Q1 2023 Innoviz Technologies Ltd Earnings Call

Speaker 1: Thank you!

Speaker 2: Good morning, this is Rob Moffett, Vice President of Corporate Development and Investor Relations at Inoviz, and I want to welcome you to our earnings conference call.

Speaker 3: Joining us today are Omar K. Laf, Chief Executive Officer, and Elder Stegla, Chief Financial Officer.

Speaker 4: Before we begin, I would like to remind you that our discussion today will include forward-looking statements that are subject to risks and uncertainties relating to future events and the future financial performance of Innovis. Actual results could differ materially from those anticipated in the forward-looking statements. Forward-looking statements made today speak only to our expectations as of today, and we undertake no obligation to publicly update or revise them. For discussion of some important risk factors that could cause actual results to differ materially from any forward-looking statements, please see the risk factor section of our Form 20F file with the SEC on March 9, 2023.

Speaker 5: I will now turn the call over to Omer. Please go ahead. Thank you all and good morning everyone and thank you for joining us.

Speaker 6: Let's start off with what I believe is the biggest development our new life commercial vehicle program. That quarter, we told you that we were in a late-stage discussion with one of our major existing customers for a new program. And today we're announcing that we have delivered the data. This program is for a level four commercial vehicle and more specifically a commercial dam that will include three to four light hour vehicle. And perhaps what is most exciting here is that the expected program is on a very accelerated time limit.

Speaker 7: With death vehicles on the roads already this year, which you will be able to see. This means that these programs can contribute tightly to the revenues in the back half of 2023 with sample shipments ramping and attractive levels of NRE expected to come on sooner than they typically do. The reason this program is moving so quickly is because we are displacing at the development stage competitor. This is a new milestone for either of these as a company, and I believe it is a very important indicator of the quality of our technology and the benefits of 905-millimeter solutions where we believe we are the leader.

Speaker 8: Another aspect of this deal that is very important is the autonomous compute platform provider that we will be working with. This is our second program with this OEM and it is the second compute platform partner that we are integrating with for this automaton.

Speaker 9: This helps to expand our compute platform exposure and show our accessibility to integrate with all of the major leading platform tests.

Speaker 10: Ultimately, we believe that working with the top autonomy platform partner should enable a faster time to market.

Speaker 11: accelerate the customer evaluation process, and use the overall customer decision process. And I believe this could help open doors to additional wins as they continue to work together. And I Ihaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiaiai

Speaker 12: Going forward.

Speaker 13: And while we are on the topic of compute platform, we have an update on another major compute platform partner and that involves our work with NVIDIA.

Speaker 14: Investors often hear us speak about the top three autonomy but complied and why we think it is important. So not only work with all three of them, but to eventually have vehicles on the road with each of them.

Speaker 15: Based on development this quarter, we think we're on one step closer to making that happen.

Speaker 16: We are in discussion with NVIDIA about being integrated into series production programs leveraging the Appearian platform. This conversation spans multiple major OEMs and could introduce RFI and RFP activities that ultimately would be incremental to the NVIDIA-based programs that are already in our pipeline.

Speaker 17: In order to help investors understand why this is such an important development, let me explain how OEM typically makes their decision around autonomy platform vendors. Conversations with OEMs historically have progressed in one of two ways. Sometimes they run their compute platform and let their suppliers also in parallel.

Speaker 18: making each of the decisions independently. And sometimes they will start by picking the compute platform first and then build the sensor suit around it. In scenarios like the second situation, already being integrated with the compute platform on another program can significantly reduce the time and cost. They detect four additional automaters deploy the same system.

Speaker 19: You essentially become in all the shelf solutions significantly reducing the risk for a new oil to chew you as the light of the planet.

Speaker 20: Our goal here is to become and bat on all major computer platforms as quickly as possible.

Speaker 21: We viewed this as potentially meaningful structural advantage and we are making excellent progress on this front-end with both of them.

