Q2 2023 Mobileye Global Inc Earnings Call

Greetings and welcome to mobilize second quarter 23 earnings call at.

At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator our system. During the call. Please press star zero on your telephone keypad.

Minder This conference is being recorded.

It is now my pleasure to turn to.

Your host Dunn golf, Chief Communication Officer.

You may begin.

Hello, everyone and welcome to mobile <unk> second quarter 2023 earnings conference call for the period ending July one 2023. Please.

Please note that today's discussion contains forward looking statements based on the business environment as we currently see it.

Such statements involve risks and involve risks and uncertainties. Please refer to the accompanying press release, which includes additional information on the specific factors that could cause actual results to differ materially.

Additionally, on this call we will refer to both GAAP and non-GAAP figures a reconciliation of GAAP to non-GAAP financial measure is provided in our earnings.

Ernie joined.

Joining us on the call today are better I'm, not so sure Mobile's, CEO and president and Baran Shemesh Rosinante mobilized acting CFO , Thanks, and now I'll turn the call over to onno.

Hello, everyone and thanks for joining our earnings call on the revenue side the quarter was in line to better than our expectation customers were very cautious in the first half of 2023, which led to below normal growth, but we have seen the production scheduled solidify for the second half of the year, where we expect it will 16.

<unk> year over year on much higher volumes in the first half.

Profitability was better than expected with adjusted operating margin of 31%.

Four points versus Q1 at.

At the midpoint of our updated guidance adjusted operating margin for 2023 is 29, 5%.

Nearly three points higher than our original guidance back in January .

The good news on the cost side, it's a combination of macro factors negotiations with customers on engineering reimbursement.

Results of a continuing to refine them to call spending plans in order to heightened efficiency and optimize weekend.

Importantly, despite the lower base of operating expenses in 2023.

Still see opex growth rates in future years moderating to more normal levels compared to 2022.

This 32% growth we originally planned for 2023.

This should support good operating leverage overtime.

Turning to business development for our advanced product portfolio, we continue to move.

More and more Oems towards the design win we can now count nine large established OEM for stake in what we consider advanced stages, so products like supervision on ship to shore.

In most cases, we're not competing against anyone.

Such as about physical testing to convince the OEM of the performance.

Banco makeup assisted establishing what the OEM will have in customizing the system and often negotiating the bundling of different products like supervision and so for close to a August ground vehicle segment and launch date.

Beyond our history of execution, and our ability to improve the capability and physical testing across long distances multiple of all types and condition, what appeals to the Oems is that our product portfolio is scalable cost efficient engineering design efficient and above all displaying leading cutting edge performance.

In terms of scalability, the core technologies of computer vision and extremely efficient IQ a processing platform boosted by Ren mapping bonds. The baselines for solutions that are relevant across all vehicle price points and the wide range of feature sets from I've gone and gone all the way through.

Also in July for Ross.

I will work with Volkswagen Group is a good example, since 2018, all new vehicles across the group most of that I provided.

Uh huh.

This relationship is well into the 2030 <unk>.

Getting into 2021 rent nothing functionality was added to the <unk> platform, leading to a relatively low cost way to provide class leading lane censoring capability among many other function.

Providing an early opportunity for good oriented generates recurring subscription revenue.

The success of this product, which we call cloud enhanced data led to a recent design win pick a random across most of the entire group over time.

Next we have the coopervision design win with Porsche Porsche shares common platforms with other premium brands of the Volkswagen Group.

While not formalized yet we expect coopervision to be adopted by the other premium brands to increase the economies of scale in fact Albion Bentley executive are already on a record expressing excitement to bring cooper present to their product.

An additional benefit of supervision to our OEM customers, you've got greater grids to a consumer level is oxley solution called support.

The surround computer vision abandoned IQ break domain controller on Coopervision also the baseline for support.

Different than the systems is the addition of secondary perception, that's been made up of radar and Lidar, which resulted in significant increase in the meantime between failure, which is obviously key to enabling the Idaho in other words.

The driver of this engagement under a broad set of conditions in real time.

This outperformed the baseline for our mobilized drives mobility as a service position on this front. There has been recent news on our delivery of multiple self driving systems, which have been integrated into Volkswagen bug.

Boston protesting by Volkswagen commercial vehicles in both the U S and Europe .

That's what it's like and has recently demonstrated these vehicles with analysts and media.

After only several months of US working together is a testament to how it bolt this technology already.

The ability to provide efficient and high probability products across all vehicle price point for both consumer owned and mobility as a service solution. All based on the same improvements caused technology is a huge starting point to OEM.

How does the increased flexibility of our technology, we provide tools to Oems, who both joined the system and also develop and deploy their own software.

To differentiate and to enable to ownership of their systems.

For example, with a post supervision program, our soft protein is providing about six times with.

Tunable parameters portion of generic kind of just to create a unique customer experience.

As an enabler for tuning we have designed a formal high level acuity language, which we call driving policy behavior shaping.

That allows one to describe the desire to have a policy at this one way code on top of our Dragon policy operating system.

Then we have IQ kits on top of that to offer them. The spokes software integration within the mobile lifestyle.

Well as the potential to deploy non mobilized functions such as automated parking or driving monitoring on the IQ saving the cost of traditional <unk>.

Final topic before turning it over to Maria is the continued role that rollout of the software to Zika vehicles on the road.

You all know the full supervision capabilities being delivered to Zika vehicles over time through over the air.

Nothing is key because it the complexity of nothing in China means of data collection that can be done through a Chinese partners and as a result data collection started much later than China, North America and Europe .

The map covered and finalize behind those other regions, but it's quickly built OSB.

The core vehicles have had a very sophisticated highway are consistent for many months now.

Until recently, the four point to point navigate on pilot functionality was only available to a fairly small number a bit.

We're very pleased the Zika recently significantly broadens the number of users with highway navigate on pilot and we expect the full rollout to all users within a week initial feedback has been very good.

Weaker assistant is performing much better than other MLP system in terms of our ability to complete and maneuvers without takeover in many difficult situations like construction area Irene mergers in hot and heavy traffic and performing the main changes within tight curves.

Influencers and media have also heightened highlighted the strength of its just unfortunate to competitors.

Focusing on the human like performance of the card.

I'll call them and get the most efficient and capable navigate on pilot.

Great.

Any negative feedback has been around some depth in the math, which will be rapidly built out over the troubling but.

The eyes on hands free market is much more developed in China than other region.

A significant proof point to other OEM customers.

Because the system is outperforming.

This supports the feedback we have gotten from other Oems that have performed benchmark tests.

Their own in a test environment, but proof point from actual production vehicles driven by non engineers is obviously much more problems.

And now I'll turn it to overcome Iran to go over the technical to go over the financial results and guidance in more detail.

Thank you.

Thanks for joining the call everyone before I begin please be aware that all my comments on profitability, we will refer to non-GAAP measurements primary exclusion.

non-GAAP number is amortization of intangible assets, which is mainly related to interest acquisition.

In 2017.

Also exclude stock based compensation.

The Q2 overall revenue was down about 1% year over year.

<unk> IQ revenue also down 1% year over year and higher ASP did not fully offset a modest volume decline we.

We do believe the destocking of inventory tier one customers.

Why did the growth rate in both Q1 and more sharply in Q2 looking ahead to the second half our guidance implies that we will be back to meaningfully outperforming industry production volumes supervision shipments were 10000 units in the quarter.

This was exactly as expected as we noted on the April call Q1 shipments of 25000 were significantly higher than end market volumes.

The impact in Q2 with two feeling fully reduce that inventory build from Q1. This is Charlie cavalry Zika and market volumes and now intentionally low shipments accomplish this goal.

Gross margins were in line with our expectations on a sequential basis I can migrate with stable. The approximate one point increase in Q2 as compared to Q1 was simply due to supervision revenue being a smaller mix of our revenue.

Operating expenses were lower than we expected and this led to strong adjusted operating margin of 31% up about four points versus Q1.

Following three areas accounted for the majority of the lower than expected costs in the quarter are number one on the payroll side the appreciation of the Israeli shekel electric payroll savings.

S dollar terms.

S exchange was approximately 4% favorable to what we had forecast for the quarter number two.

Into unusual, Arizona, and Kansas was delayed from May until the fall of 2023.

The higher facility expenses from the new complex will now begin later in the year than we expected.

Number three we also experienced lower costs for our <unk>.

Of course around mobility and.

We are constantly reviewing our activities to ensure that the product rollout is as efficient as possible in the case of mobility as a service.

We have de emphasized plan to satisfy an IQ five base Neo fleet vehicles for our customers in the near term because simply weren't justified relative to the volumes that were possible on the new based platform the benefit of the new Neo base. However.

However, still exist in terms of continued testing and validation of the software.

In terms of scaling production volume from the mobile I drive some Chinese system. Our go to market strategy is focused on integration of the system into purpose built vehicles from vehicles, including schaeffler hauled on net calls back in commercial vehicles.

We expect these vehicles platforms to begin production in 2025, which also coincides with volume production of the IQ six based compute platform and our software defined imaging imagining writers each important for scanning and mobility as a service business.

In terms of cash flow, we continue to read them, our strategic inventory of IQ chips, which had been largely consumed over the course of 2021 and 2022 doing the supply chain crisis.

Our ability to satisfy demand during rethinking partially by consuming inventory buffer was a big positive rebuilding of the inventory is a very important activity. So that we will be prepared in case of any potential disruptions in the future.

Capital expenditure in the quarter were consistent with our view that the capex should be roughly similar this year versus 2022.

Turning to the guidance revenue is tracking in line with our prior guidance.

Which we are reaffirming today, both for the core IQ business and supervision.

