with the SEC on March 30, 2022, I will now turn the call over to Omer. Please go ahead.

about our recent announcements. I want to.

Our recent announcements I want to.

Okay.

Can you hear me? Okay. I want to use the opportunity to thank people that reached out during the last week to congratulate us. Definitely, we went through a very long process to make this happen and we are very, very excited.

Can you hear me okay.

I want to use the opportunity to thank people that reached out during the last week.

To congratulate us.

Definitely we went through a very long process to make this happen and we are.

We're very very excited.

Obviously, adding another $4 billion to our audiobook is a major achievement and would allow the company to do many more things.

Obviously, adding another $4 billion of our order book is a major achievement and will allow the company to do many more things.

But one of the most meaningful impacts of this recent announcement of our design win and award by one of the loudest car makers.

But one of the most meaningful impacts of this recent announcement of our.

Design win an award by one of the largest car makers.

is not only through the fact that we want additional business, it's actually a big part of it that makes us very happy is our ability to secure this business as a direct supplier of tier 1. Becoming a tier 1 in the automotive market is a huge, huge step for us that will help us to want faster.

Not only through the fact that we won additional business it's actually.

A big part of me that makes us very happy is our ability to secure this business as it does the biofuel one becoming a tier one in the automotive market is a huge huge step for us that will help us to want faster.

and secure many more deals. This is one of the things that we've been working for for a very long time. It's very difficult to become a T1 in this space but we are sure that this will allow us to run faster and succeed in many more deals.

In secure many mobile.

This is one of the things that we've been working for for a very long time, and it's very difficult to become a tier one in this space.

But we are sure that this will allow us once tester and succeed in many mortgage.

With that, I will please go to the presentation and elaborate more.

With that I will air please go to the presentation and elaborate more.

Thank you can you go to the next page.

Okay.

Thank you.

So following two years of working closely with one of the world's three largest vehicle groups as part of their expensive RFQ process, we were happy to finally announce last week that we were selected to be their direct and only lighter supplier for the L2 to L3 multi-use air production program.

So following two years of working closely with one of the world's three largest vehicle groups as part of their expensive RF cube process. We were happily we were happy to finally announce last week that we were selected to be there Dara and only lighter supplier for the L. Due to L. Three multiyear series production program.

Selection of InnoVisTube out of any other larger solution is a big vote of confidence to our technology leadership and product superiority.

Selection of renal with two out of any other laser solution is a big vote of confidence to our technology leadership and product superiority.

Both companies have agreed to have a joint announcement following the first delivery expected in the coming months.

Both companies have agreed to have a joint announcement following the first delivery expected in the coming months.

This design win is our first automotive production bill for InnoVisQ, which follows our two design wins for InnoVisQ.

This design win is our first automotive production deal for in August two which follows two design wins for this one back.

Back in Q3 2021, we updated you about inubis being qualified as a direct fuel one supplier by one of the loudest cow makers in the world. Being recognized as a direct supplier was a critical step to allow these groups to select us for serious production. Yes, we were waiting for the formal nomination. Last week, we were finally able to celebrate being awarded for the first time as a direct supplier by one of the most technical, prestigious and loudest cow makers in the world.

Back in Q3 'twenty to 'twenty, one we updated you about nobody has been qualified as a darn steel wire supplier by one of the largest car makers in the world being recognized as the supplier was a crack at this critical step to allow this group to select US for series production, Yes, we were waiting for the formal nomination last.

We were finally able to celebrate being awarded for the first time as a direct supplier by one of the most technical prestigious and largest car makers in the world.

This win has a significant impact on our ability to generate future revenues, we are no longer only selling components as a few to but rather the entire product along with our perception stuff.

This win has a significant impact on our ability to generate future revenues were.

There are no longer only selling components as a tier two but rather the entire products along with our perception of soccer.

This also means that we can leverage our success more easily to win other programs without being dependent on any third party.

This also means that we can leverage our success more easier to win other programs without being dependent on any cell therapy.

This win is a testament to the quality and uniqueness of our technology in this realization capabilities and automotive experience.

This win is a testament to the quality and uniqueness of our technology industrialization capabilities and automotive experience. During this process, we demonstrated a variety of tier one capabilities, including our ability to manage mass production manufacture ability automotive grade quality hardware validation of computer vision validation being selected by a technology leader.

During this process, we demonstrated a variety of Q1 capabilities, including our ability to manage mass production and manufacturing ability, automotive grade quality, hardware validation and computer vision validation. Being selected by a technology leader in the industry is an important vote of confidence in innovation.

In the industry is an important vote of confidence in enormous.

which we believe will influence the rest of the industry and create a domino effect bringing us other business opportunities. I would now like to take a minute to explain the recent announcement we made regarding our partnership with Llandau, the first tactile one service provider based in China and Germany. This partnership will help

Which we believe will influence the rest of the industry and create a domino effect, bringing us other business opportunities I would now like to take a minute to explain the recent announcements we've made regarding our partnership with Yum 's out a full stack tier one service provider based in China and Germany.

This partnership will help secure.

Ensure we are poised to deliver on our commitment to our customers who target the Chinese market. We needed a partner to validate our perception software in China and land down positions that do that exactly.

And sure we are poised to deliver on our commitments of our customers who target the Chinese market, we needed a partner to validate a perception software in China, and Lansdowne positions us do that exactly.

As a result of winning our third design win our older book was increased by four billion dollars resulting in a forward-looking older book of 6.6 billion two and a half times larger than last

As a result of winning our third design win our order book was increased by $4 billion, resulting in a forward looking order book of $6 6 billion $2 five times larger than last quarter.

Allow me to briefly explain how our forward-looking order book was calculated.

Allow me to briefly explain how we are forward looking order book was calculated.

In terms of volume production, the OEM we were selected by is one of the three largest vehicle groups in the world, with about 10% market share.

In terms of volume production. The OEM. We were selected by is one of the three largest speaker groups in the world with about 10% market share.

The program plan is based on three years of development and validation, followed by eight to ten years of sales, with the expectation to see a growing rate take rate of one to fourteen percent over the course of the program.

The program plan is based on three years of development and validation followed by eight to 10 years of sales with the expectation to see a growing racing the take rate of 1% to 14% over the course of the program.

We expect to supply our lighted sensors for at least eight million cars and there is a potential to significantly increase this number, given the fact that we are in discussions with the group on additional brands and models expecting growth margins of between 30 to 40%.

We expect the supply of Lidar sensors for at least 8 million cars and there is a potential to significantly increase this number given the fact that we are in discussions with the group on additional brands and models.

<unk> gross margins of between 30% to 40%.

These amounts do not include the sample or see samples and a production tool that are also part of the nation.

These amounts do not include the b sample or see samples entering production tools that are also part of the nation.

These are exciting times for innovation and thrilled by what we have already achieved and what is still to come.

These are exciting times for any reason I'm thrilled by what we have already achieved and what is still to come.

Turning to our sales funnel and targets for the year.

We increased the number of shared production views to three, emphasizing that the last is based on multiple brands, not just one. We have currently nine preproduction activities with customers that are using our LiDAR for development stage.

We increased the number of serious production deals to three emphasizing that the last thing is based on multiple brands not just one we have currently nine preproduction activities with customers that are using our lineup or development stage.

