Q3 2024 Mobileye Global Inc Earnings Call
Ovalon, over the first half of 2024.
Turning to the future, I would like to spend a few minutes reflecting on this strategic objective that we established several years ago to guide phase one of mobilized return to the public markets. Our objectives are as follows.
The QR long term A-dash position with core customers and looked to expand into new customers when opportunities present themselves.
The ploy, iQI, they supervision in China as a proof point to our global customers and as a beachhead for advanced products growth.
The
Development Launch our IQ Six-Based products on time and on quality, including integration of cutting edge AI technology in the software stack.
Deep in the relationships with our core customers by securing design wins with our advanced product support for you including superficial, short-for-end life.
Lastly, maintain a high level of profitability.
Now we have clearly experienced unsourcing headwinds that have impacted 2024 and 2025 market expectations, but in terms of the strategic objective, intended to set up.
As up for major top-line growth and operating leverage in 2026 and beyond, we believe we have made substantial progress.
First, in terms of AEDAS, our top 10 customers represent more than 80% of our volume and approximately 50% of current global auto production.
If we look across 2022 to a 2024, we have achieved follow-on aid of design wins from all of these automakers. The vast majority of these projects extend our business with these OEMs into the early 2030s.
Outside of China, we have seen known you or existing competitors and more to challenge us for these customers.
Second, regulatory environment is creating unexpected additional tailwinds, with end of decade testing protocols adding very challenging scenarios that are expected to require analysis and processing of data for additional sensors.
We believe the continued expansion of required aid of performance benefits us as a technology leader and provide opportunities for higher ASP systems such as surround aid us.
The successful launch of our supervision system in China was the critical proof point on our advanced products and our ability as a tier 1. It was an important catalyst for the Volkswagen Group design wins, which in turn led to interest from other global customers.
On that note, at the time of the IPO, we had engaged with one or two of our top 10 customers in terms of surround aid us supervision and so forth.
including the production programs with the Volkswagen Group, we now have advanced pre-designed win engagements with nine out of the top 10 as well as a number of other OEMs.
Converting these pre-designed wins engagements into production agreements as critical to set us up for the second phase of our strategy.
Beginning in the second half of 2026, where we expect advanced products to lead to a major acceleration of growth from mobile-eye.
While exact timing is difficult to predict, we may consider the conversion given C-Suit endorsement to many of these engagements and actions by the OEM that we believe signal to our commitment.
Finally, in terms of IQ-6 high execution, we are increasingly confident in our AI-driven software stock, the hardware and the ECU in terms of providing the best combination globally, of course that performance measured by meantime between critical intervention.
The ability to demonstrate this performance to customers and with the world scenarios, using the IQ6 hardware has been a key driver of continued progress towards design win.
In terms of our technology, we recently posted presentations that myself and Shai reported earlier this month, representing what I believe is the deepest and most detailed exposure of our technology approach ever.
It's two hours of content, so it worries some commitment, but it lays out our compound AI approach, which we believe is the right methodology to take the general revolution in AI and tailor it to solve a specific problem like self-driving, where precision matters most.
and Edge Compute is Conscreen. It can be accessed on mobileys YouTube page or just reach out to the link.
Finally, we're excited to host Analysts and Investors at our Capital Market today in Munich in December. We'll have real world demonstrations of the current IQ 5 based supervision system and our latest Robotaxi vehicle to give you a sense of the current introduction technology.
Then we plan to go deep on specific technologies that are included in the IQ-65 advanced product generation that will be used by Volkswagen Group and other global OEMs were engaged with.
where we can demonstrate significant improvements to the eyes on products but even more importantly, line of sight to an intervention rate that supports eyes of driving in a scalable way.
These step change improvements are driven by meaningful integration of transformer based architectures and end-to-end techniques across our stack, unique ways of utilizing our massive database and innovative approaches that we use processing power needs at the edge.
Additionally, we'll provide updates on the progress of our production programs with 4th Wagen Group for Supervision Shafar and Drive, the learnings of which we can be leverage for other customers.
Finally, we'll get a comprehensive overview of the market landscape and the framework of how to value our advanced product design wins when they come. Thanks and I will now turn the call over to Moran.
Moran: Thank you Amnon and thanks for joining the Call of Woon.
Moran: Before I begin, please be aware that all my common negativity will be referred to now and that measurement.
Moran: The primary exclusion in mobilized non-gap numbers is a more tisession of intangible assets which is mainly related to inter the acquisition of mobilized in 2017. We also exclude some dense compensation and the goodwill in permanent reference in earnings relief.
Moran: Our Q3 results likely exceeded the Q3 Outlook Color we provided back in all.
Moran: Revenue was down 8% year over here. As Amnon mentioned, Robert production was down 30 significantly in the quarter, particularly for our top 10 customers. But the bigger factor was the significant decline in our volume to China, OEM, which was down more than 50%.
