Q1 2024 indie Semiconductor Inc Earnings Call

Operator: Good afternoon, and welcome to Indie Semiconductor's first quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded. I will now turn the call over to Ashish Gupta, Investor Relations. Mr. Gupta, please go ahead.

Good afternoon, and welcome to Indy Semiconductor's first quarter 2024 earnings call.

Operator: At this time all participants are in a listen only mode.

Ashish Gupta: A question and answer session will follow the formal presentation.

Operator: As a reminder, this conference call is being recorded.

Operator: I will now turn the call over to Ashish Gupta Investor Relations. Mr. Gupta. Please go ahead.

Ashish Gupta: Thank you, operator. Good afternoon, and welcome to Indie Semiconductor's first quarter 2024 earnings call. Joining me today are Don McClymont, Indie's co-founder and CEO, and Tom Schiller, Indie's CFO and EVP of Strategy. Don will provide opening remarks and discuss business highlights, followed by Tom's review of Indie's Q1 results and Q2 outlook. Please note that we will be making forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. These statements reflect our views only as of today and should not be relied upon as representative of our views as of any subsequent date.

Ashish Gupta: Thank you operator, good afternoon, and welcome to any Semiconductor's first quarter 2024 earnings call. Joining me today are Dom climate, <unk> co founder and CEO, and Tom Schiller, CFO and EVP of strategy.

Ashish Gupta: <unk> will provide opening remarks and discuss business highlights followed by Tom's review of in these Q1 results and Q2 outlook. Please note that we will be making forward looking statements based on current expectations and assumptions, which are subject to risks and uncertainties.

Ashish Gupta: These statements reflect our views only as of today and should not be relied upon as representative Bob as of any subsequent date. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations for.

Ashish Gupta: These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations, for material risks and other important factors that could affect our financial results. Please review our risk factors in our annual report on Form 10-K for the fiscal year ended December 31, 2023, as well as other public reports filed with the SEC. Finally, the results and guidance discussed today are based on consolidated non-GAAP financial measures such as non-GAAP gross margin, non-GAAP operating income loss, non-GAAP net income loss, and non-GAAP EBITDA.

Ashish Gupta: Material risks and other important factors that could affect our financial results.

Ashish Gupta: Please review our risk factors in our annual report on Form 10-K for the fiscal year ended December 31, 2023, as well as other public reports filed with the SEC.

Ashish Gupta: Finally, the results and guidance discussed today are based on consolidated non-GAAP financial measures such as non-GAAP gross margin non-GAAP operating income loss non-GAAP net income loss and non-GAAP EBITDA.

Ashish Gupta: These metrics may exclude from their corresponding gap measures certain of the following items: depreciation and amortization, share-based compensation, acquisition-related expenses, and inventory cost realignment. Gain or loss from change in fair values, not a cash interest expense, and Income Tax Benefits or Expenses. For a complete reconciliation to GAAP and the definition of the above items, please see our Q1 earnings press release, which was issued in advance of this call. It can be found on our website at www.indiesemi.com. I'll now turn the call over to Donald.

Ashish Gupta: These metrics exclude from its corresponding GAAP measures certain of the following items depreciation and amortization share based compensation.

Donald: Acquisition related expenses inventory cost realignments.

Donald: Gain or loss from change in fair values noncash interest expense.

Donald: And then can tax benefits or expenses for a complete reconciliation to GAAP. The definition for the above items. Please see our Q1 earnings press release, which was issued in advance of this call can be found on our website at www Dot <unk> Dot com.

Donald: I'll now turn the call over to develop.

Donald McClymont: Thanks, Ashish, and welcome, everybody. Indie continues to significantly outpace our industry peer group and is capitalizing on the technology deployment momentum in the auto tech market. Despite the contracting vehicle end market, we produced 29% year-over-year top-line growth to a record first quarter level, albeit slightly below our guidance. Our innovative product portfolio continues to gain design win traction across ADAS, user experience, and electrification applications, positioning Indie to benefit from outsized growth through new program ramps in the second half of this year and over the longer term planning horizons.

Donald: Thanks, Ashish and welcome everybody.

Donald McClymont: India continues to significantly outpace our industry peer group and is capitalizing on technology deployment momentum in the auto Tech market.

Donald McClymont: Despite the contracting vehicle end market, we produced 29% year over year top line growth to a record first quarter level, albeit slightly below our guidance.

Donald McClymont: Our innovative product portfolio continues to gain design win traction across eight us user experience and electrification applications.

Donald McClymont: <unk> indeed to benefit from Outside's growth through new program ramps in the second half of this year and over the long the longer term planning horizon.

Donald McClymont: In the meantime, global automotive markets are facing transitory headwinds, following strong growth in 2022 and 2023. According to S&P Global, in 2022, light vehicle production was up 7% year over year and up 9% in 2023. Well, for 2024, production is expected to be flat to down year over year at under 90 million vehicles. This forecast reflects weaker demand stemming from persistently higher interest rates and inflationary pressures and, in turn, has led to consumers opting for more economical, de-featured car models, which typically carry lower semiconductor content. In particular, the EV market has been exhibiting a precipitous decline in consumer demand of late.

Donald McClymont: In the meantime, global automotive markets are facing transitory headwinds following strong growth in 2022 and 2023.

Donald McClymont: According to S&P global in 2022 light vehicle production was up 7% year over year and up 9% in 2023.

Donald McClymont: Well for 2024 production is expected to be flat to down year over year at under 90 million vehicles.

Donald McClymont: This forecast reflects weaker demand stemming from persistently higher interest rates and inflationary pressures and in turn has led to consumers opting for more economical D featured car models, which typically carry lower semiconductor content.

Donald McClymont: In particular, the EV market has been exhibiting precipitous decline in consumer demand of late.