Several of them are expected to turn into serious production at the latest.

Several of them are expected to turn into series production at a later time.

We continue to bring new potential customers into our sales funnel. Currently, we have 12 different customers in different stages of RFI and RFQ.

We continue to bring new potential customers into our sales funnel currently we have 12 different customers in different stages of Alex by in our Q3.

three are at the late stage of their decision process. We expect our conversion rate to increase as we win the confidence of more OEMs.

Three are at the late stage of their decision process, we expect our conversion rates to increase as we win the confidence of more Oems, we see that our new nomination as a direct supplier to such a high volume and preceded program is already removing any friction pursued by other car makers in allowing universal.

We see that our new nomination as a direct supplier to such a high volume and precedence program is already removing any friction received by other filmmakers in allowing innovation to become the direct supplier for sales production program.

Under Dr supplier for sales production programs.

This new design enables us not only to meet our 2022 targets, but even exceed with another, before they have the first half of the year, namely signing at least one automotive commercial agreement and increasing our order, which is now 153%

This new design win and it enables us not only to meet our 2022 targets, but even exceeds with another before the half the first half of the year, namely signing at least one automotive commercial agreement and increasing our order book, which is now 153% higher.

I would like to explain the difference between a preproduction commercial agreement versus a serious production design when preproduction deals mostly serve the customers need in testing validating and understanding the all the lighter requirements and needs to draft their RFI and RFQ for a later stage.

I would like to explain the difference between the three production commercial agreements versus a series production design win grip reduction deals mostly serve the customers' need in testing validating and understanding that the lighter requirements and needs to drop their RFID and argue for a later stage.

When it comes to making a thought and decision for automotive series production, it's a much more rigorous and long process. Many other considerations come into play, such as reliability, industrialization, cost sensitivity, automotive grade, cyber security, and endless other aspects that are covered in order to ensure the safe launch of a high volume production line, all elements in which InnoViz is well-positioned.

When it comes to making a salt indecision automotive series production, it's a much more rigorous and long process. Many other considerations come into play such as reliability industrialization cost sensitivity automotive grade cyber security and the endless other aspects that are covered in order to be sure.

The safe launch of a high volume production line all elements in which you know which is well positioned.

Pre-production programs are far more common, which is why we are able to secure more of them compared to serious production nominations.

Preproduction programs are far more common which is why we are able to secure more of them compared to serious production nominations.

But as expected, the committed volume and older book size are significantly different.

But as expected the committed volume and order book size are significantly different.

Our strategic priorities.

our strategic priorities are what we have grounded our focus on so far and what we will continue to profile our success going forward. So I'd like to take a moment to remind everyone of our three strategic priorities.

What we have grounded our focused on so far and what we will continue to propel our success going forward.

So I would like to take a moment to remind everyone of our three strategic priorities.

solidifying our position as a leading light of supply of automotive expanding our market share beyond the automotive industry and investing in our technology and perceptions for.

Solidifying our position as a leading lighter supplier for promoting expanding our market share beyond the automotive industry and investing in our technology and perceptions Foster.

We have a sustainable strategy to deliver against these priorities and position innovation for success.

We have a sustainable strategy to deliver against these priorities and position in a reasonable success.

Automotive deals have a long sales cycle, high switching costs, enterprise-level deals and a long-term commitment for high volume, but they come only following several years of development and testing period. We believe our automotive applications for lighters and passenger vehicles, the level 2 plus and level 3 applications, will be the main driver for our revenue growth, which are expected to show significant growth in 2024 to 2030 model year.

Automotive dealers have a long sales cycles high switching cost enterprise level deals and the long term commitment for high volume, but they come only following several years of development and testing periods. We believe our automotive applications for lighters and passenger vehicles the level, two plus and level three applications will be the main dry.

Ever for our revenues growth, which are expected to show significant growth in 2024 to 20 therapy model years.

These opportunities are at a critical decision time, decisions that will set the winners for the next 10 years.

These opportunities are at a critical decision time decisions that will set the winners for the next Daniels.

Non-automotive deals have shorter sales cycles, lower switching costs, and they take place in quite a fragmented market. Non-automotive deals will deliver revenues over the near term and are much easier to penetrate.

None of US are most of those have shorter sales cycles, lower switching cost and they take place and quite a fragmented market non automotive deals will deliver revenues over the near term and are much easier to Patrick.

Given these dynamics, we see the importance of keeping 2022 focused on our first strategic priority, which is solidifying our position as a leading supplier for LiDAR for automotives.

Given these dynamics, we see the importance of keeping 2020 to focus on our first strategic priority, which is solidifying our position as the leading supplier for the lidar or lighter for automotive.

and leveraging on our momentum during the industry critical decision window. We will keep pursuing many automotive opportunities that are still in play, and we believe we can secure more. These automotive wins could guarantee long term and sustainable growth for the company.

And leveraging our momentum during the industry critical decision window.

We will keep pursuing many automotive opportunities that are still in play and we believe we can secure more.

These automotive wins could guarantee long term and sustainable growth for the company and as we enter 2023 with several serious production deals in our corporate with two program expected to launch we'll take the next step of our plan, which is expanding our market share beyond automotive industry to boost our revenue generation.

And as we enter 2023, with several serious production deals in our pocket, with two programs expected to launch, we take the next step of our plan, which is expanding our market share beyond the automotive industry to boost our revenue generation. To that end, we are building today our production capacity for both InnoVis 2 and InnoVis 360 products and have confidence in our ability to penetrate these markets.

To that end, we're building today, our production capacity for both <unk>, two and <unk> 360 products and have confidence in our ability to penetrate these market quickly.

With InnoViz 1, InnoViz 2 and InnoViz 360, we expect an uptick in revenues during 2023 through the non-automotive market while we begin to recognize revenues from the automotive deals we closed earlier.

We've been on with one <unk>, two and <unk> hundred 60, we expect an uptick in revenues during 23 through the nonautomotive market, while we begin to recognize revenues on the locomotive deals we closed earlier.

With that I'll turn it over to Dow to go over the financials.

With that, I'll turn it over to Eldao to go over the financials.

Okay.

Thank you Omar and good morning, everyone.

Our confidence in our future growth opportunity is supported by our robust cash position, which gives us both the flexibility to execute our 2022 strategy and additional runway to invest in new and innovative technology.

Our confidence in our future growth opportunity is supported by our robust cash position which gives us both the flexibility to execute our 2022 strategy and an additional runway to invest in new and innovative technologies.

These are exciting times for innovation, as we are at the starting point of another major project, we maintain a high liquidity level of $275 million in cash, short-term deposit and marketable security.

These are exciting time for <unk> as we are at the starting point of another major project, we maintain a high liquidity level of $475 million in cash short term deposits and marketable securities.

Our operating cash flow during the first quarter of 2022 was well within planned budget and InnoVis debt-free cash assets enable us to continue to execute our 2022 plan.

Our operating cash flow during the first quarter of 2022 was well within planned budget and the interface that free cash assets enable us to continue to execute our 2022 plan.

Revenues for Q1, 2022 were one point to $8 million compared to Q1, 2021 revenues of zero point $7 million.

