Q4 2024 Mobileye Global Inc Earnings Call

January 30, 2025

Our discussion contains forward looking statements based on the business environment as we currently see it such statements.

[music]

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

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

Joining us on the call today are professor unknown sure sure mobilized CEO and President and Mark <unk> Shemesh mobilized CFO also joining today for the Q&A session Nimrodi <unk> mobilized EVP of business development and strategy.

Speaker Change: And now I'll turn the call over to <unk>.

Speaker Change: Hello, everyone and thanks for joining our earnings call.

Speaker Change: Starting with our results Q4 was closely aligned with our expectations.

Speaker Change: Volume was a bit better than expected and was 9%.

Speaker Change: It was up 10% versus Q3.

Speaker Change: The upside was largely related to higher than expected volume from Chinese domestic Oems, who continue to order above the levels, we talked about back in July.

Speaker Change: <unk> gross margin and operating expenses were aligned with our deal at the beginning of the quarter operating margin of 21% was almost five points higher than Q3.

Speaker Change: Operating cash flow was robust in 2020 for finishing up by $4 million.

Speaker Change: $400 million.

Speaker Change: That was flat compared to 2023.

Written and Directed by Daniel Galves

Speaker Change: Quite significant year over year revenue and earnings declined driven primarily by the previously disclosed inventory digestion periods, we experienced in the first half operating cash flow was approximately double our non-GAAP net income in 2024.

There you have it.

Speaker Change: Brian will cover guidance in more detail in a few minutes with our first set the stage.

Lined up right here in a piazza Late tonight Just about to cause a party Gimme four Four Shake the glass Bring my purse Old friend Bringing chum Bring my papers Ooh, come on Just want a ride Just want a ride

Speaker Change: Bob.

Speaker Change: Is that if we use indications from our customers for the full year, our guidance would be higher as we preferred to take conservative approach that accounts for the risk that uncertainties negatively affect earnings.

Speaker Change: Top 10 customers were assuming global production volumes meaningfully worse than they assume then that the fueled by third party forecasters with Chinese Oems forecasting remains difficult due to less visibility we received volumes appear to have stabilized and the $2 million plus annualized range in the second half of 2024.

Speaker Change: Greetings and welcome to the Mobileye fourth quarter and full year 2024 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Speaker Change: Higher than we had expected several months ago, but we're assuming a deterioration from that level simply to account for the low visibility.

Speaker Change: As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Mr. Dan Galves. Thank you, sir. You may begin.

Speaker Change: On supervision, we're assuming about half of the current run rates.

Speaker Change: Of end market demand for the vehicles. We are on on Zika, we are electing to account for the risk that Zika could choose to go with their in house system on 0009, which is currently running up to 2000 units per month.

Speaker Change: Thank you. Hello, everyone, and welcome to Mobileye's fourth quarter and full year 2024 earnings conference call for the period ending December 28, 2024.

Speaker Change: Please note that today's discussion contains forward-looking statements based on the business environment as we currently see it. Such statements involve risks and uncertainties. Please refer to the accompanying press release, which includes additional information on the specific factors that could cause actual results to differ materially.

Speaker Change: We have no indication that this is planned but we are unwilling to be surprised again.

Speaker Change: On Pollstar, we're assuming volumes of pole star four to remain at the current levels Desplat. Despite their stated plans for further geographic expansion.

Speaker Change: Turning to seasonality as a percentage of the midpoint of the full year revenue guidance, our assumptions for Q1 revenue was 25% of the full year typically it would be lower so this gives us further confidence that the full year outlook is achievable, even if macro conditions deteriorate.

Speaker Change: Additionally, on this call, we will refer to both GAAP and non-GAAP figures. A reconciliation of GAAP to non-GAAP financial measures is provided in our posted earnings release.

Joining us on the call today are Professor Amnon Shashua,

Amnon Shashua: Mobilized CEO and President, and Moran Shamash, Mobilized CFO. Also joining today for the Q&A session is Nimrod Nehustam, Mobilized EVP of Business Development and Strategy. Thanks, and now I'll turn the call over to Amnon.

Speaker Change: Turning to the commercial the new business side, we continued to win new business with our core customers at the same very high rate, we have for years and are seeing good opportunities with some new customers. We've recently won a multimillion unit.

Hello, everyone, and thanks for joining our earnings call.

Speaker Change: Ram data harvest stake and cloud enhanced driving assistance program from a very very.

Speaker Change: Very key customer in parallel with continued due diligence for supervision. This deal strengthens our global data harvesting with another leading OEM with significant global volumes. This data plays a key role in our sixth generation AI stack.

was up 10% versus a Q3.

Amnon Shashua: The upside was largely related to higher-than-expected volume from Chinese domestic OEMs who continue to order above the levels we talked about back in July.

Speaker Change: Additionally, we'll move forward with an Indian OEM on Rem data harvesting for this important growth market a number of upcoming.

Amnon Shashua: ASP's gross margin and operating expenses were aligned with our view at the beginning of the quarter. Operating margin of 21% was almost 5 points higher than Q3.

Speaker Change: Launches from this customer will have cloud enhanced driving assist capability.

Amnon Shashua: Operating cash flow was robust in 2024, finishing up at $400 million.

Speaker Change: On the advanced product side, we have the customer engagements in place to drive a steady cadence of announcements over the course of 2025, which is consistent with the messaging will deliver that the December capital markets day.

$400,000

Amnon Shashua: That was flat compared to 2023, despite significant year-over-year revenue and earnings declines driven primarily by the previously disclosed inventory digestion period we experienced in the first half.

Speaker Change: While our expectations for advanced product design wins remain intact. The exact timing of those announcements remains challenging to predict the decision for an OEM.

Amnon Shashua: Operating cash flow was approximately double our non-GAAP net income in 2024.

Speaker Change: What path to take towards autonomy, it's very strategic very long term decision and this is why did your diligence process is so intense and take stock.

Speaker Change: Moran will cover the guidance in more detail in a few minutes, but I will first set the stage.

Speaker Change: But it is clear that the customers believe in our approach and that the faster the outstanding products went through a mobile license technology.

Speaker Change: Bottom line is that if we use indications from our customers for the full year, our guidance would be higher, but we prefer to take conservative approach that accounts for the risk that uncertainties negatively affect our needs.

Speaker Change: In the past few months, we have revealed through our AI day back in October or the capital markets day in December.

Speaker Change: He asked already this month a lot of technological advancements underlying overstock. The common theme is efficiency of design efficiency in our silicon design and we'll be rebuilding very soon detailed benchmarks of IQ six high versus competing high performance chips.