Schedules have become more solid over the last couple of months and customer requests to move volume around have large D C.

Customer orders support the steep ramp of expected volume in second half.

Q3.

Over 10% versus Q2, and Q4 up more than 20% versus Q3 levels.

Supervision.

And market volumes recovered strongly in Q2, which both reduced the inventory built in Q1.

And so maybe if I had the volume.

Trajectory for the second half.

We continue to expect full year shipments because he says without prior guidance.

Q4 will be higher than Q3, given the new vehicle launches and the victory 001 entry into Europe .

Margin for individual product lines are stable we.

Expect coopervision revenue mix to be higher in Q3, and Q4 versus Q2, which will drive some reduction in overall gross margin versus Q2 levels.

Adjusted operating income side, the positive updates to our guidance is related to lower than expected operating expenses year over year growth of Opex is now expected to be around 22% to 23% versus our prior indication of a 30% growth.

Nearly half of the reduction already occurred in Q2.

The rest of the reduction is primarily primarily coming from the following two areas number one to varying degrees.

And he has a lower cost in Q2 like payroll facilities and mobility as a service are generating some saving in the second half of the year as well.

Number two nonrecurring engineering reimbursement in the second half of the year are now expected to be higher than we had originally forecast that.

This tax rate, we continue to expect an effective tax rate in between the 12 and 13% range for the year.

Before we start the Q&A session I'd like to thank cannot Heather so being an amazing mentor to me and for your continued support as an adviser to the finance team and management I'd also like to thank our entire finance team for their professional and Paris. These work since we became a public company.

And we will now take your questions.

Yeah. Thank you for taking the questions I I do have one question and one quick follow up. So you know I think in the prepared remarks, you you had started with a comment that you now have nine <unk> you know.

Tomatos Odm's engaged in terms of chauffeur end and supervision I think last quarter, you talked about having six.

Large Oems kind of deployed looking out into the 2024 timeframe. So I'm I'm just curious if can you walk us through how is that a change how things have changed in terms of your pipeline of design wins on supervision.

Okay. Thank you I'll I'll take this question would.

We noted in the press release that are serious engagements on supervision and chauffeur have expanded versus the beginning of the year in terms of the number of <unk>, yeah, I'm defining serious engagement does wear OEM engineers are fully aligned with mobile line. That's mobilized the right path forward in terms of technology performance and cost whenever you're ready.

Are in production executing an official product the program or in the funded physical concept phase.

Currently this list of Oem's represents about 30 per cent of global volume.

This is very encouraging to go to the vast majority of the rest of the industry remains very open to us.

So for these OEM engagements, we're not competing with another company or technology.

But there are other complexities in the decision making process that have nothing to do with competitive landscape things like go to market and consumer pricing tried to <unk> how to best of line the product into the portfolio launch plan defining roles within the program what to do within internal development the assets.

So we'll level two plus what we call is on hands off in the past two eyes off as well as a new potentially <unk> gigantic automotive it.

With strategic implications and complexities that make the decision making process more complex than a simple Ada say program.

So working in our favor as a competitor.

Competitive pressure, a tesla, China startups, including Zycher pushed the envelope on hands free technology, we have noted and inquiries and seriousness within the Oems over the past one two years and have seen some Oems that appear to be far away from us when our best technology moved rapidly to a line behind over approach. This.

It's all very positive for us so the technology and and then <unk>.

We still see high likelihood of significant design wins announcements and the second half.

Yeah that that's that's very helpful and very interesting and then you know I guess on the other the other phone <unk> I'm just curious as we as we think about seeker jurors are 1009, you've got pollster for you know I I I guess, it sounds like the inventory dynamic and the.

Issue is the cheapest plan to normalize itself out. So you know as we look forward I I guess I'm trying to understand.

<unk>.

What are you in bedding as far as the <unk> for the full year <unk>.

Reiterating the full your guide or what I'm trying to gauge is how do we think about the potential upside if these volumes continue to improve.

Date of views on just vicar and what you've seen to start up into the back half of the year.

Sorry, I think 2023 is very solid in terms of <unk> corrected guidance that we did the last a quarter.

Regarding a 2020 Ford if we provided the longterm outlook for no supervision volumes of C. S. Early January .

And we will make annual updates.

We're not going to update this on an AD hoc basis.

But in order to provide some more of a color.

You know everything is on track with use supervision customers that'd be talked about in January we closed the forest design when an expansion of the supervision platform to other <unk> group plans and that's proceeding as planned.

The pipeline of 40 answered advanced the discussion supervision.

It has it grown versus where it wasn't January .

And in terms of 2024, the number of vehicles models with supervision systems that has not changed we expect to have five vehicles in production by Q1 of 2024 compared to one at the beginning of this year.

Two of those vehicles are sold outside of China.

One thing that has changed is that that worked 300 K unit. The outlook for next year assume that 0001 would sustain it's Q4 2022 demand.

The man's face in China that was the best data points available in January the.

The pace and Q2 of this year for that specific vehicle with about 60000 units lower than the Q4 2022 place on an annualized basis.

So that's consistent with what we assumed in our guidance update last quarter, but that gap is a risk to the 2024 forecast we provide the January .

No I I would point out that they have to register a significant adjustments and expectations from above half hour covering gonna list.

Projecting volume isn't was 220 K range for a 2024.

Yep. Thank you very much.

Thank you.

Our next question comes from Chris Mcnally Evercore. Please go ahead.

[noise] [noise] uhm, 18th at two roadmap questions. If if if I may so first I'll note the supervision rollout in and then I I appreciate the 24 update I think.

I think that's been clear my questions really around maybe you know if if you think about 25.

And it's more not asking them about a target more are you starting to get the visibility on some of these larger more consequential programs on whether they could launch in 25 or 26 or is it just too early at this point in the Oem's themselves are still trying to determine launch timing mode. When when does that sort.

Typical go.

No go where you would sort of have an idea whether twenty-five programs would be significant.

Well, what what I, probably more confident the end of 2026 forecast in 2024.

The business will be much more diverse in 2026th with portion likely several other automakers being added.

As well as significant volume outside China was deeper into other gili either related grant like bolster.

This will reduce the reliance on just a few vehicles and one region like we have now it would lead to less fluctuation in volumes now.

Now all the high probability potential wins that we included an hour or 2026 forecast still look very good in terms of booking design brains and launching over the course of 2045 and early 2026.

But we feel very confident in the overall trajectory of the supervision business business light in terms of big inflection point in volumes around 2026 time for Ya.

We also see the potential for supervision platform spread to more models within OEM customers that all sounds automakers get more bullish on the potential profit making opportunities.

Now this could positively impact our mid term projections. So I think we're very confident on 2026 things look brighter than they looked back in January .

Okay. That's that's great and then the the quick five boys are sort of a delicate one but you know regarding the more aggressive talk of full self driving licensing over the last six months.

Maybe just even very generally you could talk about the recent tone of your your customer conversations with respect to full self driving specifically either good or bad I mean, it could honestly make some oem's move faster to compete with they are offering.

Or maybe some OEM discussions.

Could slow down if they just want to take a free look.

And engaged Tesla any it's just such a a relevant topic anything that you can add on that that told me. If it had any effect on the conversations that you were having them directly.

Alright, I I think that Tesla has mentioned several times in the past about licensing their SSD.

So it's not really a new a new concept.

It's not you do have competitive noise in the market.

And then I I would say that we have lots of respect to what does not have the conflict with S. S D and.

In fact received the rapid development of the significant positive for does it pushes the market to move faster to implement advanced solutions like a supervision.

That specific question of test I'm working with the with Oems.

I think there's one argument that really clarifies the matter I would put it as performance versus cost of assistance you can look at supervision. It's an F. S. D. Like category 11 camera and the rays are a few radars supervision adult so ram the high definition mapping in addition to what they are <unk>.

Today, we have one at 20000 to supervision enabled vehicles in China more than 1000 beta testers.

And the response in terms of a no comparitive analysis is very very good. It's on part of our superior two <unk> two F. S. D that is measured by the rate of intervention the ability to handle complex maneuvers remedies as a stronger differentiation.

But now let's look at the cost the price of his supervision subsystem, including the cameras and radars now the acu software with Red.

Is approximately somewhere in that $2500 range now.

Now if Tesla matches that system Fries, then Oems will be able to offer supervision or S. A D at less than half the price that that <unk> that that's a car owners.

Now this would immediately kind of a like this levels throughout the G appears to be with to reduce gross margins on the vehicle and rely almost solely on the value of the facility.

Creating the growth.

I would also mentioned in this this this bodes well with our OEM customers now there are 400000 emphases on the roads, it's 2019 and mobile I has already 120000.

And approximately two years will surpass the 1 million bar and from there will grow much faster.

That also important differences with respect to access of data something that Tesla is very often highlights as an advantage.

And that's <unk> another key advantage that the Oems recognize so for example at their March Investor Day, just a note that they had the video cachet of 30 Petabytes and.

And we're intending to grow to 200 <unk>.

<unk> video database, it's 400 gigabytes nuts.

Not to mention all the data that we collect for the program. The high definition. The mapping we collected almost 9 billion miles of this type of data in 2022 alone.

<unk> talks about 300 million miles driven today.

So I think offer all when <unk> when you look at what Tesla has a has accomplished it it's a very very big positive for us and.

We believe the supervision is much more optimal solution for our customers.

Both in terms of cost and performance and customization basis.

The all of Tesla the accomplishments actually creates a very positive momentum to to have other Oems wanting to have this type of this category of a solution in their own cars.

I appreciate the Decaf.

Thanks, Chris.

Our next question comes from Joshua <unk>, calling please go ahead.

