Q2 2024 indie Semiconductor Inc Earnings Call

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Operator: Good afternoon, and welcome to Indie Semiconductor's second 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.

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Speaker Change: Good afternoon and welcome to Indie Semi Conductor's second 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.

Speaker Change: 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.

Ashish Gupta: Thank you, operator. Good afternoon, and welcome to Indie Semiconductor's second quarter 2024 earnings call. Joining me today are Donald McClymont, Indie's co-founder and CEO, Roger Ball, Indie's acting CFO and Chief Accounting Officer, and Mark Tindall, Head of Corporate Development and Investor Relations. As a reminder, our CFO, Tom Schiller, is currently recuperating while on medical leave of absence.

Ashish Gupta: Thank you, operator. Good afternoon and welcome to Indie Semiconductor's second quarter 2024 earnings call.

Speaker Change: Joining me today are Donald McClymont, and he's co-founder and CEO, Roger Ball, Indies Acting, CFO, and Chief Accounting Officer, and Mark Tindall out of corporate development and investor relations.

Speaker Change: As a reminder, our CFO , Tom Schiller, is currently recuperating while on medical leave of absence. Donald will provide opening remarks and discuss business highlights, followed by Roger's review of Indie's Q2 results and Q3 outlook.

Ashish Gupta: Dowell will provide opening remarks and discuss business highlights, followed by Roger's review of Indie's Q2 results and Q3 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.

Speaker Change: Please note that we will be making forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties.

Speaker Change: These statements reflect our views only as a change, not be relied upon as representatives about views as of any subsequent dates. These statements are subject to a variety of risks and uncertainties. The good kind of actual results are different materials from expectations.

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 can 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, non-GAAP net income loss, and non-GAAP EBITDA.

Speaker Change: For material risks and other important factors that affect our financial results, please review our risk factors in our annual report on the form of sentient for the fiscal year and to December 31, 2020 rates, as well as other public reports filed with BSCC.

Speaker Change: 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 items for the following items: Appreciation and Amortization, Sharecase Compensation, and Acquisition Related Expenses. Gain or Loss from Change in Fair Value, Non-Cash Interest Expense, and Income Tax Benefits or Expenses. For complete reconciliation, the gap, and the definitions for the above items, please see our Q2 earnings press release, which was issued in advance of this call and can be found on our website at www.indiesemi.com. I'm now turning the call over to Donald.

Speaker Change: He's an electric sling, exclude from its corresponding gap measures certain by the following items. The appreciation and amazement, service compensation, acquisition and weight expenses.

Speaker Change: Gain or loss from change in fair values, non-cash interest expense, and income tax benefits or expenses.

Speaker Change: For complete reconciliation, the gap, and the definition for the above items, please see our Q2 earnings press release, which was issued in advance of this call and can be found on our website at www.indiesemi.com. I'll now turn the call over to Donald.

Donald McClymont: Thanks, Ashish, and welcome, everybody. I want to start by welcoming Mark Tindall, our new Head of Corporate Development and Investor Relations, to Indeed. Mark is looking forward to meeting all of you over the next month.

Donald: Thanks, Ashish, and welcome, everybody.

Donald: I want to start by welcoming Mark Tindall, our new head of corporate development and best relations to Andy.

Donald McClymont: Let me first briefly cover our revenue performance in the context of the overall automotive market environment before focusing on the technical and business achievements. During the second quarter of 2024, Indie achieved total revenue of $52.4 million, coming in flat from Q1 at the lower end of our previous outlook. Our results were generally in line with the automotive market, where unfavorable global macroeconomic conditions impacted vehicle production, with consensus forecasts currently projecting approximately 88 million units for 2024 in comparison to just over 90 million units in 2021.

Speaker Change: Mark is looking forward to meeting all of you over the next months.

Speaker Change: Let me first briefly cover our revenue performance in the context of the overall automotive market environment before focusing on the technical and business achievements.

Speaker Change: During the second quarter of 2024, Indie achieved total revenue of $52.4 million, coming in flat from Q1 at the lower end of our previous outlook.

Speaker Change: Our results were generally in line with the automotive market where unfavorable global macro-economic conditions impact the vehicle production. With consensus forecasts currently projecting approximate the 88 million units for 2024, in comparison to just over 90 million units in 2023.

Donald McClymont: Additionally, given lower consumer pricing thresholds for vehicle purchases and reduced global electric vehicle stimulus programs, Automotive OEMs have been prioritizing de-featured vehicles, which has led to reduced semiconductor content. These factors, coupled with ongoing inventory consumption, which persisted in the second quarter, negatively impacted our revenue against our prior outlook.

Speaker Change: Additionally, given lower consumer pricing thresholds for vehicle purchases and reduced global electric vehicle stimulus programs, automotive OEMs have been prioritizing de-featured vehicles, which has led to reduced semiconductor content.

Speaker Change: These factors, coupled with ongoing inventory consumption, which persisted in the second quarter, negatively impacted our revenue against our prior outlook.

Donald McClymont: We now anticipate this trend will spill over into the second half of 2024, as reflected in most recent analyst estimates, which project essentially flat to low single-digit negative growth for the automotive semiconductor industry in 2024. Despite these headwinds, we believe that with our new product launches and current customer status, Indie is poised to deliver modest growth in the third quarter, going above the market to reach outsized growth levels as we move through the second half of 2024 and into 2025.

Speaker Change: We now anticipate this trend will spill over to the second half of 2024 as reflected in most recent analyst estimates, which project essentially flat to low single digit negative growth for the automotive semiconductor industry in 2024.

Speaker Change: Despite these headwins, we believe that where there are new product launches and current customer status, India's price to deliver modest growth in the third quarter, growing above the market to reach outside growth levels as we move through the second half of 2024 and into 2025.

Donald McClymont: Now, Looking closely at our business progress in the second quarter, in the ADAS sector, I want to point out that Indie is unique and differentiates itself from its competitors as being the only chip vendor offering all four of the key ADAS sensors, radar, vision, LiDAR, and ultrasound, which gives us the unique ability to offer any combination of these sensors. This will enable the scalable ADAS processing architectures that car makers are demanding for deployment across their portfolio.

Speaker Change: Now.

Speaker Change: Looking closely at our business progress in the second quarter, in the ADAS sector I want to point out that Indie is unique and differentiates itself from its competitors as being the only chip vendor offering all four of the key ADAS sensors, radar, vision, lidar and ultrasound.

Speaker Change: which gives us the unique ability to offer any combination of these sensors.

Speaker Change: This will enable the scalable ADAS processing architectures that carmakers are demanding for deployment across their portfolio.

Donald McClymont: This gives us the ability to fuse multiple modalities into a single chipset solution. We are now in discussions with key OEMs to define the specifications for our next generation AI-centric sensor fusion products. I will continue to keep you updated in the upcoming quarters as we progress.

Speaker Change: This gives us the ability to fuse multiple modalities into a single chipset solution. We are now in discussions with key OEMs to define the specifications for our next generation AI-centric sensor fusion products. I will continue to keep you updated in the upcoming quarters as we progress.

Donald McClymont: Starting with our flagship 77 gigahertz radar program and since sampling our millimeter wave and DSP products to our lead customer, I'm extremely happy to now share that we have achieved the important milestone of full functional verification in our labs, including the all-important range Doppler performance, which surpasses current industry benchmarks. This technical evaluation has also been completed by our lead customer, and the radar is currently being tested in live automotive application environments, which is the final stage of testing before volume production.

Speaker Change: Starting with our flagship 77 gigahertz radar program.

Speaker Change: Since sampling our mmWave and DSP products to our lead customer, I am extremely happy to now share that we have achieved the important milestone of full functional verification in our labs, including the all-important range Doppler performance, which surpasses current industry benchmarks.

Speaker Change: This technical evaluation has also been completed by early customer and the radar is currently being tested in live automotive application environments, which is the final stage of testing before volume production.