Moran: Rojansky, World Margin, was down one point. This was expected and mainly related to the combination of slightly lower IQ ASP as well as higher IQ related costs per unit, given a different mix of IQ generation souls.
Moran: This was partially offset by higher supervision in World Margin.
Moran: Operating expenses were largely in line with expectations.
Moran: Higher Headcount, the Prisionation, Program Development Expenses related to the VW Group's supervision and show fair programs, mobility as a service, testing and customer support operations and significantly higher spending on technologies approaching production, like at you six high and imaging radar, have driven year over year increases throughout 2024.
Moran: We also conclude about five million of restructuring expenses associated with the lighter unit closure in history
Moran: Looking ahead on Opx, we'd expect to spend some hot blessings you've got in two weeks
Moran: which should drive some modern improvements in operating margin. Mori Portland League, due to the lighter unit closure and relatively stable has some expectations, we expect to be able to hold quarterly objects as or below the Q3 level on average in 2025.
Moran: Iran's 600 million of our non-gap operating expenses are dedicated to products that are either yet too lounged or are at low volumes today. Given the scalability of our company, this means that the current level of optics is capable of supporting a much-lubbed.
Moran: Lager Revenue, level turning to the guidance.
Moran: We maintain the revenue and just the operating income guidance at the midpoint and narrow the range. Guapo-pureting income is lower due to the goodwill impairment. The revenue guidance is based on 12.24 IQ volumes between...
Moran: 28.4 and 28.8 million units and supervision between 110,120,000 units.
Ezir: Ezir, all likely aware, supervision is now only a portion of the Kuzir's 1 volume as of September 1.
Ezir: This was incorporated into our prior guidance, but they take place a few summons lower than assumed. The supervision volume in Q4 is expected to be around 15,000 units, with half of that coming from poster 4.
Ezir: We spend a lot of time on China on the prior early school. Now that the dust has settled a bit, we thought it would be helpful to side the business.
Ezir: In terms of the Q3 results, shipment of IQ and supervision units into China represented about 20% of our overall revenue, excluding supervision units for vehicles sold outside China.
Ezir: This was split between IQ units to local China OEM at about 3%.
Ezir: IQ units to non-Chinese OEMs producing in China at 1%
Ezir: and Supervision for Vehicle Sold in China at about 5%. In Q4, we expect China as a whole to represent a similar percentage of our revenue, but for Supervision units for Vehicle Sold in China to represent about 2% of our revenue.
Ezir: Please note these numbers one match exactly with the geographic revenue disclosure in the quarterly filing because also provision units are currently shipped to China and included in that region in the quarterly disclosure whether the vehicles are sold domestically or exported.
Ezir: Learning to operating cash flow.
Ezir: The 106-million were generated in Q3, was hired then adjusted net income, even if we adjust for working capital, which was an approximate of 30-million benefit in the quarter.
Ezir: We expect this dynamic to continue in the fourth quarter. Lessley in terms of the tax rate, we assume an on-gap effective tax rate of between 18 to 20% for 2024. Thank you and we will now take your questions.
Speaker Change: Thank you. We'll now be conducting a question and answer session.
Speaker Change: If you would like to ask a question, please press star 1 on your telephone keypad.
Speaker Change: A confirmation told him on the case your line is in the question queue. You may press star 2 if you'd like to remove your question of the queue. For participants using speaker equipment, and maybe necessary to pick up your hands that before pressing the star keys.
Speaker Change: Thank you. Our first question is from Joshua Bocalter with 2D Cowan. Please pursue your question.
Joshua Bocalter: Hey guys, thank you for taking my question and I appreciate all the details you just gave on Units in and in and out of China and around Supervision and Joe for...
Speaker Change: [inaudible] I'm a great fan of the show.
Speaker Change: Thanks. Thanks Josh for the question. This is Dan. It's too early to talk specifically about 2025. We're still working with our customers to understand.
Speaker Change: The expected orders for next year, but I can make some high-level comments. We'd expect 2025 to benefit from the resolution of the inventory digestion that happened in the first half of 2024.
Speaker Change: In other words, the second half run rate in terms of IQ volume of around 35 million units is a better starting point than the actual shipments in 2024.
Speaker Change: Then it's important to focus in on our top 10 customers, the expected production growth or decline of those customers in 2025.
Speaker Change: Many of these OEMs have been facing headwinds in China that also affect our volume. And we think it's reasonable to expect that to continue in 2025, but that would all be included in kind of whatever the production expectations are for those customers.
Speaker Change: Next, we'd expect to outperform the production of those customers in the mid-single digit range, as we continue to benefit from ADF's adoption growth and growing share within some of those customers.
Speaker Change: For example, in Q3 we outperform by a bit more than 5 points.