Speaker 22: And while we're discussing software, I'm excited to share some details on a new product that we are quoting in conjunction with an entire discussion with a leading global OEM.

Speaker 23: During our evaluation process with the SOEM, there were highly impressed with the capabilities that our leader and perception solter brings to the table.

Speaker 24: Neither results. The expanded scope of the RQ to include what could be the first industry, first ever ladder-based minimal risk removal, all MLM systems.

Speaker 25: First, let me give a little color of what an MRM does. The MRM system is software that sits on a dedicated compute box.

Speaker 26: within a vehicle and operates as a backup system. In the event of a complication with the primary system, the MLM could take over, control of the vehicle, offering a transition period for the driver to we take control of the vehicle and to offer the ability to safely pull the vehicle to the side of the road, if the driver does not we take control within a specific time frame.

Speaker 27: MOM systems are not new, they have been around for several years, but historically they have been camera based. We believe that operating a LIDAR based system offers key structural advantages over camera systems, including a true 3D image along with reduced risk in low light and extreme sound situations.

Speaker 28: as well as environmental considerations by terrain or snow.

Speaker 29: Successfully building out this product category would be a natural extension of the success we have already demonstrated in perception software and would help us move further up the stack potentially offering additional incremental opportunities down the road. The benefits of having a larger software offering are clear.

Speaker 30: First, they can build upon and further expand the value that our lighter hardware technology brings to the table.

Speaker 31: And second, the growth margin profile on software is much higher than the average.

Speaker 32: And in the end market, like automotive, where you have more than 90 million units of volume per year, you can generate many for-labored and stronger returns on invested capital.

In spite of this program we are quoting a bundle that includes the LIDAR, the Perception Software, the Compute Box and the MLM Software.

And we are starting to explore this product with additional OEMs. This could offer us incremental revenue that we believe would be positive to the goal.

And we are starting to explore this project with additional OEMs. This could offer us incremental revenue that we believe would be projective to the growth margin profile.

I'm also happy to announce that we continue to explore new ways to grow our relationship with the company And we are working with both Postman and Carre on additional programs including several that are in various stages of discussion We are also working with other compute platform partners to build a wide area of ladder integration options This would give the OEM an almost modular approach to ladder development Deployment that could allow integration into multiple platforms and sub-voluments

The key point here is that we are making good progress with all of that. And because of that progress, we believe we have additional opportunities for growth with them. As a reminder, the long-term strategy of our business is to gain an initial support for this major OEM with one platform. And then, all your time, earn the right to be the light of the end of every additional future program.

They decided to deploy later on in the coming year.

Given the amount of ongoing momentum we are seeing with our existing customers like Volkswagen, we believe we are well along the path to proving this important milestone of our business. And we look forward to continued growth with all of our existing customers. Our goal here is to build upon our industry-leading $6.9 billion dollar...

Follow looking all the book which will be updated on our post-cortal 20.3-iron score.

Coming into the quota, we have both series production allowed, BMW, VW, the shuttle program, and the Asian TV focus, Oya.

Two of those awards in the W&S program are on target to SOP in the back half of this year. The Asian EV Focus program is targeting late 2024 to 2025 SOP. And our current Volkswagen award is targeting a mid-decade SOP. When you like vehicle programs with Amsterdam, it's targeting a similar vehicle.

mid-decade timeline. While we have delivered on several major marks on this quarter, the progress we've seen in our pipeline during the last quarter is at least equally exciting, if not more so. So, we had a record number of programs move from an RFI to the RFQ process in this order, with roughly

Half of the pipeline now at the RFQ stage, which is the first in the company's history. We are now working on more than 5 RFQs in parallel.

Between the programs we've already announced and the 10 to 15 in the RFI and RFQ pipeline, we either have already won business or are actively quoting new awards with 8 out of the top 10 global automakers.

Let that sink in for a minute. Eight of the top 10 loudest calmators in the world are in our pipeline and actively making so-sync decision for our leader.