Donald McClymont: I want to stress here that these advancements keep Indie firmly on track to bring this radar program to production within the 2025 timescales previously communicated. Furthermore, samples of our 120 GHz radar front-end IC, developed for high-resolution in-cabin vital signs monitoring and vehicle dynamics sensing, have been received in our labs, and I'm delighted that functionality for this challenging RF application has also been validated.

Speaker Change: I want to stress here these advancements keep Indy firmly on track to bring this radar program to production within the 2025 timescales previously communicated.

Speaker Change: Furthermore, samples of our 120 GHz radar front-end IC, developed for high-resolution in-cabin vital signs monitoring and vehicle dynamics sensing, have been received in our labs and I am delighted that functionality for this challenging RF application has also been validated.

Donald McClymont: This demonstrates Indie's clear leadership in the market for next-generation radar solutions, which is a cornerstone of Indie's high growth trajectory for 2025 and beyond. Moving on, vision-based sensing in particular has received key industry focus recently as a result of two major regulatory directives, which will play nicely in Indie's favor. First, in the US, the Road Safety Regulator, the National Highways Traffic Safety Administration, or NHTSA, announced that Automatic Emergency Braking, or AEB, would become mandatory for all passenger cars and light trucks in 2029.

Speaker Change: This demonstrates Indies clearly to ship in the market for next generation radar solutions, which is a cornerstone of Indies' high growth trajectory for 2025 and beyond.

Speaker Change: Moving on, vision-based sensing in particular has received key industry focus recently as a result of two major regulatory directives which will play nicely in Indy's favor.

Speaker Change: First, in the U.S., the Road Safety Regulator, the National Highways Traffic Safety Administration, or NHTSA, announced that Automatic Emergency Braking, or AEB, would become mandatory for all passenger cars and light trucks in 2029.

Donald McClymont: While many new vehicles today are already equipped with AEV, the progressive aspect of NHTSA's is that it is the first global regulator to stipulate that pedestrian AEB requirements be extended to night-time conditions. This is significant because none of today's commercial radar or camera sensors have the required performance to deliver such features. Long and mid-range radar sensors operating at 77 GHz lack the required resolution and performance for reliable pedestrian detection. And the image sensors and image signal processing deployed in today's camera systems exhibit insufficient low-light sensing capability.

Speaker Change: While many new vehicles today are already equipped with AEB, the progressive aspect of NHTSA's mandate is that it is the first global regulator to stipulate that pedestrian AEB requirements be extended to night-time conditions.

Speaker Change: This is significant because none of today's commercial radar or camera sensors have the required performance to deliver such features.

Speaker Change: Long and mid-range radar sensors operating at 77 GHz lack the required resolution and performance for reliable pedestrian detection, and the image sensors and image signal processing deployed in today's camera systems exhibit insufficient low-light sensing capability.

Donald McClymont: These sensor shortcomings, particularly vision sensors, accelerate an exciting and significant opportunity for our recently launched computer vision solution, the IND880, which features our newest proprietary image signal processing and can perfectly address NHTSA's requirements. Last quarter, we shared that we were preparing to sample the SOC to customers, and I am excited to now confirm that the IND880 has not only been sampled to key customers with extremely positive feedback, but it has also been selected for high volume production programs by a number of global OEMs scheduled to ramp in late 2025.

Speaker Change: These sensor shortcomings, particularly of vision sensors, accelerate an exciting and significant opportunity for our recently launched computer vision solution, the IND880, which features our newest proprietary image signal processing and can perfectly address NHTSA's requirements.

Speaker Change: Last quarter, we shared that we were preparing to sample the SOC to customers and I am excited to now confirm that the IND880 has not only been sampled to key customers with extremely positive feedback, it has also been selected for high volume production programs by a number of global OEMs scheduled to ramp in late 2025.

Donald McClymont: Some of these wins for the IND 880 include applications as diverse as OMS, occupancy monitoring systems, and additionally a demanding non-passenger vehicle application which will use up to 36 cameras per vehicle. Leveraging to the maximum the multi-channel ISP and high dynamic range capabilities of the IND 880, and finally, The IND 880's high performance, but low power, and tiny footprint is also proving the perfect solution for surround view and e-mirror applications, with the first design win successes at two major European OEMs achieved in the second quarter.

Speaker Change: Some of these wins for the IND-80 include applications as diverse as OMS, occupancy monitoring systems, additionally a demanding non-passion geographical application which will use of the 36 cameras for vehicle.

Speaker Change: leveraging to the maximum the multi-channel ISP and high dynamic range capabilities of the IND880. And finally...

Speaker Change: The IND's ADA-D's high performance but low power and tiny footprint is also proving the perfect solution for surround you and emitter applications with the first design when success is at 2 major European OEMs achieved also in the second quarter.

Donald McClymont: These wins so quickly after the availability of the IND 880 are a clear indication of the potential of this product as a major revenue contributor for indie going forward. The second impactful regulatory initiative is the European Union's Intelligent Speed Assist Requirement, ISA, which is now mandatory in all new European cars as of July this year. Studies have indicated that ISA may reduce road fatalities by up to 20%. In combination with GPS for positioning, ISA leverages the vehicle's front view camera for speed sign detection to warn a driver of exceeding local speed limits.

Speaker Change: These wins so quickly after the availability of the IND 880 are a clear indication of the potential of this product as a major revenue contributor for indie going forward.

Speaker Change: The second impactful regulatory initiative to the European Union's intelligence speed assist requirement, I.e., which is now mandatory in all European cars as of July this year.

Speaker Change: Studies have indicated that ISA may reduce road fatalities by up to 20%.

Speaker Change: In combination with GPS for positioning, ISA leverages the vehicle's front view camera for speed sign detection to warn a driver of exceeding local speed limits.

Donald McClymont: This European ISA mandate further underscores the need for superior low-light vision sensing capabilities, and we are seeing so-called Strong Pull-Through Impetus for Indie's latest generation computer vision systems, including the IMD 880. Our design momentum for our previous generation GW5 family of Vision SoCs also continues unabated, particularly for driver monitoring applications. In the second quarter, we started volume shipments for two mass production programs at the Hyundai Kia Group. Additionally, in the second half of this year, we expect to begin volume production shipments to multiple Chinese OEMs, including Geely, B.U.I.D., Nio, Chery, and Audi China. Turning to the in-cabin user experience, or UX, our discussions with OEMs globally reveal a consistent request for SOC solutions or custom ASIC solutions that can deliver more. For example, more wired and wireless charging power delivery for personal devices.

Speaker Change: This European I.C. mandate further underscores the need for superior low-light vision sensing capabilities. And we are seeing all strong pull-through impetus for in these latest generation computer vision systems, including the I.N.D.A.D.

Speaker Change: Our design wind momentum for our previous generation GW5 family of Vision SoCs also continues unabated, particularly for driver monitoring applications.

Speaker Change: in the second quarter.

Speaker Change: We started volume shipments for two mass production programs at the Hyundai Kia Group. Additionally, in the second half of this year, we expect to begin volume production shipments to multiple Chinese OEMs, including Geely, BYD, NIO, Chery, and Audi China.

Speaker Change: Turning to in-caven use at expedience or UX, our discussions with OEMs globally reveal a consistent request for SOC solutions or custom ASIC solutions that can deliver more.

Donald McClymont: More bandwidth and improved signal integrity for reliable networking and multi-screen video delivery, and lighting solutions that can deliver more light output and thermal stability under changing environmental conditions. These OEM requirements are incredibly difficult to deliver in cost, power, and bomb-efficient SOC implementations, and are often underserved by our competitors with limited ASIC capabilities. In contrast, this is an area of mixed signal design where Indy excels and continues to expand our customer design when necessary.

Speaker Change: Moorewire and wireless charging part delivery for personal devices, more bandwidth and improved signal integrity for reliable networking and multi-screen video delivery, and lighting solutions that can deliver more light output and thermal stability under changing environmental conditions.

Speaker Change: These OEM requirements are incredibly difficult to deliver in cost, power and bomb-efficient SOC implementations and are often underserved by our competitors with limited ASIC capability.

Speaker Change: In contrast, this is an area of mixed signal design where Indy excels and continues to expand our customer design pipeline.