Revenues for Q1 2022 were $1.8 million compared to Q1 2021 revenues of $0.7 million. All of our revenues in Q1 this year were Innovys 1 related. The company expects Innovys 1 sales to continue to increase and we are also targeting to sell the first samples of Innovys 2 later this year.

All of our revenues in Q1. This year were innovative unrelated the company expect <unk> to continue to increase and we are also targeting to sell the first samples of interviews through later this year.

Operating expenses for the first quarter of 2022 were $31.1 million, an increase from $19.7 million in the first quarter of 2021. Operating expenses in Q1 2022 included $4.7 million of share-based compensation compared to $1.8 million of share-based compensation in Q1 2021.

Operating expenses for the first quarter of 2022 were $31.1 million, an increase from $19 $7 million in the first quarter of 2021 operating expenses in Q1, 2022 included $4 $7 million of share.

Based compensation compared to $1.8 million of share based compensation in Q1 2021, the increase in operating expenses in Q1 2022 compared to Q1 2021 was primarily due to the increase in the number of employees and the share price compensation.

The increase in operating expenses in Q1 2022 compared to Q1 2021 was primarily due to the increase in the number of employees and the share price competition.

Research and development expenses for Q1 2022 were 22.8 million dollars, an increase from 16.7 million dollars in Q1 2021. Research and development expenses in Q1 2022 included 2.7 million dollars attributable to share-based compensation compared to 1.3 million dollars attributable to share-based compensation in Q1 2021.

Research and development expenses for Q1, 2000 rented two were $22 $8 million, an increase from $16 $7 million in Q1, 2021 research and development expenses in Q1.

2022 included $2 $7 million attributable to share based compensation compared to $1.3 million attributable to share based compensation in Q1, 2021 to.

To conclude, we gained a strong position in the marketplace with the recent win, and we believe that this win strengthens our position to gain additional market share during this year and the years to come.

To conclude regained our strong position in the marketplace with the recent win and we believe that this win strengthens our position to gain additional market share during this year and the years to come.

As a direct supplier for the industry, we will continue to leverage our strong cash position to develop groundbreaking technology and products for the automotive market and beyond. And with that, I will turn the call back to Omer.

As a direct supplier for the industry, we will continue to leverage our strong cash position to develop ground breaking technology and products for the automotive market and beyond and with that I will turn the call back to Omar.

Thank you well done.

I Hope you can tell from our call today are excited we are about nov's future.

I hope you can tell from our call today how excited we are about the new

Years of blood, sweat, and tears have gone into achieving the agreement to justice.

Years of blood sweat and tears have gone into achieving the agreement suggests announced I'm incredibly proud of what our team has accomplished and know that the best is yet to come.

I'm incredibly proud of what our team has accomplished and know that the best is yet to come.

We are eager to execute to exceed our customer's expectation and we'll deliver value as we deliver value to our shareholders.

We are eager to execute to exceed our customers expectation and we deliver value as we deliver value to our shareholders. I will now open.

I will now open the calls for your questions. Thank you.

Thank you. In order to ask a question, please raise your hand.

In order to ask a question. Please raise your hand using your mobile.

mobile or desktop application and wait for your name to be announced.

Desktop application and wait for your name to be announced once again in order to ask a question. Please raise your hand, using your mobile or desktop application and wait for your name to be announced our first question today comes from the line of Michael Filatov from Bahrenburg.

raise your hand using your mobile or desktop application and wait for your name to be

Our first question today comes from the line of Michael Filatov from Berenberg, please go ahead.

Please go ahead.

Hey, guys can you hear me.

Great. Well, first of all, congrats on the big win. I'm sure a lot of hard work went into that. So, so well done. So I just want to ask for maybe a bit more detail on that, that win, right? You talked about multiple brands being in the win or being part of the win. So I was wondering if you could talk about maybe how many brands are included, and maybe how many models within each of those respective brands. You might have said it earlier and I might have missed it, but if you could just provide any more color on that, that would be helpful. Thanks.

Okay.

Great well first of all congrats on the big win I'm sure a lot of hard work went into that so so well done.

So I just wanted to ask for maybe a bit more detail on that that win rate you talked about multiple brands.

In the win or being part of the wind. So I was wondering if you could talk about maybe how many brands are included and maybe how many models within each of those respective brands you might have said it earlier and I might have missed it but if you could just provide any more color on that that would be helpful. Thanks.

Yes, so Michael, I'll start. We start with three brands which are the more premium brands of this program and later on we expect that this program will be trickled down to other brands and other car models. So we are starting with certain

Yes, so Michael I'll start.

We start with.

Three brands, which are the more premium brands.

This drove Graham.

Later on when we expect that this program will be tricky.

Trickle down to other brands.

And other car models. So we are starting with certain.

brands and models and slowly exceeding over the time of this project.

OE brand and model and slowly exceeding over at the time of this project.

But part of the reason that this program was delayed, I mean, we were expecting a decision already last September was part of the problem. This is a big group and there are multiple brands and

But part of the reason that this program was.

I mean, we were expecting a decision already last September was part of the problem with this is a big group and there are multiple brands and being a company with so many car com.

Being a company with so many car designs and each one has its own constraint required a lot of iterations of design. Working with the team trying to help them in finding the right fit eventually in order to kick off the program because they didn't want to delay the launch of those cars that are targeting to be launched earlier, the nomination was made today.

Any car designs and each one has its own constraints required a lot of iterations of design working with the team trying to help them in finding the right fit eventually in order to kick off the program because they didn't want to delay the launch of the dose.

Those cars that are targeting to be launched earlier the minute elimination was made to date, but there are discussions yet with the other brands to be included we didnt count them in the order book, but once that decision will be done later.

But they, there are discussions yet with the other brands to be included. We didn't count them in, in the order book, but once that decision will be done.

We will update the market. We expect to have more brands included in this platform.

We will update the market.

We expect to have more brands included in the in this platform.

Okay understood. That's really helpful. So just just to clarify that the order book number then it's just for those three brands that you mentioned those assumptions.

Okay understood that's really helpful. It's just to clarify that the order book number then it's just for those three brands that you mentioned those assumptions.

Right. Yes. Yeah. Okay. Got it. Perfect. So just another follow-up question here. I see in the press release that the Univis One startup production is targeted for next year when you plan on launching with your first customer, BMW, I assume. I thought the startup production was supposed to be ready for production by the end of this year. Is that still the case, or is there any change to the production strategy for Univis One?

Correct, Yes, yes, okay got it perfect.

So just another follow up question here I see in the press release that the universe is one start production is targeted for next year. When you plan on launching with your first customer BMW I assume I thought the start of production was supposed to be ready for production by the end of this year or is that still the case or is there any change to the production strategy for Amazon.

No, I mean, the our readiness is by end of this year, customers lunch is next year. There are two customers that we expect to launch next year, both of them are relying on you know.

No I mean, our readiness is by end of this year customers launches next year there.

There are two customers that we expect to launch next year both of them are relying on this one.

Okay, yeah, understood. And one last one for me, and then I'll hop back into queue. Just, you know, in regards to the programs you're currently competing on in the RFI, RFQ stage, those that are maybe higher volume series production customers, what's your expected sort of timing on the decisions for those programs? Are there any that you think could be decided this year? I know you don't want to get ahead of yourself, but just curious if you have any thoughts on timing.