Hi, Thanks for taking my question and congrats on the results I. Appreciate the color that you gave on it tiger thinking about supervision in 2024 in particular on the Lord of all one production numbers I was curious compared to the original expectations, how you're thinking about I guess the other for that should be meaningfully in the 24 numbers has there been.

Any more I guess incremental handicapping to how you're thinking about those vehicles. Given you know those are our new vehicles that haven't really launched yet with a new technology or are your expectations for those similar to what they were six to nine months ago. Thank you.

Thanks, Josh it's Dan.

I'll take this one so we feel good about the other models right does Zycher all nine for example is performing exactly to the expectations.

That Zeke are provided to us and that we baked into the forecast. There's another vehicle launching right now and then pulse dark or looks to be on track.

To launch so yeah. We're we're feeling good about the expectations, you know and in 2023 as well like relative to.

The revisions that we made last quarter or the seeker 001009 are performing exactly as we expected and you know with some minimal volumes from the additional launches in the back half, we should be able to comfortably get in into our guidance offer that product we feel good about kind of.

You know how the performance is going in 2023 and everything looked solid for 2024, you know except for that that you know that that that gap that we identified versus where where we originally expected back in January .

Got it thanks, Dan and then uhm congrats on a VW in for them more fully autonomous vehicle Uhm I was hoping you could help us understand any god, rather you can give on timing and scope of this project when should we expect this to contribute to ensure a V revenues and is this plan for you know the approximate <unk> red light commercial vehicles.

But at this plan and you see a roadmap for the chauffeur type technology moving into more consumer types of vehicles. Thank you.

The only reason that we have mentioned the Ivy buses because false by getting their own T hours They mentioned.

The Austin <unk>.

Vehicles that shipped to Austin with our technology <unk> tests and also in Germany.

It's still ongoing all the formalities all say actually designed one for this but they are already.

No more than 30 vehicles already in <unk> in testing phase at the at the VW and hopefully this will do the mature into an official is designed wind and hopefully this year.

Thank you.

Alright next question comes from Mark <unk> with Goldman Sachs. Please go ahead.

Yes. Thank you very much for taking the questions somebody can provide more details on your latest outlook on an easy opportunity with mobile I drive I think you mentioned in the prepared remarks, and I'm, putting less emphasis on updating you avail, Neil vehicles, and I'm, making more sense to ramp on purpose fulfilled vehicles in the 2020th 2025 time frame could you share a bit more on what chain.

<unk> that led you to have that view and your confidence on purpose built platform has been ready in 2025.

Sorry, Mark you broke up a little bit richer connection.

Mark Mark Sorry can you can you repeat the question you broke up a little bit.

Yeah of course, and yes, sorry about that hopefully you can hear me a little bit better now and I was hoping for.

For some updated and add the details on your Avi plan with mobile I drive I believe if I heard correctly, you're now putting less emphasis on upfitting, new vehicles, and you mentioned and making more sense too.

Ramp of Aves on purpose filter vehicles in the 2025 timeframe. So I was hoping for a bit more color on which changed.

And led you to have that that new strategy and when your confidence is in having those purpose built vehicles already in there 2025 time frame.

I'll I'll take that.

So back at the C. S. We mentioned that we are working with the platform builder. So you mentioned the shape, Florida, We mentioned Bentler with a software company <unk> was there with another company hold on and we mentioned also a third the company who buy nowadays they made their own press releases, which is false hugging commercial vehicles.

On the I D on the bus.

We're working also with the with another personal a carmaker called the P. Three think we announced that the a while ago with the <unk>.

Mobilized why the 64.

So the focus is on collaborating with a partnering with platform that builders, rather than having our own vehicle and homologate in our own vehicles.

And then performing the entire.

Chain of a <unk>.

Owning vehicles operating vehicles, a customer facing applications.

Applications, we do that through a way to partnerships. So that is the new focus that we announced that gets at the C. S. And then everything is on track, including what you saw in the press a in a few weeks ago by false again.

An actual testing of the busses equipped with or without without with technology.

Okay, Alright, that's helpful. Thanks, and I was hoping you could also share a little bit more of an update on the progress you're making developing your own radar in line are centers as I believe it could be helpful. In supporting your opportunity with both the shift for offering as well as mobile I drive. Thank you.

So the imaging.

The imaging the radars.

We are on track for end of 2024 and Soapy we are already.

Been interacting and engaging with a tier one partner to work together on the offering the <unk> to the market.

And the soundtrack for end of 2024, the FMC W. A ladder is on track for second generation ladders around 827, 2028, the timeframe, where we where we feel that first generation of the numbers vehicles.

Would be served with titles like the <unk> and second generation, where the essentials.

Thank you Mark.

We'll take the next question please Priscilla.

Our next question comes from <unk> <unk> <unk> <unk> research. Please go ahead.

Hey, Thanks, so much for taking my question, maybe just first just thinking about the how to think about the revenue our potential margin upside.

That you could see from <unk> as they are now unlocked and some of these more advanced features and is that something that we would be seen morning into 2024 potentially or could we see some of them even in the back half of this year.

I think that that that potential we'll see and then 2024 because the NLP features.

I'd buy Ram is for the first of six six months is going to be all for the for free to all his legal customers and then we'll start seeing the revenue based on the.

On a certain the attraction we will see we will to revenue so that should take care of 2020. So we're talking about hundreds of dollars per vehicle potential in 2024.

Okay, I understood and then I'm not sure. If this is relevant so so you know feel free to discuss dismissive.

Based on this but.

The current political situation in Israel have any implications for you from a business perspective.

Well you know it's a.

One moment.

It's creating districts, it's great. Thank personal distress and I think also most of mobilized not all of <unk>.

Art cannot experiencing.

Experiencing this kind of distress.

But now when you look at the mobile I employees are all professionals, we haven't seen any effect on efficiency and productivity in the past few months.

Manufacturing anything in Israel, Israel is not a source of revenue for multiple lines. So we don't see any material impact.

For all the political upheaval that is going on in the going on in Israel.

Okay, and just maybe just a quick model and one just how how do you think about the benefit of the engineering reimbursements that you mentioned in the second half and and what's what's driving that increase.

Is it from the drive business or is it is it also from supervision or or the base at S X.

Yeah. So yeah. So it's it's basically coming from from <unk>. So we have in in our programs we handle the enemy we visited.

You know from us.

Then sometimes there's nothing we can unexpected immediately.

My ambition.

Additional benefits.

These reimbursement that mainly relate to that a desk to investment.

For <unk> for 2020.

Yeah, and I think that there was one one smaller item related to mobile I drive that that were infected now as well.

Thanks for Ya Okay.

Next question. Please thank you sure.

Our next question comes from dry can jam.

<unk> said when you're ready. Please go ahead.

Hi, Thanks for taking my question.

Characterize a couple of times in the script about not seen.

Competition and many of the discussions you're having with Oems I'm wondering if you just kind of take a step back and help us understand your view of the competitive landscape not relative to test left with Steve up more to some of the other internal OEM efforts and some of the point solution to the marketplace and how you see the market evolving.

For the next 12 to 24 36 months.

I think what we're talking about competitive landscape of the category of a supervision and the going for going upwards to switch lines off.

The competition comes from like the majority of the composition comes from in House E as elephant.

And we have seen in the past.

A year or so some some form of awakening.

Oh, yeah that that's waiting for this this process of building an inhouse a solution for.

Or a a supervision like type of.

Of a product or even trying to do in the eyes of the product they tend to be somewhere between four to six times more expensive than our redistribution and performance why we don't see advantage.

And and they they also come to the conclusion that it will.

May satisfy a very very slim.

Piece of their business in terms of very high and the model and the key to a big gap in terms of the medium segment. The vehicles and this brings <unk> back to us to talk about the supervision we have.

A large number of serious engagements with the with ODM that in the past or you know very bullish on talking only about in house development.

And we are now around the table talking with them about the supervision products and and beyond beyond the supervision.

So that that that the majority of the competitive landscape. It's not that's not the likes of Nvidia and Qualcomm there are offering the tools for for in House development. So the competitors are the Oems themselves.

I said before we see a certain wave of awakening.

That the.

Thanks.

Yeah, George just to just to follow up with.

With one point you know what what we said specifically was that Oems that represent about 30% of global volume. We're in the theory of engagements were essentially the Zoe <unk> have a line behind our approach and or curling up there there's not.

We we have no competition there you know the rest of the industry is still in the you.

So I I don't want to make the comment that we don't have any competition like I'm not that it's mostly coming from internal effort, but with these 30% that was what the the the comment was really reflecting.

Thank you and just as a follow up you talked about this awakening is there one particular element of what you bring to the table, that's causing that is it.

The red mapping, our assessors or anything that you can point to that's more important than the other component pieces. Thanks.

I'll point, you to wake up the competitive landscape in China. For example, you know you have <unk> you have the the auto you have the <unk> they have products on the road.

And we look at at their products.

They have many more sense or is that a supervision all of them have the front facing <unk> some of them have multiple front facing the <unk>. They have much more confused sometimes somewhere between 10 to 20 times more compute that then we have.

Very very expensive products and when we start doing benchmarking.

Superior in terms of the performance and in almost every aspect.

And and and this this gets exposed to with two other Oems once we started putting vehicles on the road with our technology, where people can test odm's can test that will so the public can start the testing the.

The difference is is becoming visible and it's all about cost horses performance.

Even if they they they have the same performance of the supervision, but the calls for times more than itself competitive. So I I think that this is becoming visible now that things are really in production.

I think that that's exactly right if you're upset that fact of being in production being able to demo the system's over thousands of miles because the <unk> are now existing across U as in Europe .