Donald McClymont: For example, in Q2, we secured major new lighting design wins with two of North America's largest OEMs for in-cabin lighting applications, such as Overhead Console, Doors, and Dashboard. These programs will commence volume production later this year and run quickly as these OEMs launch multiple models in quick succession. Additionally, we continue to solidify our lighting leadership position at practically all Chinese OEMs, and we have also secured multiple new design wins with multiple Korean brands that will begin shipping early in 2025. For UX, we continue to see strong OEM demand for the latest standards for in-cabin wired and wireless charging to meet the insatiable consumer demand for higher power and faster charging of personal devices.

Speaker Change: For example, in Q2, we secured major new lighting design wins with two of North America's largest OEMs for in-cabin lighting applications, such as overhead console, doors, and dashboards.

Speaker Change: These programs will commence volume production later this year and ramp quickly as these OEMs launch multiple models in quick succession.

Speaker Change: Additionally, we continue to solidify our lighting leadership position at practically all Chinese OEMs, and we have also secured multiple new design wins with multiple Korean brands that will begin shipping early in 2025.

Speaker Change: For UX, we continue to see strong OEM demand to enable the latest standards for in-cabin wired and wireless charging to meet the insatiable consumer demand for higher power and faster charging of personal devices.

Roger Ball: Here, I'm pleased to share that the wireless charging OEM win in India we alluded to last quarter, leveraging our systems capability, was for Volkswagen and will be delivered through their local Tier 1 for a 2025 production round. There have been multiple similar examples this year where our systems design prowess has allowed Indie to shorten the typical long design and cycle. I'm also pleased to announce that we recently achieved a significant milestone of shipping 400 million ships cumulatively to our broad and global customer base.

Speaker Change: Here, I'm pleased to share that the wireless charging OEM win in India we alluded to last quarter, leveraging our systems capability was for Volkswagen.

Speaker Change: and we will and will be delivered through their local tier one for a 2025 production round.

Speaker Change: There have been multiple similar examples this year where our systems design prowess has allowed indie to shorten the typical long design and cycle.

Speaker Change: I'm also pleased to announce that we recently achieved a significant milestone of shipping 400 million ships cumulatively to our broad and global customer base.

Roger Ball: This is an achievement that I am incredibly proud of, which clearly reflects the differentiation that our products bring to our customers, as well as the tireless innovation and dedication of the Indieglobal team. In summary, despite the current muted automotive environment, the actual mid- to long-term opportunity remains bright, with S&P Global projecting total automotive semiconductor value to exceed an incredible $100 billion in 2026 and pass $130 billion in 2029. Indie remains extremely well positioned to capitalize on these trends with the strategy we are currently executing for the three automotive megatrends, not only in product development but also in securing key design wins and partnerships with the major global OEMs.

Speaker Change: This is an achievement that I am incredibly proud of, which clearly reflects the differentiation that our products bring to our customers, as well as the tireless innovation and dedication of the Indie Global team.

Speaker Change: In summary, despite the current muted automotive environment, the actual mid- to long-term opportunity remains bright, with S&P Global projecting total automotive semiconductor value to exceed an incredible $100 billion in 2026.

Speaker Change: and surpass 130 billion in 2020-9.

Speaker Change: India remains extremely well positioned to capitalize on these trends with the strategy we are currently executing for the three automotive megatrends not only in product development but also in securing key design wins and partnerships with the major global OEMs.

Roger Ball: This, together with the progress we have made in our key 2025 Radar and Vision programs, just outlined, makes me confident that we will deliver sequential quarterly growth in the second half of 2024, accelerating into 2025 when we anticipate a return to an industry-leading growth trajectory. However, Indie has experienced some temporary short-term delays to the start of production of some programs. Created as a knock-on effect of the overall macro conditions, I want to stress across the portfolio that we have not lost any design. And, in fact, our growth trajectory has simply shifted. I'll now turn the call over to Raja for a discussion of our Q2 results and Q3 outlook.

Speaker Change: This together with the progress we have made in our key 2025 radar and vision programs just outlined makes me confident

Speaker Change: that we will deliver sequential quarterly growth in the second half of 2024.

Speaker Change: Accelerating into 2025.

Speaker Change: when we anticipate a return to an industry-leading growth trajectory.

Speaker Change: While indie has experienced some temporary short-term delays to the start of production of some programs, created as a knock-on effect of the overall macro conditions, I want to stress across the portfolio that we have not lost any designs.

Speaker Change: And in fact, our growth trajectory has simply shifted more this time.

Speaker Change: I'll now turn the call over to Raja for discussion of her two two results and two three outlook.

Roger Ball: Revenue for the second quarter of 2024 was roughly flat year over year at $52.4 million, coming in at the low end of our outlook as Donald. Non-GAAP gross profit was $26.3 million, translating into a 50.3% gross margin, which was slightly below plan, primarily due to favorable. R&D was $32.8 million, while SG&A was $10.7 million, bringing total operating expenses to $43.5 million, consistent with our forecast. As a result, our second quarter non-GAAP operating loss was $17.2 million.

Raja: Thanks, Donald.

Raja: Revenue for the second quarter of 2024 was roughly flat year of a year at $52.4 million, coming in at the low end of our outlook as Donald said.

Raja: non-GAAP gross profit was $26.3 million, translating into a 50.3% gross margin, which was slightly below plan, resulting primarily from an unfavorable product mix.

Raja: R&D was $32.8 million, while SG&A was $10.7 million, bringing total operating expenses to $43.5 million, consistent with our forecast.

Raja: As a result, our second quarter non-GAAP operating loss was $17.2 million.

Roger Ball: With a net interest expense of $800,000, our net loss was $18 million, and the net loss per share was $0.09 on a basis of 191.1 million shares. Turning to the balance sheet, During the quarter, we incurred total CAHPS usage of $19.7 million through operating activities and $3.7 million in CAHPS expansion, exiting the quarter with $122.6 million of total CAHPS. Moving to our outlook for the third quarter of 2024, we expect to deliver modest quarter over quarter revenue growth within the range of 0 to 5% or 2.5% at the midpoint, outpacing the projected automotive industry.

Raja: With net interest expense of $800,000, our net loss was $18 million, and net loss per share was $0.09 on a base of 191.1 million shares.

Raja: Turning to the balance sheet.

Raja: During the quarter, we incurred total cash usage of $19.7 million through operating activities and $3.7 million in CapEx expansion, exiting the quarter with $122.6 million of total cash.

Raja: Moving to our outlook. For the third quarter of 2024, we expect to deliver modest quarter-over-quarter revenue growth within the range of 0% to 5% or 2.5% at the midpoint, outpacing the projected automotive industry.

Roger Ball: At the same time, we expect gross margins of approximately 50% and OPEX of $44 million. Below the line, we anticipate $1 million in net interest expense and no tax. Assuming the midpoint of the revenue range, and with 199.5 million shares outstanding, we expect a 9 cent net loss per share for the third quarter. Looking further ahead, based on the production ramp plans for our radar and vision programs, we anticipate a return to our industry-leading growth trajectory in 2025 and beyond. With that, I'll turn the call back to Donald for his closing comments.

Raja: At the same time, we expect gross margins of approximately 50% and off-ex of $44 million.

Raja: Below the line, we anticipate one million dollars in that interest expense and no taxes.

Raja: Assuming the midpoint of the revenue range, and with 199.5 million shares outstanding, we expect a 9 cent net loss per share for the third quarter.

Raja: Looking further ahead, based on the production ramp plans for our radar and vision programs, we anticipate a return to our industry leading growth trajectory in 2025 and beyond.

Raja: With that, I'll turn the call back to Donald first closing comments.

Donald McClymont: In closing, while industry headwinds for the automotive market have persisted, Indy's strategic outlook continues to strengthen, driven by our design win momentum. Our focus on innovation, customer engagement, and operational excellence is distinguishing us in the market. With cutting-edge solutions spanning ADAS, user experience, and electrification, Indie remains at the forefront of the automotive industry's transformative megatrend. We're excited about our future and remain ideally positioned to capitalize on market opportunities as conditions improve, continuing our journey to build the next automotive powerhouse global semiconductor company. That concludes our prepared remarks. Operator, please open the line for questions.