Speaker Change: Our top 10 customers were assuming global production volumes meaningfully worse than they assumed, than that assumed by third-party forecasters.

Speaker Change: Volumes appear to have stabilized in the $2 million plus annualized range in the second half of 2024, higher than we had expected several months ago, but we are assuming a deterioration from that level simply to account for the low visibility.

Speaker Change: Efficiency of our AI.

Speaker Change: Hi.

Speaker Change: <unk> has the ability to transform our network, which is a factor of 100 and more efficient than they are.

Speaker Change: Existing transformer architectures used by practitioners.

Speaker Change: Its efficiency and design is also translated to the amount of resources data and compute which is required by our AI stack.

Speaker Change: On supervision, we're assuming about half of the current run rate.

Speaker Change: of End Market Demand for the vehicles we are on. On Zikr, we are electing to account for the risk that Zikr could choose to go with our in-house system on Zikr 009, which is currently running at 2,000 to 3,000 units per month.

Speaker Change: Efficiency in our mind matters and goes against the dogma Brute force development.

We're supposed to development as a signature for our competitors as reflected by the massive investments in compute and data pipeline.

Speaker Change: <unk> has a long tradition of excellence and efficiency preproduction vehicles powered by our IQ six high stacked show great promise for substantial leap in performance and precision of our next generation supervision and so for more updates will come in the course of 2025 as we get ready for startup production during 2026.

Speaker Change: We have no indication that this is planned, but we are unwilling to be surprised again. On Polestar, we are assuming volumes of Polestar 4 to remain at current levels, despite their stated plans for further geographic expansion.

Speaker Change: Turning to seasonality, as a percentage of the midpoint of the full year revenue guidance, our assumption for Q1 revenue is 25% of the full year. Typically, it would be lower, so this gives us further confidence that the full year outlook is achievable, even if macro conditions deteriorate somewhat.

Laura: Thank you and I will turn the call over to Laura.

Laura: Thank you Tom and thanks for joining the call everyone. Before I begin please be aware that all my comments on continuing team will refer to non-GAAP measurements with Fannie exclusion in normalized non-GAAP numbers.

Speaker Change: Turning to the commercial and new business side, we continue to win new ADAS business with our core customers at the same very high rate we have for years and are seeing good opportunities with some new customers.

Laura: Session of intangible asset, which is mainly related to the position of <unk> in 2017.

Laura: So exclude stock based compensation as well as the goodwill impairment that occurred in Q3.

Speaker Change: We recently won a multi-million unit REM data harvesting and cloud-enhanced driving assist program from a very key customer, in parallel with continued due diligence for supervision.

Laura: And just wanted results slightly exceeded the Q4 outlook implies a full year guidance, we provided back in October largely due to higher than expected volumes from Chinese Oems.

Speaker Change: This deal strengthens our global data harvesting with another leading OEM with significant global volumes.

Laura: That was down 23% a year.

Laura: You didn't match insight to begin from that comparison is a portion of the meaningful inventory BMO.

Speaker Change: This data plays a key role in our IQ 6th generation AI stack.

Speaker Change: Additionally, we move forward with an Indian OEM on REM data harvesting for this important growth market. A number of upcoming launches from this customer will have cloud-enhanced driving assist capability.

Laura: The first half of 2025 and 10 in Q4 of 2023.

Laura: Q1 will again be an apples to oranges comparison, even the inventory digestion that occurred in Q1 of 2020 from beginning with Q2.

Laura: That would be more than that.

Laura: Last margin was consistent with expectations and up slightly versus Q3 due to lower percentage of supervision revenue in Q4 versus Q3.

Speaker Change: While our expectations for advanced product design wins remain intact, the exact timing of those announcements remain challenging to predict.

Laura: Operating expenses without somehow versus Q3 as expected.

Laura: Is related to the initial impact.

Speaker Change: The decision for an OEM on what path to take towards autonomy is a very strategic, very long-term decision, and this is why the due diligence process is so intense and takes so long. But it is clear that the customers believe in our approach and that the path to outstanding products runs through a mobilized technology.

Laura: <unk> unique wind down and increase in Medicaid.

Laura: And then gentlemen, based on your emulation, who benefited tools and other items are largely timing.

Laura: Turning to guidance, we provided 2025 revenue and adjusted operating income guidance into gains.

Speaker Change: In the past few months, we have revealed through our AI Day back in October, the Capital Markets Day in December, and CES already this month, a lot of technological advancements underlying our stack.

Laura: At the midpoint, we expect $1 75 billion of revenue and $217 million of adjusted operating income.

Laura: This represents approximately 6% year over year at the each month and more than 10% fall in adjusted operating income.

Speaker Change: The common theme is efficiency of design, efficiency in our silicon design, and we'll be revealing very soon detailed benchmarks of IQ6 high versus competing high-performance chips.

Laura: The new guidance is based on actual volume in the range of 30 to 35 million.

Speaker Change: Efficiency of our AI, for example the AI day, how to build a transformer network which is a factor of 100 more efficient than the existing transformer architectures used by practitioners.

Laura: Mentioned the I'm, assuming the vast majority is typically in the East Africa excellent.

Laura: Overall volume in the low 20000 Union.

Laura: At the midpoint, assuming no expansion into the U S.

Speaker Change: This efficiency in design is also translated to the amount of resources, data, and compute, which is required to train our AI stack.

Laura: No.

Laura: Finally, we don't plan unexpectedly investing to position volume in the near term until we began launching and when.

Speaker Change: Efficiency in our mind matters and goes against the dogma of brute force development.

Laura: What product is best in Oems in 2020, we don't expect it to be significant enough to call out.

Speaker Change: GoodForce development is a signature of our competitors as reflected by the massive investment in compute and data pipelines.

Laura: What's the expectation low me now if anybody wishes to.

Mobileye has a long tradition of excellence and efficiency.

Laura: Signed are not material.

Laura: On the ICU volume side based on our analysis and information from the Q1, we believe that customer inventories are currently its normal seasonal levels.

Speaker Change: show great promise for a substantial leap in performance and precision of our next generation supervision and chauffeur. More updates will come in the course of 2025 as we get ready for start of production during 2026.

Laura: Give you a better insight on our guidance, we thought it would be helpful to provide a bridge from the second half 2024 annualized run rate of $75 6 million to the midpoint of our 2025 volume outlook of 73 million, which is somewhat below the indications. We currently have some estimates we do.

Speaker Change: Thank you and I will turn the call over to Moran.

Thank you, Amnon. Thanks for joining the call, everyone.

Speaker Change: Before I begin, please be aware that all my comments on profitability will refer to NAMDAP measurements.

