Q2 2024 Innoviz Technologies Ltd Earnings Call
Joining us today are Omer Keilaf, Chief Executive Officer, and Eldar Cegla, Chief Financial Officer.
Speaker Change: Following their opening remarks, we will open the call to your questions. I would like to remind everyone that this call is being recorded and will be available on the Investor Relations section of our website at ir.innoviz.tech.
Speaker Change: and Uncertainties Relating to Future Events and the Future Financial Performance of Innoviz. Actual results could differ materially from those anticipated in the forward-looking statements.
Speaker Change: For discussion of some important risk factors that could cause actual results to differ materially from any forward-looking statements, please see the Risk Factors section of our Form 20-F filed with the SEC on March 12, 2024. Omer, please go ahead.
Omer Keilaf: Thank you. Thank you.
Omer Keilaf: Thank you, Maya, and good morning, everyone. Thank you for joining us. In the second quarter, we continued our strong performance on all fronts.
Speaker Change: These strong revenues, in tandem with our ability to operate efficiently, contributed to another quarter of decreased cash burn on both a sequential and year-to-year basis.
Speaker Change: This morning, we reached an important agreement with a major platform partner to supply our set of short and long-range riders to their Level 4 autonomous driving platform, which has already been selected by several OEM programs.
Speaker Change: You can imagine the effort that went into making this happen.
Speaker Change: Yesterday we announced an agreement with the Indoor Lab, the world leader in non-automotive ladder analytics.
Speaker Change: To supply Innoviz 2 liners within their airport portfolio beginning with Denver, Nashville, and Tampa International Airports with more airports expected to be added to the program
Speaker Change: Beyond these announcements, we are busy meeting with existing and potential customers across the globe.
Speaker Change: Importantly, we continue to progress our pipeline of existing RFIs and RFQs, having bolstered our relationships with new and existing customers through the addition of new programs while engaging with prospective customers to pursue additional opportunities to provide them with our solutions.
Speaker Change: Meanwhile, we further matured the Innoviz2 platform and upgraded our advanced AI perception software during the quarter.
Speaker Change: As you saw this morning, we announced that we have reached an important agreement with a major platform partner to supply a bundle of Innoviz 2 short and long-range riders to their Level 4 autonomous driving platform.
Speaker Change: Importantly, this platform has already been selected by several OEM programs.
Speaker Change: This is an important partnership for Innoviz, and we expect that being part of this platform will lead to further opportunities as more OEMs adopt the platform.
Speaker Change: We believe that our selection for this platform is a vote of confidence in our products and technology and has the potential to accelerate the growth of our business.
Speaker Change: We can now provide...
Speaker Change: With the announcement of today, we are now providing a viable short and long-range bundle through a credible partner across multiple OEMs with higher income per vehicle.
Speaker Change: Importantly, adding short-range ladders to our portfolio has also unlocked a new batch of RFI and RFQ opportunities with other customers which we are working to convert.
Speaker Change: As we are likely to gain more level 4 customers, we expect our volumes to grow rapidly and our unit economics to continue to improve while costs decrease.
Speaker Change: This is because we believe we will be meaningfully increasing the number of riders we can offer per vehicle, which should allow us to take advantage of synergies from working off the same Innoviz II platform.
Speaker Change: During the quarter, we continue to mature our technology and progress the industrialization of innovation.
Speaker Change: The Innoviz 2B sample has gone through design changes to better meet SOP requirements in terms of size.
Speaker Change: We do not expect any further changes to the product and anticipate taking this version of the Innoviz 2 to SLP.
Speaker Change: As I mentioned at the beginning of the call, we recently spent time with different potential customers demonstrating the advantages of our advanced AI perception software.
Speaker Change: Innoviz One is already in production and in vehicles on the road with the Perception software.
Speaker Change: A significant portion of our existing and potential customer base sees the AI perception software as a key part of their RFQ requirements. Without AI perception software, lighter companies cannot compete for this business.
Speaker Change: We are pleased to share that just recently two top ten OEMs have indicated their need for AI perception software as part of their requirements. Innoviz has the advantage of already having a product on the road with perception software. These OEMs were impressed by the demonstrations we gave them during our tour.
Speaker Change: Vehicles with level 3 autonomy only require 1-2 liters per vehicle. While level 4 vehicles volumes are growing, the multiples are very high and can vary depending on the type of vehicle.
Speaker Change: We were pleased to share that the Indoor Lab will deploy Innoviz 2 within their airport portfolio with their aims of keeping passengers safe, improving operational efficiencies at airports, and mitigating damage to airport property.
Speaker Change: Innoviz II lighters will be deployed in the Denver International Airport, one of the largest and fastest growing U.S. airports.