Donald: Thanks, Roger.

Donald: In closing, while industry headwinds for the automotive market have persisted, indie strategic outlook continues to strengthen.

Donald: driven by our design window mentor.

Donald: Our focus on innovation, customer engagement and operational excellence is distinguishing us in the market. With cutting-edge solutions spanning ADAS, user experience and electrification, Indy remains at the forefront of the automotive industry's transformative megatrends.

Raja: We're excited about our future and remain ideally positioned to capitalize on market opportunities as conditions improve, continuing our journey to build the next automotive powerhouse global semiconductor company.

Speaker Change: That concludes our prepared remarks. Operator, please open the line for questions.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press the star key, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press the star key, then 2. One moment, please, for your first question. The first question comes from Suji DeSilva, please go ahead.

Speaker Change: Thank you. Ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press the star key, then 1 on your touchtone phone.

Speaker Change: If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press the star key, then two. One moment, please, for your first question.

Suji DeSilva: Hi Donald, hi Roger. So maybe I can start with the overall auto demand environment for the second half. Donald, can you characterize where we are in the auto inventory digestion cycle as we look at 3Q and then 4Q qualitatively, and you know by early 25 any call for when you know when they may be worked through or whether it already is, any color there would be helpful. Thank you.

Speaker Change: The first question comes from Suji DeSilva. Please go ahead.

Suji DeSilva: Hi, Donald, hi, Roger. So maybe I can start with the overall auto-demand environment in the second half. Donald, can you characterize where we are in the auto inventory digestion cycle as we look at you, and then for Q qualitatively and you know, by only 25, any.

Speaker Change: Call for when, you know, when they may be worked through whether or not he is any color there to be helpful. Thank you.

Donald McClymont: So, as we said in the prepared remarks, I mean, we are seeing the inventory situation significantly improving. That was certainly the case through Q2. It may take a little longer than we expected, but at this point, we're seeing general recovery from the inventory situation, and we do expect that that will allow us a little more flexibility going forward into the second half of the year.

Speaker Change: So, um, as we said in the prepared remarks, I mean, we are seeing, um, the inventory situation significantly improving. That was certainly the case through Q2. Um, it did, uh,

Speaker Change: persevere a little longer than than we expected but at this point we're seeing general recovery from from the inventory situation and we do expect that that will allow us a little more flexibility going forward into the second half of the year.

Suji DeSilva: And then looking ahead to 25 and the LEAD RADAR program, along with other programs, I guess, do you have any timing for when we would start to see that revenue contribution? And what factors can impact the commencement of that program, if it's relatively fixed in place with model years or whether there is some variability there, any color there would be helpful as well. Thanks.

Suji DeSilva: Okay.

Speaker Change: And then looking ahead to 25 and the LEAD radar program along with other programs, I guess.

Speaker Change: The timing in the 25 time frame, we would start to see that revenue contribution and if, you know, what factors can impact the commencement of that program if it's relatively fixed in place with model years or whether there's some variability there, any color there would be helpful as well.

Donald McClymont: Well, this is a very large program, so it entails ramping up through our key lead customer multiple OEMs, so it will be something that takes some, let's say, significant amount of time to get to full volume, but we are very confident now about the situation that we find ourselves in. I mean, the parts are back, as we mentioned in the prepared remarks also.

Speaker Change: Well, this is a very large program, so it entails ramping through our key lead customer, multiple OEMs, so it will be something that takes some, let's say, significant amount of time to get to full volume.

Speaker Change: But we are very confident now about the situation that we find ourselves in.

Donald McClymont: They've been very successful in testing. We've made super fast progress to get through that whole process, so we feel that a lot of the execution risk is really out of that. We won't comment on exact timing because there's a certain amount of confidentiality that we have with our lead customer about who's getting what when, but we feel generally really positive about the situation. I'd also add the vision ramps that we're expecting to happen through the second half of this year and into next year.

Speaker Change: I mean, the parts are back, as we mentioned in the prepared remarks also. They've been very successful in testing. We've made super fast progress to get through that whole process. So we feel that a lot of the execution risk is really out of that.

Speaker Change: We won't comment on exact timing because there's a certain amount of confidentiality that we have with our only customer and who's getting hot when.

Speaker Change: but we feel generally really positive about the situation. I'd add also the the vision ramps that that we're expecting to happen through the second half of this year and into next year.

Donald McClymont: In the sense that, again, the engineering risk is out for those programs, the products are mature, and it really is a question of... the deployment really within our end customer, which has been running reasonably well.

Speaker Change: In the sense that, again, the engineering risk is out for those programs, the products are mature, and it really is a question of...

Speaker Change: The deployment, really, within our end customer, which has been running reasonably well, I would say.

Ross Seymour: The next question comes from Ross Seymour; please go ahead.

Speaker Change: The next question comes from Ross Seymour. Please go ahead.

Donald McClymont: Hey, Donald, just a question on certainty, and it kind of follows up Suji's question to a certain extent. But, you know, 90 days ago when you talked to us, everybody thought that the market would get a bit better in the back half. And that hasn't happened as much as we hoped. I understand that part. But you also talked about a lot of the growth you were confident in being driven by company-specific ramps.

Ross Seymour: Hey Donald, just a question on the certainty and it kind of follows up Suji's question to a certain extent But you know 90 days ago when you talked to us You know everybody thought that market would get a bit better in the back half and that hasn't happened as much as we hoped I get that part But you also talked about a lot of the growth you were confident in being driven by company specific ramps So I guess what happened to those companies specific ramps and more importantly than that

Donald McClymont: So I guess what happened to those company-specific ramps? And more importantly than that, if they didn't happen to some degree, what gives you confidence or the willingness to commit to the radar side of things, given the uncertainty that seems to be hitting today?

Speaker Change: If they didn't happen to some degree, what gives you confidence or the willingness to commit to the radar side of things, given the uncertainty that seems to be hitting today?

Ross Seymour: I mean, nothing is missing from our backlog. There were no programs lost. We are very confident that everything that we talked about before will happen.

Donald: I mean, so nothing is missing from our backlog. There was no programs lost. We are very confident that everything that we talked about before will happen.

Donald McClymont: We have seen some delays in programs; you've probably read a lot about some of the restructuring at the major automotive companies. People are missing from certain programs who are not there anymore, and that's caused a certain amount of delay for us in the market, also coupled with the fact that they're also consuming a certain amount of inventory from older generation products, which causes a little delay. But, generally speaking, they are on track.

Speaker Change: We have seen some delays in programs. You've probably read a lot about some of the restructuring at the Major Automotive Companies, where...

Operator: Good afternoon, and welcome to indie Semi Conductors 2nd 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.

Ross Seymour: people are missing from certain programs who are not there anymore and that's caused a certain amount of delay for us in in the market also coupled with the fact that they're also consuming a certain amount of inventory from from older generation products which which causes a little delay.

Ashish Gupta: As a reminder, this conference call is being recorded. I will now turn the call over to Ashish Gupta, investor relations.

Donald McClymont: They will ramp up. Any of the delays are, let's say, more organic in nature rather than some conscious big decision to delay a program or cancel anything. That's not been the case, so we feel good about that. And really, in this case, it's just a knock-on effect of the macro that's caused this slight delay. So there's nothing lost, and we're feeling super excited about what's coming. We've also seen a lot of momentum and design wins through the course of this quarter, which should drive our future even higher as we move forward.

Ross Seymour: But generally speaking, they are on track, they will ramp, any of the delays are let's say

Ashish Gupta: Mr. Gupta, please go ahead. Thank you, operator.