We ultimately believe that it's likely going to be a winner takes most of it.

The technology is safety critical. There are very high levels of tech differentiation. And the player that wins the most business is ultimately going to have a scale and cost leadership advantage. It is likely going to be difficult to match.

Given the fact that most of these programs will be on the road for 8 to 10 years, we believe that major portion of the industry market share is going to be determined in the next 12 to 18 months.

Looking at our customer programs, you can already see some solid evidence that the base of programs' activity is accelerating. After winning the Endabiliance 2018, it took us over three years to win our next production award.

From there, it took us a full year to announce the next one. In the past year, we've already announced fewer production awards along with today's new program. Looking forward, we think there are 3-5 programs that have the potential to make decisions before the end of the year.

I believe this timeline shows some solid evidence that the pace of light of decision making is likely accelerating, which is very confident about how we are positioning the process. And we hope that we will have much more to share in the comic world, and this outlook is embedded in our 2023 targets. As you can see, we are now targeting one to three of these.

And on the new customer prompt, we are still targeting two series production awards with new customers. We have a few RFQs that we believe can advance into final commercial negotiations in mid-summer, and I'm hoping we will have something to share by late summer to early fall.

from we're still targeting two serious production awards this new customer. We have a few RFQs that we believe can advance into panel commercial negotiations in mid-summer and I'm hoping we will have something to share by late summer. And in terms of financial targets.

We are introducing a very important new metric, cash collection from customers, which we target to be $20 to $30 million this year.

This is a metric we consider to be even more important than the reported revenue because we target to collect large amounts of NREs that are not always counted as revenues.

This is a metric we continue to be even more important than the report is revenue because we started to collect large amounts of energy that are not always counted as revenues. 20 to 30 billion dollars this year.

The purpose of this new metric is to more accurately communicate the powerful contribution of NLIs to our financial picture and to encourage investors to take NREAs into considerations along with revenue. That platform will make sure everyone understands what NRE is because it's critical.

to our cash flow and the funding strategy of the business. What's in their focus is quickly understand our income profile once the business in production, but they often do not understand the drivers.

of revenue in the two to three years before production starts.

During that period of time, we have three sources of income and cash, sample unit, shipment, non-automotive shipment, and an array. Tempel unit shipments are important because they carry much higher growth margins than production pricing.

For instance, sample units typically sell in the $5k to $15k range, compared to the multi-production ASP which is under $1k and can eventually approach $500 per unit at extreme volumes. These sample units are not priced on gross margins, they are priced to recover fixed costs like on the investment.

And for each customer program we can bring in from our pipeline, we could typically sell several hundred units per year during the pre-production phase of the program. This could potentially translate into millions of dollars per year for each award, and potentially tens of millions of dollars per year across multiple awards.

Till, we are also stopping to shift units into the non-automotive market.

This effort began in late 22 and is starting to ramp up as we go through 23.

As you can see, ASP for non-automotive sales are basically in line with sample unit sales ranging from 5k to 15k. So here, too, you have the potential for a very high gross margin that can help absorb your fixed costs. While our efforts in non-automotive are still in the early stages, we think this is a market that could be in the tens of thousands of units per year for us in the next few years.

At a very high level, I will encourage you to think of another easy and potentially disturbing experience.

The communication challenge that we have, however, is that they cannot always be recognized for their revenues, depending on their accounting treatment.

Sometimes they can be recognized as revenue and sometimes they have to be recognized as a control item to expense such as R&D.

and you don't always know upfront how you will be able to classify them since it can often depend on terms and milestones that require input from the customer.

I won't go into all the facts of the things that accounting details. What's important here is that whether it's classified as revenue or contract expense, it doesn't really matter. Either way, it's a cash payment made by the customer and received by us. And it's a critical part of our funding strategy.

Last photo, we looked across 10 to 15 programs that are in our pipeline. We calculated the total amount of NRE that we are closing to those companies.