Speaker Change: The primary exclusion in Mobileye's NAMGAP numbers is amortization of intangible assets, which is mainly related to indoor acquisition of Mobileye in 2017. We also exclude stock-based compensation, as well as the goodwill impairment that occurred in Q3.

Laura: Don't plan to provide this level of detail on a quarterly basis, but think it is half full as context for our initial 2025.

Laura: First of all some pull forward of volume into Q4 is typical given annual tax changes in volume yes.

Speaker Change: Our Q4 results slightly exceeded the Q4 outlook implied by the full-year guidance we provided back in October, largely due to higher-than-expected volumes from Chinese OVMs.

Laura: We estimate this added about half a million units annualized in Q4 of 2024.

Laura: We are not assuming these securities again in Q4 of 2025.

Speaker Change: was down 23% year-over-year. There isn't much insight to be gained from that comparison as a portion of the meaningful inventory build-up that impacted the first half of 2024 occurred in Q4 of 2023.

Laura: We assume 2025 production of a car OEM customers, which represent about half of industry volume will be down almost 7% versus 2024 level similar today as it comes out we saw in 2024 versus 2023, this is meaningfully lower and brokerage.

Speaker Change: Q1 will again be an apples-to-oranges, year-over-year comparison, given the inventory digestion that occurred in Q1 of 2024. Beginning with Q2, the comparison will be more relevant.

Laura: So that is an IHS projection of minus 4% and would account for that.

Laura: Two 2 million units of reduction.

Speaker Change: Roth's margin was consistent with expectations and up slightly versus Q3 due to lower percentage of supervision revenue in Q4 versus Q3.

Laura: We all see it exiting the assumed production decline, we do expect share gains in Adas adoption built from these customers.

Speaker Change: Operating expenses without sum-out versus Q3 as expected. This is related to the initial impact of the LIDAR unit wind-down, an increase in military reserve duty refunds, some adjustments based on the evaluation of benefited pools, and other items that are largely timing related.

Laura: One 5 million units of growth in 2025 or about four points of growth over market benign generic expectation.

Laura: As it relates to new programs. In addition, our market specifically.

Laura: Regarding seasonality second half production at the top customers.

Speaker Change: Turning to guidance, we provided 2025 Revenue and Adjusted Operating Income guidance in today's earnings release. At the midpoint, we expect $1.75 billion of revenue and $217 million of adjusted operating income.

Laura: <unk>, 2% higher than first half.

Laura: This would represent almost 1 million units annualized reductions versus the second half mentally.

Laura: Finally regarding the China.

Laura: We are assuming approximately half a million unit decline as compared to the second half for me. This is to reflect the volatility we've seen over the last several quarters.

Speaker Change: This represents approximately 6% year-over-year revenue growth and more than 10% growth in adjusted operating income.

Turning to gross margin in 2025, we are assuming about one five points higher in 2024 trillion, primarily due to the lower percentage of supervision relate to exactly in terms of operating expenses.

Speaker Change: The revenue guidance is based on IQ volumes in the range of 32 to 34 million units.

Speaker Change: As Annon mentioned, we are assuming the vast majority of supervision units this year are for postal forms, and expect overall volumes in the low 20,000 unit range at the midpoint, assuming no expansion into the U.S.

Laura: About 250 million per quarter, we're doing 2025 on average which is consistent with our comments on the Q3 call. When we said the run rate at the same time be sustained into 2025.

Speaker Change: I note that, for the time being, we don't plan on expressly addressing supervision volumes in the near term.

Laura: This is best Q3 run rate, we will see savings from the wind down of the lineup.

Speaker Change: Until we begin launching this system on more products with Western OEMs in 2026, we don't expect it to be significant enough to call out, and we won't set expectations low enough that any variances to downside are not material.

Laura: This reduction to be offset by typical employee compensation inflation as.

Laura: As expected military reserve investment.

Laura: Mind, you that head count related expenses represent went above half of our opex other areas of growth such as <unk> and SMA.

Speaker Change: On the IQ Volume side, based on our analysis and information from Tier 1, we believe that customer inventories are currently at normal seasonal levels.

Laura: A related expenses are largely offset by efficiencies we do know.

Speaker Change: To give you better insight on our guidance, we thought it would be helpful to provide a bridge

Laura: Is that a limiting activities as well as expected higher year over year engineering reimbursement on production program spending in.

from the second half.

Speaker Change: 2024 annualized run rate of 35.6 million units to the midpoint of our 2025 volume outlook of 33 million, which is somewhat below the indications we currently have from our customers.

Laura: In terms of Q1, we expect revenue to be down about 11% versus Q4, which reflects typical seasonality and a bit more than 80% growth year over you against the inventory digestion, we experienced in Q1 of 2020 from a revenue.

Speaker Change: We don't plan to provide this level of detail on a quarterly basis, but think it is helpful as context for our initial 2025 outlook.

Laura: Expectations for Q1 implies about 25% of the midpoint of our full year revenue guidance we.

Speaker Change: First of all, some pull-forward of volume into Q4 is typical given annual price changes and volume events. We estimate this added about half a million units annualized in Q4 2024, and we are not assuming this occurs again in Q4 2025.

Laura: We expect overall gross margin about 100 basis.

Laura: Basis points higher than Q4 level and for adjusted operating expenses to be at or slightly lower than the 250 million per quarter I indicated.

Speaker Change: We assume that by 2025, overall production of our core OEM customers, which represent about half of industry volume, will be down almost 7% versus 2024 levels.

Laura: Operating cash flow in 2020 full its been above adjusted net income even after taking into account capital expenditure $81 million cash flow generation in 2024 was consistent with 2023, despite substantially lower adjusted operating income, reflecting strong management and control of working capital in a variety of areas.

similar to the crisis we saw in 2024 versus 2023.

Speaker Change: This is meaningfully lower and more conservative than IHS projections of minus 4% and would account for about 2.3 million units of reduction.

Laura: Additionally, we anticipate continuing to reduce our strategic reserve of cheap inventory on our balance sheet in 2025, we choose support another year of delivering operating cash flow above adjusted net income. Finally, we explained the full year effective tax rate to be approximately 20% similar to 2024.

to drive approximately 1.5 million units of growth in 2025.

are about four points of growth of the market.

Laura: Thank you and we'll now take your questions.

Speaker Change: These are not generic expectations, but rather relate to new programs and additional markets with specific OEMs.

Laura: Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question to you.

Speaker Change: Regarding seasonality, second half production at our top customers is typically 2% higher than first half. This would represent almost 1 million unit annualized reduction versus the second half runway.