Okay, Yes, understood and one last one for me and then I'll hop back in the queue.

In regards to the programs are currently competing on the Rsi RQ stage those that are maybe higher volume series production customers. What's your expected timing on the decisions for those programs are there any that you think could be decided this year I know you don't want to get ahead of yourself, but.

Just curious if you have any thoughts on timing.

Um, I would say, yes, there are three customers that, you know, based on the discussion, they could make a decision this year, having that we've gone through this process, seeing that sometimes these decisions take longer than we would have wished.

I would say, yes, there are three customers that.

Based on the discussions could make a decision this year, having that we've gone through this process.

Seeing that sometimes these decisions take longer than we would wish.

I can't really predict that it will really happen, but yes, there are three programs that we expect to be decided this year, but again, we can't say how it will develop. I think that we are in a very good position having, I can say that, you know, since this nomination award, having the fact that we became a tier one.

I can't really predict.

It will really happen, but yes. There are three programs that we expect to be decided this year, but again, we can say.

How it will develop I think that we are in a very good position, having I can say that since this.

Nomination Award.

Having the fact that we became a tier one.

has really surged the discussions around several customers and even new ones that before you know you know we try to approach many car makers as a direct supplier not all of them even initially thought that it's possible now we are kicking off those discussions. I'm feeling very comfortable saying that we are in a very good position on those programs that we're completing in the short term.

Has really surged the discussions around several customers and even new ones that before.

<unk> tried to approach many carmakers as a supplier not all of them had been initially thought that it's possible now we're kicking off those discussions.

I am feeling very comfortable saying that we are in a very good position on those programs that we're competing in the short term.

Excellent thanks, very much I'll hop back in the queue.

Thank you. Our next question today comes from the line of Mark Delaney from Goldman Sachs.

Thank you. Our next question today comes from the line of Mark Delaney from Goldman Sachs. Please go ahead.

Yes.

Yes, thank you very much for taking the questions, and let me add my congratulations on the series production win. I was hoping to also ask more on that, and for this newest production win, when do you expect to begin shipments for series production, and maybe you could talk about what needs to happen between now and then in order to get ready in terms of sampling, testing, getting the manufacturing ready, and things like that.

Yes. Thank you very much for taking the question and then let me add my congratulations on the series production win.

I was hoping to also ask more on that and for this newest production win when do you expect to begin shipments for series production and maybe you could talk about what needs to happen between now and that in order to get ready in terms of sampling testing and manufacturing ready.

And things like that.

Sure.

Sure. So as any automotive program, I mean, the nomination was just made a week ago.

So as any automotive program in nomination was just made.

Week ago.

And basically, as any program, there is a very standard process of providing A-sample, B-sample, C-sample, D-sample.

And basically as any program there is a very standard both vessel, providing a simple sample see sample the sample.

in which we are committed to the timeline it will be in the next three years and three and a half years and Beyond that expecting the SOP next step is Delivering the a sample which is basically Integration and then that's also, you know, basically pending for the joint announcement integration into the car of our first samples

And which we are committed to the timeline it will be in the next two to three years and three five years and beyond that expecting the S&P.

Next step is delivering the sample which is basically our integration and that also basically pending for the joint announcement.

Gration into the color of our first samples.

As possibly discussed earlier, we're not only providing a LiDAR for this program, we're also providing the perception software. In this opportunity, the perception software is embedded in a new platform. It's different than the platform that we use for the first

Is it possibly discussed earlier, we're not only providing lighter for this program. We are also providing the perception software.

And this opportunity the perceptions, though still is is embedded in the new platform is different and the platform that we use for the first.

program we have with BMW. But it's a very strong platform that will allow us to leverage on other programs.

Program, we have with BMW.

But it's a very very strong platform that will allow us to leverage on other brokers.

Yes.

Maybe talk about what some of the financial implications are in that intermediate term period between now and that start of series production. Can you talk to some of the puts and takes in terms of maybe there's some revenue from these samples that you could have, but also I imagine there's some op-ex on how should we think about some of those puts and takes netting out in terms of the profitability impact. Thank you.

That's helpful. And then maybe talk about what some of the financial applications are in the intermediate term period between now and that startup series production can you talk to some of the puts and takes in terms of maybe there is some revenue from the samples that you could have but also I imagine there is some opex and how should we think about.

Some of those puts and takes netting out in terms of the profitability impact. Thank you.

Sure. So there isn't a great pricing for the different samples.

Sure, so there is an agreed pricing for the different samples and actually those are with very good, I would say, pricing points for us. We are expecting InnoVis2, I mean, we are working right now to ramp up the capacity of InnoVis2. We are very eager also to penetrate the non-automotive market and get ready with our production line of InnoVis2. Part of that capacity will serve this new customer, which is now a lead customer.

Actually those are with very good I would say pricing points for us we are expecting this too I mean, we are working right now to ramp up the capacity of cleanup was do we are very eager also to penetrate the nonautomotive market and get ready with our production line Athena is too.

Part of that capacity will serve this new customer, which is now a lead customer.

and so for the following years InnoViz is going to be producing these units. We're going to have our own production line in our new facility. It's a production line that will have quite a large capacity and there's not going to be a problem to serve them and many others.

And.

So for the following years inorganic is going to be producing these units, we're going to have our own production line in our new facility.

It's a production line that will have quite a large capacity and there is not going to be a problem to serve them and many others.

Beyond that, there is an NRE portion that is related to development of the platform and development also related to our activity right now with the other brands in order to bring them to the desired, I would say, configuration that's part of our work right now.

Beyond that there is an NRG portion.

That is related to development.

Of the platform and development also related to that our activity right now with the other brands in order to bring them to.

To the desired.

Configuration, that's part of it.

Work right now.

Beyond that, there is the C sample and D sample.

Beyond that there is the system and this simple.

Again, there is a great pricing on the different stages of the of the product stage and we made sure that those although in those stages that we will have also good margins. I hope this

Again, there isn't a great pricing on the different stages of the of the product stage and we made sure that those although those stages that we will have also good margins.

I hope this answers your question.

Yeah, maybe one just quick clarification in terms of manufacturing, as you get to high volume manufacturing, even as the tier one supplier, would you still envision using contract manufacturing partner to help you with that, or do you plan to do all of that on your own? And then I'll leave it there and turn it over.

Maybe one just quick clarification in terms of manufacturing.

As you get to high volume manufacturing.

And as the tier one supplier would you still envision using contract manufacturing partner to help me with that or do you plan to do all of that.

On your own.

And then I'll leave it there and turn it over thank you.

We're in discussions with different contract manufacturers and also a few other ones in regards to taking the ownership of the manufacturing and managing the supplier of the contract manufacturer. There's no plan right now to build our own manufacturing site.

We're in discussions with different contract manufacturers and also tier ones in regards to being thick.

Taking the ownership of the manufacturing and managing.

The supplier of the contract manufacturer and there is no plan right now to build our own manufacturing site.

<unk>.

So.

It's our production line is only for the B sample. That's a, that's a production line. I mean, you know, this is not only designing the lighter. We also designing the manufacturing.

It's our production line is only for the B sample.

That's a production line.

<unk> is not only designing the lighter we're also designing the manufacturing tools all of the automation of the production.