Speaker Change: more organic in nature rather than some conscious large decision to delay a program or cancel anything that's not been the case so

Ashish Gupta: Good afternoon, welcome to indie Semi Conductors 2nd quarter, 2024 earnings call. Joining me today are Donald McClymont, indie co-founder and CEO, Roger Ball, indie's acting CFO and chief accounting officer, and Mark Tindall out of corporate development and investor relations. As a reminder, our CFO time Schiller is currently recuperating well in medical league of absence. Donald will provide open remarks and discuss business highlights, followed by Roger's review of indie's Q2 results in Q3 outlook.

Speaker Change: We feel good about that and really in this case it's just a knock-on effect of the macro that's caused this slight delay. So nothing lost and we're feeling super excited about what's coming.

Speaker Change: We've also seen a lot of momentum and design wins through the course of this quarter, which should drive our future even higher as we move forward.

Ross Seymour: Thanks for that color! And then I guess as my follow-up either, probably for you and Raja, getting into the profitability side of gross margin specifically, we've heard from some of your other auto semi-exposed peers about the tier ones and others burning inventory down to ridiculously low levels, well, let me say significantly lower levels than people had expected, returning to a kind of past behavior, despite the shortage issue that they all complained about in the middle of the pandemic. Yeah, we're so like, one. Are you seeing that? And two, is there any pricing follow-on, and that would kind of lead to the gross margin trajectory for next?

Speaker Change: Thanks for that color and then I guess as my follow-up either probably for you and Raja getting on to the profitability side to in the gross margin specifically

Ashish Gupta: Please note that we will be making forward-looking statements based on current expectations for the assumptions for subject to risk and uncertainties. These statements reflect our views only as of today and should not be relied upon as representative about views as of any subsequent dates. These statements are subject to a variety of risks and uncertainties. The good kind of actual results are different materially from expectations. From material risks and other important factors that affect our financial results, please review our risk factors in our annual report on form 20 for the fiscal year in the December 31, 2023, as well as other public reports followed by SEC.

Speaker Change: We've heard from some of your other...

Speaker Change: Auto-Semi exposed peers about the tier ones and others burning inventory down to ridiculously well, let me say, significantly lower levels than people had expected, returning to kind of the past behavior despite the shortage issue that they all complained about in the middle of the pandemic. So, one, are you seeing that, and two, is there any pricing follow on, and that would kind of lead to the gross margin trajectory for next year?

Donald McClymont: Yeah, we do see that. I mean, we're for sure back to just in time and, in spite of what happened during the allocation situation, no material pricing impact for us that we can't yet.

Speaker Change: Yeah, we do see that. I mean we're for sure back to just-in-time and in spite of what happened during the allocation situation. No material pricing impact for us as yet that we can see.

Ashish Gupta: Finally, the results in guidance discussed today are based on consolidated non-gap financial measures such as non-gap gross margin, non-gap operating income laws, non-gap net income laws, and non-gap EBITDA. These in retrospect exclude from its corresponding gap measures certain of the following items. Appreciation and amortization, surface compensation, acquisition-oriented expenses, gain or loss from change in fair values, non-cash interest expense, and income tax benefits or expenses. For complete reconciliation to gap and the definition for the above items, please see our Q2 earnings press release, which was issued in advance of this call.

Anthony Stoss: The next question comes from Anthony Stoss; please go ahead.

Speaker Change: Next question comes from Anthony Stoss. Please go ahead.

Anthony Stoss: Thanks. I just want to start by offering Tom my best wishes. Hopefully, he'll be back in short order.

Speaker Change: Thanks. I just want to start with offering Tom my best wishes. Hopefully he'll be back in short order.

Donald McClymont: Donald, I wanted to follow up on Ross's question. I think you kind of dodged it to some degree. In the past, you've talked about half a dozen, a dozen new programs launching between Q3, Q4 of this calendar year. On the call, you said there were delays in some production ramps. Can you maybe equate to half the wins that you thought were going to go live aren't going to go live? They're going to shift a quarter. Any more detail on you saying you haven't lost them? I'm just trying to figure out where the shift is. I'm just trying to figure out where the shift is.

Donald: Donald, I wanted to follow up on Ross's question. I think you kind of dodged it to some degree. You know, in the past, you've talked about half a dozen, a dozen new programs launching between Q3, Q4 of this calendar year. On the call, you said there's delays in some production ramps. Can you maybe equate to...

Ashish Gupta: I can be found on our website at www.indicemy.com.

Speaker Change: Asked the wins that you thought were going to go live aren't going to go live They're going to shift a quarter just any more detail on on you're saying you haven't lost them I'm just trying to figure out you know where the shift is

Ashish Gupta: I'm not from the call over to Donald.

Donald McClymont: Thanks, Ashish, and welcome everybody. I want to start by welcoming Mark Tindel, our new head of corporate development and best relations to Indie. Mark is looking forward to meeting all of you over the next months.

Anthony Stoss: Yeah, I mean, it's just a knock-on effect of the macro situation. We have seen certain product verticals that are a little more impacted than others. Some have indeed ramped up, and that has been, in some cases, in the last quarter, at least offset by some additional inventory consumption. So some of them have already happened. And that's nice because once you start, then you're opening the spigot, and it will begin to ramp up. So, from our perspective, again, nothing's lost. There are some slight delays in these programs, and, you know, we expect that the second half will begin to pick up and drive strongly through 2025.

Speaker Change: Yeah, I mean it's just a knock-on effect of the macro situation. We have seen certain product verticals which are a little more impacted than others. Some have indeed ramped and that's been in some cases in the last quarter at least offset by some additional inventory consumption. So some of them have already happened.

Donald McClymont: Let me first briefly cover our revenue performance in the context of the overall automotive market environment, before focusing on the technical and business achievements. During the second quarter of 2024, Indie achieved total revenue of $52.4 million, coming in flat from Q1 at the lower end of our previous outlook. Our results were generally in line with the automotive market, where unfavorable global macroeconomic conditions impacted vehicle production. With consensus forecasts currently projecting approximately 88 million units for 2024, in comparison to just over 90 million units in 2023.

Donald: That's nice because once you start then you're opening a spigot and it will begin to run through.

Donald: So, from our perspective, again, nothing's lost, there's some slight delays in these programs and, you know, we expect that the second half will begin to pick up and drive strongly through 2025.

Donald McClymont: Okay. And then on top of the first, excuse me, major radar win, I think even the past talked about wins with Bosch and Focosa. Are those still on track, or, you know, just any update you can provide on those two would be helpful. Yeah, those are very much.

Speaker Change: Okay. And then on top of the first, excuse me, major radar win, I think even the past talked about wins with Bosch and PECOSA. Are those still on track? Or, you know, just any update you can provide on those two would be helpful.

Donald McClymont: Additionally, given lower consumer pricing thresholds for vehicle purchases and reduced global electric vehicle stimulus programs. Times, Automotive EOEMs have been prioritizing defeatured vehicles which has led to reduced semiconductor content. These factors coupled with ongoing inventory consumption, which persisted in the second quarter, negatively impacted our revenue against our prior outlook. We now anticipate this trend will spill over into the second half of 2024, as reflected in most recent analyst estimates, which project essentially flat to low single digit negative growth for the automotive semiconductor industry in 2024.

Donald McClymont: Yeah, those are very much still on track. They're slated to ramp up next year, and we're really happy with the progress on those projects.

Speaker Change: Yeah, those are very much still on track. They're slated to ramp next year, and we're really happy with the progress on those programs.

Craig Ellis: The next question comes from Craig Ellis. Go ahead, sir.

Donald: Next question comes from Craig Ellis. Go ahead, sir.

Donald McClymont: Despite these headwinds, we believe that whether our new product launches and current customer status, Indy is priced to deliver modest growth in the third quarter, growing above the market to reach outsized growth levels as we move through the second half of 2024 and into 2025.

Craig Ellis: Yeah, thanks for taking that question, Donald. I'll just start with a follow-up to Tony's question there on Radar Bosch and FICASA. Can you give us some sense for when you'd expect each of those programs to ramp during the year? Are they all kicking off in the first quarter, or will it be more phased as we go one through 4Q?

Craig Ellis: Yeah, thanks for taking my question. Donald, I'll start with a follow-up to Tony's question there.