Speaker Change: We could also see headwinds from local China OEMs. However, our total shipments in 2024 are forecasted at around 1.5 million units. So any declines here would not be very material.
Speaker Change: Finally, on the IQ side, we'd also suggest incorporating some buffer to reflect the risk macro volatility, could lead to a reduction in third party global auto forecast by the time we get to 2025.
Speaker Change: On supervision, again, we're still working with the customers to understand the expected orders for 25. This has been so volatile over the last two years that it's...
Speaker Change: It's really impossible for us to have good visibility on 25 volumes with any specificity at this time. Also the materiality to near-term revenue is much lower today than it has been. We'll have more to say in January or potentially at the investor day and December on that.
Speaker Change: Thank you, you really appreciate all the color there and I guess for my follow up.
Speaker Change: It seems like things have stabilized from an inventory perspective, certainly in the West.
Speaker Change: and it also feels like this market in particular for Core 8 asks is by for Cating into the West versus China. Recognize it again, China's going to be the auto and there's ongoing shared dynamics there. Maybe you can give us, you know,
Speaker Change: and New sort of normalized, how are you thinking about quarry, dash growth from either a union or a, with both units and ASPs, specifically at your Western customers, the curious, you know, again, now I think the stabilize to get a better feel for what normalized growth could look like specifically in quarry, dash. Thank you.
Speaker Change: i
Speaker Change: Yeah, I think I think um...
Speaker Change: You know, I think it's kind of been in my first answer, right? Like within our top 10 customers, we would continue to expect to outgrow their global production by mid-Single digits because of growing share within those customers because of.
Speaker Change: Aedatsadoxin growth, and that would kind of bacon, you know, any kind of, you know, reductions that they would have in China, which I think, you know, it's already, you know, significantly smaller, there than it has been.
Speaker Change: I can add more.
Speaker Change: So near term, the tailwind comes from going back to normal inventory levels, which we expect to start happening.
Speaker Change: I start happening next year. Longer term, as Amnon mentioned in these comments.
Speaker Change: Over the past two years, we have won the vast majority of business opened by our existing customers, which secures our position within these customers, went into the next decade. And also we have created opportunities to win Core A-DAS business with OEMs that are today not our customers.
Speaker Change: So, longer term growth in volumes in aid as will come from continuing to increase our market here with our existing customers as well as winning new business with OEMs that are today not in our customer base.
Speaker Change: Our diverse product portfolio enables us to create new types of deals that are attracting OEMs. It previously were not, maybe, no, where closer circle of OEMs.
Speaker Change: In addition to this, Amnon also mentioned the push from regulation to increase the content in ADF requires more sophisticated software and more sophisticated sensors to continue to be compliant with all Western regulation.
Speaker Change: This is also a good tailwind for our ASP in the back in the next few years. Hopefully it answers the question.
Speaker Change: Yes, it does. Thank you both.
Joshua Bocalter: Thanks Josh.
Speaker Change: Thank you. Our next question is from Mark Delaney with Dolphin Stacks. Please pursue with your question.
Mark Delaney: Yes, thank you very much for taking my questions.
Mark Delaney: First, I'm going to provide more detail on the customer engagement with your advanced solutions. We're there any decisions that went against MobileI or have been meaningfully delayed into 2025 compared to 90 days ago. Can you share more of the color on the progress you're having with these engagements for your more advanced solutions, specifically around supervision and chipper?
Speaker Change: Yeah, I'll take this so
Speaker Change: There has been no decision made against mobile in the past 90 days.
Speaker Change: and I'm going to answer your first question. And we continue to make progress with all of the engagements we've had. And we also see more and more evidence that the power OEM partners are deciding towards a product and advanced product to be launched in the next few years, and the our competitive position is...
Speaker Change: probably the best suited to win in the majority of these opportunities. For example, some OEMs have already initiated the process of securing sensors and other components in the system that are necessary for our advanced solutions. Other OEMs are now in the final stages of
Speaker Change: The commercial evaluation and the final negotiation rounds towards a decision, and we have not seen any material delay into the next year. As Amnon mentioned, it's...
Speaker Change: The decision making timelines are a little bit dynamic and it's not barely in our control, but we do see that we make continued.
Speaker Change: and the progress towards decisions and that the OEMs are continuing to invest and to secure all the necessary elements to enable such a system in their next product launch.
Speaker Change: Thank you for that. But second question was just better understanding that the cyclical and inventory environment. The company left its revenue guidance for the year unchanged.
Speaker Change: [inaudible]
Speaker Change: Maybe you could talk a little bit more about how you see inventory at Tier 1 and or at OEMs and you're tracking that much more closely and you know, her, Dan, your comment round outgrowth for next year but did want to check on how you guys see inventory levels and is there any risk of inventory having been built up at your customers? Thank you.