Donald McClymont: The International Energy Agency, in their 2024 Global EV Outlook, highlighted higher EV costs as one of the top consumer concerns impacting adoption in the current environment. This, coupled with reduced EV subsidies in some markets, range anxiety due to a slower than anticipated rollout of charging infrastructure, and some regulatory relaxation in the phase out of combustion engines, has led to OEMs prioritizing a more affordable ICE and hybrid model in the near term, which tend to contain legacy silicon versus newer, feature-rich EV vehicles.

Donald McClymont: The International Energy agency and their 2024 global EV outlook highlighted higher <unk> cost as one of the top consumer concerns impacting adoption in the current environment.

Donald McClymont: This coupled with reduced EV subsidies in some markets range anxiety due to a slower than anticipated rollout of charging infrastructure and some regulatory relaxation in the phase out of combustion engines.

Donald McClymont: Led to Oems prioritizing a more affordable ICD and hybrid model in the near term, which tend to contain legacy silicon versus newer feature rich E vehicles.

Donald McClymont: This slowdown in global vehicle sales and this shift in mix towards lower silicon content vehicles, coupled with the ongoing inventory correction of our Tier 1 customers, is pressuring the addressable market in real time. Specifically, S&P Mobility recently trimmed their 2024 growth forecast for the automotive semiconductor Dollar Tam to the low single digits, a notable deceleration from the 23% posted in 2023.

Donald McClymont: This slowdown in global vehicle sales and the shift in mix towards lower silicon content vehicles, coupled with the ongoing inventory correction at our tier one customers.

Donald McClymont: Is pressuring the addressable market in real time.

Donald McClymont: Specifically S&P mobility recently trimmed their 2024 growth forecast for the automotive semiconductor dollar Tam to the low single digits.

Donald McClymont: A notable deceleration from the 23% posted in 2023.

Donald McClymont: Nevertheless.

Donald McClymont: [inaudible] We believe much of this short-term negativity has been overblown, given the regulatory imperatives for Level 2 Plus Active Safety, which features heavy indie content, and the recurring fundamental that new functionality has always transitioned from high-end models to lower tiers since the beginning of the automotive industry. Furthermore, our strategic growth trajectory is completely independent of the adoption of electric, hybrid, or internal combustion powertrains. Harking back to Henry Ford, he once said that if he had asked customers what they really wanted, they would have asked him for a faster horse.

Donald McClymont: We believe much of the short term negativity has been overblown given the regulatory imperatives for level two plus active safety.

Donald McClymont: Which features heavy in the content and the recurring fundamental that new functionality is always transition from high end models to lower tiers since the beginning of the automotive industry.

Donald McClymont: Further our strategic growth trajectory is completely independent of the adoption of electric hybrid or internal combustion powertrain.

Donald McClymont: Harking back to Henry Ford.

Donald McClymont: <unk> said that if you ask customers what they really wanted they would've asked him for a faster horse.

Donald McClymont: In any event, the independent team remains intensely focused and continues to drive relentless innovation and win exciting designs across our differentiated product portfolio. The long-term automotive megatrends, including driver safety and automation, best-in-class in-cabin user experiences, and drivetrain electrification, will ultimately foster demand and substantially boost addressable silicon content. In fact, a recent McKinsey report highlighted that automotive semiconductors are expected to have the fastest 10-year growth rate across all semiconductor sectors.

Donald McClymont: In any event the endy team remains intensely focused and continues to drive relentless innovation and when exciting designs across our differentiated product portfolio.

Donald McClymont: The long term automotive megatrends, including driver safety and automation.

Donald McClymont: First in class in cabin user experiences in drivetrain electrification will ultimately foster demand and substantially boost addressable silicon content.

Donald McClymont: In fact, a recent Mckinsey report highlighted the automotive semiconductors are expected to have the fastest 10 year growth rate across all semiconductor sectors and.

Donald McClymont: And given our broad array of products, underlying patent portfolio, and demonstrated scalability, Indie is uniquely positioned to capitalize on this opportunity. To that end, we are executing a highly differentiated sensor fusion strategy to address the growing needs for ADAS solutions, leveraging key sensing technologies such as computer vision, radar, LIDAR, and ultrasound. This multimodal approach creates redundancy and compensates for the limitations of individual sensors, enhancing system robustness and reliability, which is ideal for challenging driving scenarios and changing environments where precision and timely response are safety critical.

Donald McClymont: And given our broad array of products underlying patent portfolio and demonstrated scalability Indy is uniquely positioned to capitalize on this opportunity.

Donald McClymont: To that end, we are executing to our highly differentiated sensor fusion strategy to address the growing needs for Adas solutions, leveraging key sensing technology, such as computer vision radar Lidar and ultrasound.

Donald McClymont: This multimodal approach creates redundancy and compensates for the limitations of individual centers enhancing system robustness and reliability, which is ideal for challenging driving scenarios and changing environments for precision and timely response, our safety critical.

Donald McClymont: We believe this holistic sensor strategy at scale ensures the highest level of driver and passenger protection and effectively meets the diverse and increasingly complex needs of ADAS implementations across the entire spectrum of use cases from basic driver assistance features to higher levels of vehicle automation, as automakers and consumers alike demand ever higher levels of safety and functionality. Sensor Fusion positions Indy to be the partner of choice in delivering these increasingly sophisticated yet cost-effective solutions. Specifically, in terms of our radar initiative, I am pleased to report that we have successfully sampled our highly integrated radar mimic and baseband solutions and are on track to commence our program ramp next year.

Donald McClymont: We believe this holistic sensor strategy at scale ensures the highest level of driver and passenger protection and effectively meets the diverse and increasingly complex needs of Adas implementations across the entire spectrum of use cases from basic driving driver assistance features to higher levels of vehicle automation.

Donald McClymont: As automakers and consumers alike demand ever higher levels of safety and functionality.

Donald McClymont: Sensor fusion positions indeed to be the partner of choice and delivering these increasingly sophisticated yet cost effective solutions.

Donald McClymont: Specifically in terms of our radar initiative I am pleased to report that we have successfully sampled our highly integrated radar mimic in baseband solutions.

Donald McClymont: And they are on track to commence our program ramp next year.