All of the automation of the production is automated in order to get to high volume production in such a product you need to design.

Is is automated in order to get to high volume production in such a product you need to design.

Eventually, a machine that builds gliders.

Eventually.

And machine that builds later, that's part of what we do part of the reason that the new customers felt comfortable with.

that's part of what we do, part of the reason that the new customers felt comfortable with Inubis becoming their direct suppliers because we showed them how much experience we have in developing production tools and being responsible for such a design for manufacturing and we are exercising right now and we are developing the production tools as we speak.

Becoming their suppliers because we showed them how much experience we have in developing production tools and being responsible for such a design for manufacturing and we're exercising right now and we are developing the production tools as we speak and that production tools will later serve anyone who will produce our lighter it will use.

and that production tools will later serve anyone who will produce outliers. It will use, you know, the production tools that we are developing, and they will need only to

Production tools that we are developing.

And they relate only to operator.

Thank you. Our next question today comes from the line of Andreas Shepard from Cantor. Please go ahead.

Thank you. Our next question today comes from the line of Madras Shepherd.

From Cantor. Please go ahead.

Hey, guys can you hear me okay.

Yes wonderful.

Wonderful. Hey Omar. Hey Eldar, congrats on the quarter and congrats on the hard win for two years of a lot of work very well deserved. And thanks for taking my questions. Just to maybe build on some of the questions that have been asked.

Hey, Omar <unk>, congrats on the quarter and congrats.

On the hard win after two years.

A lot of work very well deserved and thanks for taking my questions.

Just to maybe build on.

On some of the questions that have been asked.

help me understand so when when can we see um revenue recognition from the uh the increase in the order book right i understand it takes a few years but maybe can you give us a sense of when we can kind of start seeing those um hit on the income side

Help me understand so when when can we see.

Revenue recognition from the.

The increase in the order book right I understand it takes a few years, but maybe can you give us a sense of when we can kind of start seeing dose.

He hit on the income statement sure. So as I tried to explain earlier on how we see our path to profitability.

Sure, so as I tried to explain earlier on how we see our path to possibility.

Basically, we're expecting next year to have a growth in our revenues coming from the non-automotive and, of course, start of the automotive programs that we were already awarded. And those will grow over the course of the years, both of them.

Basically we're expecting that to have a growth in our revenues coming from the automotive and of course starts of the non of the automotive programs that we will already awarded and those will grow over the course of years both of them and three five years from today, we expect to start generating revenues from the first order book and the growth and rates would be.

And three and a half years from today, we expect to start generating revenues from the first order book and the growth and rate would be, as we said, you know, one to 14% over the course of eight or 10 years.

As we said in the 1% to 14% over the course of the eight opinions.

Sorry, and of course our assumption right now that in a similar timeline to that launch there are other car makers that are due to make a decision. My expectation eventually is that the older book would not come only from a single customer, even if it's multiple brands. We do expect that other car makers that are planning to launch at a similar time time table. It is something that we can leverage on and add to our report.

Got it.

Alright and of course, our assumption right now that in a similar timeline to that launched there are other carmakers that.

Due to make a decision my expectation eventually that the order book would not come only from a single customer even if its multiple brands. We do expect that other car makers that are lending.

Planning to launch at a similar time timetable.

It is something that we can leverage on and add to our earnings.

Got it thanks, and then I think we can all kind of deduce who the partner is but when do you anticipate I guess to disclose.

I think so. And then, you know, I think we can all kind of deduce who the partner is, but when do you anticipate, I guess, to disclose the name formally? Sure. I mean, of course, we are eager to share it. You know, it has, I mean, this customer is a very prestigious customer. And of course, standing the name would be building a lot of confidence to everyone and.

The name formerly.

Sure.

Of course, we are eager.

Sure.

It has.

This customer is.

Very prestigious customer and of course, extending the name would be building a lot of confidence to everyone.

I think the industry knows well about this deal, I can tell you that many car makers and tier 1s have reached out to congratulate us on this huge deal, we've been competing on this for a long time and of course meanwhile we were nominated, there were other parts of the vehicle that were nominated, it's a very important program for the whole industry.

The industry.

Nosewheel about this deal I can tell you that many carmakers and tier ones have reached out to congratulate us on this.

Huge deal.

We've been competing on this for a long time and of course. Meanwhile, we were nominated there were other parts of the vehicles that were nominated.

Very important program for the whole industry.

Right now there is an agreement between us and the customer to do a joint press release announcement following the first delivery right now it's a it's a it's spending the first delivery of the example and integrating our product into the vehicles including our perception software and following that will do this joint.

Right now there is an agreement between us and the customer to do it.

Joint press release announcements following the first delivery right now.

Spending deferred delivery of the a simple and integrating our products into their vehicles, including our perception software and following that we will do this joint principles I think.

I think that there is a lot of eagerness from our side but also from their side. We are working closely with their teams for really two years and there is a good relationship. Today I'm having dinner with the team. It's really a start of a new relationship which I believe will take us for now for many years.

There is a lot of eagerness from our side, but also from their site.

We are working closely with their teams for really two years and there is a good relationship.

Today, I'm, having dinner with the team.

It really is.

A start of a new relationship, which I believe will take us forward now for many years.

Got it no that's very helpful. Thanks, again, and maybe one last one if I may.

Got it. No, that's very helpful. Thanks again. And maybe one last one, if I may. I know you didn't provide 2022 guidance in terms of revenue, but you did say that you kind of expect revenues to, I guess, increase or start ramping up throughout the year. So I'm just wondering, can you give us maybe a little bit more color on kind of what that means and how do you see revenue shaping up for the rest of the year?

I know you didn't provide.

2022 guidance in terms of revenue.

But you did say that you kind of expect revenues too.

I guess increase or sort of ramping up.

Throughout the year. So I'm just wondering can you give us.

Maybe a little bit more color on kind of what that means and how do you see revenue shaping up for the rest of the year.

Sure, maybe I'll just start by saying, you know, when we started, you know, when we went public, we had an assumption that this carmaker decision would be at a certain timeline and the decision window of the automotive market would be at a certain timeline.

Sure maybe I'll just start by saying.

When we started.

When we went public.

The assumption that this.

This carmaker a decision would be at a certain timeline and there was a decision window of the automotive market would be at a set a timeline that has been pushed by about nine months and our focus was always to leverage on that decision critical time, and basically making sure that we're not missing the opportunity to look at.

That has been pushed by about nine months and our focus was always to leverage on that decision critical time and basically making sure that we're not missing the opportunity to lock as many customers as possible, knowing that we're sacrificing the short term opportunities of making more revenue from selling selling light us to the non.

Many customers as possible knowing that we're sacrificing short term opportunities of making more revenues from selling selling light of toward the nonautomotive and for that reason because we identify that the decision window has shifted but it's actually as we speak and I think that now we expect it to accelerate.

And for that reason, because we identified that the decision window has shifted, but it's actually as we speak, and I think that now we expect it to accelerate in 2022 focus was really not about those cells or a non automotive. I will let them down to refer to the expected revenue store at the end of the year, but really our focus right now is automotive, but next year we know that we will have secure in our pockets several design wins.

2022 focus was really not about those sales for nonautomotive I will let them down.