Speaker Change: Yeah.
Speaker Change: We are very much encouraged by the trend of the year.
Speaker Change: So seeing a very significant increase from Q1 to Q2, then 11% from Q2 to Q3, kind of set our expectation or relief that the inventory, and Q2 is behind us on the first half. Also from Q3 to Q4, we do see a more of a increase in IQ, but it's something that again is.
Speaker Change: and reflects normalized levels of inventory and we believe reflects the market demand.
Speaker Change: So, Q3M and Q4R3D.
Speaker Change: Simala, which again, aims at the inventory for the first half of the year. That's for your question.
Speaker Change: Production, a further production decrease that happens. We had some change in mix between OEMs this year versus last forecast. So for some OEMs that were used, but we had some project for the clonches in the second part of the year. China, local OEMs have been a bit better, so there was some change in mix, but overall.
Speaker Change: I'm so lined with our expectations.
Speaker Change: Thank you.
Speaker Change: Thank you Mark.
Speaker Change: Our next question is from Edison You with Dolly Chabank. Please proceed with your question.
Speaker Change: Thank you for taking our questions. First one is on the comments you made about 20, 6, obviously there's some very big programs launching the end very important for the gross inspection.
Speaker Change: How are we feeling about the timing and the take risks? I'm really not, you know, I'm providing some specific, but obviously we've seen some big program delays from some of the legacy OEM, so wondering kind of your confidence level in.
Speaker Change: in those marchers.
Speaker Change: So far we are on track with the project milestones. So we continue to execute and do...
Speaker Change: Meet all of the major milestones for integration, so from the execution standpoint, the currency have good confidence in meeting the back half of the 2026 and onwards product launches.
Speaker Change: Of course there could be changes due to reasons unrelated to us directly. OEMs have their own considerations and potentially lead to some delays, but at this point we have our plans are intact and we continue to make progress.
Speaker Change: and all of France and will provide more color on this in the capital market day in December.
Speaker Change: and then just more of a, I guess, on the AI side. Obviously, there's a lot of focus on interventions, this engagement, I think, especially if the late as there's more coming out there, who's...
Speaker Change: and provide you know kind of constant.
Speaker Change: and Metrics on that, or they're trying to gauge its reminders how you're thinking about the thresholds for interventions in terms of the various.
Speaker Change: Levels of the Thomas driving and what sort of the timeline or roadmap you envision for performance to reach shows thresholds.
Speaker Change: What's with him?
Speaker Change: We believe that the notion is much more complex than just intervention rate.
Speaker Change: When you look about classifying failures, they are identifiable failures in the system, they are reproducible failures in the system. There are black swans.
Speaker Change: and the type of failures when they're looking about intervention rate.
Speaker Change: There are certain failures that you want to have zero intervention rate. For example, if an error with a failure is reproducible, you want to fix it. And not that it can surface again.
Speaker Change: We are now at the point of publishing a very extensive and comprehensive safety outlook in which
Speaker Change: How, in which the way Fusion of Sensors and the way intervention is measured would be made very explicit. And we'll talk about it in our capital day capital market day in December.
Speaker Change: Today's intervention rate in our supervision is measured by...
Speaker Change: by ours. So roughly 10 hours or so. We have a line of sight for our supervision 6th on the IQ 6th next generation.
Speaker Change: of about 1000 hours in the invention rate just for the camera subsystem and then when you put together
Speaker Change: The Active Centers, Radars and Front facing Ladar will have another step function in terms of intervention rate which is crucial for an eyes-off system.
Speaker Change: Now intervention rate of eyes of the system at the end of the day should be at least in the tens of tens of thousands of hours of, of driving, it's hard for us to see.
Speaker Change: and a credible eyes of a system with a lower intervention rate. And that, and we are on track to achieve it. And more details would be presented at the capital markets day and also the safety report, which would be published in about a month or so.
Speaker Change: Many thanks to the colors.
Speaker Change: Thank you, Adam.
Speaker Change: Our next question is from Dan Levy with Park Lays. Please proceed with your question.
Speaker Change: i
Speaker Change: is it?
Dan Levy: Just, first I had a question.
Dan Levy: Around customer discussions and interests, as we've seen, you know, if you've seen any meaningful changes in the interest from your advanced products associated with a site potential competitive pressures from Tesla and if there's anything in the report actually day.
Dan Levy: I'm not a naïve.
Speaker Change: Yes, I'll answer about the...
Speaker Change: We're all the taxi today. I think the test are all the taxi day.
Speaker Change: Green Force is what we have been seeing in the past months, which is the revival of the Robot Activision as a realistic end of the world.
Speaker Change: This comes together with way-most new equity round, the high market capital, the big investments in promising startups.