Laura: You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing this darcie.

Speaker Change: Finally, regarding the China program, we are assuming approximately half a million unit decline as compared to the second half run rate. This is to reflect the volatility we've seen over the last several quarters.

Laura: In order to allow for as many questions as possible. We ask that you read to keep to one question and one follow up thank you.

Patel: Our first question comes from the line of <unk> Patel with Wolfe Research. Please proceed with your question.

Speaker Change: Turning to gross margin in 2025, we are assuming about 1.5 points higher than 2024, primarily due to the lower percentage of supervision-related revenue.

Patel: Okay. Thanks, so much for taking that.

Patel: Question.

Patel: And then maybe just.

Speaker Change: In terms of operating expenses, we expect about $250 million per quarter during 2025 on average, which is consistent with our comments on the Q3 call where we said the run rate at the same time would be sustained through

Patel: At a high level.

Patel: As you're talking to the legacy Oems on adopting advanced automation like supervision.

Patel: Just curious what kind of timelines they are considering.

Patel: It's kind of autonomy.

Patel: You mentioned.

Patel: Uncertainty by Oems as it relates to making that decision.

2025

Speaker Change: Versus that Q3 run rate, we will see savings from the wind-down of the LiDAR unit.

Patel: Or the legacy automaker still viewing this as a.

Patel: 2027 or 2028.

Patel: Launch.

Speaker Change: We expect this reduction to be offset by typical employee compensation inflation as well as our expected military reserve investment. I remind you that HEDCAM-related expenses represent well above half of our OPEC.

Patel: The real adoption, particularly in markets like North America.

Patel: In Europe.

Patel: I'll start and then maybe.

Patel: Nevertheless, with the with <unk>.

Patel: During 2024, where there's a lot of buildup.

Speaker Change: Other areas of growth, such as A.V. testing and customer support and style-related expenses are largely offset by efficiencies within our data labeling activities, as well as expected higher year-over-year engineering reimbursement on production program spending.

Patel: With the potential customers building.

Patel: <unk> development vehicles with our stock.

Patel: Working with them on on very.

Patel: Very extensive testing and we believe all of that will bear fruit in 2025 exact timing in 2025, it's difficult to pinpoint.

Speaker Change: In terms of Q1, we expect revenue to be down about 11% versus Q4, which reflects EPITAS seasonality.

But all the indications that all what we did in 2024 are going to bear are going to bear fruit, both in supervision and in surround.

Speaker Change: and a bit more than 80% growth year-over-year against the inventory digestion we experienced in Q1 of 2024. Our revenue expectation for Q1 implies about 25% of the midpoint of our full-year revenue guidance.

Patel: Surround data is also a very interesting category that has been good as it's being built right. Now 2027 seems like still looks like the sweet spot in terms of introduction introduction of these kinds of Av.

Speaker Change: We expect overall gross margin about 100 basis points higher than Q4 level, and for adjusted operating expenses to be at or slightly lower than the $250 million per quarter I indicated earlier.

Patel: Oh geez.

Hum.

Patel: Work of the Tesla is it's really creating a sense of urgency with our OEM. So we still believe that 2027 is really the right timing towards reduction of these of these systems and he brought do you have anything to add.

Speaker Change: Operating cash flow in 2024 was well above adjusted net income even after taking into account capital expenditure of $81 million.

Speaker Change: Capital generation in 2024 was consistent with 2023 despite substantially lower adjusted operating income, reflecting strong management and control of working capital in a variety of areas.

Patel: Mhm.

Patel: I agree and support the majority of the RF Skus that we have and the engagements that we have are addressing or aiming for 2027 28 timeframe.

Speaker Change: Additionally, we anticipate continuing to reduce our strategic reserve of cheap inventory on our balance sheet in 2025. We should support another year of delivering operating cash flow above adjusted net income.

Patel: And especially for I think surround that hit us, which is kind of a new category that has been picking up in the past year.

Patel: I think that there is.

Speaker Change: Finally, we expect the full year effective tax rate to be approximately 20% similar to 2024. Thank you and we will now take your questions.

Patel: And even more expedited our sense of urgency, let's see due to also regulatory and regulatory drivers not just the competition.

Speaker Change: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Patel: So that still remains intact, and we did not see any any shift in the timeline so far.

Patel: Okay. Thanks, So maybe just on that point.

Speaker Change: You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Patel: I think typically you've talked about.

Patel: Oems would have to kind of secure when maybe two to three years ahead of deployment.

Speaker Change: In order to allow for as many questions as possible, we ask that you each keep to one question and one follow-up. Thank you.

Patel: I know, it's hard to pinpoint timelines, but.

Patel: Just trying to get a sense of.

Speaker Change: Our first question comes from the line of Shreyas Patel with Wolf Research. Please proceed with your question.

Patel: Of your confidence level on on some of these awards, particularly.

Patel: The chart that you had provided at the capital markets day.

Shreyas Patel: Okay, thanks so much for taking the question. Maybe just at a high level, as you're talking to legacy OEMs on adopting advanced automation like supervision,

Patel: Showed.

Patel: A number of Oems that seems fairly closer.

Patel: To crossing the finish line. So just trying to get a sense of your your competence.

Patel: On those.

I'm just curious what kind of timelines they are considering.

Shreyas Patel: for this kind of autonomy because, you know, Amnon, you mentioned uncertainty by OEMs as it relates to making that decision. So are the legacy automakers still viewing this as a 2027 or 2028 kind of launch for real adoption, particularly in markets like North America and Europe?

Patel: Yes, yes, yes.

Patel: Again, I think we've been maintaining a steady progress in these engagements.

Speaker Change: And we kind of continue to do so and as Amin said at his remarks, but we cannot really predict the exact timing of decisions, but we are we maintain steady progress since the capital markets day.

I'll start and then maybe Nimrod would add.

Patel: In these activities.

Shreyas Patel: During 2024, we did a lot of build-up with the potential customers, building development vehicles with our stack, working with them on very

Patel:

Patel: We believe that.

Patel: And he startup production until the middle of 2007.

Patel: If the nomination is within the next four or five months with me too.

Patel: Especially if we're talking about the carryover.

Shreyas Patel: very extensive testing and we believe all of that will bear fruit in 2025.

Patel: We are doing with the portion of the Illinois supervision.

Patel: There's also a possibility to introduce IQ seven in that timeframe as well.

Exact timing in 2025, it's difficult to pinpoint.

Shreyas Patel: But all the indications that all what we did in 2024 are going to bear are going to bear fruit Both in supervision and in surround ADAS. Surround ADAS is also a very interesting category

Patel: Yes.