The expected revenue towards the end of the year, but really our focus right now in automotive, but next year. We know that we will have securing our focus several design wins and then focused on the nonautomotive and starting generating and growing.

and then focus on the non-automotive and starting generating and growing revenues to catch up with the revenue expectations that we had. And I believe that with the really promising products that we have, the InnoVis 2 and 360, we will be able to capture a very nice portion of the market to generate revenues for the near term until, of course, the growth of the automotive.

<unk> to catch up with the revenue expectations that we had and I believe that with the really promising products that we have the <unk> two and 360.

We will be able to capture a very nice portion of the market to generate revenues for the near term until of course the growth of Docomo.

Yeah, so in terms of revenues, we do expect that we will see a continuous growth in revenues over the year and the coming years.

Yes, so in terms of.

Revenue, but.

But we do expect that.

We will see a continued growth in revenues over the year in the coming years.

Of course, as we stated, InnoVis 1 is the primary product that we'll be selling this year, but even more importantly, there is a push to bring InnoVis 2.

Of course, as we stated in there with one of the primarily product it will be selling this year, but.

Even more importantly.

There is a push to.

During interviews through.

to such a production space that we can start shipping it this year in order to see additional growth next year. So this year there was a third

Two such a production space that we can start shipping this year in order to see.

Additional growth next year. So this year there was a focus.

As we said, there was a focus on winning the market and there will continue to be the focus.

We said there was a focus on winning the market and there will be continued to be the focus for.

For next year, we do expect to see some revenues not only from the automotive space, but also from other application and other market that vertical.

Next year, we do expect to see some revenue not only from the automotive.

Space, but also from other.

Application in other markets.

Verticals.

Yeah, the team are spending a lot of time now and I mean, we are knocking on kind of like the opportunity right now since we have this award, I'm, I'm traveling to this next week with my team to the US.

Now the team are spending a lot of time now.

Knocking on kind of like the opportunity right now since we have this award.

I'm I'm traveling to this next week with my team to the U S.

to the East Coast and the West Coast, meeting with different customers. We are coming with the innovative too. And those, I would say discussions would obviously would provide us more and more business to allow us to generate our revenue.

To the east coast, and the West Coast and meeting with different customers, we are coming with dealers with steel and those I.

I would say discussions.

Obviously.

Would provide us more and more business to allow us to generate our revenues.

Wonderful, thank you so much guys. Congrats again. I'll pass it on. Thank you. Thank you As a reminder in order to ask a question, please raise your hand

Wonderful. Thank you so much guys. Congrats again I'll pass it on thank you Julian.

As a reminder, in order to ask a question. Please raise your hands using the mobile or desktop application and wait for your name to be announced our next question today comes from the line of Kevin Cassidy from Rosenblatt Securities. Please go ahead.

I congratulations, I'll add that to, you know, just wondering about the competitive landscape or maybe the bake off you went through over the last two years, the way you describe what what is the key attributes that you know this to had that no one else could do.

Alright, congratulations I'll add that too.

And I was just wondering about the competitive landscape or maybe the bake off you went through over the last two years and the way you described but what is the.

Key attributes that <unk> had that no one else can do.

Good question so.

Let's say that through the last two years, it was a very, it was a very long process. I think during the first year, we were probably turned down about five times.

Let's say that through the last two years. It was a very it was a very long process I think during the first year, we were probably turned down about five times.

And I told the team, the customer, that through their negative result each time, we improved the product each time, eventually reaching to the 30 times improvement. So much credit for them. Eventually, once we were able to reach their performance target.

And I told the team the customer that through there Nick.

Negative result, each time, we improve the product each time.

<unk>, reaching to the 30 times improvement.

So much credit for them.

Chile, once we were able to which their performance targets.

and gave indication for pricing, it was clear that in order for us to win the program we need to be nominated, we need to be qualified as a Tier 1. This kind of car maker, because it was really a high volume program, it couldn't allow to be able to work to nominate just a lighter company. They need to have a Tier 1 which is meeting all of their goals.

And gave indication for pricing it was clear that in order for us to win the program we need to be nominated we need to be qualified as a tier one.

This kind of car maker was because it was really high volume program.

<unk> allows us to be able to work to nominate just a liner company they need to have a tier one which is meeting all of the Sandoz, we were going through a process of about three to four months different workshops. Eventually concluded with our recognition as a tier one signature of becoming a tier one and eventually.

We were going through a process of about three to four months, different workshops that eventually concluded with our recognition as a Tier 1, signature of becoming a Tier 1. And eventually, we were competing against another Tier 1. Towards the end of the year, it was us versus another Tier 1, which came with a technology that, from our understanding, was actually inferior in terms of...

We're competing against another tier one.

Towards the end of the year.

Us versus another tier one.

Which came with the technology that's from our understanding was was actually inferior in terms of.

Performance and through the different requirements.

performance and through the different requirements that came.

King.

from the group in order to support different configurations, mostly related to the use of lidars in different locations and different that actually boosts for even higher performance than initially asked. The other comparison couldn't live to the expectations and or to the performance requirements and eventually towards the end of the process.

From the group in order to support different configurations, mostly related to use of lasers in different locations and different.

Or even higher performance than initially.

The other competitor prudently to the expectations of the performance requirement and eventually towards the end of the process.

We were under the assumption that we're no longer competing with anyone. It felt like that. And of course, I can't possibly don't have the full visibility.

We were under the assumption that we are no longer competing with anyone it's felt like that and of course.

Possibly don't have the full visibility.

of the discussions that went, you know, through between January to April was mostly related to internal discussions at the group level related to some changes of the configuration. And we worked with the customer.

The kind of the discussions.

Between January to April was mostly related to internal discussions at the group level.

Related to some changes of the configuration and we worked with the customer the.

Probably redesign the light out 10 times again.

The redesign.

Right.

10 times again.

uh which you know part of it was related to you know the change in the in the in the height of the of the of the lidar which was super critical

Which part of it was related to the engine.

The height of the of the of the lighter which was supercritical.

But eventually it felt that the level of engagement, the level of discussions

But eventually it felt that.

The level of engagement the level of discussions.

With all of the things in the group made us feel that we are very likely to be nominated And we were happy that it eventually happened, but I think that the until the last Kind of time that we thought that we're really negotiating versus another competitor It was versus another tier one a traditional tier one

With all of the teams in the group made us feel that we are very likely to be nominated and we're happy that it's eventually happened, but I think that the.

Until the last.

<unk> kind of time that we felt that we're really negotiating versus another competitor.

It was versus another tier one traditional tier one.

uh and yeah that's that's what we know

And yes, that's what we know.

Great, thanks for that detail. And, you know, this is why I guess in the prepared remarks, you had said that you think the process will move quicker. Now you learned a lot on this. And so the next bid you're on, you'll, you'll remove some of those obstacles already. Is that the way we should think of that?

Great Thanks for that detail.

This is why I guess on the prepared remarks, you had said that you think that process will move quicker you learned a lot on this thing so the next bids you're on.

You'll have to remove some of those apps book already is that the way we should think of that.

Look, one of the challenges of becoming, to be selected as a LIDAR4 carmaker is the fact that carmakers want to select a Tier 1 that meets all of their group standards. They can't work, I mean, they have thousands of components in the car, and they need to make sure that the Tier 1, that eventually all of the components are sourced with Tier 1 that can manage multiple components, and eventually they have a small group of companies that meet up to their expectations.