Speaker Change: The Nashville International Airport, also one of the fastest growing U.S. airports, and the Tampa International Airport.
Speaker Change: On this program, we were told that we're displacing the previous slider supplier to the program. In our discussions, the Indoor Lab noted they were highly impressed by Innoviz 2's high point cloud density and high frame rates.
Speaker Change: During the quarter, we increased the number of programs in the pipeline, and we see an uptick in interest in our short-range virus.
Speaker Change: One potential new customer, in particular, that was added to the pipeline just over the last quarter. This important potential customer is working with us on an RFQ for their second generation Level 3 Backbone.
Speaker Change: The RFQ is moving along well. The program, which features strong volumes, is expected to launch in 2026.
Speaker Change: In addition, last quarter we mentioned that we were working with a leading level 4 platform company in the tracking space.
Speaker Change: We are in close contact with this customer and met with them just a few weeks ago.
Speaker Change: This partner has multiple customers for this platform. The next step for this program is the supplier agreement.
Speaker Change: We have much to be excited about and we are working tirelessly to advance these opportunities as well as the ones I haven't talked about today with the goal of converting them into new design wins.
Speaker Change: Taking a step back and looking at the market as a whole, OEMs and other customers need technology that meets evolving safety requirements while solving their problems, ultimately delivering a seamless autonomous driving experience.
Speaker Change: Innoviz is a credible tier 1 supplier with a proven ability to execute.
Speaker Change: As we continue to further advance our technology and expand our pipeline, Innoviz is demonstrating its capabilities to address key areas of concern across autonomy levels.
Speaker Change: For example,
Speaker Change: In our conversations, potential customers
Speaker Change: Customers have expressed being impressed by the ability of Innoviz lighters to function in conditions where water or blockages are present without noticeable degradation to visibility.
Speaker Change: A very important KPI.
Speaker Change: Potential and existing customers are noticing the advantages that our technology contributes to a safe driving experience. As a result, we are engaged in various stages of conversations with several potential customers to replace the current LIDAR solutions they are using.
Speaker Change: In addition, right now, given the uptick we're seeing in the short-range customer activity, we're offering both short- and long-range sliders for customers in a bundle.
Speaker Change: We remain confident in our ability to position Innoviz to capitalize on future opportunities for ladders resulting from the regulatory and market activity we are currently observing.
Speaker Change: The past quarter represents another quarter in which we are exceeding our quarterly revenue guidance.
Speaker Change: We delivered $6.7 million in revenue, above the guidance range of $4-5 million. As I mentioned earlier, and Eldar will discuss shortly, we recorded another quarter in which we achieved lower cash burn, displaying our focus on the Innoviz II platform.
Speaker Change: With the positive customer activity we're seeing and our continued momentum through the first half of the year, we reiterate our 2024 operational targets.
Eldar Cegla: Thank you, Omer, and good morning, everyone.
Eldar Cegla: Starting with cash, we ended Q2 2024 with approximately $106.4 million in cash, cash equivalent, bank deposit, marketable securities, and short-term restricted cash on the balance sheet.
Speaker Change: Cash used in operations and capital expenditure came in at $21.6 million compared to $27.6 million in Q2 2023 and compared to $23 million last quarter.
Speaker Change: This decrease in our burn...
Speaker Change: Annually we are expecting this year to be an improvement over last year and we are confident in our ability to maintain decreased levels of cash burn in the future.
Speaker Change: Now turning to the income statement, revenues for Q2 were $6.7 million compared to $1.5 million in Q2 of 2023.
Speaker Change: a track record of financial execution.
Speaker Change: Our Operating Expenses for Q2 2024.
Speaker Change: were $23.3 million, a decrease of 23% from $30.4 million in Q2 2023.
Speaker Change: Research and Development Expenses for Q2 2024 were $16.8 million and decreased from $23.8 million in Q2 2023.
Speaker Change: The Fortune's R&D expenses included $2.6 million attributable to share-based compensation compared to $3.4 million in Q2 2023.
Speaker Change: Overall, we are pleased by Innoviz's continued positive financial trajectory, driven by the strength of our top-line performance coupled with our disciplined approach to expense management.
Ildar: Thank you, Eldar.
Speaker Change: As we close, I'd like to say how honored we were to host the Ecomotion Annual Assembly at our headquarters on June 4th.
Speaker Change: The turnout was incredible, and we were pleased to welcome visitors from across the global industry, including leading OEMs to Innoviz headquarters.
Speaker Change: During the quarter,
Speaker Change: of Importing New Programs and Partnerships.