The the actual cost of the system because it's in production, it's no longer a projected cost. It's it's really an actual cost and then if this pressure from you know from other automakers moving fast like like Tesla in some of the Chinese Oems that that amount is referred to as well. These are all kind of areas, where where we think is driving.

This awakening.

Okay.

Next question. Please <unk>.

Our next question comes from the <unk> <unk> <unk> <unk>. Please go ahead.

Great. Thanks, Hi, everybody I, just the first question going back to the engagement with the the nine large automakers. What can you talk about just the reception thus far the IQ Kid driving policy behavior model and secondly, roughly what what what do you expect these automakers to make their sourcing decisions is is it partially this year next year or maybe.

Mostly this year.

We believe that the sourcing decisions will take a number of months. So somewhere this year beginning of next year first quarter next year that that's the kind of the timeframe that we are <unk> in terms of.

Working together IQ Kid and the behavior shaping language that were built where as we move forward, we're adding more and more capabilities.

Or allowing OEM, two words really have hands onto our system gradually creating this of the platform.

The behaviour shaping the language is is really something very powerful it allows the OEM.

To write actual codes kind of X M. L files that described in great detail.

Lots of lots of aspects of the driving policy that they wish to have and it's all running on top of our driving a policy.

<unk>. So you have a very.

Powerful driving policy that when you test you simply amazed how good it is and now you can shape it.

Do you own your own needs, it's like writing code on top of an operating system. So you don't need to write the operating system in order to innovate and white coat on top of it so.

As as we move forward, we're adding more and more innovations that allow Oems to have serious hands on top of our platform and and this this is a very very good reception.

So that's very helpful. As a quick follow up was hoping you could touch upon the second generation of up the ramp maps. Thank you you're you're developed.

Developing maybe maybe launching in terms of what that does to the journey from <unk> eyes off and it may be what you expect that to roll out.

Alright.

<unk> is a continuous development.

It's not that there was a first generation or second generation our focus it now was expansion in in China.

And the Oh, so activating read maps and your weapon.

But China is the first priority to go where the production vehicles are now being being deployed.

We're adding more and more automation <unk>.

To the rim maps this is necessary in China because.

In order to comply with the Chinese regulations.

Foreign entity cannot even view the data so.

So it makes us more efficient and the.

And the much much better in order to comply with those regulations. So this is our first priority and as we move forward with the <unk> program and additional programs that will come with a 25 26 also posts are coming out at outside of China later in 2024.

The <unk> the priority will start the shifting towards Europe , and the U S to make <unk>.

Prototype for.

For deployment.

That's very helpful. Thank you.

Our next question comes from <unk> wait Oops capital markets. Please go ahead.

Hey, Thanks, I appreciate that I. Appreciate you taking the questions. Two quick lines is there is there any way to.

To provide context it out how we can anticipate the interplay between the mix that you talked about <unk> kind of.

Heading heading into 2024 and the various Opex dynamics you mentioned some cost savings you also mentioned some some costs coming on how.

<unk> those things play together Gridsmart gymnastics, Daniel My Kids, we head into 2024.

And then I have a quick follow up after that thanks.

Okay, Sir I'll pass the cost saving and all of that to <unk>.

And our our <unk> acting fearful and.

So.

Yeah S S for that excellent.

<unk>, so what we said in the past.

2022, and 2023 will be higher than our historical levels. So in terms of percentage of.

Okay I can expenses.

We believe that the 2020 car will be returning to <unk> between 15 and 20%.

So 20 twenty-two was almost 75% growth.

And a regional expectation for 2023, what's around 30 per cent.

Despite the good news.

Plenty twenty-three opex, we stable in 2024 will be close to 20%.

Then 30%.

So.

What.

Would be.

And decided that we are the base.

Is.

Is is decreasing Lee still not going to too ingrained expectations off the trees April .

Very helpful. And then the quick follow up is you would actually you mentioned I believe.

It'd be more of a clarification that K y L. E. M inventory Destocking has had some impact and demands and you had talked about a time frame over which which it will normalize can you can you just clarify the time frame that you'd expect that to normalize and that's it for me. Thanks.

Yeah, Yeah, and about you were talking about supervision inventory or I Q.

I think.

Yeah, the Ikea, yeah, you're talking about strategic and before it got it okay sorry.

Yeah Yeah.

So yeah actually.

<unk> that.

This for the the second part of it and also the first plug it the <unk>.

Actuation between the reporters with what's the big and we see the second half it's much more of a button and the first test. So this this is we think it is the result of our customers coming to the beginning of the year, we'd higher level of inventory.

Maybe resulting from increasing in the pricing.

Banking fees at the beginning of 2023 now.

Now we see schedule on Stabilising in terms of IQ silly for the beginning of the year.

We had requests for shipped off of volumes from 2222323 to <unk>.

You're saying that it's.

<unk> Stabilised, we think that you know.

The last two years, and then very bumpy in terms of.

Fly change prices and production volumes.

<unk>.

Of course, it it's not it's not the same situation as we enter this year and that's when you receive the volume increase and.

Inventory issue Uhm.

We think played around in the first half of the year.

I'll I'll add a bit in terms of the types of inventory inventory that our customers have the other you know.

Piled up in terms.

Perfect.

And that is being and that is Moran said it has a table, but we don't see any any request to push.

Volumes from quarter to quarter, then there is our own inventory that we build six months ahead of <unk> just to make sure that there's another crisis you know knocks on our door.

The <unk> will be prepared and that inventory has been completed.

Does that affect it kind of cough cause we have to buy more either chips than than we normally have to pay a bill.

And the story and that I think we have completed or it's going to be completed so that'll be here yeah did the entity.

Alright, that's all very helpful.

Thank you so much very helpful. Thanks Amanda.

Our next question comes from one let me wake Barclay. Please go ahead.

Hi.

Good afternoon to you. Thank you for taking the questions first.

Clarification on some of the volume commentary that you received as far as it relates to sequential improvements maybe you could just clarify again you know just what the Caden some volume should be over over the next couple of quarters as far as it relates to.

Supervision. Thank you.

Alright. Thanks, Thanks, Dan Yeah, just to clarify what we said in the prepared remarks, we were <unk>, referring to I Q volume.

Being up more than 10% versus Q2 levels, and then Q4 level being more than 25% above Q3.

We should also see some average selling price increases because of supervision, becoming a bigger part of the mix and and that was really not part of the the comment about the volume cause. There's just really wanted to kind of you know support that you know volume.

Expectations volume orders from our customers have been very solid and point too much higher volumes and in the second half of the year.

Mmm great great. Thank you and then uhm wanted to just follow up on the conversation specifically on chauffeur. So it sounds like.

Masters, maybe more of a focus on dedicated platform less retrofitting more partnership et cetera, chauffeur Uhm do you can give us some some sense I knew that was part of the engagement conversation that you that you mentioned, but you know how significant is your spend on show pro right.

Now what is the interest in shape for are your customers are seeing this as sort of an evolution of supervision. So it's very Ah line with the supervision spent or is this a separate stream and it's something that maybe the timing is getting pushed out a bit more and that's playing into the opex commentary.

Oh, it's it's it's very aligned with the supervision you can think of a desktop and incremental addition.

With the supervision supervision is it mostly camera based on some <unk> as an option for example, and the ZIP code is 001, there's a front facing Gregor and the Porsche program. There's also surround the radar.

When you go through a ice off the chauffeur, you're adding some <unk> as well in order to create more of a redundancy accurate and a bit more computers instead of two IQ six that we have in the in the Porsche program. It's <unk>.

Yeah, it's really it's really incremental the heavy lifting is is not so much on the on the developments it's on the validation.

Because you need to connect to prove that you're multi fold time better than human there's the basics it crashes statistics.

And that creates an effort of validation that that's something that we're working together with a with the Oems work ratings hardware in the loop the farm software thousands of.

It's used for each program.

Sample for the S. B 62 for the C. H at 63 for the D. R. S 64, each one having hardware in the loop the farm of many many thousands of the into use in order to run to thousands of hours of of data for for.

Nine.

And this is ongoing and part of our budget part of our <unk> <unk>, it's not something definitely does not dissipate or would come as a surprise in terms of anthrax.

Interaction.

Serious engagements with a number of programs.

I I I believe that at least two of them will be able to with the clothes.

This year.

Great. Thank you.

Mmk next <unk>, we we.

We can only take one more question.

Okay. Our next question comes from Avon John S like Morgan Stanley .

<unk>.

Hi, Thanks, everybody what are your thoughts on the advantages or disadvantages of using <unk>.

Custom silicon versus a G P as such as admin video a 100 provision neural no training curious what mobilized strategy is regarding regarding customer versus G. P. U and is there any effort to to move towards a custom system in a vertically integrated way the way some of your competitors are.

Our system is perfectly integrated we have an IQ chip, but didn't setup fed Gpus, we have our only an hour accelerates our family.

Five different families of the accelerators and that's what makes our chest very efficient.

If you look at the supervision to to occupy 6910001.

On paper the saucer Thompson, the 30 30, something compared to that one.

110th of the tops on paper.

Painting solution I don't see any advantage in terms of performance for the competing system that we have highly efficient solution and and the advantage of a highly efficient solution is cost power consumption.

Signs of David.

Whether you need to you need to call. It power is very important when you are talking about an electric vehicles.

So our approach, which is not that general purpose. The chip like the a 100. It is it's really customized to the type of.

Workload that we need another superpower, both computer vision and driving your policy has great advantages of efficiency.

Thanks.

Hold the follow up thanks.

Thank you so much.

Thanks, everyone for 20 <unk> call, we will talk to your next quarter. Thank you.

He didn't understand my.

That's true.