And the number is in the range of $1,650,000 to $250,000.

with most programs falling into the 10 to 50 million dollars range depending on their size. Yes, there are programs that could contribute as much as 40 to 50 million dollars each.

So here too, we have the potential to bring in tens of millions of dollars per year if we can convert several of the programs from our pipeline.

One last important point here is that the NRE are usually only available to T01. Typically the total goal of NRE is allocated to the T01. And if anything is allocated to the T01, it is a tiny amount of adhesion.

This was a key part of our decision to invest the time and effort to become a tier one so we could collect energy as part of our funding strategy in a meaningful way.

We've been getting an increase in number of questions like on our funding strategy. And my response to it is, the most important step is funding our activity, our business is growth. We have tremendous amount of opportunity in our pipeline. In each deal, we win, has the potential to bring in tens of millions of dollars of NREs and sample shipments. Both of these items offer high-goat profits through a flow through.

And we are specifically in heaven to help us those six costs.

We don't assume that we can win every single program, but if we can continue to show the momentum that we have demonstrated lately, and continue to bring in several programs per year, then these things will start to build up upon themselves.

with the potential for each of these of the multi-stamped units, none of the multi-stiles and an array, offering the potential to contribute the tens of minutes to all of each, structurally lower our gun rate.

Stand out, Keshe runway, and bring us one step closer to break even. With that, I'll turn it over to a adult to go over the financials. Thank you, Omar, and good morning, everybody.

Starting with cash, we ended Q1 2023 with approximately $156.5 million in cash, short-term restricted cash and marketable securities on the balance sheet.

Our largely matured cost structure and our operating cash outlays remained mostly stable during the quarter and were in line with our 2023 budget.

Moving to the income statement, revenues in Q1 2023 came in at $1 million compared to Q1 2022, revenues of $1.8 million. Revenue were impacted by our pivot towards SOP with BMW and the shuttle program, which will weigh

on the first half of the year before revenues begin to grow in the back half of the year.

The biggest factor involved here is the lower sales price as we transition from selling the larger sample unit to selling just the components to Magna, who is the tier one for the BMW program.

As we think about revenues cadence for the year, we expect the second quarter to look largely similar to the first quarter and for the same reason. Looking to the back half of the year, we expect revenues to step up modestly in the third quarter and then step up to a large extent in the fourth quarter with the second quarter

Tailwinds from improving production volumes, growing innovation volumes, revenue-based NREs, and increased sample shipments to new programs.

Moving forward down to the income statement, on the cost side, operating expenses for Q1 2023 were $33.3 million, an increase from $31.1 million in Q1 2022.

Q-1 2023 operating expenses included $5.2 million of share-based compensation compared to $4.7 million in Q-1 2022.

The increase in quarterly operating expenses compared to last year Q1 operating expenses was primarily due to the higher R&D expenses, mainly on in-office two costs, a general increase in headcount associated share-based compensation expenses and fertility costs.

Research a development expenses for Q123, where $26.1 million and increased from $22.8 million in Q122.

The quarter included $3.5 million attributable to share-based compensation compared to $2.7 million in Q1 2021.

to the $3.5 million attributable to share-based compensation compared to $2.7 million in Q1, 2021, 2022.

In conclusion, 2023 is an important year of growth for Innovis. We are launching our first series production vehicles, ramping our Innovis 2 volumes, expanding in the non-automotive market and diligently going after all of the programs in our robust pipeline.

we expect to finish the year on a very strong note with lots of momentum heading into 2024. And with that, I will turn the call back to Omar. Thank you. Thanks, Andao. You've heard us talk a lot about existing customers today, including Postvagn. So I wanted to take the opportunity to offer a reminder for my upcoming fireside chat with Giro Kemp, the head of ADAS over at Audi. Usually it's Giro asking me all the questions, but this time I will get to turn the table around and ask him about how the autonomy strategy and some of the lessons he learned along the way.

during his years of experience in the film. I'll probably also fit in one or two questions on what led Aldi to choose Innovis at the still one latter's class.

to additional opportunities for growth going forward, including with other OEUs. We also talked about our discussion with another top three compute platform player, which is NVIDIA, exploring a deeper integration with the appearance platform that could bring further programs into our pipeline, in addition to the ones that are already working on NVIDIA base.