Craig Ellis: and Radar Bosch and the Casa, can you give us some sense for when you'd expect each of those programs to ramp?

Speaker Change: During the year, they're all kicking off in the first quarter of will at the more phase as we go one through four cue.

Donald McClymont: No, they're phased. I mean, we won't give specific ramp dates for customer programs, but they are indeed phased throughout the whole year.

Speaker Change: No, they're phased. I mean, we won't give specific ramp dates for customer programs, but they are indeed phased throughout the whole year.

Craig Ellis: Got it. And then, Roger, I wanted to cycle back to the Grist Marching Guide for the third quarter. So, you know, why would it be with revenues up that we're down a little bit quarter on quarter? Can you just talk through some of the gives and takes and grist margin? Thank you.

Speaker Change: Got it. And then, Roger, I wanted to cycle back to the Grist Marching Guide for the third quarter.

Donald McClymont: Now, we can closely at our business progress in the second quarter. In the ADAS sector, I want to point out that Indy is unique and differentiates itself from its competitors as being the only chip vendor offering all four of the key ADAS sensors, radar, vision, lidar, and ultrasound, which gives us the unique ability to offer any combination of these sensors. This will enable the scalable ADAS processing architectures that car makers are demanding for deployment across their portfolio. This gives us the ability to fuse multiple modalities into a single chip set solution. We are now in the discussions with key OEMs to define the specifications for our next generation AI-centric sensor fusion products.

Speaker Change: Why would it be, with revenues up, that we're down a little bit, quarter on quarter, can you just talk through some of the gives and takes, and Chris Marchand, thank you.

Roger Ball: So we're not expecting gross margins to erode next quarter.

Roger Ball: Road next quarter. We had a slight downtick in Q3, and that was primarily the result of some unfavorable product mix that we saw in the quarter.

Roger: So we're not expecting Ross margins to erode next quarter. We had a flight downtake in Q3 and I was primarily a result of some unfavorable product mix that we saw in the quarter.

Jon Tanwanteng: The next question comes from Jon Tanwanteng. Please go ahead.

Speaker Change: The next question comes from John 10-1 Tank. Please go ahead.

Jon Tanwanteng: Hi, I was wondering if you could go through the decontenting trend and when you think that might reverse and how that's impacting, I guess, your forecast or your backlog, depending on how you think of it. Are the indicated volumes that your customers are telling you they want lower than they were before? And especially as they go into 25?

Speaker Change: I was wondering if you could go through the decontenting trend and when you think that might reverse, and how that's impacting, I guess, your forecast or your backlog is how you think of it, are the indicator volumes that your customers are telling you they want lower than they were before and especially as they go on in 25.

Donald McClymont: I will continue to keep you updated in the upcoming quarters as we progress. Starting with our flagship flagship 77Ghz radar program, since sampling our millimeter wave and DSP products to our lead customer, I'm extremely happy to now share that we have achieved the important milestone of full functional verification in our labs, including the all important range Doppler performance, which surpasses current industry benchmarks. This technical evaluation has also been completed by our lead customer, and the radar is currently being tested in live automotive application environments, which is the final stage of testing before volume production.

Donald McClymont: I mean, there are some short-term puts and takes that we see. But we don't really see a shift in 2025 because the forecasts for those errors are, I would say, reasonably fixed at this point. I mean, obviously, that can change, but at this point, we don't see a big impact from that next year. It's really more of a short-term issue that we've seen where the consumer appetite to buy lower-priced cars is increasing versus higher-priced cars, and that is generally bad for the semiconductor Content overall. It's not specific to us. It's a general market.

Speaker Change: I mean there's some short-term puts and takes that we see. We don't really see a shift in 2025 because the

Speaker Change: Workouts for those ours, I would say reasonably fixed at this point, I mean, obviously that can change, but at this point we don't see a big impact from that the next year. It's really more of a shortcut, I'm not sure that we've seen where just really due to.

Speaker Change: Consumer appetite to buy lower-priced cars increasing versus higher-priced cars and that is generally bad for the semiconductor content overall. It's not specific to us, it's a general market trend.

Donald McClymont: I want to stress here these advancements keep Indy firmly on track to bring this radar program to production within the 2025 climate skills previously communicated. Furthermore, samples of our 120 gigahertz radar front NIC developed for high resolution in cabin vehicle signs monitoring and vehicle dynamics sensing. I've been received in our labs, and I'm delighted that functionality for this challenging RF application has also been validated.

Jon Tanwanteng: Okay, got it. And then, as we look into Q3 and possibly into Q4, flat to up revenue, I assume that incorporates, you know, some of the new launches that you're doing. Is it fair to imply that, you know, the existing products you had heading into Q3 are declining as a result?

Speaker Change: Okay, got it. And then as we look into Q3 and possibly into Q4, you know, flat to up revenue, I assume that incorporates, you know, some of the new launches that you're doing. Is that, is it fair to imply that, you know, the existing products you had heading into Q3 are declining as a result?

Donald McClymont: Not declining, no, but there is still some inventory burn off in certain areas of our product portfolio, which is now largely alleviated compared to what we went through in the last couple of quarters, but still something that we need to manage. It has been offset by new program ramps. But yeah, I mean, we hope we're getting conservative.

Speaker Change: Not declining, no, but there is still some inventory burn-off in certain spot areas of our product portfolio, which is now largely alleviated compared to what we went through in the last couple of quarters.

Donald McClymont: This demonstrates Indy's clear leadership in the market for next generation radar solutions, which is a cornerstone of Indy's high growth trajectory for 2025 and beyond.

Donald McClymont: Moving on, vision-based sensing in particular has received key industry focus recently as a result of two major regulatory directives which will play nicely in Indy's favor. First, in the US, the road safety regulator, the National Highways Traffic Safety Administration, or NITSA, announced that automatic emergency braking or AEB would become mandatory for all passenger cars and light trucks in 2022. While many new vehicles today are already equipped with AEB, progressive aspect of NITSA's mandate, is that it is the first global regulator to stipulate that pedestrian AEB requirements be extended to night time conditions.

Speaker Change: but still something that we need to manage. It has been offset by new program ramps. But yeah, I mean, we hope we're getting conservatively.

Cody Acree: The next question comes from Cody Acree; please go ahead.

Cody Acree: Yeah, thanks for taking my questions and my best to Tom on his recovery. Thanks, Cody.

Speaker Change: Next question comes from Cody Acri. Please go ahead, Sam.

Cody Acri: Yeah, thanks guys for taking my questions and my best to Tom and his recovery.

Cody Acree: Absolutely. Could we maybe talk a bit about your mix between product revenue and contract revenue? We don't usually talk a lot about that mix, with contracting typically pretty consistent, but with it being down 50% and your product revenue being up 8%, there seemed to be a dichotomy this quarter.

Cody: Thanks, Cody.

Cody Acri: Absolutely. Could we maybe talk a bit about your mix?

Cody Acri: between Product Revenue and Contract Revenue. We don't use to talk a lot about that, that makes for contracting typically pretty consistent. But with it being down 50% and your Product Revenue being up 8% there seem to be a dichotomy discordant.

Donald McClymont: This is significant because none of today's commercial radar or camera sensors have the required performance to deliver such features. Long and mid-range radar sensors operating at 77 gigahertz lack the required resolution and performance for reliable pedestrian detection, and the image sensors and image signal processing deployed in today's camera systems exhibit insufficient low light sensing capability. These sensor shortcomings, particularly of vision sensors, accelerate an exciting and significant opportunity for our recently launched computer vision solution, the INDAAA, which features our newest proprietary image signal processing and can perfectly address NITSA's requirements.

Roger Ball: Yeah, so that's a good point.

Roger Ball: So our total NRE or contract revenue as a percentage of total has come down this quarter, as well as last quarter, as you pointed out, and we expect it to come down further.

Speaker Change: Yeah, so that's a good point. So our total NRE contract revenue is a percentage of total.

Speaker Change: has come down this quarter, as well as it did last quarter, as you pointed out, and we expect that trend to continue, in fact.