Patel: Okay, and just maybe to add one comment on this if I may.

Patel: What is also happening in Portland is that we continue to mature our nexgen product within our programs with Volkswagen group. They do address or have a concrete plan to startup production in 2026 onwards, so I'll work and maturing the technology of the hardware software mix NII.

Patel: Apologies is continuing as planned so it does give some added confidence also to our future opportunities that we can meet even shorter time frames.

Shreyas Patel: The work of Tesla, it's really creating a sense of urgency with our OEM So we still believe that 2027 is really the right timing For introduction of these systems. Nimrod, do you have anything to add?

Patel: And when decisions are going to maybe take a little bit longer. They can maintain the same missile P plan.

Patel: Because mobile is continuing to improve and kind of mature its products in parallel.

Thank you.

Nimrod Nehustam: I agree and support the majority of the RFQs that we have and the engagements that we have are addressing or aiming for 2027-2028 timeframe.

Patel: Okay, Great and maybe just a quick one how do we think about gross margins for 2025.

Patel: Yeah.

Nimrod Nehustam: and especially for things around ADAS, which is kind of a new category that has been picking up in the past year.

Patel: I mentioned that.

Patel: We expect.

Patel: A slight increase in gross margin above our 115, but then.

Nimrod Nehustam: I think that there is an even more expedited sense of urgency, let's say, due to also regulatory and regulatory drivers, not just the competition.

Patel: As a result, mainly of supervision being lower volume in 2024.

Patel: But with <unk>, it's really reflected in the year. So no issue at all.

Nimrod Nehustam: So that still remains intact and we did not see any shift in the timeline so far.

Patel: On slide 25.

Patel: Thank you sure. Thank you closer to the next caller please.

Speaker Change: Okay, thanks. So maybe just on that point, because I think typically you've talked about...

Speaker Change: Thank you. Our next question comes from the line of Chris Mcnally with Evercore ISI. Please proceed with your question.

Speaker Change: OEMs would have to kind of secure a win maybe two to three years ahead of deployment.

Chris Mcnally: Thanks, so much team.

Chris Mcnally: Just maybe around the eight or excuse I'm on I think one of the.

I know it's hard to pinpoint timelines, but...

Just trying to get a sense of...

Chris Mcnally: Questions that we always get from investors is if.

Speaker Change: of your confidence level on some of these awards, particularly the chart that you had provided at the Capital Markets Day, which showed

Chris Mcnally: If you were to lose these.

Chris Mcnally: What would be the reasons that you were.

Chris Mcnally: To lose them I kind of always think about the three buckets.

Chris Mcnally: The first bucket would be sort of timing or push out OEM. Just you know, it's unclear, which trims, which vehicles they want and they're constantly deciding that changes year by year, there's sort of a <unk>.

Speaker Change: a number of OEMs that seems fairly closer to crossing the finish line so just trying to get a sense of your your your competence on those.

Chris Mcnally: <unk>, which is very clear within the legacy Oems It is theres no action.

Amnon Shashua: Yeah, so again, I think we've been maintaining steady progress in these engagements and we kind of continue to do so and as Amnon said at his remarks

Chris Mcnally: And they just decide to go with their basic level to in the past on advanced solutions and then obviously the third is sort of more mobile I, losing which would be an OEM decides to go to in house. So.

Amnon Shashua: and Michael R. We cannot really predict the exact timing of decisions, but we maintain steady progress since the capital market stay in these activities.

Chris Mcnally: I don't want to hold you to percentages, but just curious where you think the risk would be in those three buckets timing Oems, taking no action or they didn't have solution. Thanks, so much.

Amnon Shashua: We believe also that any start of production until the middle of 2027, if the nomination is within the next four or five months, we'll meet it.

Chris Mcnally: Hello.

Chris Mcnally: The third bucket in terms of in House development, we don't see a trend there.

Chris Mcnally: We don't see anything that is serious about.

Amnon Shashua: especially if we're talking about the carryover of what we're doing with the Porsche and Audi on supervision. And there's also a possibility to to introduce IQ7 in that time frame as well.

Chris Mcnally: Because of such advanced.

Chris Mcnally: Product.

Chris Mcnally: So it's mostly related to the first few Buck first two buckets, which is all about now powertrain. So.

Chris Mcnally: Sales of <unk>.

Amnon Shashua: And just maybe to add one comment on this, if I may, I think what is also happening in parallel is that we continue to

Chris Mcnally: These were below expectations. So carpet car companies are kind of going back to the design the board.

Chris Mcnally: And putting more emphasis on combustion engine model. So the issues of powertrains, so that delays also.

Chris Mcnally: Driving assist a big driving assist the decisions.

Amnon Shashua: onwards, so our work in maturing the technology, the hardware, software, next-gen AI technologies is continuing as planned.

Chris Mcnally: But.

Chris Mcnally: In terms of in House development, we don't see any significant traction traction there and what do you have anything to add.

Amnon Shashua: So it does give some added confidence also to our future opportunities that we can meet even shorter timeframes. If and when decisions are going to maybe take a little bit longer, they can maintain the same SRP plan because Mobileye is continuing to improve and mature its products in parallel.

Chris Mcnally: Okay.

Chris Mcnally: I think that it's a little bit hard for us to answer. This question because we're not aware of all the behind the scenes considerations so from our perspective.

Chris Mcnally: It's obvious that there is there are attempts in the market for our in house development and the GM recently talked about their plans and so on so we are aware of those.

Speaker Change: Okay, great. And maybe just a quick one, how do we think about gross margins for 2025? Thanks.

Chris Mcnally: For the for the kind of the opportunities that we're now pursuing.

Speaker Change: I believe I mentioned that we expect a slight increase in gross margins of 1.5% as a result mainly of supervision being lower volume than 2024.

Chris Mcnally: It's a combination of these buckets that you mentioned that can play into this mostly the kind of the whether or not the Oems are ready for such a product at this time frame.

Chris Mcnally: What will it take from them and some perhaps.

Speaker Change: But with IQ, it's pretty flat within the year, so no issue with this cross-margin on 2025.

Chris Mcnally: More more like a vehicle lineup considerations longer term, we cannot fully predict what will be the outcome of these are in house developments, but we can we've been working with our with customers that didn't have this attempted in the past and we did managed to build a very successful business and furloughed because eventually we executed so.

Thank you, Shreya. Okay. Thank you.

Speaker Change: Thank you. Our next question comes from the line of Chris McNally with Evercore ISI. Please proceed with your question.

Speaker Change: Thanks so much, team. Just maybe around the ADAR cues, Amnon, I think one of the questions that we always get from investors is, you know, if you were to lose these, you know, what would be the reasons that you were to lose them? I kind of always think about three buckets.