On the RFQ front, our pipeline is the biggest it has ever been, and even more importantly, we have a record number of programs in the RFQ stage with more than five programs running above it.

And we believe that there could be as many as three to five decisions by the end of this year.

And for one of those programs in the RSQ process, we disclosed that we're actively quoting a new MRM product that can increase our revenue and profit their vehicles through a bundled system.

while allowing us to move further up the softest stack and we are starting to explore offering these bundles to additional organs.

And after updating, we have 23,000 to include them.

To include a solid outlook for cash collection from customers, we outlined how strong growth could serve as the primary building block of our long-term funding strategy.

I'm incredibly proud of the progress the team has made this quarter. I know it can be exhausting working at a company where things are moving this fast, and we know that things are only going to get busier. With more than five RFQs running in parallel with customers all around the world. There is a lot of travel and time away from the family, a lot of late nights and early moments. So I just wanted to finish by saying thank you to everyone on the team.

for your contribution this quarter and going forward. We have a lot to be proud of with more to come soon. Let's keep up the momentum. With that, I'll turn the call over to the operator to take us into the community. Thank you. Thank you.

In order to ask a question, please raise your hand using your mobile or desktop application and wait for your name to be announced. Once again, 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 Mark Delaney of Goldman Sachs. Please go ahead.

Yes, thank you very much for taking the questions. Omer, you spoke about integrating with a major compute platform for the new commercial vehicle program and also about being in discussions with NVIDIA for its Hyperion platform. Can you speak more on what work needs to be done in order to be successful with those integrations and then the timeframe that you expect to be integrated with?

some of them in the next month or two and another one later in the year. So the work has already started. This is going to be several years of work that eventually SOP is in the middle of the decade but we already started to work. With NVIDIA the discussion is around several...

programs that are still in the RFQ stage and basically following the RFQ process we hope that we will be able to win this contract. Okay that's helpful thank you and then Univiz has a goal of series production awards with two new customers this year I believe.

How many shots on gold do you have specifically with new customers this year so we can get a sense of the win rate you're expecting? And maybe you can comment a bit more on your confidence on being successful with these awards in 2023 with the two new customers. Thank you.

Sure. So we talked about having more than five RFQs in parallel right now. And we said that there are additional one to two programs that are with existing customers. So you can get a sense of that more than five.

So you get a sense of how many programs is with our new customers. And I believe that we're in a very good position. Generally, I think that what Inobit is offering today is very attractive. Beyond the fact that the product is great, pricing, et cetera, I think the fact that we are already a whole different.

with several programs today is giving us a huge advantage. In talking with these customers, you can see that those are not the first customers who made a decision for the lighter sourcing. The fact that they can rely on us having already customers that are going to make sure that we'll be on time and working with very credible customers like Volkswagen is giving them a lot of confidence.

So I believe that with the potential with the great product that we offer, the price fund that we offer, the lot of experience that we have, guaranteed volume from customers is giving us a huge advantage. So I would say that I'm confident that we will be able to get to those, at least to dual worlds.

Thank you. I'll turn it over.

Thank you. Our next question comes from the live of Jared Maimon from Veronik. Please go ahead. Hey, good morning, guys. Thanks for taking the question. Obviously, congratulations, by the way. Eight of the top 10 global OEMs is very meaningful. That's pretty exciting. Obviously exciting.

is a large silicon platform provider that recently announced an expansion of their supply and development agreement with Volkswagen for level 2 plus and level 3 vehicles.

That same platform provider has been increasingly discussing the need for radar and lidar subsystems in recent years. It sounds like that award is for a vision-only system, but that same provider is in talks with it sounds like all of their customers.

for that system to eventually add LIDAR and RADAR subsystems. So just curious if you can tell us about your work with that platform provider and then how meaningful it could be if they partner with Inovis for that redundant system that they're creating.