Speaker Change: Now this helps mobilize shining light on our own robot activity, which is based on production development with OEMs like Volkswagen's ADMT and the ID Buds Ziplat Form.
Speaker Change: Holon Mover by Bentellar, Shafler in VDL platform and Verne, which we announced a few few months ago, and we have more in the pipeline. So the leading customer is ADMT on the ID bus platform and the development is moving well. I will go all of building an affordable self-rising system.
Speaker Change: For Powering Robotoxy is very advanced and will make deep dive demonstrations during the IR day in December.
Speaker Change: Now, so far in the past year we have been focusing on this course more on supervision and so forth.
Speaker Change: But we have a very active and lively activity on Robotaxi. This is something that we didn't talk much about in the last year and we'll make a focus of it on our capital markets day in December.
Speaker Change: and just to follow up on the applications and other OEMs as a result of this as Robot Activity.
Speaker Change: So we have seen the appetite from OEMs to similar systems before the robot actually.
Speaker Change: We see a realization amongst our aims that the next generation of driver systems is going to be a step-function improvement and capabilities and performance compared to today's system.
Speaker Change: and they also understand that technology companies leading technology companies like Mobilei and Tesla make very very quick progress towards this new generation.
Speaker Change: and as a result, looking for most of our customers have it as a kind of within their brand identity to be top of the line in aid us performance. It's been important for them for the past maybe two decades and it will continue to be important to them and they understand it now.
Speaker Change: is going to be required from them to do something completely different than a simple incremental improvement.
Speaker Change: and we are being perceived as in some cases.
Speaker Change: and Patensha Leigh, the most relevant solution for the next two to three years.
Speaker Change: especially if you think about the chances of meeting.
Speaker Change: SOP deadlines, and with everything involved in this.
Speaker Change: functional performance, execution of a project, hardware design, software design and reputation. And this is really helping us to surface as a leading candidate in all of these engagements.
Speaker Change: and in addition, this robot taxi angle that Amnon just laid out.
Speaker Change: also created an opportunity with OEMs that also wants to play into Robotax in a similar way to how folks
Speaker Change: have a program with us and Robotaxi with another major global OEM that has started a similar activity with us. It's a little bit more early in the process, but it also is an encouraging sign of the push from the market.
Speaker Change: This is very helpful. Thank you for all the color there. Just as a follow-up, I appreciate you're not ready to give an outlook for 2025 but...
Speaker Change: Without kidding in specifics.
Speaker Change: On Numbers, could you just help give us a maybe a directional sense?
Speaker Change: As the House of 2020, five supervision volumes will change from the 15,000 that you noted for full queue, including half of that coming from the full start floor. Just as a sense of where the volumes are going to trend from that, if you will.
Speaker Change: Yeah, so I think that...
Speaker Change: I think that you've got the right starting point, right? Is it kind of what the current run rate is?
Speaker Change: and then you have to think that in terms of there are some upside potentials there. Post our four was we were only producing for that in the second half.
Speaker Change: You do have, you know, such a new customer in 2025 as well, but, you know, visibility.
Speaker Change: In terms of Chinese OEMs is very difficult to call.
Speaker Change: But then you also have, you know, downside risks as well. In terms of, you know, you're working with, you know, Chinese OEMs that we, again, we don't have much visibility on.
Speaker Change: and startups. So, you know, I think that, you know, looking at the current run rate as a good starting point for 2025, but we really don't have enough information right now to get specific.
Speaker Change: Thanks for that.
Speaker Change: i
Speaker Change: Thanks for ever.
Speaker Change: Thank you, our next question is from Adam Jonas with Morgan Stanley. Please proceed with your question.
Adam Jonas: Thanks everybody. So you have the Core 8S and nobody's stream that is essentially a 90% of your revenue today and I think
Adam Jonas: People on the call understand that that will last and they buy the...
Adam Jonas: See that you're renewing and growing enough with your existing customers and new customers to keep that in the new industry.
Adam Jonas: [inaudible]
Speaker Change: But are the earnings power from that annuity stream enough combined, basically to fund the Kpex Narndy required?
Speaker Change: For those longer term options, really stepping up supervision.
Speaker Change: Shoefer and Drive to support your customers.
Speaker Change: and I guess it's more of a strategic question. When would we see the quantum of your spending step up?
Speaker Change: is an at timing thing that it's kind of...
Speaker Change: in sync with the wins that you would get in development with that required outside capital or working with a partner.
Speaker Change: But we are, if you analyze our U3 spending, we're talking about about one million, one billion dollars of topics. I think for 2025, we don't need more than that.
Speaker Change: There would be certain programs, supervision and so forth, that once we get the design when we think we'll need some headcount increase.
Speaker Change: In specific sites, very local to those customers. But again, this is tens of millions of dollars of increase in budget. It's not something really material. I think in terms of...