Donald McClymont: On the computer vision front, during the quarter, we secured a major program win that will deploy our technology at Honda for blind spot detection, using both side and rear camera feeds for unprecedented visibility and safety. This will be a multi-model deployment at Honda, with the first vehicles on the road with our technology as soon as next year. Additionally, we recently captured a key camera design with Vallejo, further expanding our vision-based sensing footprint across leading Tier 1 suppliers, and leveraging our image signal processor algorithms, we enabled augmented reality navigational systems within Cadillac's 2025 Escalade models. We anticipate this breakthrough technology will cascade down throughout the GM vehicle lineup over time.

Donald McClymont: On the computer vision front during the quarter, we secured a major program win that will deploy our technology at Honda for blind spot detection, using both side and rear camera feeds for unprecedented visibility and safety.

Donald McClymont: This will be a multimodal deployment at Honda with first vehicles on the road with our technology as soon as next year. Additionally.

Donald McClymont: Additionally, we recently captured a key camera design win Vallejo further expanding our vision based sensing footprint across leading tier one suppliers.

Donald McClymont: And leveraging our image signal processor algorithms, we enabled augmented reality navigational systems within Cadillac's 2025, escalate models and anticipate this breakthrough technology will cascade down throughout the GM vehicle lineup overtime.

Donald McClymont: Again, speaking of GM, we are thrilled to share that our next generation vision processor has been selected for their occupant monitoring system with deployment starting in 2026. This, combined with the North American OEM OMS win that we alluded to last quarter, which I can now share is with Ford and other leading OEMs, including BMW, positions Indy to seize a first mover advantage in this rapidly emerging application. This development validates Indie's best-in-class technology and demonstrates a relentless focus on innovation and product roadmap execution.

Donald McClymont: Again speaking of GM, we are thrilled to share that our next generation vision processor has been selected for their occupant monitoring system with deployment starting in 2026.

Donald McClymont: This combined with the North American OEM, who EMS win that we alluded to last quarter, which I can narrative share is with Ford.

Donald McClymont: And other leading Oems, including BMW position, indeed to seize a first mover advantage in this rapidly emerging application.

Donald McClymont: This development validates and these best in class technology, and demonstrates our relentless focus on innovation and product roadmap execution.

Donald McClymont: In addition, we are preparing to sample our next generation flagship SoCs, the Indie 880 family, for automotive camera applications that will usher in unprecedented features for the automotive industry. This chip can process several cameras simultaneously at ultra-low power, reducing the system burn while addressing the unmet needs of ADAS applications.

Donald McClymont: Further we are preparing to sample our next generation flagship <unk>. So the MD 80 family.

Donald McClymont: For automotive camera applications that will usher in unprecedented features to the automotive industry.

Donald McClymont: This chip can process several camera simultaneously at ultra low power, reducing the system bone, while addressing the unmet needs of Adas applications.

Donald McClymont: At a higher level, in our discussions with leading global OEMs and Tier 1s, it's becoming increasingly clear that the previous one-size-fits-all central compute architecture is fast losing mindshare. The industry needs a more distributed intelligence, zonal processing-enabled approach that can efficiently scale across vehicle segments. By doing more processing at the edge and zones and intelligently fusing and partitioning sensor data, we can dramatically reduce system cost, complexity, and power consumption.

Donald McClymont: At a higher level and our discussions with leading global Oems and tier ones, it's becoming increasingly clear that the previous one size fits all central compute architecture is fast losing mindshare.

Donald McClymont: The industry needs a more distributed intelligence zonal processing enabled approach that can efficiently scale across vehicle segments.

Donald McClymont: By doing more processing at the edge and zones, and intelligently fusing and partitioning sensor data, we can dramatically reduce system costs complexity and power consumption.

Donald McClymont: S&P Mobility sees this distributed ADAS zonal processing as a $2 billion standalone silicon opportunity by 2029, and we intend to lead it. Indie is developing a new generation of distributed processing solutions that will incorporate sensor fusion to meet underserved market needs for cost-effective and power-efficient ADAS functionality up to the level 2 plus segment. In support of this, we recently announced a minority investment in AI processing leader Expedera.

Donald McClymont: S&P mobility sees this distributed Adas zonal processing is a $2 billion standalone silicon opportunity by 2029, and we intend to lead it.

Donald McClymont: India is developing a new generation of distributed processing solutions that will incorporate sensor fusion to meet underserved market needs for cost effective and power efficient Adas functionality up to the level two plus segment and.

Donald McClymont: In support of this we recently announced a minority investment in AI processing leader expert Dara, we intend to integrate custom neural networking processing IP from this exciting collaboration into our future sensor fusion solutions, allowing high performance Adas AI processing to be driven into mass market vehicles.

Donald McClymont: We intend to integrate custom neural networking processing IP from this exciting collaboration into our future sensor fusion solutions, allowing high-performance ADAS AI processing to be driven into mass market vehicles. Scaling ADAS from feature-rich down to entry-level vehicles is an industry fundamental, and one that Indy is firmly committed to realizing. According to the United Nations, 1.19 million people die in car crashes every year around the world. That's 3,260 people per day.

Donald McClymont: Scaling Adas from feature rich down to entry level vehicles, as an industry fundamental and one that India is firmly committed to realizing.

Donald McClymont: According to the United Nations, one $1 9 million people die in car crashes every year around the world at 3260 people per day, that's a staggering human human tool not just for the victims, but for their surviving family members.

Donald McClymont: It's a staggering human toll, not just for the victims, but for their surviving family members. Indie is uniquely positioned to help mitigate and ultimately prevent these tragedies via our cost-effective, innovative ADAS technology. Turning to user experience, we continue to launch new products that enable our customers to redefine the in-cabin experience. Leading automakers such as Audi are leveraging interior and exterior lighting as a core pillar of their brand identity, while consumers are demanding seamless integration and charging of their personal devices.

Donald McClymont: Andy is uniquely positioned to help mitigate and ultimately prevent these tragedies are cost effective innovative Adas technologies.