So what I can say as we said during our talks earlier, the discussion with Volkswagen in regards to expansion on additional platforms is also with additional compute platforms. Basically any program that will go with the LIDAR will be with Inuit LIDAR.

That means that if the decision to kick off a program based on a mobile platform or that silicon company that will be with innovation and we will work with them together.

Of course it will have a nice impact on additional opportunities that they are part of.

Right, yeah, and obviously a lot of opportunities that they're kind of a part of there, so that's great to hear. And then just on the light commercial vehicle award this morning, so curious if there's any kind of read across here for potential expansion into passenger light vehicles with that OEM, and it sounds like if that's the case, both on this kind of commercial vehicle award and potentially on passenger light vehicle awards.

could be displacing kind of a key competitor. So I guess also just curious, anything you could share on that OEM strategy with LiDAR, for example? Is this an OEM that's similar to Nissan where they're hoping to install LiDAR on all of their vehicles by 2030 or something like that? Yeah, fill out maybe before I answer that, maybe just to comment on why we're not...

of the negotiation which we learned is becoming, I would say, annoying to the customer. That specific customer told us from the beginning that they expect that the marketing element would not be even raised during the process. They told us that some larger companies talk with their marketing team more than they talk with them.

and they asked us not to push for that at this point and we want to respect it. I mean we are we want to act as a traditional as a tier one in this manner and they're expected they expect us to act in that manner. Since this is a program that you will actually see on the road.

in a few months and we didn't see a good reason to push for it. And for sure not to add friction in the process in order to make things move faster.

But as we did last year when we announced on our VW group that eventually without naming them and following that we did, we

That will be possible in the following months. To your question about whether this OEM has experience with the LIDAR and also with passenger vehicles, it's an extension that this is an existing customer that is using our LIDAR already.

on other platforms that they're using for passenger people. Got it, okay. Loud and clear. And then one more for me, if I can. Just on the MRM software, obviously that's pretty exciting. You guys have a big software team. Sounds like this is maybe one of the things that they've been working on. Just curious on an ASP basis, is this kind of, you know.

we're still bolting it, but I think it's a very interesting direction, where the market is going, understanding that they see the LiDAR, the Molyzeeian sensor in order to provide the backup for a computer box that will eventually drive the vehicle for safety.

needs to make a decision on which sensor it wants to rely on. The fact that our sensor has the ability to see very clearly in the different weather conditions and light conditions and with the ability to see lane markings, etc. I think it's a very interesting development that we're seeing.

We hope that will be successful and that it will become a product that can be a loss of offer to others. But in terms of pricing, our other music?? great now.

Thank you. As a reminder, in order to ask a question, please raise your hand using your mobile or ZEPF application and wait for your name to be in M. Our next question comes from the line of the making, Charter G.

J.C. Morgan, please go ahead. Hi, I hope you can hear me. Thank you for taking my question and congrats on the win you announced this morning. I guess a question on that, maybe if you can help us size…

the sort of impact that has on the order book. I know you're waiting to sort of frame up the parameters around it, but any sort of ballpark numbers of how it impacts your overall order book, the magnitude of the wind you're expecting there. And you mentioned three to four LIDARs for vehicle is the opportunity. Are you really thinking about sort of all of them being a similar sort of spec in OVES2 or?

are there more sort of diverse opportunity where you have InnoViz 2 and InnoViz 360 sort of all on the same vehicle? How are you thinking about that? And I have a follow up, thank you. Yeah, sure. So we didn't yet communicate the volume of the program, but it is only based on InnoViz 2. So there's three to four LIDARs per vehicle. And I wish I'd get coined, not to disclose additional figures.

until things maybe will be also shared with the customer because also that's something that we want to be a bit more cautious with in respect to the customer. We said that we will update our older book by the end of the year, so we don't need to talk specifically on every program, any size. Having that, it does reflect a lot of information that our customers not necessarily want us to improve.