Speaker Change: We have all what we need to meet the goals and let's repeat the goals. One is to maintain a dust and a dust is an evolving field.
Speaker Change: The testing is becoming more and more complex. Programs are starting to require multiple sensors, what we call surround data.
Speaker Change: To support that, to support the supervision, to support your firm, and to support life. And all of this is ongoing simultaneously. It's not that there is one area in which one of the supporting. And the $1 billion we have in optics is completely sufficient.
Speaker Change: To fuel our growth going forward and just to give color out of this $1 billion opx.
Speaker Change: 600 million of it is purely on future investments in AI and things that are not related.
Speaker Change: to supporting the production programs. So I think we are very well equipped to meeting all the future challenges.
Speaker Change: With the level of income that we have and even though we didn't give numbers for 2025, clearly we are expecting growth in 2025 in terms of revenue, just because of the inventory issue that has been normalized. And we expect.
Speaker Change: Our operating cash flow in 2025 to be higher than the operating cash flow in 2024.
Speaker Change: Not to mention that we have a war test today of around $1.4 billion.
Speaker Change: in cash to help us both in acquisitions and unexpected growth that will need to have. I think we have all what we need to support our growth.
Speaker Change: Thanks, Amnon.
Adam Jonas: Thank you Adam.
Speaker Change: Thank you. Our next question is from George Giorghear Gianna Ricoz with Canacord Genuity. Please say with your question.
Speaker Change: Hi, good morning and thank you for taking my question. I'm just curious to see whether there's any progress on a segment that you've discussed.
Speaker Change: and the past about emerging market. Chipsets, wondering if you have any update there, is there any problem she's made with some of your potential customers?
Speaker Change: So if you refer to the lower cost solutions for emerging markets, find us incorrectly.
Speaker Change: Yes, it's correct.
Speaker Change: We have been working with some of our Tier 1 partners on improving cost-optimized systems specification that is really well-optimized for emerging markets where
Speaker Change: and kind of the software necessary entry level. And there is kind of a lower price point to start with. And we are on track to be production ready within a year with this lower cost.
Speaker Change: System Speck. It's not just our product that is being optimized but also the components necessary for all products that are delivered by the two one partners. And we are well-unfracted to this.
Speaker Change: Thank you. Maybe as a follow up and more of a technology, go ahead and sign.
Speaker Change: Just wanted to add more, one more sentence that we have been also winning few important R-SQs in India which is one of the...
Speaker Change: and the government's emerging markets in automotive and in aid specifically as we see more and more of preparations towards future regulation coming up and we are in a prime position to be leading the Indian market as well in the similar fashion to where we are leading global markets.
Speaker Change: Thank you. Maybe as a follow up just from a technology perspective, you've had a lot of announcements regarding imaging radar, FMCW light, just trying to be clear as to what where you think the sensor sets evolve.
Speaker Change: and over the next call at the end of the year, in the 2030s, you still envision vehicles that have all three sensors that's cameras.
Speaker Change: Radar and Lidar, or do you think that your imaging radar is going to replace some of the Lidar functionality. Thank you.
Speaker Change: I think it's a very interesting question, and the answer I can give is on the speculative.
Speaker Change: We feel that imaging radar is key. This is why we put so much investments in 2018. And this area and building an imaging radar that is...
Speaker Change: With a huge gap to anything else you see on the market or people are developing.
Speaker Change: and we'll have more news in the coming months about our imaging radars. Our bee samples are operating to the theoretical spec that we imagined a few years ago.
Speaker Change: and the start of production of next year is on track. So, I also believe that imaging radar is really a key sensor to complement the cameras.
Speaker Change: The
Speaker Change: In the coming years, there will be also a ladder. At least a front facing ladder when you're talking about the programs and our drive programs, there are multiple ladders providing 360 coverage.
Speaker Change: Whether you would need ladders saying they can't.
Speaker Change: I can't imagine a world in which it's just a camera as an image in the way there's.
Speaker Change: Parades, the moment of speculative.
Speaker Change: So at the moment we are using all three sensors and we'll see how we...
Speaker Change: and how we how this will play out in the coming years. Just to mention that our Narogataxi activity.
Speaker Change: Our imaging radar is an integral part of it, our 5 imaging radars in our robot axiiftivity.
Speaker Change: and just to follow up, we have seen the uniqueness of our imaging radar has attracted interest from players who are not in our customer base today but have strong interest in competing in driverless or eyes off space and have reached out to us.
Speaker Change: Specifically for this image engraved are. So just a signal, kind of how it's being perceived in the market and its performance and uniqueness.
Speaker Change: Thank you. Thank you George.
Speaker Change: Thank you. Our next question is from Antoine Shiba with New Street Research. Please proceed with your question.