Roger Ball: And we expect that trend to continue, in fact. Over time, we're going to see more of a shift towards ASSPs as opposed to custom ASPs in our business. And so that, you know, long term, we expect it will come down.

Speaker Change: Over time, we're going to see more of a shift towards ASSPs as opposed to custom ASICs in our business. And so that, over the long term, we expect will come down over time.

Cody Acree: So your expectations for the September and December periods are for contract versus product.

Speaker Change: So your expectations for the September and December periods are for contract versus product?

Roger Ball: It is fairly flat where we are sitting.

Donald McClymont: Last quarter, we shared that we were preparing to sample the SOC to customers, and I'm excited to now confirm that the INDAAA has not only been sampled to key customers with extremely positive feedback, it has also been selected for high volume production programs by a number of global OEMs scheduled to ramp in late 2025. Some of these wins for the INDAAAD, include applications as diverse as OMS, occupancy monitoring systems, additionally a demanding non-passenger vehicle application, which will use up to 36 cameras per vehicle, leveraging to the maximum the multi-channel ISP and high dynamic range capabilities of the INDAAD.

Speaker Change: It's fairly flat where we are today.

Operator: Ladies and gentlemen, there are no more questions at this time. The conference has now concluded. Thank you for attending today's presentation.

Speaker Change: Ladies and gentlemen, there are no more questions at this time. The conference has now concluded. Thank you for attending today's presentation.

Donald McClymont: And finally, the IND's high performance, but low power and tiny footprint, is also proving the perfect solution for surround view and e-minor applications, with the first design win successes at two major European OEMs achieved also in the second quarter.

Donald McClymont: These wins so quickly after the availability of the INDAAD 18 are a clear indication of the potential of this product as a major revenue contributor for Indiegling Forward.

Donald McClymont: The second impactful regulatory initiative is the European Union's intelligence speed assist requirement, ISA, which is now mandatory in all new European cars as of July this year. Studies have indicated that ISA may reduce road fatalities by up to 20 percent. In combination with GPS for positioning, ISA leverages the vehicle's front-view camera for speed sign detection to want a driver of exceeding local speed limits. This European ISA mandate further underscores the need for superior low-light vision sensing capabilities, and we are seeing strong pull-through impetus for Indiegling's latest generation computer vision systems, including the INDAAD.

Donald McClymont: Our design win momentum for our previous generation GW5 family, OVS and SOC's also continues unabated, particularly for driver monitoring applications. In the second quarter, we started volume shipments for two mass production programs at the Turin de Kia Group.

Donald McClymont: Additionally, in the second half of this year, we expect to begin volume production shipments to multiple Chinese OEMs, including GLE, CUID, NIO, Cherry, and IRD China.

Donald McClymont: Turning to end cabin use at Expedients or UX, our discussions with OEMs globally reveal a consistent request for SOC solutions or custom ASIC solutions that can deliver more. More wired and wireless charging power delivery for personal devices, more bandwidths and improved signal integrity for a live-on networking and multi-screen video delivery, and lighting solutions that can deliver more light output and thermal stability under changing environmental conditions. These OAM requirements are incredibly difficult to deliver in cost, power, and bomb-efficient SOC implementations, and are often underserved by our competitors with limited ASIC capability.

Donald McClymont: In contrast, this is an area of mixed signal design where indie excels and continues to expand our customer design when pipeline. For example, in Q2 we secured major and new lighting design wins with two of North America's largest OAMs for in-cabin lighting applications, such as overhead console, doors, and dashboards. These programs will commence volume production later this year, and now quickly as these OAMs launch multiple models in quick succession. Additionally, we continue to solidify our lighting leadership position at practically all Chinese OAMs, and we have also secured multiple new design wins with multiple Korean brands that will begin shipping early in 2025.

Donald McClymont: For UX, we continue to see strong OAM demand to enable the latest standards for in-cabin wired and wireless charging to meet the insatiable consumer demand for higher power and faster charging of personal devices. Here I am pleased to share that the wireless charging OAM win in India we alluded to last quarter leveraging our systems capability was for Volkswagen, and we will be delivered through their local tier 1 for a 2025 production run. There have been multiple similar examples this year, but our systems design prowess has allowed India to shorten the typical long design in cycle.

Donald McClymont: I am also pleased to announce that we recently achieved the significant milestone of shipping 400 million ships cumulatively to our broad and global customer base. This is an achievement that I am incredibly proud of, which clearly reflects the differentiation that our products bring to our customers as well as the tireless innovation and dedication of the India global team.

Donald McClymont: In summary, despite the current muted automotive environment, the actual mid to long-term opportunity remains bright, with the S&P global projecting total automotive semiconductor value to include an exceed an incredible 100 billion in 2026 and surpass 130 billion in 2029. India remains extremely well positioned to capitalize on these trends, with the strategy we are currently executing for the three automotive mega trends, not only in product development, but also in securing key design wins and partnerships with the major global OEMs.

Donald McClymont: This together with the progress we have made in our key 2025 radar and vision programs just outlined makes me confident that we will deliver sequential quarterly growth in the second half of 2024, accelerating into 2025 when we anticipate a return to an industry leading growth trajectory. While India has experienced some temporary short-term delays to the start of production of some programs, created as a knock-on effect of the overall micro-conditions, I want to stress across the portfolio that we have not lost any design. Williams, and in fact our growth trajectory has simply shifted modestly.

Roger Ball: I will now turn the call over to Roger for discussion of retreat to results in two-three outlooks. Thanks Donald. Revenue for the second quarter of 2024 was roughly flat year over year at $52.4 million, coming in at the low end of our outlook as Donald outlined. Non-gap gross profit was $26.3 million, translating into a 50.3 percent gross margin, which was slightly below plan, resulting primarily from an unfavorable product mix. R&D was $32.8 million, while SGNA was $10.7 million, bringing total operating expenses to $43.5 million, consistent with our forecast.

Roger Ball: As a result, our second quarter non-gap operating loss was $17.2 million. With net interest expense of $800,000, our net loss was $18 million, and net loss per share was $0.9 on a base of $191.1 million shares. Turning to the balance sheet, during the quarter we incurred total cash usage of $19.7 million through operating activities and $3.7 million in CapExx expansion, exiting the quarter with $122.6 million of total cash.

Roger Ball: Moving to our outlook, for the third quarter of 2024, we expected to deliver modest quarter over quarter revenue growth within the range of 0 to 5 percent or 2.5 percent at the midpoint, outpacing the projected automotive industry. At the same time, we expect gross margins of approximately 50 percent, and off-ex of $44 million. Below the line, we anticipate $1 million net interest expense, and no taxes. Assuming the midpoint of the revenue range, and with $199.5 million shares outstanding, we expect 9 cents net loss per share for the third quarter.

Roger Ball: Looking further ahead, based on the production ramp plans for our radar and vision programs, we anticipate a return to our industry-leading growth trajectory in 2025 and beyond.

Donald McClymont: With that, I'll turn the call back to Donald for his closing comments. Thanks, Roger. In closing, while industry headwinds for the automotive market have persisted, indie strategic outlook continues to strengthen, driven by our design wind momentum.

Donald McClymont: Our focus on innovation, customer engagement, and operational excellence is distinguishing us in the market, with cutting-edge solutions spanning ADAS, user experience, and electrification, indie remains at the forefront of the automotive industry's transformative mega-trend. We're excited about our future, and remain ideally positioned to capitalize on market opportunities as conditions improve, continuing our journey to build the next automotive powerhouse global semiconductor company.

Donald McClymont: That concludes our prepared remarks.

Operator: Operator, please open the line for questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press the star key then one on your touch-tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press the star key then two. One moment please for your first question.

Suji DeSilva: The first question comes from Suji DeSilva. Please go ahead. Hi, Donald. Hi, Roger. So maybe I can start with the overall auto-demand environment in the second half. Donald, can you characterise where we are in the auto-inventory digestion cycle as we look at 3Q and then 4Q qualitatively and by early 25, any call for when they may be worked through whether it already is, any color there would be helpful. Thank you. So as we said in the prepared remarks, I mean we are seeing the inventory situation significantly improving, that was certainly the case through Q2.