This concludes today's conference call you may disconnect your lines at that time. Thank you for participation and have a great day.

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[music].

Hello, everyone and welcome to mobilize second quarter 2023 earnings conference call for the period ending July 1st 2023. Please.

Please note that today's discussion contains forward looking statements based on the business environment as we currently see such.

Such statements involved involve risks and uncertainties. Please refer to the accompanying press release, which includes additional information on the specific factors that could cause the actual results to differ materially a.

Additionally, on this call we will refer to both gap and non got figures a reconciliation a gap to non-GAAP financial measures provided are posted furniture.

Running up on the call today are professor unknown <unk>.

Mobile I C E O and president and Maran, Shemesh <unk> mobilized acting CFO , Thanks, and now I'll turn the call over to them now.

Hello, everyone and thanks for joining our earnings call on the revenue side the quarter was in line to better than our expectation customers Rosemary cautious in the first half of 2023, which led to below normal growth, but we have seen the production scheduled solidify for the second half of the year.

We expect the grilled 16% year over you are much higher volumes of the first pet.

Perfect ability was better than expected with adjusted operating margin of one per cent.

Four points worse is Q1 at.

The mid point of all updated guidance adjusted the operating margin for 2023 is 29.5%.

Nearly three points higher than our original guidance back in January .

The good news on the cost side is a combination of macro factors negotiations with customers on engineering reimbursement.

The results of a continuing to refinance a card spending plans in order to heighten efficiency optimize <unk>.

Importantly, despite the lower base of operating expenses Bitcoin twenty-three, we still see opex growth rates in future years motivating to more normal levels compared to 2022.

30 per cent growth, we originally planned for 2023 dishes.

This should support good operating leverage over time.

So I think the business development for our product portfolio will continue to move.

More and more oriented towards the design Wednesday, we can now count Tonight large established all one perfect and what we consider advantages for products like supervision and ship it.

In most cases were not competing against anyone.

She was about physical testing to convince the OEM of the performance that the designer might have persisted establishing what was the oriental haven't customize in the system and often negotiating the bud different products like supervision and shop for a close various brands legal statements and bumped states.

Yonder or history of execution.

<unk> to prove the capability physical testing across long distances multiple types in condition.

[noise] appeal to the Oems is that our product portfolio is scalable cost efficient engineering design efficient and above all this blank.

H performance.

In terms of scalability, the core technologies with computer vision and extremely efficient I Q processing platform boosted by <unk> <unk>.

The baseline for solutions that are relevant across all vehicle price points and the wide range of features tips from <unk> all the way to <unk>.

I will work with folks working group is a good example.

Thousand 18, all new vehicles across the <unk> mobile I provided data and this relationship exists.

Well into the 23rd.

Beginning in 2021 <unk> nothing functionality was added to the N E D platform.

The low cost way to provide class leading link censoring capability.

Many other function and providing an early opportunity for all you have to generate recording subscription revenue.

This product, which we call cloud <unk> data.

A recent design going through Cascade Grandma cause most of the entire group over time.

Next we have the supervision designed when with Bush for sure. It's common platforms with the other premium brands of before plugging group.

Not formalized yet we expect supervision to be adopted by the other premium brands.

<unk> the economies of scale.

In fact I'll be in Bentley executive.

Alright code expressing excitement to bring supervision to their product.

An additional benefit for supervision to our customers.

Great the bridge to a consumer level is offered solution <unk>.

The surround computer vision under <unk> domain controller on supervision also the baseline for support.

The system is the additional secondary prescriptions is made up of <unk>, which results in significant increase in the meantime between failure, which is obviously key to neighborhood.

In other words.

Right, where this engagement and I brought that up conditions animal.

This all performed the baseline for a mobile I drive will be with you as a service solution and this fact that has been recently used.

Delivery of multiple driving systems, which have been integrated into for plug ins I D.

Protesting by phone commercial vehicles and both the U as in Europe .

It felt like it has recently demonstrated these vehicles with analyst a media.

After only several months of us working together.

Q how evolved.

<unk>.

The ability to provide deficient in high probability product, it's across all different price points for both consumer owned and mobility as a service solution all based on the same improvement calls <unk>.

That is the increased flexibility of our technology, we provide tools to orient to both the system and also develop and deploy their own software.

Differentiate enter enabled through ownership of assistance.

For example, with a poor supervision program our software team is providing about six times with.

Parameters approach in Geneva, It's kinda, just a great customer experience.

As an enabler for tuning we have designed a formal high level kidney language, which we called driving policy behavioral shaping.

That allows one to describe the desired budget policy at this one right code on top of dragging policy operating system.

Then we have Ikea get on top of that to offer them. These books software integration within the mobile <unk>.

<unk> has the potential to deploy nonmobile like functions such as like the Archangel driving monitoring on the IQ saving the cost of <unk>.

Final topic before trying to get over to Iran is a continuous raga rollout.

Software to Zico vehicles on the road.

Oh, no the boat supervision capability being delivered to zico vehicles over time too over the area.

Nothing is can you do this the complexity of nothing in trying that means the data collection must be done through Chinese darker.

And as a result data collection started much later in China Most of America.

The map coverage and finalize behind those are the region, but as quickly.

<unk> have had a very sophisticated highly assistant for many months now.

But until recently the four point appointment that'd be great on private functionality with only available to a certain number of data.

We're very pleased with zero recently significantly brought at the number of users with a highlight navigate on pilot.

We expect a full roll out to all users within weeks initial feedback has been very good <unk>.

<unk> our system is performing much better than other NLP systems in terms of the ability to complete maneuvers without takeover of many difficult situations like construction areas.

As in happy in heavy traffic.

Forming the bank changes within type of course.

Influence or is the media have also heightened highlighted the strength of the system. Unfortunately <unk> 31st.

Focusing on the 30th.

I'd like the appointment of the card.

He will call in and get the most efficient and cable bill that'd be <unk>.

Any negative feedback has been around <unk> quoted the map, which will be rapidly broke out over the phone rang.

The eyes on hand free market is much more developed in China than other region.

Significant proof 0.2, other odium customers.

Because the system is outperforming.

This support the feedback we have gotten from other <unk> that have performed benchmark test.

Of their own in a test environment, but proof point from actual production vehicle driven by non engineers is obviously much of a problem.

I now turn it over come around to go over the technical so over the financial results are diagnosed with mortgages.

Thank you and thanks for joining us a call back.

Before I begin please be aware that's all my comments on susceptibility.

<unk> measurements.

Primary exclusion can you hold the line.

<unk> number please I'm recognition of intangible assets, which is mainly related to this acquisition of <unk> 2017, We also excludes cam based compensation.

Starting with you to offer a revenue was down about 1% to you <unk> <unk>.

<unk> revenue also down.

Okay. Thank you over here and hire a speed did not fully office emergency volume decline.

Do believe the Destocking, even tell me that was T. One customers <unk> <unk> <unk> <unk> <unk> looking ahead to the second half. Okay. I don't think that we will be back to meaningfully outperforming industry protection money.

Supervision shipment well 10000 units in the corner.

This was exactly as expected as we noted on the <unk> I can call Q1 shipment of 25000 were significantly higher than and market volumes.

<unk>, what's the feeling totally reduced inventory dance from Q1.

Johnny Cavalry, Zika and mortgage volumes and now intentionally lost shipments accomplished difficult.

<unk>, where in line with our expectations on a sequencer bison I can <unk> with table. The approximate one point increase in Q2 as compared to Q1 will simply due to supervision revenue.

<unk> <unk> <unk>.

Alright, thank expenses were lower than we expected and this led to strong adjusted operating margin, 31% up about 4.2 message Q1.

Following three areas accounted for the majority of the lower than expected cost <unk> number one on the payroll side appreciation.

Let me check electric painless savings newest Darlington the ethics rate was approximately 4% favorable to what we had four cats for the corner.

Ready to move into a new <unk>, Kansas was delayed for Mei M. T M before I'm 2023, yeah.

The highest facility extensive from the new campus will now begin later in the year than we expected.

Number three we also experienced <unk>.

Constantly reviewing our activities to ensure that the product rule it out.

Is it sufficient if possible.

Can't tell them ability as a service we.

We have the interest I plan to satisfy an I Q five base Neil fleet of vehicles for our customers in the near term it caught simply weren't justified relative to the volumes that were possible.

Neil based platform.

Benefits of the new Neil.

However, still exist in terms of continuous testing and validation of this up there.

In terms of scaling production volume from the <unk>.

Drive the dining system I'll go to market strategy focused on integration.

<unk> <unk>, <unk>, <unk>, including Scheffler hold on and call us back in commercial vehicles, we expect <unk> to begin production in 2025, which also coincides with volume production of IQ six based computing platform and have yourself to a defining Megan.

<unk> each appointment for scanning the mobility as a service.

In terms of cash flow, we continuing to read them, our strategic inventory of Icke cheap, which had been largely consumed over the course of 2021 and 2022.

The supply chain crisis.

The ability to satisfy demand during these symptoms.

Actually by consuming even tell me about her was a big classic name rebuilding of the inventory is a very unpleasant activity. So that we will be prepared in case of any potential distractions in the future.

Capital expenditure in the corner convincingly without review the Catholics should be roughly similar D. C University of 2022.

Turning to the guidance revenue is checking the line without trial guidance.

Re assuming today.

For the core IQ business and supervision on I Q schedules have become more solid over the last couple of months and customer request to move volume around large D C.

My orders.

<unk> Oh, the expected volume in the second half.

You have three.

Over a 10% nurses queue to thank you for more than 20 per cent versus Q3 levels.

Mm supervision victory and market volumes recovered strong link you to which bought with youth named <unk> and solidified while you can.