Speaker Change: Good afternoon, thanks for taking my questions. As you mentioned earlier, Zika started using its in-house software in September, and in the video hardware for the majority of the Zika 01 sold in China.
Speaker Change: Can you maybe walk us through what happened there?
Speaker Change: How they were able to achieve that, how you see the performance of their in-house system, maybe measured in time between critical intervention, compares to the 10 hours that you mentioned earlier for supervision.
Speaker Change: The outtake of the Zikers in-house system, it costs twice as much of the hours and has similar performance. I don't want to get into the nuances where the performance is higher and where the performance is lower. I would say it's similar.
Speaker Change: But this tells you something that there's something strategic here. Now, Zika was very open about her in-house development early on.
Speaker Change: While we didn't think so at the time we now realize that no matter what we could have done, we would have been eventually replaced by the in-house system regardless of cost.
Speaker Change: Now there is a major top-down push in China for critical technologies to be developed locally at the end of the end of the year
Speaker Change: Nevertheless, we see further benefits gained from the relationship. First, we still have a fleet of about 300,000 zika vehicles on the road that are generating feedback from the consumers and we use that to improve the overall software stack.
Speaker Change: The Gillian Zika Relationship will continue to help us build our room in China, which is very important as our global customers want a supervision system that works globally. And we still believe that this can be an important driver of business to Chinese OEMs over time.
Speaker Change: We are working on delivering a very sophisticated parking system to Zika in the coming months. China is very automated parking forward, I would say. And this work and collaboration will benefit us in benefit of globally.
Speaker Change: Thank you very much for the color and maybe as a quick follow up.
Speaker Change: So can you elaborate on the challenges that you faced in building Remy in China? I believe you mentioned practical and regulatory hurdles in the past.
Speaker Change: Can you maybe elaborate a bit more on this and what gives you the confidence that you will overcome these challenges and offer competitive advanced products in China.
Speaker Change: We've been working in China with local map providers to make sure that our technology is fully compliant and meets a lot of the local standards and we've been compliant since we started working in China and we will continue to do so and this is how we manage to launch products in production.
Speaker Change: Thank you.
Speaker Change: Thank you and power next.
Speaker Change: Thank you. Our next question is from John Gapka, who is Bank of America. Please proceed with your question.
John Gapka: I guess my question partly tags on to last in a little bit, but I guess what I'm wondering is...
John Gapka: I won't be able to talk to me, you know, I'm recognizing there, or maybe as a specific
John Gapka: You know, gap between each one but as you go from like level two to level three to level four and ultimately you know eventually hopefully level five
John Gapka: Is there a point at which you view the component environment as potentially getting less competitive over time?
John Gapka: I guess the question is we've started to see a lot more competition in the market.
John Gapka: You know, in terms of some of these level of lawfreens, but as the market develops and as, you know, gets more sophisticated due to expect that as you get to, you know, higher level, higher higher aspects of level 3 and into level 4 that competitive environment may be changes so you have a higher competitive advantage. If you could just kind of talk about that that'd be helpful.
Speaker Change: Well, I think what separates.
Speaker Change: I will say a nice demo from a production system in this area of autonomy.
Speaker Change: is safety and safety is not just a word, it's not just the meantime between interventions.
Speaker Change: There's a fairly operational use of validation. There are so many things going on there. And as you go up the stack of autonomy.
Speaker Change: The situation becomes more and more complicated because you need to reach very high precision.
Speaker Change: and very high precision is something that...
Speaker Change: You don't see in many products, you see it in aircrafts and airplanes. You don't see it in day by day products like on your smartphone.
Speaker Change: But in order to reach a high level of autonomy, you need a system where its precision is incredibly high.
Speaker Change: and reaching those high level of precision with a cost of optimized products that can meet a consumer level demand is hugely challenging.
Speaker Change: and I think mobilized is really in the pole position to meet those requirements on one hand to reach very high precision.
Speaker Change: and on the second hand, be very cost-optimized, both in terms of the silicon, in terms of the software, in terms of what kind of sensors are being used, in terms of the infrastructure, online and offline, in terms of the efficiencies of algorithm, some of this.
Speaker Change: Some of those would be talked about that I will a-a-i-day, this two-hour talk.
Speaker Change: and the both me and Anshai, we elaborated what goes into our autonomy software stack in terms of the efficiency and how we bring the precision to be at the production level. So I think as we go up the stack,
Speaker Change: The level of competition should decrease and not increase because it's a very very complex.
Speaker Change: and the Board. And just to follow up, even in the entry segment of the data, which is a market that has been developed over the course of the past two decades.
Speaker Change: We are still able to maintain a very significant leadership position in this segment.
Speaker Change: Even though competitive pressure might have been coming and going.
Speaker Change: A lot of it is because of our technology advantages, but also our reputation and our execution capabilities.