Donald McClymont: Turning to user experience, we continue to launch new products that enable our customers to redefine the in cabin experience.

Donald McClymont: Leading automakers churches, Audi are leveraging interior and exterior lighting is a core pillar of their brand identity, while consumers are demanding seamless integration and charging of their personal devices.

Donald McClymont: India is leading the way in enabling these experiences with highly integrated solutions that set the standard for performance and efficiency. This quarter, we introduced a new family of smart connectivity solutions that enable high-speed networking of displays and controllers throughout the vehicle with best-in-class signal integrity. In fact, the leading North American e-vehicle OEM is planning to ramp this technology into their mainstream platforms in 2025. At the same time, we've achieved production readiness for our highly integrated mixed signal solution that enables advanced ultrasonic intrusion detection, leveraging piezoelectric transducers, at Volkswagen.

Donald McClymont: India is leading the way in enabling these experiences with highly integrated solutions that set the standard for performance and efficiency.

Donald McClymont: This quarter, we introduced a new family of smart connectivity solutions that enable high speed networking of displays and controllers throughout the vehicle with best in class signal integrity.

Donald McClymont: In fact, a leading north American E vehicle OEM is planning to ramp this technology into their mainstream platforms in 2025.

Donald McClymont: At the same time, we've achieved production readiness for our highly integrated mixed signal solution that enables advanced ultrasonic intrusion detection leveraging Pietro electric transducers.

Donald McClymont: At Volkswagen.

Donald McClymont: In addition, we continue to capture key design wins for our wireless charging technology. During the quarter, a major Tier One selected us for use across multiple vehicle models, and another leading OEM targeted the booming Indian market with production slated to ramp up in 2025. And more recently, I'm delighted to report that we've been awarded Wireless Charging Design Wins in support of a leading North American OEM. Our innovative solutions have been winning across multiple applications within the cabin, including with the newest flagship SU-7 from Xiaomi, which includes more than 10 independent chips, serving as yet another testament to our degree of innovation. In short, we continue to demonstrate tremendous design wind momentum, setting the stage for outside growth. I'll now turn the call over to Tom for a discussion of our Q1 results and Q2 outlook.

Donald McClymont: In addition, we continued to capture key design wins for our wireless charging technology during the quarter a major tier one selected us for use across multiple vehicle models with another leading OEM targeting the booming Indian market with production slated to ramp in 2025.

Tom: And more recently I am delighted to report that we have been awarded wireless charging design wins in support of a leading north American OEM.

Donald McClymont: Our innovative solutions have been winning across multiple applications within the cabin, including with our newest flagship S. Seven from Xiaomi, which includes more than 10 Indy chips, serving as yet another testament to our defeat renovation.

Tom: In short we continue to demonstrate tremendous design win momentum setting the stage for outsized growth.

Thomas S. Schiller: Thanks Donald. Revenue for the first quarter of 2024 was up 29% year-over-year to $52.4 million, though short of our guidance, as Donald outlined. Gross profit was $26.4 million, translating into a 50.3% gross margin, also below plan as a result of an unfavorable product. R&D was $32.6 million, while SG&A was $11 million, bringing total operating expenses to $43.6 million, slightly better than our forecast. In turn, our Q1 operating loss was $17.2 million.

Donald McClymont: I'll now turn the call over to Tom for a discussion of our Q1 results and Q2 outlook.

Thomas S. Schiller: Thanks, Donald revenue for the first quarter of 2024 was up 29% year over year to $52 $4 million short of our guidance as Donald outlined gross profit was $26 4 million translating into a 53% gross margin also below plan as a result of an unfavorable product mix.

Thomas S. Schiller: R&D was $32 6 million, while SG&A was $11 million, bringing total operating expenses to $43 $6 million slightly better than our forecast.

Thomas S. Schiller: In turn our Q1 operating loss was $17 $2 million.

Thomas S. Schiller: With a net interest expense of $500,000 and excluding tax benefits, our net loss was $17.7 million, and we posted a 10 cent loss per share on a base of 186 million shares. Turning to the balance sheet, during the quarter, we generated a $4.2 million working capital benefit, partially offset by $2.3 million in capital expenditures, primarily for expanded RF lab capability and radar production test tooling. Additionally, we initiated an asset-backed revolver, adding $10 million at relatively low-cost capital with zero dilution and enabling us to exit the quarter with $148.2 million in total cash.

Thomas S. Schiller: Net interest expense of 500000, and excluding tax benefits, our net loss was $17 $7 million and we posted a 10% loss per share on a base of 186 million shares.

Thomas S. Schiller: Turning to the balance sheet during the quarter, we generated a $4 $2 million working capital benefit partially offset by $2 $3 million in capital expenditures, primarily for expanded RF lap capability and radar production test tooling.

Thomas S. Schiller: Additionally, we've initiated an asset backed revolver, adding $10 million at a relatively low cost of capital with zero dilution and enabling us to exit the quarter with $148 $2 million in total cash.

Thomas S. Schiller: For the second quarter of 2024, we expect Indy's revenue to be flat to up 5% sequentially, more than offsetting the current market softness stemming from the still ongoing industry-wide inventory rebalance. At the same time, we are planning for gross margin expansion back to the 51 to 52% range from a richer product mix, sequentially flat expenses, and, as a result, a narrower operating loss. For the line, we anticipate $800,000 of net interest expense, with no tax.

Thomas S. Schiller: For the second quarter of 2024, we expect <unk> revenue to be flat to up 5% sequentially more than offsetting the current market softness stemming from the still ongoing industry wide inventory rebalancing at.

Thomas S. Schiller: At the same time, we are planning on gross margin expansion back to the 51% to 52% range.

Thomas S. Schiller: From a richer product mix sequentially flat expenses and as a result of narrower operating loss.

Thomas S. Schiller: Below the line, we anticipate 800000 of net interest expense no taxes.