<unk> for the second half.

We continue to expect.

He or she has been consistent without prior guidance.

<unk> will be higher thank you three giving the new vehicle lounges and does it take care of 001 <unk>.

Magenta for individual product lines are stable.

Expect supervision revenue makes to be higher in Q3, and Q4 a nurse's queue to which we have drive some reduction Olga <unk>.

Justin operating income tax the positive update guidance is related to lower than expected operating expenses.

Over your growth of Opex. These now expect it to be around 22% to 23% misses out prior indication of <unk>.

Nearly half of the reduction already cause I didn't <unk>.

The rest of the reaction is primarily primarily coming from the following two areas.

Number one.

The green.

And he has a lower cost thank you to like payroll facilities and mobility as a service generating some saving in the second half of the year as well.

Number two Natalie carrying engineering reimbursements.

Second half of the here and now.

Now expect it to be higher than we had originally forecast that.

This tax rate, we continue to expect an effective tax snake inbetween, the 12 and 13% range.

Before we started the Q&A question I'd like to think and not headaches for being an amazing meant it to me and for him continuing to provide as an advisor to the financing and then I'd also like to thank our entire financing for the professional in Paris, the black essentially become a public company. Thank you.

And we will now take your questions.

Fasciola, we're ready to start the Q&A session.

Excuse me.

Now the conduct a question and answer session because we'd like to ask a question. Please press is Taiwan on your telephone keypad.

Confirmation powered willing to change your line isn't a question Sir.

Practice type two if you would like to remove the question from the queue.

<unk> <unk> <unk> <unk> <unk> <unk> <unk>.

May be necessary to pick up your headset before.

Thank you.

One moment, please while I pull for a question.

Thanks, everybody, it's Dan and jumped in the interest of time, please limit yourself to one question on one follow up please.

Thank you.

Thank you.

And our first question comes from Arrow Rockers Wells Fargo.

Yeah. Thank you for taking the questions I I do have one question and one quick follow up so.

I think in the prepared remarks, you you had started with a comment that you now have nine <unk> estimated Oems engaged in terms of chauffeur and supervision I think last quarter, you talked about having six <unk>.

Large Oems kind of deployed looking out into the 2024 timeframe. So I'm I'm just curious if can you walk us through how is that a change how things have changed in terms of your pipeline of design wins on supervision.

Okay.

Thank you I'll I'll take this question, but we noted in the press release that are serious engagements on supervision and chauffeur have expanded versus the beginning of the year in terms of the number of <unk>.

Defining serious engagement, where OEM engineers are fully aligned with multiply that's mobilize the right path forward in terms of technology performance and cost where we already are in production and executing an official product the program or in the funded physical concept phase.

Currently this list of Oem's represents about 30% of global volume.

This is very encouraging to go to the vast majority of the rest of the industry remains very open to us.

So for these OEM engagements, we're not competing with another company or technology.

But there are other complexities in the decision making process that have nothing to do with competitive landscape things like go to market and consumer pricing strategies, how to best the lines of product into the portfolio launch plan defining roles within the program what to do within internal development the assets.

So we'll level two plus what we call idle hands off in the past two eyes off as well as a new potentially gigantic gigantic automotive it was.

With strategic implications and complexities that make the decision making process more complex than a simple Ada say program.

So working in our favor is the competitive pressure test plan to China startups, including zeger pushed the envelope on hands free technology, we have noted and inquiries and seriousness within the Oems over the past two years and have seen some <unk> that appear to be far away from us when advanced technology.

Rapidly to a line behind over approach.

This is all very positive for us so the technology and and then cost leader.

We still see high likelihood of significant design wins announcements and the second half.

Yep.

That's very helpful and very interesting.

You know I guess on the other the other <unk> I'm just curious as we as we think about seeker jurors are 1009, you've got pollster for.

I guess it sounds like the inventory dynamic and the issue is the cheapest kind of normalized itself out so.

We look forward I guess I'm trying to understand.

What are you in bedding as far as the zeger volumes for the full year.

Reiterating the full year guide or what I'm trying to gauge is how do we think about the potential upside if these volumes continue to improve.

Updated views on just vicar and what you've seen the start up into the back half of the year.

Sorry, I think 2023 is very solid in terms of our very corrected.

Corrected guidance that we did the last quarter.

Gardening 2020 Ford if we provided the longterm outlook for supervision volumes of C. S. Early January .

And we will make annual updates.

Not going to update this on an AD hoc basis.

But in order to provide some more.

A color.

You know everything is on track with use supervision customers.

That'd be talked about in January we closed the forest design Wayne at the expense of the supervision platform to other Volkswagen group plans and that's proceeding as planned.

The pipeline of oriented advanced the discussion supervision you know it has it grown versus where it wasn't January .

And in terms of 2024 with the number of vehicles models with supervision systems that has not changed we expect to have five vehicles in production by Q1 of 2024 compared to one at the beginning of this year two.

Two of those vehicles are sold outside of China.

One thing that has changed is that that worked 300 K unit outlook for next year assume that 0001 would sustain it's Q4 2022 demand.

The man's face in China that was the best data points available in January the.

The pace and Q2 of this year for that specific vehicle was about 60000 units lower than the Q4 2022 place.

Basis.

So that's consistent with what we assumed in our guidance update last quarter, but that gap is a risk to the 2024 forecast we provide the January .

No I I would point out that they have to register a significant adjustments and expectations from above half hour covering on them as well.

Projecting volume event was 220 K range for a 2024.

Yep. Thank you very much.

Thank you.

Alright next question comes from Chris Mcnally Evercore. Please go ahead.

[noise] mm 18th at two roadmap questions. If I may so first one supervision rollout in and then I I appreciate the 24 update I think.

I think that's been clear my questions really around maybe you know if if you think about 25.

And it's more not asking about a target more are you starting to get the visibility on some of these larger more consequential programs on whether they could launch in 25 or 26 or is it just too early at this point in the Oem's themselves are still trying to determine launch timing mode. When when is that.

Typical go.

No go where you would sort of have an idea whether twenty-five programs would be significant.

Well, what we're probably more comfort at the end of 2026 forecast in 2024.

The business will be much more diverse in 2026 was portion likely several other automakers being added.

As well as significant volume outside China was deeper into other gili either related grand like bolstered.

This will reduce the reliance on just a few vehicles and one region like we have now it would lead to lift fluctuation in volumes now.

Now all the high school ability potential wins that we included an hour or 2026 forecast still look very good in terms of booking design wins and launching over the course of 2045 and early 2026th.

But we feel very confident in the overall trajectory of the supervision business.

<unk> light in terms of big inflection point in volumes around 2026 time for Ya.

We also see the potential for supervision, if that's going to spread to more models within OEM customer that also is automakers get more bullish on the potential profit making opportunities.

Now this could positively impact our midterm protection. So I think we're very confident on 2026 things look brighter than they looked back in January .

Okay.

That's great and then the the quick five boys are sort of a delicate one but you know regarding the more aggressive talk of wholesale driving licensing over the last six months Uhm <unk> maybe.

Maybe just even very generally you could talk about the recent tone of your your customer conversations with respect to full self driving specifically either good or bad I mean, it could honestly make some oem's moved faster to compete with they are offering.

Or maybe some OEM discussions.

Could slow down if they just want to take a free look.

Engaged hassled by any such.

Such a.

Relevant topic anything that you can add on you know that that told me if it had any effect on the conversations that you were having them directly.

Alright, I I think that Tesla has mentioned several times in the past about licensing there is a D. So it's not really a new a new concept.

It's not that you do have competitive noise in the market.

And then I will say that we have lots of respect to what does not have the conflict with SSD in.

In fact received the rapid development of the significant positive for does it pushes the market to move faster.

Implement advanced solutions like a supervision.

That specific question of just I'm working with the <unk>.

Oh yeah.

I I think there's one argument that really clarifies the matter I would put it as performance versus cost of assistance you can look at supervision. It's an F. S. D. Like category 11 campgrounds under <unk> supervision is also Ram the high definition mapping in addition to what they are <unk>.

Today, we have one at 20000 to supervision enables vehicles in China more than 1000 beta testers and the response in terms of a no comparitive analysis is very very good at.

One part or superior to way to F. S. D. That's measured by the rate of intervention the ability to handle complex maneuvers Ram is is a stronger differentiation.

But now let's look at the cost of the price of his supervision subsystem, including the cameras and radars. The E C U software with Red is.

Is approximately somewhere in that $2500 range.

Now if Tesla matches that system Fries, then Oems will be able to offer supervision or if it's D at less than half the price of these offers to test a car owners.

Now this would immediately kind of a like this levels throughout the G appears to be with to reduce gross margins on the vehicle and rely almost totally on the value of the facility.

Creating the growth.

I would also mentioned in this this this bodes well without OEM customers now there are 400000 <unk> on the roads, it's 2019 and mobile I has already 120000 and.

And approximately two years will surpass the 1 million bar and from there will grow much faster.

There are also important differences with respect to access of data something that Tesla is very often highlights as an advantage.

And that's <unk> another key advantage.

Oh and the recognized so for example at their March Investor. They just a note that they had the video cachet of 30 Petabytes.

And we're intending to grow to 200 <unk>.

Video database, it's 400 gigabytes nuts.

Not to mention all the data that we collect for the program. The high definition. The mapping we collected almost 9 billion miles of this type of data in 2022 alone.

<unk> talks about 300 million miles driven to date.

So I think all parole when when you look at what <unk> has accomplished it's a very very big positive for US you know.

We believe the supervision is much more optimal solution for our customers.

Both in terms of cost and the performance and customization basis.