Speaker Change: and there are more things that are involved in launching a product and just in the past year there have been a few articles about OEMs that needed to do recalls about it because of safety, in programs that they selected competing solutions even for the quote unquote simpler systems.
Speaker Change: So I think it's been realized more and more and as evident in the past two years we've managed to win the vast majority of the businesses that our core customers have issued.
Speaker Change: I'll say also a case in point in this if we're talking about base A-das
Speaker Change: Gaitsen Point is that the recent U.S. end-cap ratings of the B.Y.D's Atto 3 driving a system, where the rating was so low that it was the first time such a low rating was ever given.
Speaker Change: So, this comes to show that even if you are looking at an entry level driving assistive system.
Speaker Change: Being able to meet the performance requirements, at least the performance requirements in Western countries, meeting those requirements is a very complex task, especially if you want to control costs.
Speaker Change: Yeah, I mean, just this kind of tie it all together because I think it's a really good question, John, like the things that...
Speaker Change: Enok.
Speaker Change: kind of reduce the competitive environment and probably are best for us.
Speaker Change: Thanks for that. And then just one quick one. Did you provide an update on supervision volumes for a 3Q? I might have missed it.
Speaker Change: Yeah, it was around 30,000 units.
Speaker Change: Thank you.
Speaker Change: Thank you, our next question is from Nick Doyle, who has a need of company. Please proceed with your question.
Nick Doyle: I got to make a little on for Climbalton. Thanks for taking our questions. Just the first one, did you guys have any thoughts on the news outweighment of achieving this 150,000 ride per week? Is that the type of goal you set for yourself or you just think about it a completely different way? Thanks.
Speaker Change: Now I think that that news is very encouraging.
Speaker Change: and others said before when I mentioned the Tesla's Robotaxi Day, I think the latest success.
Speaker Change: of the way-mold is kind of creating a revival of interest in robot axes. I think this is...
Speaker Change: This is very encouraging data
Speaker Change: I think the next challenge and the Robotaxi is not the number of the autonomous rides is how to bring the economies at scale. So for example there is a tail operation issues.
Speaker Change: that question is, how many people in the back office you have in other support those drives?
Speaker Change: So there is system cost there. So I believe that over time.
Speaker Change: If the teleoperation activity would get reduced using more advanced technologies, when talking about offline technologies, this could bring the economies even to a more attractive level. But I think...
Speaker Change: The industry now is on a very interesting trajectory.
Speaker Change: Thanks and then the other one is recent news base. You know, it is the new EU tariffs on the Chinese.
Speaker Change: OEMs, is that incremental to the prior IQ or supervision and volume expectations built in that you're talking about today.
Speaker Change: Yeah, I think that the European tariffs were expected and have already been kind of reflected in kind of the metrics we've been reporting today.
Speaker Change: Thanks.
Speaker Change: Thanks Nick.
Speaker Change: Thank you. Our next question is from Aaron Raekers with Wells Fargo. Please pursue with your question.
Speaker Change: Hi, this is Jake Wilhelm on for Aaron. Thanks for the question. I was wondering if you could give a little additional color on the SP drop you saw from IT feature bundles.
Speaker Change: I see that changing it heading into 2025 and maybe just talk a little bit about the mix within ICO.
Speaker Change: So, in terms of SP,
Speaker Change: We don't anticipate any significant changes in the near term trajectory.
Speaker Change: This year, we had a pretty volatile year in terms of Nick's, within the IQ because of the inventory issues.
Speaker Change: wanted to use the volumes were very different between the quarters.
Speaker Change: So we saw some volatility within the quarters but in terms of our trajectory for 2024 and also in the new term We don't see any significant changes of corporate or moving pieces.
Speaker Change: like some positive such high feature bundles versus negative pricing, fishery and China, but overall we don't anticipate them all, that they're there.
Speaker Change: Okay, thanks. Maybe just a follow-up as wondering if you can give a little color maybe on the adoption rate for ICU light. Do you see that cannibalizing supervision, shipments in the future at all? Obviously, you know, not as powerful.
Speaker Change: Now, I can slide it as our next generation base ADAS chip that is very, very cost-optimized and part consumption optimized to support entry-level regulation, five-star uran cap for the entry segment and it's a different segment than the higher and more advanced ADAS solution.
Speaker Change: and we do not see a cannibalization. We do see a very encouraging dynamics where our existing customer base are all adopting IQ6L for the next year in FZ segments. It's been progressing steadily in that direction.
Speaker Change: We're thank you.
Speaker Change: Thank you, there are no further questions of this time. I would like to hand the floor back over to Dan Galves for any closing comments.
Dan Galves: Thanks a lot Paul and thanks for joining the call thanks to the Executive Team and we'll talk to you next quarter.
Speaker Change: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
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