Chris Mcnally: Very helpful. Just as a quick follow on.

Chris Mcnally: And supervision that the launches you have in 2026.

Chris Mcnally: That are sort of known in the 27 ones that are in our Q are they mostly or the majority are the are the standard or a take rate. Thanks. So much.

You know, the first bucket being sort of...

Chris Mcnally: So it's not it's not decided yet to be honest and that's something that we're discussing with our customer with our OEM partners different models of how to sell these products to consumers.

Speaker Change: Timing or push out OEM just you know, it's unclear, you know, which which trims which vehicles they want They're constantly deciding and that changes year by year The sort of the second which is, you know, very clear within the legacy OEMs is there's no action

Chris Mcnally: There is a combination between standard fit and opt.

Chris Mcnally: Opt ins so the more we will have information on this as it moves forward. We can we will share this of course.

Speaker Change: And then obviously, the third is sort of more Mobileye losing, which would be an OEM decides to go to in-house. So look, I don't want to hold you to percentages, but I'm just curious where you think the risk would be in those three buckets, timing, OEM taking no action, or an in-house solution. Thanks so much.

Chris Mcnally: Thank you.

Chris Mcnally: Thanks, Chris.

Speaker Change: Thank you. Our next question comes from the line of Joe Spak with UBS. Please proceed with your question.

Speaker Change: Ah Thanks, everyone I'm not in a Nimrod I'm just curious again on on the OEM conversations if price at all comes up and if Thats, a pushback and if so.

Speaker Change: I think the third bucket in terms of in-house development, we don't see a trend there.

Speaker Change: I just wonder how you think about without giving like it seems like if you give a little bit there to gain a footing. It would seemingly make you stickier and perhaps more valuable to customers.

Speaker Change: We don't see anything that is serious about the in-house development of such advanced products.

Speaker Change: It's mostly related to the first two buckets, which is all about power trade. Sales of EVs were below expectations, so car companies are going back to the design board.

Speaker Change: Over time, and then I guess also in the conversations with your urgency comment.

Speaker Change: Does that also mean that once if and when they do sign they're also willing to move quicker to implement than they have historically.

Speaker Change: Okay.

Speaker Change: Price is always a consideration, but I don't think thats. The price right now is any impediment to make to make decisions.

Speaker Change: and putting more emphasis on combustion engine models, so issues of powertrains and that delays also driving assist or big driving assist decisions.

Speaker Change: We are very optimized on price and we work with our customers to find the right fit either.

Speaker Change: The right solution.

Speaker Change: But in terms of in-house development, we don't see any significant attraction there. Nimrod, do you have anything to add?

Speaker Change: What do you think you want to add.

Speaker Change: Yes, I don't think that we have lost a program on prices.

Speaker Change: I don't think it comes down to this at this stage, however, and we are we.

Speaker Change: We can see of aggressive and flexible relatively.

Speaker Change: With our prices in negotiation, we don't want to make this a stepping stone.

Speaker Change: I don't think this is right now.

Speaker Change: The challenge of 'twenty to overcome them.

Speaker Change: I think that the sense of urgency that you asked about is more about.

Speaker Change: How much how many.

Speaker Change: Vehicles, they can deploy such a systems on and and so on that is more a question of the Oems plants and rollout plans. It's not just a question of if they want to do this but if they can.

Speaker Change: Really accelerate execution and deployment in the larger scale of cars.

Speaker Change: This is something that we're working with them and we can we're not the bottleneck, let's say for a broader expansion of our vehicle integration.

Speaker Change: We are very very efficient and and have one of our strength actually the execution side and being able to support multiple vehicle lineups multiple vehicle architectures.

Speaker Change: So if and when this will become the chosen strategy, we can indeed support us.

Speaker Change: Okay.

Speaker Change: Second question, obviously, a lot of news in NII.

Speaker Change: This weekend.

Speaker Change: You guys have always talked about the efficiency of your development solution, but I'm just wondering big picture, but does any of the developments you know get to reevaluate your own approach or or or do you have any views on whether the prevalence of open source foundation of models can kind of lower the barriers to entrance to the others.

Speaker Change: I think what we have seen with the deep C. B three and deep Sea card one no really aligns with the approach that <unk> hasnt been advocating for many for many years is that you need to build a purpose built approach which means efficiency.

Speaker Change: The idea we had in October.

Speaker Change: We revealed a transformer architecture that we built which is 100 times more efficient in terms of the run time, and then compute than any stand or the transformer because its purpose built for the task of autonomous.

Speaker Change: Driving so everything we do in terms of the Silicon design, if you look at the area.

Speaker Change: The area of our IQ six is one fourth of the silicon area of our competing chips.

We will provide in the next couple of weeks a significant benchmarks that we have been delivered the leading high performance compute chips.

Speaker Change: And I just thinks is exceeding in terms of major kpis like running both commercial net and Transformers.

Speaker Change: All the chips that we have that we have.

Speaker Change: Benchmark.

Speaker Change: Again, so we efficiency is really the hallmark of what mobile is doing deep sea has shown us that.

Speaker Change: Now if you innovate and.

Speaker Change: <unk> Engineering did there was nothing there scientifically knew that.

Speaker Change: Communicated up know about but.

Speaker Change: The fact that they created a very tight flow of training.

Speaker Change: In terms of making use of the memory bandwidth, making use of efficient reinforcement learning like <unk> instead of a PPO.

Speaker Change: Working with the quantize the precision F. P F D a.

Speaker Change: There was really made under even a rope assembly language to bypass all sorts of FIC was our bottlenecks that they have there.

Speaker Change: So if you are really purpose built and you want to be efficient you can gain a lot and this is what nobody like has it been advocating hurdle for many years. So this is exactly aligned with with our approach.

Speaker Change: This is something that we're working with them and we can we're not the bottleneck, let's say for a broader expansion of our vehicle integration. We are very very efficient and and have one of our strength actually the execution side and being able to support multiple vehicle lineups multiple vehicle architectures.

Speaker Change: Thank you.

Joe Spak: Thank you Joe.

Speaker Change: Thank you. Our next question comes from the line of Dan Levy with Barclays. Please proceed with your question.

Dan Levy: Hi, Thank you for taking the question I just wanted to ask a question on the guide for 'twenty.

Speaker Change: So if and when this will become the chosen strategy, we can indeed support us.

Speaker Change: <unk> on the.

Speaker Change: The IQ shipment guide, maybe you could just talk about the extent to which.

Speaker Change: Okay.