And the all of the accomplishments actually creates a very positive momentum to to have other Oems wanting to have this type of this category of a solution in their own cars.

I appreciate the Decaf.

Thanks, Chris.

Our next question comes from Joshua No Shorthair wake people, calling please go ahead.

Hi, Thanks for taking my question and congrats on the results I appreciate the color that you gave on <unk>.

Tired of thinking that supervision in 2024 in particular on the lowered one production numbers I was curious compared to the original expectations, how you're thinking about I guess the other for that should be meaningfully in the 24 numbers has there been any more I guess incremental handicapping to how you're thinking about those vehicles give any of those are our new vehicles.

Really launched yet with a new technology or are your expectations for those similar to what they were six to nine months ago. Thank you.

Thanks, Josh It's Dan I'll I'll take this one so we feel good about the other models right does <unk> Oh nine for example is performing exactly to the expectations.

That Zeke are provided to us and that we baked into the forecast. There's another vehicle launching right now and then pulse dark or looks to be on track.

To launch so yeah, we're feeling good about the expectations, you know and in 2023 as well like relative to.

The revisions that we made last quarter or the Zeke or over 109 are performing exactly as we expected and with some minimal volumes from the additional launches in the back half, we should be able to comfortably.

Get into our guidance offer that product we feel good about kind of you know how the performance is going in 2023 and everything looked solid for 2024.

For that that that that that gap that we identified versus where where we originally expected back in January .

Got it thanks, Dan and then uhm congrats on a VW in for them more fully autonomous vehicle Uhm I was hoping you could help us understand.

Any guard rails, you can give on timing and scope of this project when should we expect this to contribute to ensure a V revenues and is this plan for the press release at a red light commercial vehicles, but at this plan and you see a roadmap for the chauffeur type technology moving into more consumer types of vehicles. Thank you.

The only reason that we have mentioned the Ivy buses because false by getting their own T hours They mentioned.

The Austin.

Vehicles that shipped to Austin with our technology for the test and also in Germany.

It's still ongoing all the formalities, all say actually designed well for this but they are already.

No more than 30 vehicles already in <unk> in testing phase at the at the.

W and hopefully this will mature into an official is designed win.

Hopefully this year.

Thank you.

Our next question comes from Mark Maloney with Goldman Sachs. Please go ahead.

Yes, Sir thank you very much for taking the questions. So we can provide more details on your latest outlook on the Avi opportunity with mobile I drive I think you mentioned in the prepared remarks, and I'm, putting less emphasis on updating you avail, Neil vehicles that I'm, making more sense to ramp on purpose fulfilled vehicles in the 2020 2025 time frame could you share a bit more on what change.

That led you to have that view and your confidence on purpose built platform has been writing of 2025.

Sorry, Mark you broke up a little bit Ricky Nelson.

Mark Mark Sorry can you can you repeat the question you broke up a little bit.

Yeah of course, and yes, sorry about that.

Can hear me a little bit better now.

For some updated and added details on your <unk> plan with mobile I drive I believe if I heard correctly.

Now putting less emphasis on upfitting, new vehicles, and you mentioned it makes more sense to ramp.

Ramp of Aav's on purpose filter vehicles in the 2025 timeframe. So I was hoping for a bit more color on what's changed.

And led you to have that that new strategy and what your confidence is in having those purpose built vehicles already in the 2025 time frame.

I'll I'll take that.

So back at the C. S. We mentioned that we are working with the platform builders, We mentioned a shake Florida, We mentioned Bentler with a software company <unk> with a double company hold on and we mentioned also a sword the company who buy nowadays they made their own press releases, which is false garden commercial vehicles.

On the I D on a diet the birds.

We're working also with the with another personal a carmaker called the P. Three think we announced that the a while ago with the <unk>.

Mobilized why the 64.

The focus is on collaborating with a partnering with platform they builders rather than having our own vehicle and homologate in our own vehicles.

And then performing the entire.

Chain of a.

Owning vehicles operating the codes a customer facing applications.

Applications, we do that through a way to partnerships. So that is the new focus as we announced back at at the D. S. And then everything is on track, including what you saw in the press the in a few weeks ago by false again.

An actual testing of the busses equipped with or without without with technology.

Okay. That's helpful. Thanks, and I was hoping you could also share a little bit more of an update on the progress you're making developing your own radar in line are centers as I believe they could be helpful. In supporting your opportunity with both the shift for offering as well as mobile I drive. Thank you.

So the imaging.

The imaging the radars.

We are on track for end of 2024 S O P.

Already.

Been interacting and engaging with a tier one partner to work together on the offering the <unk> to the market.

The soundtrack for end of 2024 the F. S. T. W. A ladder is on track for second generation ladders around 827, 2028, a timeframe, where we where we feel that first generation of the numbers vehicles.

Would be served with titles like the <unk> and second generation was the essentials.

Thank you Mark.

We'll take the next question please Priscilla.

Our next question comes from <unk> <unk> <unk> <unk> research. Please go ahead.

Hey, Thanks, so much for taking my question, maybe just first just thinking about the how to think about the revenue our potential margin upside.

That you could see from Zeke or as they are now unlocked and some of these more advanced features and is that something that you.

B C morning into 2024, potentially or or could we see somebody that even in the back half of this year.

I think that that that's potentially will see it and then 2024 because the NLP features.

By Ram is for the first of six six months is going to be all for the for free to all the as you go customers and then we'll start seeing the revenue based on on the.

On a sort of an attraction we will see we will do revenue so that should take care of 2024. So we're talking about hundreds of dollars per vehicle potential in 2024.

Okay, I understood and then I'm not sure. If this is relevant so feel free to discuss dismiss it somehow.

Somehow based on this but uhm.

The current political situation in Israel have any implications for you from a business perspective.

Well you know.

It's a.

It.

It it's Crazy district, it's great. Thank personal distress and I think also most of mobilized not all of them on the line. Please.

Are are.

Experiencing this kind of distress.

But now when you look at the mobile I employees are all the professionals, we haven't seen any effect on efficiency and productivity in the past few months.

Manufacturing anything in Israel, Israel is not a source of revenue for a mobilized so we don't see any material impact.

For all the political upheaval that is going on in the going on in Israel.

Okay.

Maybe just a quick model and one just how how do you think about the benefit of the engineering reimbursements that you mentioned in the second half and and what's what's driving that increase.

Is it from the drive business or is it is it also from supervision or or the base eight us. Thanks.

Yeah. So yeah. So it's it's basically coming from <unk>. So we have an email programs.

Visited.

You know so much of a problem.

Sometimes we we cannot expect it to be easy.

Additional benefits.

On these reimbursement that mainly relate to that.

Investment.

For the Itchiness with for 2020.

Yeah, and I think that there was one one smaller item related to mobile I drive that that were inspecting now as well.

Thanks for Ya, Okay, we'll take the next question. Please thank you for it.

Our next question comes from drive.

<unk> 10 o'clock when you're ready. Please go ahead.

Hi, everyone. Thanks for taking my question.

So you characterize a couple of times in the script about not seeing <unk>.

Competition and many of the discussions you are having with Oems I'm wondering if you can just kind of take a step back and help us understand your view of the competitive landscape not relative to touch left with Steve up more to some of the other internal OEM effort and some of the point solution to the marketplace and how you see the market evolving.

For the next 12 to 24 36 months.

I think what we're talking about competitive landscape of the category of say supervision and the going for going upwards to two lines of.

The competition comes from like the majority of the composition comes from in House development of payable.

Oh yeah.

And we have seen in the past year or so some some form of awakening.

Oh, yeah that that's waiting for this this process of building an in house a solution for.

Or a a supervision like type of.

Of a product or even trying to do in the eyes of the product they tend to be somewhere between four to six times more expensive than our way solution and performance why we don't see advantage.

And they they also come to the conclusion that it will.

It's may satisfy a very very slim piece.

Piece of their business in terms of very high and the model and the key to a big gap in terms of the medium segment the vehicles and and this brings <unk> back to us to talk about the supervision we have.

A large number of serious engagements with the with Oems at in the password you know very bullish on talking only about in house development.

And we are now around the table talking with them about the supervision products and and beyond beyond the supervision.

So that that that the majority of the competitive landscape. It's not that's not the likes of Nvidia and Qualcomm there are offering the tools for for in House development. So the competitors are the Oems is themselves and as I said before we see a certain ways of awakening from that the.

Okay.

Yeah, George just to just to follow up with.

With one point, what what we said specifically was that <unk> that represent about 30% of global volume. We're in the theory of engagements were essentially the Zoe <unk> have a line behind our approach and are telling up there there's not.

<unk>, we we have no competition. There you know the rest of the industry is still in the you.

So I I don't want to make a comment that we don't have any competition like I'm not that it's mostly coming from internal effort, but with these 30% that was what the the the comment was really reflecting.

Thank you and just as a follow up you talked about this awakening is there one particular element of what you bring to the table, that's causing that is it.

The red mapping our assessors there anything that you can point to that's more important than the other component pieces. Thanks.

I'll point, you to wake up the competitive landscape in China. For example, you know you'll have <unk> you have the D. Also you have the <unk> products on the road.

And we look at at their products.

They have many more sense or is that a supervision all of them have the <unk>. Some of them have multiple front facing the <unk>. They have much more confused sometimes somewhere between 10 to 20 times more confused than we have.

Very expensive the products and when we start doing benchmarking.

Superior in terms of the performance and in almost every aspect.

And and and this this gets exposed to with two other Oems once we started putting vehicles on the road with our technology, where people can test Orient can test that will so the public can start the testing. The difference is is becoming visible and it's all about cost horses performance.

Even if they they they have the same performance of the supervision, but the calls for times more that it's so competitive so I I think that this is becoming a visible now that things are really in production.