Speaker Change: The announcement we've made this morning is an important one for Innoviz, which we expect will lead to further opportunities as more OEMs adopt the platform. Our selection for this platform is a vote of confidence in our products and technology and has the potential to accelerate the growth of our business.
Speaker Change: We are taking advantage of new opportunities that are arising in the market to provide existing and potential customers with both our short and long-range providers, while expanding our pipeline to new customers.
Speaker Change: Meanwhile, we are working hard to convert various pipeline opportunities into design wins in the near future. We expect the second half to be meaningful in terms of further progressing these opportunities.
Speaker Change: And with that, Operator, please open up the call for Q&A.
Speaker Change: Thank you.
Speaker Change: Today was pretty hectic for us. This was actually just done today. And we were very anxious whether we can bring it in before the call or not. You can imagine the last few days.
Speaker Change: It is very meaningful.
Speaker Change: So you can get a grasp of what are we talking about.
Speaker Change: In front of other customers that are looking to deploy short-range and long-range riders. We're stepping from here forward, I would say, very confident and satisfied.
Speaker Change: That's great. Well, congratulations on getting that across the finish line and certainly looking forward to seeing how that progresses going forward. A follow-up on this award that you announced today. In June , you had announced an expanded
Speaker Change: following
Speaker Change: It's incremental. Just like, it's incremental. The, the, the, the, the, the, this program adds.
Speaker Change: In addition to what we announced previously.
Speaker Change: And just to confirm, you guys are exclusive with this platform partner as they're going to market?
Speaker Change: We are the only LiDAR provider to this platform. We are actually displacing two other LiDAR companies.
Speaker Change: Well noted. I'll pass it along. Thank you. Thank you. Thank you, Mark. Our next question comes from the line of Andres Sheppard of Canthor. Please go ahead.
Andres Sheppard: Hey Omer, hey Eldar, good afternoon. Thanks for taking our questions and congratulations on another quarter.
Andres Sheppard: I want to touch on maybe the Indoor Laugh LLC program. I'm wondering if you can maybe help quantify some of the details of this agreement. You know, when might you expect deliveries to ramp up?
Speaker Change: Can you give us a sense of, you know, some of the volumes you might be expecting from this? Thank you.
Speaker Change: So what I can share at this point is that we are starting to deliver units to equip
Speaker Change: In terms of number of LIDARs per airport, I would actually let that to IndoorLab to elaborate.
Speaker Change: If I can, that was not sharing.
Speaker Change: Okay, that's helpful. And then maybe coming back to the short-term and long-term LiDAR bundle announcements.
Speaker Change: I realize you're not disclosing the name of the partner, but just wondering if maybe you can give us...
Speaker Change: A little bit more color on the type of client or the specifics of the agreement, you know, how should we be thinking about this from a, from a modeling perspective? Thank you.
Speaker Change: We refer to it as a major platform player.
Speaker Change: And selected.
Speaker Change: and actually already operating with several OEMs.
Speaker Change: using their Level 4 platform.
Speaker Change: and the agreement.
Speaker Change: would now replace the set of sliders they were using with our set of short-range and long-range.
Speaker Change: I gave a range of how many lighters per vehicle, so you can imagine the multiples are very meaningful.
Speaker Change: And having that is we're referring to multiple, already several.
Speaker Change: customers that are within this platform and we are expecting more to come. We are very much, I would say, this is a very, very meaningful program, platform-wise.
Speaker Change: Okay, super helpful. Maybe if I could squeeze one more really quick. Sorry Andres, it is launching in 2026.
Speaker Change: Okay, start of production is 2026. Yes, got it.
Speaker Change: Maybe one last one for Eldar, you know, there was significant improvement in gross margins this quarter.
Speaker Change: I'm wondering if you can maybe help break this down for us, you know, how much of this was related.
Speaker Change: to NREs and you know what type of margins might you expect for later this year particularly with the BMW ramping up in the second half. Thank you.
Eldar Cegla: Sure. So most of our revenues today.
Speaker Change: come from NREs. NREs, as I said in the past, have a positive contribution to our gross margin.
Eldar Cegla: I also mentioned during the call that since the construction of our top line is consistent of both NRE samples and SOP units, we should mainly do two.
Eldar Cegla: BMW
Eldar Cegla: It's still very lumpy.
Eldar Cegla: So, you can see in one...
Eldar Cegla: As long as the NRE factor is growing up to SOP, I think this will have a positive contribution to...
Speaker Change: Thank you. As a reminder, in order to ask a question, please raise your hand using your mobile or desktop application and wait for your name to be announced.
Eldar Cegla: Our next question comes from the line of Kevin Cassidy of Rosenblatt Securities. Please go ahead.