Speaker Change: Second question, obviously, a lot of news in NII This weekend.

Speaker Change: <unk> activity is factored into that guide to what extent is that based on launches I think what we saw in the past was that although your powertrain agnostic. It's typically movies that are taken.

Speaker Change: You guys have always talked about the efficiency of your development solution, but I'm, just wondering big picture, but does any of the developments that you're doing.

Speaker Change: Taking on more advanced content and we saw some slowdown in the activity. So maybe you could talk about it.

Speaker Change: To reevaluate your own approach or or or do you have any views on whether the prevalence of open.

Speaker Change: Switch launch activity factored into the guide.

Speaker Change: Open source foundation of models can kind of lower the barrier to entrance to others.

Speaker Change: Okay, I'll start by saying that maybe what kind of moron.

Speaker Change: I think what we have seen with the deep sea biscuit and deep Sea card one now really aligns with the approach that multi line hasnt been advocating for many for many years is that you need to build a purpose built approach which means efficiency.

Speaker Change: <unk>.

Speaker Change: We took a very conservative approach with guidance.

Speaker Change: It would have taken the numbers that we received from our tier ones and Oems.

The guidance would have been much much closer to consensus than what we did.

Speaker Change: We took the conservative approach because we don't want to re guide during 2025, we don't want to risk that.

Speaker Change: The idea we had in October.

Speaker Change: We revealed a transformer architecture that we built which is 100 times more efficient in terms of the run time, and then compute than any standout the transformer because its purpose built for the task.

Speaker Change: And our guidance includes the new our new launches as well.

Speaker Change: Do you want to add something.

Speaker Change: I think the mix of our mix of new launches versus kind of carryover programs as normal this year, it's not.

Speaker Change: Thomas the.

Speaker Change: Driving so everything we do in terms of the Silicon design, if you look at the area.

Speaker Change: There is no higher or lower percentages of new product launches versus a carryover.

Speaker Change: The area of our IQ six is one fourth of the silicon area of our competing chips.

Speaker Change: So it's pretty consistent with what we have been facing in the past few years.

Speaker Change: We will provide in the next couple of weeks a significant benchmarks that we have been dealing with the leading high performance compute chips.

Speaker Change: And those new launches or that Youre targeting.

Speaker Change: And I just thinks is exceeding in terms of major kpis like running both commercial net and Transformers.

Speaker Change: I just wanted to think of it on the new guidance.

Speaker Change: And in market share that has offset some of the.

Speaker Change: All the chips that we have.

Speaker Change: Benchmark.

Speaker Change: Again, so we efficiency is really the hallmark of what mobile is doing deep sea has shown us that.

Speaker Change: No not at all production a reduction of volume reduction. This happened also in China.

Speaker Change: No it doesn't.

Speaker Change: Now if you innovate and.

Speaker Change: Patients with <unk> five mm in terms of market you know, we did above market also and now.

Speaker Change: In January there was nothing there scientifically.

Speaker Change: The community did not know about but the fact that they created a very tight flow of training.

Speaker Change: Also when you said you're paying for it.

Speaker Change: Okay.

And then secondly, just went down.

Speaker Change: Got somebody just went down like six or 7% from 2023% to 2024, but oh.

Speaker Change: In terms of making use of the memory bandwidth, making use of efficient reinforcement learning like.

Speaker Change: Definitely some offsets.

Speaker Change: <unk> instead of a PPO.

Speaker Change: Working with the quantize the precision of FPA FBA.

Speaker Change: Understood. Thank you.

Speaker Change: Maybe we can just follow up on China.

Speaker Change: Do we really made under even a rope assembly language to bypass all sorts of FIC was our bottlenecks that they have there.

Speaker Change: We can just mark where you are now I think based on the disclosure, giving you assume something like 1 million units from a domestic OEM something like $5 million from the multinationals in China.

Speaker Change: So if you are really purpose built and you want to be efficient you can gain a lot and this is what <unk> has been advocating hurdle for many years. So this is exactly aligned with with our approach.

Speaker Change: The volume outlook.

Speaker Change: Where do you stand now on resource allocation and effort in China, especially especially amongst the domestics and taking into account maybe some of the challenges that went to China in 'twenty four.

Speaker Change: Thank you.

Joe: Thank you Joe.

Speaker Change: Thank you. Our next question comes from the line of Dan Levy with Barclays. Please proceed with your question.

Speaker Change: Yes.

Dan Levy: Hi, Thank you for taking the questions first wanted to ask a question.

Speaker Change: I'll, maybe address this and I'm gonna and Martin can Ed.

Dan Levy: The guide for 'twenty and specifically on the.

Speaker Change: So we have been our volumes in China next year for four IQ is growing compared to 2024.

Dan Levy: The IQ shipment guide maybe you can just talk about the extent to which.

We're close to 2 million units for the for the Oems Chinese Oems.

Dan Levy: <unk> activity is factored into that guide to what extent is that based on launches I think what we saw in the past was that although your powertrain agnostic. It's typically movies that are taken.

Speaker Change: What we're finding is there that we have.

Speaker Change: Some good level of stability with the Chinese Oems that have significant export volumes and they are willing to they are willing and there.

Dan Levy: Taking on more advanced content and we saw some slowdown in activity. So maybe you could talk about you can't switch launch activity factored into the guide.

Speaker Change: Very much a keen in partnering with mobile is a global proven solution that that has proven performance and maybe the risk of potential technology with frictions in some western markets is is of course lower than adopting that Chinese solution.

Dan Levy: Okay.

Bye Bye bye bye, saying that maybe what kind of moron.

Dan Levy: <unk>.

Speaker Change: We took a very conservative approach with guidance.

Speaker Change: It would have taken the numbers that we received from our tier ones and Oems.

Speaker Change: That has really helped us in the in kind of maintaining and solidifying our position with them with our core customers and expanding our position with our core customers Chinese customers.

Speaker Change: The guidance would have been much much closer to consensus than what we did.

Speaker Change: We took the conservative approach because we don't want to guide during 2025, we don't want to risk that.

Speaker Change: We have been optimizing mildly our investment in China, we still have a strong team there that supports all of the local R&D needs to maintain full compliance with the local restrictions and regulations for data and so on.

Speaker Change: And our guidance includes the new our new launches as well.

Speaker Change: Well do you want to add something.

Speaker Change: I think the mix of mix of new launches versus kind of carryover programs as normal this year, it's not.

Speaker Change: So.

Speaker Change: Just just we're maintaining kind of a very tight investments compared to the business in China.

Speaker Change: There is no higher or lower percentages of new product launches versus a carryover.

Speaker Change: Okay. Thank you.