Thomas S. Schiller: Assuming the midpoint of these ranges and with 191 million shares outstanding, we expect a 9 cent net loss per share in the current quarter. Looking ahead, based on the strength of our new product pipeline and a general market recovery as channel inventory levels normalize, we plan to return to high growth mode in the back half of this year, reaching EBITDA profitability by Q4, and to resume our industry-leading growth trajectory into 2025 and beyond. With that, I'll turn the call back to Donald for his closing comments.

Thomas S. Schiller: Assuming the midpoint of these ranges and with 191 million shares outstanding we expect a <unk> <unk> net loss per share in the current quarter.

Thomas S. Schiller: Looking ahead based on the strength of our new product pipeline and a general market recovery as channel inventory levels normalize we plan to return to high growth mode. In the back half of this year, reaching EBITDA profitability by Q4 and to resume our industry leading growth trajectory into 2025 and beyond.

Thomas S. Schiller: With that I'll turn the call back to Donald for his closing comments. Thanks.

Donald McClymont: Thanks, Tom.

Donald McClymont: In conclusion, while we are navigating some near-term industry headwinds, Indy's strategic outlook continues to improve, driven by our continued design momentum. Our intense focus on innovation, customer service, and operational excellence is truly distinguishing us from our worthy competitors and positions us to sustainably outperform the auto tech market. With cutting-edge solutions spanning ADAS, user experience, and electrification, Indie is at the forefront of the fastest-growing strategic megatrends reshaping the automotive industry, and we're well on our way to building the next great global semiconductor company. That concludes our prepared remarks.

Donald McClymont: In conclusion, while we are navigating some near term industry headwinds in the strategic outlook continues to improve driven by our continued design win momentum our intense focus on innovation customer service and operational excellence is truly distinguishing us from a worthy competitors and positions us to sustainably.

Donald McClymont: Outperform the auto tech market.

Donald McClymont: With current cutting edge solutions spanning Adas user experience in electrification.

Donald McClymont: He is at the forefront of the fastest growing strategic mega trends reshaping the automotive industry.

Donald McClymont: And we're well on our way to building the next great Global semiconductor company.

Donald McClymont: That concludes our prepared remarks.

Ashish Gupta: Thanks, Donald. Before we move to Q&A, I want to be clear that we cannot comment on recent speculative press reports. With that, Operator, let's open the call to questions.

Speaker Change: Thanks, Donald before we move to Q&A I wanted to be clear that we cannot comment on recent speculative press reports.

Speaker Change: Operator, let's open the call up for questions.

Operator: Thank you, ladies and gentlemen. We will now conduct the question and answer session. If you have a question, please press star followed by the number one on your telephone keypad. And if you wish to cancel your request, please press star two. Please limit your time to one main and one follow-up question only.

Speaker Change: Thank you, ladies and gentlemen, we will now conduct the question and answer session.

Operator: You have a question. Please press star followed by the number one on your telephone keypad.

Operator: And if you wish to cancel your request please press star two.

Operator: Please limit your time to a one man and one follow up question only.

Speaker Change: Thank you.

Operator: Thank you. Your first question comes from Suji DeSilva from Roth MKM. Your line is now open.

Speaker Change: Your first question comes from <unk> de Silva from Roth.

Suji DeSilva: Your line is now.

Suji DeSilva: Your line is now open hi.

Suji DeSilva: Hi Donald. Hi Tom.

Suji DeSilva: Hi, Donald Hi, Tom I appreciate that you guided to Q and gave a sense that the second half is going to be a recovery can you talk about Tom how you frame visibility here, perhaps pipeline or some level of kind of backlog measure and.

Suji DeSilva: I appreciate that you guided 2Q and gave a sense that the second half is going to be a recovery. Can you talk about, Tom, how you frame visibility here, perhaps pipeline or some level of some kind of backlog measure? And, you know, you talk about the large programs that we're aware of, the camera and the radar programs in particular, ramping up to 25. What is the ramp in the second half, 24, that can be a tailwind for you to help?

Suji DeSilva: Can you talk about the large programs that were aware of the camera and the radar programs particular ramping in 25, what is the ramp in the second half 'twenty forward that can be a tailwind for you.

Suji DeSilva: To help.

Thomas S. Schiller: Sure, the way we thought about it, it's a number of singles and doubles, it's the products that we outlined, that Donald walked through, a number of new product introductions, so it's not, in other words, it's not dependent upon a general market recovery that would be a tailwind for a general market recovery. But we're certainly excited about those new ranks.

Thomas S. Schiller: Sure, the way we thought about it...

Tom: Sure the way, we thought about it it's a number of singles and doubles its the products that we outlines that Donald walked through a number of new product introductions. So it's not in other words, it's not dependent upon a general market recovery that would be a tailwind for a change.

Thomas S. Schiller: But.

Thomas S. Schiller: We're certainly excited about those new ramps.

Thomas S. Schiller: Okay.

Suji DeSilva: And then, as you look at the camera systems in particular, diving in there, the market has embedded offerings from leaders like Mobileye and so forth and Umbrella and others. I'm wondering what the differentiation for Indy is in that market as you seem to be gaining traction there. And if maybe you can talk, Donald, about edge versus central processing in that conversation.

Thomas S. Schiller: And then as you look at the camera systems in particular diving in there the market has embedded offerings from leaders like mobile ly and so forth then umbrella others I'm wondering what the differentiation for Andy is in that market as you seem to be gaining traction there and if maybe you can talk Donald about edge versus central processing in that conversation.

Donald McClymont: Certainly, that's kind of a longer conversation that we can have, Suji, but yes, I mean, our differentiation has been heavily driven by the fact that our image signal processing technology is simply the best in class, and our products are very much right sized for the exact applications that we're winning at. So we are really getting an unfair share of our wins here just because of the technology deployment that we have with our concept, and OEMs and tier ones alike are saying, yes, that's what we want.

Speaker Change: Certainly as kind of a longer conversation that we can have <unk>, but yes.

Donald McClymont: Our differentiation has been heavily driven by the fact that our image signal processing technology is simply the best in class.