Look one of the challenges of the coming to be selected as a lighter for carmaker is the fact that carmakers wants to select.

A tier one.

Midst all of their <unk> work I mean, they have thousands of components in the car and they need to make sure that the tier one that eventually all of the components are sourced through tier ones that can manage multiple components and eventually we have a small group of companies that meet up to their expectation.

Several car makers are more technical and I would say more advanced and are allowing to, I would say, absorb some risk in going into new technologies. Most of the car makers don't. They need to rely on selection and due diligence made by other car makers.

Several automakers.

More technical and I would say more advanced and are allowing to let's say absorb some risk and going into new technologies. Most of the car makers they need to rely on selection and due diligence made by other car makers.

And the fact that we approach them with a very exciting technology was actually not enough. They wanted to work with Q1. They asked us to come with the Q1. Our preference was to be working directly. And once we were able to show them that we were certified by Q1 and that was actually done several months ago, it allowed them to feel comfortable to start the process.

And the fact that we approach them with a very exciting technology was actually not enough. They wanted to work with tier ones as Tom with the tier ones, our preference was to be theyre working directly and.

Once we were able to show them that we were certified by a tier one and that was actually done several months ago allows them to feel comfortable to start the process with us and having this nomination is another step forward, which not which means that this was a very.

and having this nomination is another step forward.

which means that we are credible to become a Tier 1.

We are credible to become a tier one becoming a tier one also allows you to be more flexible I think one of our advantages as a tier one is that <unk> is a very flexible company. We are very technical one.

Becoming a tier one also allows you to be more flexible. I think one of our advantages as a tier one.

is that InnoViz is a very flexible company. We are very technical. One of the things that the customer that we were awarded for, I would say had a preference for InnoViz was due to our agility. They've said multiple times that we were the most professional in the terms of actually going through the RFQ and answering it in a way that we actually added value.

One of the things that the customer wins, we were awarded.

I would say it had a preference for <unk> was due to our agility. They have said multiple times that we were the most professional in the terms of actually going through the <unk> SKU in answering it in a way that we actually added value.

Our, I would say, experience through the programs that we are already working for, for sure, working with BMW, you know, gained us a lot of knowledge. We work with BMW, though we were at Tier 2.

Sure.

We'll take spilling into the programs that we are already working both offshore working with BMW.

<unk> gained us a lot of knowledge, we work with BMW, though we were at Q2, we work directly with the BMW all along I mean, we were working with them.

We work directly with BMW all along, I mean, we were working with them.

day after day. There is a big group today from BMW spending a week here.

Today, there is a big group to date from the.

MW spending a week here.

We are working very closely with the market, we understand the requirements, we just showed BMW also all of the...

We are working very closely with the market we understand the requirements just shove BMW also all of the <unk>.

benefits coming from InnoVis2 and you know all of the lessons learned that we embedded into it and those are very I would say very much appreciated by a customer that wants to make a decision doesn't want to spend two years

Benefits coming from each of us do and all of the lessons learned that we embedded into it and those are very.

I would say very much appreciated by our customer that wants to make a decision doesn't want to spend two years.

to do the diligence, want to pick a solution that is thought by others.

To do due diligence wants to pick a solution that is sourced by others and don't they don't need to take the risk on themselves and <unk>.

and they don't need to take the risk on themselves.

and obviously there aren't so many car makers that at that size right this is one of the third I mean one of the one of three car companies in the world so obviously the volumes are very big and that allows us to get to level of industrialization and cost that serving any other car makers even if they are not at that size and we we can we can leverage on our success.

Obviously, there are so many carmakers that are that size right. This is one of the third I mean, one of the one off three current companies in the world. So obviously the volumes are very big and that allows us to get to a level of industrialization and cost at serving any other carmakers, even if they are not at that site and we can we can.

Leverage on our success now.

Before, when we were trying to win business and we had to engage also, I mean, our desire to win business was obviously high always, but not always it was that easy to bring the tier one partner to that level of motivation and each company has its own set of motivation and I would say resources that it was not always easy to

Before when we were trying to win business and we had to engage also our desire to win business was obviously high always but not always it was that easy to bring the tier one partner to that level of motivation and each company has its own set of observation and I would say resources that it must not always easy to two <unk>.

to bring that partner into the, to win a program. Now we don't have this issue anymore. We basically, nothing can stop us. We are very eager to win more business and leverage on our success. And that's really why I'm super excited about this design win, because it really allows us to win more deals faster. And, you know,

Bring desktop into.

When the program now we don't have this issue anymore.

Nothing can stop US we are very eager to win more business and leverage on our success and that's really why I'm Super excited about this design win because it really allows us to win.

This faster.

And.

That's all.

Yeah.

All right, great, thank you very much and congratulations again.

Alright, great. Thank you very much Greg Greg Congratulations again.

Thank you.

Our next question comes from the line of Michael Filatov from Berenice.

Our next question comes the line of Michael Filatov from Barrington.

Go ahead.

I'm still here. So, just two clarification questions. First one, you mentioned that you wouldn't be producing the Intimus 2 for this program yourselves on your own manufacturing line, right? Like you wouldn't, the initial samples, but you said you might work either through a Tier 1 or a contract manufacturer. So, I just, I'm just trying to understand, you know, when you say you're a direct Tier 1 supplier, how that sort of ties with, you know, manufacturing through a Tier 1, right? I guess try and...

I'm still here.

So just just to clarify question clarification questions first one you mentioned that you wouldn't be producing the enemies too for this program yourselves and your own manufacturing line right like you wouldn't have the initial samples right.

You said you might work could you go through a tier one of our contract manufacturers. So I just I'm just trying to understand when you say youre direct tier one supplier, how that sort of ties with manufacturing through a tier one right I guess try and Claire.

You clarify that for me. Okay, maybe just I'll clarify the first few samples. We are going to manufacture. We are manufacturing today. I mean, now, I mean, actually, next to us, there is that production. One of the production line, you know, we still production design is done by us. So we're designing the product, but we're also designing the production.

Clarify that for me okay.

Okay, maybe just I'll clarify the first <unk> samples, we are going to come in et cetera, we are manufacturing to date.

Now actually next throughout there is the production is one of the fun parts of the production line.

With two production.

<unk> is done by us, but we are designing the product, but we're also designing the.

The production line and we are going to utilize the production line for the first time until we get it stable until we get to December .

and we are going to utilize the production line for the first time until we get it stable until it gets

So the big sample of next year is going to be done by us. It's going to be in our new facility, and that will get to quite a large capacity.

The B sample of next year is going to be done by us it's going to be in our new facility and that will get to quite a large capacity eventually when it goes to high volume and of course, when we were I would say.

eventually when it goes to high volume and of course when we were I would say qualified to become a tier one we had to point to the customer the expected location of the production line. So we worked with the contract manufacturer, we worked with the customers which audited the automotive grade, they wanted to make sure that this facility is meeting all of the automotive grade group standards, the logistics, the shipping, everything has to be audited. Eventually when we get to the C sample and then to the D sample it has to be in automotive grade facility.

Qualified to become a tier one we have to point to the customer the expected.