Okay, sorry, and quick one for elder here the difference between the NRE bookings and the cash collection guidance is maybe just explain the difference there and does it expand as you're sort of does the gap between cash collection and NRE bookings expand as you expand over time.

Is there any sort of thing to keep in mind there? So the NRE is a very important factor in our business and it's meaningful to our cash flows. So when we talk about NRE booking, usually when we approach a program

We quote for a few tens of millions of dollars of NRE typically and this is for the first part, the development part, the first two to three years of the program as of the wind. Then we have the collection. The collection is done over the period of the development process so that the collection is being done for every book.

$30 million and it goes over three years. It may be collected $10 million every year, just as an example. But it's very meaningful and incremental, each program has additional collection opportunities for each year.

So it's aggregating. And maybe just to add, last year we announced our first win with Volkswagen and we stated that we're acting as a tier one. I know there were lots of concerns whether Inovis will have to increase its burn rate in order to act as a Dutch supplier. I think that the proof behind us now

is the same one. The innovation is two. And ideally the NREs are going to offset the spending that we have and we expect to have more wins this year which will allow us to offset significantly, I would say more significantly, the spending that we have by those NREs. And some of those programs are quite meaningful.

between 40 and 50 million dollars each. Thank you. Thanks for taking my questions.

Thank you. Our next call comes from the line of Andrea Shepherd of Kanthor. Please go ahead.

Good morning or good afternoon guys. Congratulations on the quarter and thanks for taking our question.

I wanted to maybe follow up on the NREs. So just to better understand.

Do we have a sense of when the NREs might be recognized? And just to clarify, if they are recognized as revenue, then is it safe to assume that that would be, that would result in additional revenues than the guidance that's provided? In other words, would that be upside to the revenue guidance?

Thank you. Yeah, newer NRE bookings which fall into, which are paid and we need certain milestones already this year and this potentially is expected might be an outside if recognized as revenue so this might be on top.

In regards to the revenue cadence that you provided, so it looks like Q2 will be similar to Q1, and then with revenue stepping up in Q3 and Q4, I'm wondering, can you give us a little bit more color in terms of the second half of the year? Is it safe to assume a gradual increase in revenue in Q3 and then a meaningful...

impact of reaching the start of production of different programs for this year the shuttle program and BMW so the impact will be there.

There is also a delivery of the last quarter which is related to the new program that we announced today which will equip a large amount of vehicles and there is activity that includes an NRE in that regard in order to expedite the process.

So that's probably the goal. I see, okay, thank you. And maybe one more, if I could squeeze in. In regards to the liquidity, so with the 100 and let's call it 157 million in liquidity, can you remind us, sorry, what is the kind of expected runway with that? I mean, I presume that's sufficient through at least a start of production.

in the second half of the year, but just remind us what the runway expected is with the current liquidity. Thank you. So for this year, we have funding needed to execute our strategy definitely, and this definitely impacts also next year. In terms of...

In terms of our expenses, as Omar mentioned before, we are not planning to increase expenses significantly while we do expect on the back half of this year or the second half of this year to see more and more revenues and more importantly more and more collection from the NREs which will balance off some of our burn.

Wonderful. Okay, thank you guys. Congratulations on the quarter again. I'll pass it on. Thank you. Our next question comes from the line of Kevin Kevin Garrigan from West Park Capital, please go ahead.

Yeah, hey guys, thanks for letting me ask a question and congrats on the announcement this morning. Just a quick clarification. So your pipeline is estimated to be over 20 million LiDAR units in total with NRE bookings in the $20 to $40 million range.

In your press release, you had said that you added a new RFQ to the pipeline. Does this addition kind of change the number of LiDAR units significantly or NRE bookings, or was this RFQ kind of already baked into the estimates?