Donald McClymont: And our products are very much right sized for the exact applications that we're winning at so we are really getting an unfair share of our wins here just because of the technology deployment that we have.

Donald McClymont: In terms of central versus distributor to our central versus non controlling.

Donald McClymont: What we're seeing in the market is really that there is a softening of the expectation that everything goes central because has become simply unmanageable in many cases, and whereas maybe a couple of years ago.

Donald McClymont: Might've gotten overnight for suggesting something like that no.

Donald McClymont: To use a phrase I, often use or running into open doors and.

Donald McClymont: We are walking in there with our concept and Oems and tier ones alike are saying, yes, that's what we want and we feel really really super good about that.

Donald McClymont: And we feel really, really, super good about that. And that will encompass the fusion of not only our vision products but also our radar products, LiDAR, and ultrasound as time progresses also. So I mean, in terms of the long term, our story is entirely intact. We're driving a lot of wins, and you can see from just the number of them that have come out the current bumps that we're going through, let's call it an air pocket. We're feeling good about where we are. Okay, thanks, Donald.

Donald McClymont: That will encompass also the.

Donald McClymont: Fusion of not only our vision products, but also our radar products on Lidar and ultrasound as time progresses also so.

Donald McClymont: In terms of the long term.

Donald McClymont: Our story is entirely intact.

Donald McClymont: We are driving a lot of wins and you can see from just a number of them that came out in our prepared remarks.

Donald McClymont: We really have a lot of momentum and a lot of traction. So in spite of the curve.

Donald McClymont: Bumps that were going through let's call it an air pocket.

Donald McClymont: We're feeling feeling good about where we are.

Suji DeSilva: Okay, thanks Donald. Thanks Tom. I'll pass it along.

Speaker Change: Okay. Thanks, Donald Thanks, Tom I'll pass it along.

Operator: Your next question comes from Ross Seymour from Deutsche Bank. Your line is now open.

Suji DeSilva: Your next question comes from Ross Seymore from Deutsche Bank. Your line is now open.

Ross Clark Seymore: Hi guys, thanks for asking questions. Donald, you just talked about, or Tom, you talked about the back half ramp being company specific, not really banking on a rebound. If we talk about the first half, in the last couple quarters, you talked about some pushouts that sounded a little more company specific, not your fault, but nonetheless, a design when that just wasn't going to ramp. Is the weakness you're seeing now something that's market-wide? Or is there something a little more indie specific in 1Q and 2Q?

Ross Seymour: Hey, guys. Thanks for me to ask a question.

Ross Clark Seymore: Why don't you just talked about Tom you talked about the back half ramp being company specific not really banking on a rebound if we talk about the first half.

Ross Clark Seymore: In the last couple of quarters, you talked about some push outs that sounded a little more company specific not your fault, but nonetheless, a design win that just wasn't going to ramp is the weakness you are seeing now is something thats market wide or is there something a little more specific in <unk> and <unk>.

Donald McClymont: No, the weakness is market-wide, and typically, I mean, if you look at our ramp last year, you know we incrementally grew ten million dollars in revenue every quarter on quarter, and that's approximately what we expect in the back half. The new ramps that we have trickle out in Q1, gain a little momentum in Q2, and gain more momentum in Q3 and Q4, and so the early part of the year is typically where we're most susceptible to macro because we don't have offsetting ramps which are really kicking into high gear in order to offset, so first half very much macro, second half very, very much positively company-specific in this case.

Speaker Change: No the weaknesses market wide.

Donald McClymont: And typically if you look at our ramp last year.

Donald McClymont: We incrementally grew $10 million in revenue every quarter on quarter.

Donald McClymont: That's approximately what we expect in the back half.

Donald McClymont: The new ramps that we have trickle out in Q1 gain a little momentum in Q2 and gain more momentum in Q3 and Q4.

Donald McClymont: And so.

Donald McClymont: The early part of the year is typically where were most susceptible to macro because we don't have offsetting ramps, which are really kick into high gear in order to offset so first half very much macro second half very very much positively company specific in this case.

Ross Clark Seymore: Got it. I guess for my follow-up, thinking a little bit longer term, if we think about next year, you rattled off a ton of design wins that will ramp up in the back half of this year and then a bunch more next year, especially with the big radar one. If we put those together, how should we think about in otherwise flats the kind of dollars you could grow, and I know you're not going to measure each one of them individually, but the outgrowth, the supersized growth that you're referring to, give us an idea of what that Well, I mean, people have gotten

Speaker Change: Got it and I guess for my follow up thinking a little bit longer term. If we think about next year you rattled off a ton of design wins that will ramp in the back half of this year and then a bunch more next year, especially with the big radar one.

Ross Clark Seymore: We put those together how should we think about it.

Ross Clark Seymore: Otherwise flat Saar the kind of dollars you could grow and I know you are not.

Ross Clark Seymore: We're going to measure each one of them individually, but the outgrowth to super size growth that you are referring to.

Ross Clark Seymore: Give us an idea of what that means.

Donald McClymont: Well, I mean, people have gotten used to us doubling year-on-year, and that was really driven by wins that we had made as a private company, which turned into an annual revenue run rate through 2023. 2024 for us is a slow growth year, and also a little bit dampened by the macro, but we'll still grow around 20% year-on-year this year. Next year should really return to supersized growth because we're beginning to actually see the design significantly larger in size than the traditional ones that we had originally made when we were private, which we rode the wave of through the first three years as a public company.

Ross Clark Seymore: Well I mean people have gotten used to is doubling year on year and that was really driven by wins that we had made as a private company, which turned into annual revenue run rate through 'twenty three.

Donald McClymont: 24 for us is a slow growth year.

Donald McClymont: And also a little bit dampened by the macro but will still grow around 20% year on year. This year next.

Donald McClymont: Next year should really.

Donald McClymont: Turning to supersize growth because we are beginning to actually see the design wins.

Donald McClymont: But were made in the early stages of us being a public company rolling to the annual revenue streams and they are.