The location of the production line. So we work with our contract manufacturer, we worked with the customer which audited the automotive grade. They wanted to make sure that this facility is meeting all of the automotive grade gold standard the logistics the shipping everything has to be audited eventually when we get to the <unk>.

Sample and then to the deep sample it has to be has to be an automotive grade facility.

uh not only that the design is automotive and that's the b-sample stage at the c-sample uh it will be also needs to be an automotive grade facility which is not you know

Not only that the design is automotive and that is the December stage at the system.

It will be also needs to be a locomotive grade facility, which is not at.

At that point, we will work with a contract manufacturer which will produce the LIDARs for us. But again, it's important for me to say, they are going to use the production tools that we developed. So if I need to try to give you an impression of how a production line looks like.

At that point, we will work with our contract manufacturer, which will produce the light sport, but again trying to important for me to say.

They're going to use the production tools that we devote so they.

If I need to try to give you an impression of how a production line looks like eventually.

Eventually, it's it's a it's a machine that you that places the optics and you know, you know, these two became significantly simpler because there is one laser and one detector. So the full active alignment process is too.

It's a machine that you that places the optics.

Two it became significantly simpler because there is one laser in one of the test also.

Active alignment processes to step compared to eight steps.

compared to eight steps. The cycle time is dramatically lower, the testing is dramatically lower, and everything is going to be designed by us, tested by us, and once we will see that the production line is up and running, we will shift the production line, the production tool, to our contract infrastructure, which will

One the cycle time is dramatically lower the testing is dramatically lower and everything is going to be.

And by US tested by Us and once we will see the production line is up and running we will ship the production lines that production tool.

Through our contract manufacturer, which will basically use it they don't need to know anything about the lidar the operators don't need to understand anything about the level of the adjusted to follow there.

They don't need to know anything about the LiDAR. The operators don't need to understand anything about the LiDAR. They just need to follow the operations of running a certified production line for automotive in terms of inventory and quality testing. But that's not going to be done by us. Sorry, just one more clarification on that. Is that not what you're doing with Magna right now, is shipping them the production tools as well as the components for the set?

Operations.

Running a certified production nine automotive in terms of inventory and quality testing.

But thats not going to be done by US sorry, just one more clarification on that is that not what youre doing with Magna right now is that shipping production tools as well as the components for the sensor.

Yeah, I mean, it is I mean, the production, the production line that that is now it's a magnet. It was designed by us. And that's, that's why it was quite easy for us when we work with the new customer. It was easy for us to show them that that our experience.

It is I mean, the production the production lines that is now with Magna as it was designed by us.

Why it was quite easy for us when we work with the new customer it was easy for us to show them that.

Our experience as the tier two is actually more than just a few we were more like a tier one and a half in already being able to show them that we have experienced in producing tools for production in automotive and Thats, what basically started their engagement and their interest so today Magna Holly.

as a field to is actually more than just a few were more like a few one and a half in, you know, already being able to show them that we have experience in producing tools for production line for automotive, and that's what basically started the engagement and their interest.

So today Magna Holy is the production line that Magna is

Is the production lines that Magnus is managing.

managing. And we sold them the production line that we designed. We are supporting them. There are people from our side there to work with the team.

And we sold them the production line that will design, we are supporting them to our people from our side. There is the work of the team and eventually lead us at Magna are produced at Magna wholly tested in Mongolia and shipped to them.

And eventually, LiDARs at Magna are produced at MagnaHoly, tested in MagnaHoly, and shipped to BMW. Michael, just to add to that, the business model is different. When we are working today with Magna, they are selling the full system to BMW. We are selling to them only the components, so the revenue line.

Just to add to that that the business model is different when we are working today with Martina they are selling the full fifth BMW, we are selling to them and with the components of the revenue line.

is from the components while once you are a direct supplier and you have a contract manufacturer at the end of the day we will be selling the whole system and the software so it has some impact also on the revenues and on the top line.

From the component while once you are a direct supplier and youll have a contract manufacturer at the end of the day, we will be selling the whole system.

Software so.

Some impact also on the revenues on the top line.

Understood, understood. Thank you for that clarification. And just one more question, you mentioned NREs is not part of the order book for this program, but will you, do you expect to see NREs this year from the program or when should you expect to see that? Yes, there is an NRE also this year we expect.

Understood understood. Thank you for that clarification and just one more question you mentioned <unk> is not part of the order book for this program, but will you do you expect to see in <unk>. This year from the program or when should you expect to see that yes.

Yes, there is.

So this year, we expect.

Okay, great. And one last one. I mean, given that you're now, you know, going to be essentially being a tier one, is there any sort of change in your cash needs to support this program? Or do you feel comfortable with the cash you have on balance sheet right now?

Okay, Great and one last one I mean, given that you're now going to be.

Essentially being a tier one is there any sort of change in your cash needs to support this program or do you feel comfortable with the cash you have on balance sheet right now.

The cash on our balance sheet enables us to execute this program, we raised sufficient amounts of cash during our going public process and we have all our needs. Even to add to it, part of the qualification to become a Tier 1 was to show the customer our financial robustness.

Okay.

Cash on our balance sheet enables us to execute this program, we raised sufficient amount of cash drilling are going public process and.

We have all our needs.

Even to add to it.

Part of the qualification to become a tier one was to show the customer our financial robustness. So of course, when we went public and we raised money for the company. We didn't have to buy companies. We didn't have to buy technologies. We are using this amount in order to show the robustness of the company has in security.

So of course, when we went public and we raised money for the company, we didn't have to buy companies. We didn't have to buy technologies. We are using this amount in order to show the robustness the company has in securing our effort in the coming years and basically reaching the SOP. I understood. All right, thanks a lot guys.

Our efforts in the coming years, and basically reaching the ESOP.

Understood Alright, thanks, a lot guys.

Okay.

You have no further questions. Please proceed.

Okay.

Okay, so really exciting time.

No really.

I think an exciting time to continue the atmosphere in the offices is very very good.

exciting times. I can tell you that the atmosphere in the office is very, very good. We all are getting a lot of our sleeping pressure off. It was a very challenging time. I mean, we've been competing on this for a long time, super important for us. We knew how meaningful it will be to us. I don't know if I managed to express how impactful this is going to be for us.

All are getting a lot of sellers.

Shipping.

The pressure off.

It was a very challenging.

I mean, we've been competing on this phone call long term super important for US we knew how meaningful it will be to us.

I don't know if it's managed to express how impactful this is going to be for us.

But I think that, just from the amount of engagement we had in the last...

But I think that.

<unk>.

From just from the amount of engagement, we had in the last week and a half from different customers and seeing how seriously. They are seeing this event then.

week and a half from different customers and seeing how seriously they're seeing this event and I have very high confidence in our ability to be very successful.

I have very high confidence in our ability to be very successful.

And we're looking forward for a bright future.

And we're looking forward.

A bright future.

Yes.

Ah, yeah. So next week I'm traveling to New York and San Francisco, meeting with investors and customers, and I'm happy to be reached out for any interesting opportunities. Thank you very much. Thank you.

Yeah. So next week I'm traveling to New York, and San Francisco meeting with investors and customers and.

Happy to be reached out for any interesting opportunities.

Thank you very much thank you.

Thanks.