Maybe just to make sure I understood your question because the pipeline that we have are programs that we are in our final RFQ stages with, which we said that more than half of it is actually at the RFQ stage, which is quite amazing. The total NRE.

opportunity is 150 million to 250 million. I heard you say 20 to 40 million dollars. The 20 to 40 million dollars is just our, I would say, target for the booking that we have this year. And as I said, our programs that are.

beyond that figure for each. So and then your question was whether the new announcement today changes the figure in the pipeline. Is that the question?

So in your press release you had said that you add an additional program to the pipeline by bypassing the RFI stage and moving directly to the RFQ stage. Was that already kind of booked into these numbers? Yeah, yeah, yeah, because those were customers that were in an RFI stage and moved into the RFQ stage.

So they were in the book on that figure earlier. But the RFQ stage is a very meaningful one because it's the last stage of the process. RFI can linger and could be also several times. And RFQ is more focused.

I would say where you down select the different suppliers and you work with generally two to three suppliers in order to conclude the process.

So the figures, the numbers of the different volumes are the same, only that there is a more mature stage in the funnel.

Okay, got it. Thank you for that clarification. I mean, just as a follow up, so you guys are really starting to gain momentum with platforms in the late stages with many platforms. Do you feel comfortable with kind of your current manufacturing capacity or is there kind of any plans to expand capacity at any point?

Of course, by the way, just to maybe add something. With this ad, there were in one or two new programs added to the older book. I don't know how it changes the whole number, but the families continue to grow. The second way is obviously, yes, of course.

We have two production lines today that are building Inovis 1 today. One in Germany, but that's a small scale, I would say, production line. The other bigger one is in the States and it's actually owned by Magna in Michigan. That's the production line that is producing LIDAR for BMW today. Inovis 2

So there we're building it at Inuvis. We have our own NPI line And we're designing the production line for automation That will eventually would provide a significantly higher capacity. The plan of levels is to reach a capacity of 200k per machine and the idea is that we will be able to duplicate those machines in order to support the production line.

to get to a rather flexible volume. So for sure, we eventually will need to support a little bit further toward a more still volume.

It won't be at EUB's facility. It will be based on contract manufacturers that we work with. Our production strategy is possibly different than others. By the time the market would grow for volume...

We want to leverage on existing factories. We don't want to spend money on building factories. And we want to leverage on existing factories by contract manufacturers that can operate our production. So we are designing the production lines, contract manufacturers will operate it for us. I mean, at the time that we were audited by Audi more than a year ago, it was built in a fewer technology project in a De darn West way.** in a year ago, in less than a year, more than a year. pay.

in order for them to nominate us, they had to qualify and feel comfortable with the production line that eventually will serve them. It can't be based on one day we'll have a production line, one day it will be.

automotive grade and one day we will meet all of the requirements they need. We had to point at a production line that can already prove that meets their standards. Obviously, one year and a half ago when we had that process with them, we couldn't show it because we don't have a production line that's in automotive grade and they couldn't nominate us based on that.

So we had two points on an existing facility by a contract point of structure that meets their standards and actually works with them already and they nominated us based on that production line that will serve them eventually. So that production is a high volume production line that will eventually serve Audi and others of our customers and maybe one day we will have our own factory.

as we became our own tier one, possibly one day we'll do the same on the production, but I think it's too early and I think it's not right at this point and we benefit from the fact that we have a simple production process and automated and we don't need to have our own dedicated factory product.

Okay, yeah, that makes a ton of sense. Okay, perfect. Thanks, guys. Thank you. We now have a follow-up question from the line of Jared Maimon from Berenberg. Please go ahead. Hey, thanks for taking the other question, guys. Sorry if there's a little bit of background noise here.

Just a quick one on the model. With the BMW program starting production soon, but when you just get a bit more color on the kind of recent developments and expectations for that agreement, can you just remind us if this is an SOP that coincides with the SOP of new BMW models, or does that scope include some mid-cycle refreshes and then anything you can update us on how many platforms or models that's across now?