Donald McClymont: Significantly larger in size than the traditional ones that we had originally.

Donald McClymont: When we were private which we we rode the wave of through the first three years as a public company.

Donald McClymont: So we're, I mean, we're super excited about that because just the size is that much bigger. And, you know, we got to sit at the adult table in order to win those designs. And as a result of that, we do expect to turn back to the sort of growth levels in percentage terms that we had in our first three years.

Donald McClymont: So we're I mean, we're super excited about that because the size is that much bigger.

Donald McClymont: We got to sit at the adult table two in order to win those designs.

Donald McClymont: And as a result of that.

Donald McClymont: We do expect to.

Donald McClymont: To turn back to the sort of growth levels in percentage terms that we had in our first three years.

Operator: Your next question comes from Anthony Stoss on behalf of Craig Hallam. Your line is now open.

Donald McClymont: Your next question comes from Anthony Stoss from Craig Hallum. Your line is now open.

Anthony Joseph Stoss: Thanks. Good afternoon, guys.

Anthony Joseph Stoss: Thanks, Good afternoon guys.

Anthony Joseph Stoss: John I was just wanted to follow up on your comment on 2020 for revenue growth of 20%. So that would put you around $2 65, largely Q3 Q4 unchanged I just wanted to confirm that that's what you're expecting.

Anthony Joseph Stoss: Donald, I just want to follow up on your comment on 2024 revenue growth of 20%, so that would put you around 265, largely Q3, Q4 unchanged. I just wanted to confirm that that's what you're expecting. Yeah, that's right.

Anthony Joseph Stoss: Yes, that's right.

Anthony Joseph Stoss: Okay. And then, yeah, I'd love to hear more about your partnership on the AI front. How many interested parties are there within the auto industry right now? When do you think you can start launching some of these products jointly and start booking revenue?

Speaker Change: Okay and then.

Anthony Joseph Stoss: Yes love to hear more about your partnership on the AI front, how many interested parties there are within the auto industry right now when do you think you can start launching some of these products directly and start booking revenue.

Donald McClymont: Well, we have products that are running artificial intelligence-based algorithms today, and we are now adding hardware accelerators to make those guys even better. We do expect that there will be some initial revenue from that towards the end of 2025, with more revenue coming in during 2026. And then the next wave of what we're doing here, beyond the radar and vision winds that we've talked about, which we are excited about, will take us to even the next level beyond that. Well, we'll be beyond that in time. But these are dollar content opportunities that are ranging in the $100 range.

Anthony Joseph Stoss: Well, we have products, which are running.

Donald McClymont: Artificial intelligence based algorithms today, and we're now adding hardware accelerators to make those guys even better.

Donald McClymont: We do expect that there'll be some initial revenue from that.

Donald McClymont: Towards the end of 'twenty, five and ramping in 2006.

Donald McClymont: And then the next wave of what we're doing here.

Donald McClymont: And the <unk>.

Donald McClymont: Radar envisioned wins that we've talked about which we are excited about will take us to even the next level beyond that well will be beyond that in time.

Donald McClymont: But these are dollar content.

Donald McClymont: Opportunities, which are ranging in the $100 range and it's something that we are very excited about for the long term future.

Anthony Joseph Stoss: And it's something that we are very excited about for the long-term future. There will be a huge amount of differentiation that goes not only with the hardware but with the algorithms that we run on top of it. So it is something that we are pursuing very actively, and the market is very ripe for it. The level of interest in it is super high. Likely we'll have the privilege of being able to choose who we work with on this because the interest level is high, and we simply won't have the bandwidth to support the whole market in one go. So we'll pick our partner. Perfect. Thanks.

Anthony Joseph Stoss: There will be huge amount of differentiation that goes not only by the hardware, but with the algorithms that we run on top of it. So it is something that we are.

Anthony Joseph Stoss: Pursuing very actively in the market is very ripe for it.

Anthony Joseph Stoss: The level of interest in it is super high.

Anthony Joseph Stoss: Likely.

Anthony Joseph Stoss: We will have the the the.

Anthony Joseph Stoss: Privilege of being able to choose who we work with on this because the interest level is high and simply we won't have the bandwidth to support the whole market in one go so we will pick our partners.

Anthony Joseph Stoss: Perfect. Thanks a lot, Donald. I appreciate it.

Speaker Change: Perfect. Thanks, a lot Dan I appreciate it.

Operator: Your next question comes from Cody Acree from Benchmark. Your line is now open.

Anthony Joseph Stoss: Your next question comes from Cody Acree from benchmark. Your line is now open.

Cody Grant Acree: Yeah guys, thanks for taking my questions. I guess you can just talk about what's happened over the last 90 days. I think we've all seen from your peers, but I'd like to hear from you what happened with your visibility over the last 90 days. You came into the quarter pretty confident that June was going to be a return to growth with March being the worst. Can you just talk about the deterioration in that visibility?

Cody Grant Acree: Yeah, guys. Thanks for taking my questions.

Cody Grant Acree: If you can just talk about.

Cody Grant Acree: What's happened over the last 90 days I think we've all seen from your peers.

Cody Grant Acree: But I'd like to hear from you whats happened with your visibility over the last 90 days <unk> you came into the quarter pretty confident.

Cody Grant Acree: That June was going to be a return to growth with March being the bottom.

Cody Grant Acree: Can you just talk about the deterioration in that visibility.

Donald McClymont: Well, look, I mean, you know, we've all seen the data points from large e-vehicle manufacturers, China, traditional Detroits, Atlantis, and of course, of course, our peers in the industries. It's, it's tough out there on the main streets, and our demand did deteriorate through the quarter as we'd expected, but it's, it's purely macro. There's nothing fundamental or company-specific.

Speaker Change: Well look I mean, we've all seen the data points from largely vehicle manufacturers, China traditional Detroit's to Atlantis and of course of course, our peers in the industries.

Donald McClymont: It's tough out there on the main streets and.

Donald McClymont: Our demand did deteriorate through the quarters as we had expected.