Kevin Cassidy: Yeah, thanks for letting me ask a question. Congratulations on the progress and some of the new wins. You know, for the RoboTaxi and even for your level four that you announced, using more LiDAR, I guess
Speaker Change: It seems robo-taxis have been using, uh, you know,
Speaker Change: There are many kinds of level four applications.
Eldar Cegla: that can benefit from such a platform.
Speaker Change: And then maybe going back to the question, so.
Speaker Change: The answer is yes. We are in discussion with several OEMs that are looking, or platform players, that are looking to industrialize their platform towards their launch. Everyone is aware that once you commercialize,
Speaker Change: You need to meet automotive grade, you need to meet the requirements, it's not enough any longer.
Speaker Change: to work based off a solution that was possibly used for an R&D purposes. They are looking for a product that is already mature, meeting automotive grade, has industrialization plan. And that's why many of them are now reaching out to us.
Speaker Change: to see how they can benefit from our solution as we see here today, but also we talked about the tracking opportunity that we are working on, similar situation there.
Speaker Change: Okay, great. Thanks.
Speaker Change: You know the indoor labs
Speaker Change: So of course we do look for ways where we can scale through the work of good teams such as the INDO lab, but in terms of the Innoviz focus, we're developing lighters for mass production for automotive grade with power perception software.
Speaker Change: on elements that are not related to the, I would say, on-road, highway driving, which we provide to our automotives there.
Speaker Change: Non-automotive water sensors could be in the thousands.
Speaker Change: you know, long range in the automotive and how are you kind of thinking about the pricing, pricing the bundle, or just kind of pricing for the short range glider?
Speaker Change: Thank you. Thank you.
Speaker Change: Innoviz 2 short range is based off Innoviz 2. It's the same platform and it benefits from all of the cost opportunities but also our ability to offer more lighters now is also helping us to scale.
Speaker Change: try to bring more deals to the table. Obviously, once for customers outside automotive market, the prices are also determined by the value that is generated and the application value that you can provide.
Speaker Change: on the level three where the volumes are very high because of the number of vehicles on the road and I would say the challenge there is related to very long range because of the highway and high resolution and very low cost and
Speaker Change: Level 4 was somehow behind and now there is an uptick really in different programs that are ready to commercialize but are looking for automotive grade solutions.
Speaker Change: Their sensitivity for pricing is different than the passenger vehicle because of the value
Speaker Change: They generate, in terms of replacing the professional driver, the number of lighters is different, so for us, you know,
Speaker Change: It's like amazing moving from a car that has one LIDAR to a car that might have 12 LIDARs. It's just mind-blowing how the multiples and the way that the numbers are growing very fast. This is this is really it's
Speaker Change: It's fun, really, it's really refreshing, and we will continue to look on these applications as Level 4. We feel that we have a very strong foot now in this area which is making tests.
O.J. Grove: O.J. Grove
Speaker Change: Got it. Okay. That makes sense. Thank you for that color.
Speaker Change: And then just as a follow-up, so I know you needed to make a few tweaks to the Innoviz 2 to go from long-range to short-range. Are there any changes you need to make to the Innoviz 2 for the indoor lab agreement or kind of non-automotive market, or can you kind of use it as is?
Speaker Change: No, we use it as is. We do not make, as I said, 99.9% focused on automotive.
Speaker Change: I would say applications that are non-automotive benefit from the capacity of our production line.
Speaker Change: and we'll use the availability of the systems that we have. There are many, I would say, even within...
Speaker Change: The long-range and short-range.
Speaker Change: There are also different variants that are defined by software only, which allows us to be very flexible. So this gives us also different, I would say, propositions that we can provide to different teams.
Speaker Change: It's practically a precondition when we are working outside the automotive market.
Speaker Change: We don't need to have any extra efforts or different flavors of the product because the focus is somewhere else and we do not want to have to support it and to have extra expenses around that.
Speaker Change: Got it. Got it. Okay. That makes sense. Okay. Perfect. I appreciate the color guys. Thank you.
Speaker Change: Welcome. Thank you. If you have no further questions, you may proceed.
Speaker Change: Chris, thanks again to everyone for joining us this morning. We look forward to seeing you next time.
Chris: to updating you next quarter on the continued progress we are making here at Innoviz.
Speaker Change: Thank you, everyone.
Chris: I appreciate you joining us.
Speaker Change: You can see it's a very exciting time for us at Innoviz.
Speaker Change: We just announced, I don't think, I told my team to go on the earnings call to hear the news, you know, nobody heard.
Speaker Change: I'm going to hug the team now, so thank you very much, bye bye.
Speaker Change: and the next person in the list is... ... ... ... ... ... ... ... ... ... ... ... ... ...