Suji DeSilva: It did persevere a little longer than we expected, but at this point we're seeing and we do expect that that will allow us a little more flexibility going forward into the second half of the year. Okay. Thanks. And then looking ahead to 25 and the lead radar program along with other programs, I guess. Do you have any timing in the 25 timeframe? We would start to see that revenue contribution and if, you know, what factors can impact the commencement of that program, if it's relatively fixed in place with model years or whether it's a variability there, any color there would be helpful as well.

Suji DeSilva: Thanks. Well, this is a very large program. So it entails ramping through our key lead customer multiple OEM. So it will be something that takes some, let's say, significant amount of time to get to full volume, but we are very confident now about the situation that we find ourselves in. I mean, the parts are back, as we mentioned, the prepared remarks also, they've been very successful in testing. We've made super fast progress to get through that whole process.

Suji DeSilva: So we feel that a lot of the execution risk is really out of that. We won't comment on exact timing because there's a certain amount of confidentiality that we have with our lead customer and who's getting what when. But we feel generally really positive about the situation. I'd add also the vision ramps that we're expecting to happen through the second half of this year and into next year, in the sense that again, the engineering risk is out for those programs. The products are mature and it really is a question of the deployment really within our end customer, which has been running reasonably well, I would say.

Donald McClymont: The next question comes from Ross Seymour. Please go ahead. Hey, Donald, just a question on the certainty and it kind of follows up Suji's question to a certain extent, but 90 days ago when you talked to us, everybody thought that market would get a bit better in the back half, and that hasn't happened as much as we hoped. I get that part, but you also talked about a lot of the growth you were confident in being driven by company specific ramps.

Donald McClymont: So I guess what happened to those company specific ramps? And more importantly than that, if they didn't happen to some degree, what gives you confidence or the willingness to commit to the radar side of things, given the uncertainty that seems to be hitting today? I mean, so nothing is missing from our backlog. There was no programs lost. We are very confident that everything that we talked about before will happen. We have seen some delays in programs.

Donald McClymont: You've probably read a lot about some of the restructuring at the major automotive companies where people are missing from certain programs. They are any more. That's caused a certain amount of delay for us in the market, also coupled with the fact that they're also consuming a certain amount of inventory from older generation products, which causes a little delay. But generally speaking, they are on track. They will ramp. Any of the delays are, let's say, more organic in nature rather than some conscious, large decision to delay a program or a canceling thing.

Donald McClymont: That's not being the case. So we feel good about that. And really, in this case, it's just a knock on effect of the macro that's caused this slight delay. So nothing lost, and we're feeling super excited about what's coming. We've also seen a lot of momentum and design wins through the course of this quarter. Which should drive our future even higher as we move forward.

Ross Seymour: Thanks for that color.

Donald McClymont: And then I guess this is my follow-up either, you know, probably for you and Roger, getting onto the profitability side in the gross margins, specifically. We've heard from some of your other auto semi-exposed peers about the tier ones and others burning inventory down to ridiculously, well, let me say significantly lower levels than people had expected, returning to kind of past behavior despite the shortage issue that they all complained about in the middle of the pandemic.

Donald McClymont: Yeah. So one, are you seeing that? And two, is there any pricing follow-on, and that would kind of lead to the gross margin trajectory for next year? Yeah, we do see that. I mean, we're for sure back to just in time and in spite of what happens during the allocation situation. No material pricing impact for us as yet that we can see.

Anthony Stas: Next question comes from Anthony Stas. Please go ahead. Thanks.

Donald McClymont: I just want to start with the offering time. My best wishes, hopefully he'll be back in short order. Donald, I want to follow up on Ross's question. I think you kind of dodge it to some degree. In the past, you've talked about half a dozen, a dozen new programs launching between Q3, Q4 this calendar year. On the call, you said there's delays in some production ramps. Can you maybe equate to half the winds that you thought were going to go live?

Donald McClymont: Aren't going to go live? They're going to shift to quarter, just any more detail on your thing. You have lost them. I'm just trying to figure out where the shift is. Yeah. I mean, it's just a knock on effect of the macro situation. We have seen certain product verticals which are a little more impacted than others. Some have indeed ramps, and that's been in some cases in the last quarter, at least offset by some additional inventory consumption.

Donald McClymont: Some of them have already happened, and that's nice because once you start, then you're opening this bigot, and it will begin to ramp through. So from our perspective, again, nothing's lost. There's some slight delays in these programs, and we expect that the second half will begin to pick up and drive strongly through 2025.

Donald McClymont: Okay. On top of the first, excuse me, major radar win, I think even the past talked about Winswood, Bosch, and Fakasa. Are those still on track, or just any update you can provide on those to be helpful? Yeah, those are very much still on track.

Craig Ellis: They're slated around next year, and we're really happy with the progress on those programs. Next question comes from Craig Ellis. Go ahead, sir. Yeah, thanks for taking my question, Donald.

Craig Ellis: Let's start with a follow-up to Tony's question there on radar Bosch and Fakasa. Can you give us some sense for when you'd expect each of those programs to ramp during the year? Are they all kicking off in the first quarter or will it be more phased as we go one through four Q? No, they're phased. I mean, we won't give specific ramp dates for customer programs, but they are indeed phased throughout the whole year. Got it.

Roger Ball: And then Roger, I wanted to cycle back to the Chris Margin guide for the third quarter. So, you know, why would it be with revenues up that we're down a little bit quarter on quarter? Can you just talk through some of the gifts and takes in Chris Margin? Thank you. So, we're not expecting gross margins to our road next quarter. We had a slight downtake in Q3, and that was primarily the result of some unfavorable product mix that we saw in the quarter.

John Tanwanteng: The next question comes from John 10-1 tank. Please go ahead.

Donald McClymont: I was wondering if you could go through the decontenting trend, and when you think that might reverse, and how that's impacting, I guess, your forecast or your backlog is how you think of it, are the indicated volumes that your customers are telling you they want lower than they were before, and especially as they go into 25? I mean, there's some short-term puts and takes that we see. We don't really see a shift in 2025 because the forecasts for those hours are, I would say, reasonably fixed at this point.

Donald McClymont: I mean, obviously that can change, but at this point, we don't see a big impact from that next year. It's really more of a short-term issue that we've seen where just really due to consumer appetite to buy lower price cars, increasing versus higher price cars, and that is generally bad for the semiconductor content overall. It's not a specific to us. It's a general market trend. Okay, got it.

Roger Ball: And then, as we look into Q3 and possibly into Q4, you know, flat-to-up revenue, I assume that incorporates, you know, some of the new launches that you're doing. Is it fair to imply that, you know, the existing products you had heading into Q3 are declining as a result? No, declining. No, but there is still some inventory burn-off in certain spot areas of our product portfolio, which is now largely alleviated compared to what we went through in the last couple of quarters, but still something that we need to manage. It has been offset by new program ramps, but yeah, I mean, we hope we're getting conserved.

Roger Ball: Thank you very much.

Cody Acree: Next question comes from Cody Acree. Please go ahead, Sam. Yeah, thanks for taking my questions and my best to Tom. He has recovery. Thanks, Cody. Absolutely.

Roger Ball: Can we maybe talk a bit about your mix between product revenue, contract revenue? We don't usually talk a lot about the about that mix with contracting typically pretty consistent, but with it being down 50%, and your product revenue being up 8%, there seem to be a dichotomy this quarter. Yeah, so that's a good point. So our total NRE contract revenue as a percentage of total has come down this quarter, as well as as nothing did last quarter, as you might point out.

Roger Ball: And we expect that trend to continue. In fact, you know, over time, we're going to see a more shift towards ASSPs or the post-custom ASSPs in our business, and so that, you know, over the long term, we expect we'll come down over time. So your expectations for the September and December periods are for contract versus product? It's fairly flat where we are sitting.

Operator: Ladies and gentlemen, there are no more questions at this time. The conference has now concluded. Thank you for attending today's presentation. May not discuss it.