Donald McClymont: It's purely macro there's nothing fundamental or company specific we havent lost share we havent lost customers.

Cody Grant Acree: We haven't lost share, we haven't lost customers. It's, it's just been a particularly tough reset, and, you know, we under-estimated it a little bit. Certainly, we have to hold our hands up at that point, but I think we feel confident about what we're seeing going forward now. We've tried to be as measured as we possibly can and as conservative as we possibly can in our approach going forward. And really, I think I've always said, we can't really control the weather, and sometimes we get struck by lightning, but that's where we are.

Cody Grant Acree: It's just been.

Cody Grant Acree: Particularly tough reset.

Cody Grant Acree: We under cold a little bit.

Cody Grant Acree: Certainly we have to hold our hands up at that point.

Cody Grant Acree: But.

Cody Grant Acree: I think we feel confident about what we're seeing going forward now we've tried to be as measured as we possibly can and conservative as we possibly can in our guide going forward.

Cody Grant Acree: And really I think I've always said we can.

Cody Grant Acree: Can't really control the weather and sometimes we get struck by lightning, but that's where we are.

Cody Grant Acree: I guess, what has happened to your bookings or your backlog over the last 90 days? How has your firm's backlog looked?

Speaker Change: I guess, what has happened to your bookings or your backlog.

Speaker Change: For the last 90 days.

Speaker Change: Has your.

Speaker Change: Firm backlog looked.

Donald McClymont: Yeah, I mean, integrated over the next few quarters, it's certainly looking like it's on plan. You know, we had some relatively small movements in and out of Q1, which is, at the end of the day, these are, you know, all things being equal, relatively small absolute numbers of dollars that need to move in order for us to have a slight problem.

Cody Grant Acree: Yes.

Speaker Change: Integrated over the next few quarters.

Donald McClymont: It's certainly looking like it's on plan.

Donald McClymont: We had some relatively small movements in and out.

Donald McClymont: Out of Q1, which is at the end of the day. These are.

Donald McClymont: All things being equal relatively small absolute numbers of dollars that need to move in order for us to have.

Speaker Change: I have a slight problem.

Donald McClymont: So we're seeing it picking up in the second half. We know it's picking up in the second half because of the NPIs that we're staged for in the second half. So from our perspective, we're largely on plan.

Donald McClymont: So we're seeing it picking up in the second half we know what is picking up in the second half because of the ntis that are stage four in the second half so from our perspective.

Donald McClymont: We're largely on plan.

Operator: Your next question comes from John Tan-Wan-Tang from CJAS Securities. Your line is now open.

Donald McClymont: Your next question comes from Jonathan <unk>, Zhang from CJS Securities. Your line is now open.

John Tan-Wan-Tang: Hi, thanks for taking my question. I was going to ask about the scale of the design wins you landed in the quarter, if they're comparable to some of the bigger ones you've seen in the past, or they're more, you know, moderate-sized.

Jonathan E. Tanwanteng: Hi, Thanks for taking my questions.

John Tan-Wan-Tang: I was going to ask about the scale of the design wins you landed in the quarter is comparable to some of the bigger ones you've seen in the past.

Jonathan E. Tanwanteng: Or are they more.

Speaker Change: Moderate size.

Donald McClymont: They are very significant. They aren't in danger of taking the record for the number one spot in terms of our historical design wind size, but they are significant. They are going to drive significant annual revenue. So you can assume they're somewhere in between our world record and significantly higher than maybe our traditional singles and doubles, which have driven the revenue to date.

Jonathan E. Tanwanteng: There are very significant.

Donald McClymont: They.

Donald McClymont: There aren't in danger of taking the record for the number one spot in terms of our historical design win size, but they are significant and they are going to drive significant annual revenue.

Donald McClymont: So you can assume there.

Donald McClymont: Somewhere in between our.

Donald McClymont: Our world record and significantly higher than maybe our traditional singles and doubles, which have driven the revenue to date and John will outline that and in some more detail.

Donald McClymont: And, John, we'll outline that in some more detail in the fall quarter when we reveal our strategic backlog update.

Donald McClymont: The fourth quarter, when we reveal our strategic backlog update.

John Tan-Wan-Tang: Okay, great. Thank you.

Donald McClymont: Could you also give us an idea of how much more conservatism or confidence you have in your guidance these days, just given the last few quarters have been a little bit harder to predict? Are you adding more cushion? Or do you feel better about where you're going to be in the next couple of quarters and years? Yeah, I think I think we do feel more confident.

Speaker Change: Okay. Great. Thank you could you also give us an idea of how much more conservatism or confidence you have in your guidance. These days just given the last few quarters, and then a little bit harder to predict.

Donald McClymont: Are you, adding more cushion or do you feel better about.

Donald McClymont: Where you are going to be in the next couple of quarters and years.

Donald McClymont: Yeah, I think we do feel more confident. We certainly did add more cushion to it.

Donald McClymont: Yes, I think I think we do feel more confident we certainly did add more cushion to it.

Donald McClymont: Our plan is to make sure that we provide the market with extreme predictability. We've had a good record to this date since we went public. We are going through a period of extreme turbulence in our particular vertical, but I think we feel pretty good about where we are going forward.

Donald McClymont: Our plan is to make sure that we provide the market with extreme predictability.

Donald McClymont: We've had a good record to this date.

Donald McClymont: Since we came public.

Donald McClymont: We are going through a period of extreme turbulence in our particular vertical but I think we feel pretty good about where we are going forward.

Speaker Change: Okay, great. Thank you.

Donald McClymont: There are no further questions at this time. Donald, please proceed with your closing remarks.

Speaker Change: There are no further questions at this time Donald.

Donald McClymont: Please proceed with your closing remarks.

Donald McClymont: Well, thanks everybody for joining us today and thanks for your insightful questions, and we'll look forward to seeing you at the upcoming investor conferences.

Donald McClymont: Well, thanks, everybody for joining us today and thanks for your insightful questions and we look forward to seeing you at the upcoming investor conferences.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.