I think that that's exactly right. If it's that that fact of being in production being able to demo the system's over thousands of miles because the <unk> are now existing across U as in Europe .

The actual cost of the system because it's in production, it's no longer a projected cost it's it's really an actual costs.

And then if this pressure from you know from other automakers moving fast like like Tesla in some of the Chinese Oems that that evidence referred to as well. These are all kind of areas, where where we think is driving this awakening.

Okay.

Next question please for solar power.

Our next question comes from the <unk> <unk>.

Kelly what city. Please go ahead.

Great. Thanks, Hi, everybody I, just the first question going back to the engagement with the the nine large automakers. What can you talk about just the reception thus far the IQ Kid driving policy behavior, a model and secondly, roughly what what what do you expect these automakers to make their sourcing decisions.

Harshly this year next year or maybe mostly this year.

We believe that the sourcing decisions will take a number of months. So somewhere this year beginning of next year first quarter next year that kind of the timeframe that we are <unk> in terms of.

Working together IQ kids and on their behaviour shaping language as.

Well as we move forward, we're adding more and more capabilities.

Allowing OEM to where it's really have hands onto our system gradually gracing this of the platform.

Behavior shaping the language is is really something very powerful it allows the OEM.

Right actual codes kind of X M. L files that described in great detail.

Lots of lots of aspect of the driving policy that they wish to have and it's all running on top of our driving a policy.

<unk>. So you have a very.

Powerful driving policy that when you test you simply amazed how good it is and now you can shape it.

You you own your own needs, it's like writing code on top with an operating system. So you don't need to write the operating system in order to innovate and white coat on top of it so.

As we move forward, where I think more and more innovation that allow Oems to have serious hands on top of our platform and this this is a very very good reception.

So that's very helpful. As a quick follow up was hoping you could touch upon the second generation of up the ramp maps. Thank you you're you're developing maybe maybe launching in terms of what that does to the journey from <unk> eyes onto eyes off and it may be what you expect that to roll out.

Alright.

The Grand Masters as a continuous development.

Not that there was a first generation or second generation.

Our focus now was expansion in in China.

And the Oh, so activating the you know the red maps in Europe , and the U S, but but China is the first priority to go with this is where the production vehicles are now being being deployed.

And we are adding more and more automation too though.

The Red maps this is necessary in China because.

In order to comply with the Chinese regulations.

Foreign entity cannot even view the data.

So it makes us more efficient and the and the much much better in order to comply with those regulations. So this is our first priority.

As we move forward with the <unk> program.

Additional programs that will come with a 25 26 also posts are coming out at outside of China later in 2024.

This should get priority will start the shifting towards Europe , and the U S to make their with the <unk>.

Prototypes.

For the appointment.

That's very helpful. Thank you.

Our next question comes from.

<unk> wait Oops capital markets. Please go ahead.

Hey, guys I appreciate that I. Appreciate you taking the questions. Two quick lines is there is there any way to.

My contacts about how we can anticipate the interplay between the mix that you talked about <unk> kind of.

Heading heading into 2024 and the various topics dynamics you mentioned some cost savings you also mentioned some cost cutting on Halloween.

<unk>.

Those things played you guys and girls Smart Genoptix dynamic as we head into 2024.

And then I have a quick follow up after that thanks.

Okay, Sir I'll pass the cost saving and all of that to a <unk> a <unk> yeah.

So.

So yeah, it's S for that actually <unk>, so what we said in the past.

Mm mm.

2022, and 2023 will be higher than restarting your levels.

<unk> of operating expenses.

And we believe that the 2020 car will be returning to <unk> between 15 and 20 per cent. So 20 twenty-two was almost 75%.

In a region unexplained <unk>, so 2023, what's around 30 per cent.

Despite the good news.

2023, Opex, we stable in 2024 will be close to 20%.

<unk>, 30%.

So.

With the.

We are the base.

Is.

Is is decreasing Lee still not going to too ingrained expectations off between safer.

Very helpful. And then the quick follow up is you would actually you mentioned I believe which might be more of a clarification <unk> inventory Destocking has had some impact and demands and you had talked about a time frame over which which it will normalize can you can you just clarify the time frame that you'd expect that to.

Normalized and that's it for me thanks.

Yeah.

About you talking about the supervision inventory or I Q.

Yeah, the Ikea, you're talking about the strategic it before it got it okay sorry.

Yeah Yeah.

So yeah actually.

See that.

Just for the the second part of it and also the first letter.

Fluctuation between reporters with what's the big and we see that second half it's much more of a button and the first test. So this this is we think it as a result, oh, sorry, our customers coming into the beginning of the year, we'd higher level of inventory.

Maybe resulting from increasing the pricing.

Passing fees at the beginning of 2023 now we see schedule a stabilising in terms of IQ silly for the beginning of the year, we had requests for <unk> volumes from 2222323 did you file it.

You're saying that.

It's pretty Stabilised, we think that you know.

The last two years, and then very bumpy in terms of and supply chain prices and production volumes uhm.

Of course, it it's not it's not the same situation as we enter this year.

When you receive the volume increase and.

Inventory issue Oh, you think playing around in the first half of the year, Yeah, I think I'll I'll add a bit in terms of the types of inventory.

Sorry that our customers have the Apple pie.

<unk> in terms of use and that is being and that is Moran said it has stabilized alright, we don't see any any way quest to push.

Oh volumes from quarter to quarter, then there was our own inventory that we build six months ahead of <unk> just to make sure that if another crisis.

Knocks on our door will be.

Will be prepared and that inventory has been completed.

That affected kind of cough cause we have to buy more ice chips than the than we normally have.

And the story and that I think we have the complete is always going to be complete until that'll be here yeah did the end of the.

Alright, that's all very helpful.

Thank you so much very helpful. Thanks Amanda.

Our next question comes from one let me wake Barclay. Please go ahead.

Hi.

Good afternoon to you. Thank you for taking the questions first.

Clarification on some of the volume commentary that you received as far as it relates to sequential improvements maybe you could just clarify again you know just what the Caden some volume should be over over the next couple of quarters.

As far as it relates to supervision. Thank you.

Alright. Thanks, Thanks, Dan Yeah, just to clarify what we said in the prepared remarks that we were referring to I Q volume.

Being up more than 10% versus Q2 levels, and then Q4 level being more than 25 per cent above Q3.

We should also see some average selling price increases because of supervision, becoming a bigger part of the mix and and that was really not part of the the comment about the volume cause. There's just really wanted to kind of you know support that you know volume.

Expectations volume orders from our customers have been very solid and point too much higher volumes and in the second half of the year.

Mmm great great. Thank you and then uhm wanted to just follow up on the conversation specifically on show first so it sounds like a masters maybe more of a focus on dedicated platforms less retrofitting more partnership et cetera.

Chauffeur Uhm, maybe you can give us some sense I knew that was part of the engagement conversation that you that you mentioned, but you know how significant is your spend on chauffeur right now what is the interest in shape for are your customers are seeing this as sort of an evolution.

A supervision so it's very Ah line with the supervision spent or is this a separate stream and it's something that maybe the timing is getting pushed out a bit more and that's playing into the opex commentary.

Oh, it's it's it's very aligned with the supervision you can think of at the stop and incremental addition.

With the supervision supervision is it's mostly camera based on sound radar system as an option for example, 0001, there's a <unk> in the Porsche program. There's also surround the radar.

When you go to a ice off the chauffeur, you're adding some <unk> as well as <unk> redundancy accurate and elevate more computers instead of 226 that we have and the and the poor shape program at <unk>.

It's really it's really incremental the heavy lifting is is not so much on the on the developments it's on the validation.

Because you need to you need to prove that you're most a full time <unk> statistics a crash statistics.

And that creates an effort of validation that that's something that we're working together with a with the Oems work rating hardware in the loop the farm software thousands of.

It's used for each program.

But for the S. B 62 for the C. H S 63 for the D. R. S 64, which one are they are going to look the farm of many many thousands of the into use in order to run without.

Of hours of of data.

Right.

And this is on going again part of our budget part of our <unk> <unk>, it's not something definitely does not dissipate or would come as a surprise in terms of the O E M traction.

Just engagements with a number of programs.

I I I believe that the two of them will be able to with the clothes.

This year.

Great. Thank you.

Mmk next question or <unk>.

We can only take one more question.

Okay. Our next question comes from Avon John S like Morgan Stanley .

Ahead.

Hi, Thanks, everybody what are your thoughts on the advantages or disadvantages of using <unk>.

Custom silicon versus G. P as such as admin video eight 100 provision neural net training curious what mobilized strategy is regarding regarding customer versus G. P. U and is there any effort to to move towards a custom system in a vertically integrated way the way some of your competitors are.

Our system is perfectly integrated we have an IQ chip, but didn't set up a G. P. U's, we have our wrongly I know accelerates our family.

Five different families of the accelerators and that's what makes that were just very efficient.

If you look at the supervision to to occupy 6910001.

On paper the sore throat sources, the 30 30, something compared to that one that 110th of the tops on paper.

Painting, Seleucia and add you don't see any advantage in terms of performance for the competing system. So we have highly efficient solution.

And the advantage of a highly efficient solution is cost power consumption.

Sides of the issue of whether you need to you need to call.

Call. It power is very important when you're talking about an electric a vehicle.

Our approach, which is not a general purpose the chip like the a 100.

It is it's really customized to the type of work.

Workload that we need another superpower, both computer vision and driving a policy has great advantages of efficiency.

Thanks, I'll hold the follow up thanks.

Thank you so much.

And thanks, everyone for joining me earnings call, we will talk to your next quarter. Thank you.