Speaker Change: So it's pretty consistent with what we have been facing in the past few years.

I wanted to follow up this is Dan.

Speaker Change: So just to answer your question about kind of where we stand.

Speaker Change: And those new launches or that's.

Speaker Change: Sorry go ahead.

Speaker Change: Last year, we did about 5 million units with the kind of non Chinese Oems in China and.

Speaker Change: Okay.

Speaker Change: Thanks, David.

Speaker Change: Okay.

Speaker Change: And market share did offset some of that.

Speaker Change: Somewhere in around the one on one 5 million units, what the Chinese Oems.

Speaker Change: No. There's a production reduction of volume reduction this happened also in.

Speaker Change: One of the main reasons why our kind of.

Speaker Change: What it does is just an expectation.

Speaker Change: <unk> are deviating from IHS is that kind of a global Oems in China were down 17, 18% last year and now the assumption is they're down kind of in the kind of mid single digits or high single digits.

Speaker Change: Five.

Speaker Change: In terms of market share, which is above market also and now also enjoys a thanks a lot.

Speaker Change: And just to double check.

Speaker Change: Yeah, Doug just went.

Speaker Change: We're taking the kind of the view that it could be worse.

Speaker Change: Went down like six or 7% from 2023 to 2024, but oh.

Speaker Change: And if it's worse, we don't want to have to re guide like our mindset. So.

Speaker Change: You see some losses.

Speaker Change: A significant reduction in kind of non Chinese Oems within China is baked into our forecast in terms of the Chinese Oems like like a Nimrod mentioned.

Speaker Change: Understood. Thank you.

Speaker Change: Maybe we can just follow up on China, and if we can just mark where you are now I think based on the disclosure, giving you assume something like Lillian.

Speaker Change: The volumes were encouraging in the second half of 2024.

Speaker Change: Ran up kind of one well above a 2 million unit run rate in the second half which was.

Speaker Change: Units from a domestic OEM something like $5 million from the multinationals in China.

Speaker Change: Quite a bit above where we thought that they would be back.

Speaker Change: The volume outlook.

Speaker Change: Back in July I think for the reasons that went through.

Speaker Change: We were not seeing any kind of change to that but we're assuming that we have about a half million dollars deterioration versus kind of where we were in the second half really just to be safe and due to the lack of visibility.

Speaker Change: Yes.

Speaker Change: So hopefully that helps to kind of size the China business right now.

Speaker Change: I'll maybe address this.

Speaker Change: And Martin can Ed.

Speaker Change: So we have been our volumes in China next year for for IQ is growing compared to 2024.

Speaker Change: Thank you that's helpful.

Speaker Change: Thank you.

Next question. Please yes. Our next question comes from the line of Adam Jonas with Morgan Stanley. Please proceed with your question.

Speaker Change: We're close to 2 million units for the for the Oems Chinese Oems.

Speaker Change: What we're finding is there that we have.

Speaker Change: Thanks, everybody.

Speaker Change: Some good level of stability with the Chinese Oems that have significant export volumes.

Speaker Change: You said in your comments.

You do not see significant in house development from Oems. So you don't see that as a real trend I just curious on the Zika. <unk> example of moving in house is that you see that as kind of a one off limited to China.

Speaker Change: Volumes and they are willing to they are willing in there.

Speaker Change: Very much a keen in partnering with mobile is a global proven solution that has proven performance and maybe the risk of potential technology restrictions in some western markets is is of course lower than adopting a Chinese solution. So that has really helped us in the in kind of maintaining and solidifying our position with them with our core customer.

Speaker Change: And I'm curious, how you view Nvidia cosmos, even if it's not a direct competitor are they offering tools.

Speaker Change: That could help.

Speaker Change: Encourage and maybe accelerate in house.

Speaker Change: <unk> and expanding our position with our core customers Chinese customers.

Speaker Change: Development from your Oems that maybe you haven't seen yet and then I have a follow up.

Speaker Change: I think cosmos has not.

Speaker Change: Lastly related to empowerment and enabling.

Speaker Change: Enablement.

Speaker Change: There is a big difference.

Speaker Change: Between supporting humanoid robotics, and supporting autonomous cars, but humanoid robotics every robot is built differently actuate is our place to differently and if you just trained on real data you will not be able to generalize among robotic platform so relying on sema.

Speaker Change: So.

Speaker Change: Just we're maintaining kind of a very tight investments compared to the business in China.

Speaker Change: Okay. Thank you.

Dan: I wanted to follow up this is Dan.

Dan: Just to answer your question about kind of where we stand.

Speaker Change: Later is is crucial for example in my other company I mean, Thea robotics rebuilt foundation models, just on simulated environments and we use a lot of video tools.

Dan: Last year, we did about 5 million units with the kind of non Chinese Oems in China.

Dan: And.

Speaker Change: And autonomous driving.

Dan: Somewhere in around the one and one 5 million units what the Chinese Oems.

Speaker Change: It was structured.

Speaker Change: And do you want to rely on real world data and other than not to create the distribution.

Dan: One of the main reasons why our kind of assumptions are deviating from IHS is that kind of a global Oems in China were down 17, 18% last year.

Speaker Change: <unk>.

Speaker Change: Did you say it.

Speaker Change: Simulations for edge cases, but you don't build your entire stack on simulators. So I don't think that would be a major enablement.

Dan: And now the assumption is they're down kind of in the kind of mid single digits or high single digits.

Speaker Change: 0009, or whatever is going to China I think is separate from what's going in the western day.

Dan: We're taking the kind of the view that it could be worse and if it's worse, we don't want to have to re guide like our mindset. So.

Speaker Change: So when I mentioned about in house development, I was referring to the western World.

Speaker Change: A significant reduction in kind of non Chinese Oems within China is baked into our forecast in terms of the Chinese Oems like like Rod mentioned.

Speaker Change: Okay. Thanks for that and just as a follow up and you alluded to it humanoid robots have been getting a ton of attention lately.

Speaker Change: Tassos efforts or other Oems in tech firms.

Speaker Change: The volumes were encouraging in the second half of 2024.

Speaker Change: Your chairman and co founder of <unk> as you mentioned so.

Speaker Change: They ran it kind of well above a 2 million unit run rate in the second half which was.

Speaker Change: Really interested in how you think about the adjacent market opportunity.

Speaker Change: Quite a bit above where we thought that they would be.

Speaker Change: For mobile for mobilize computer vision Tech.

Nimrod Nehustam: Back in July I think for the reasons that Nimrod went through.

Speaker Change: <unk> technologies and expertise in other markets. Because you said you said you mobilize not the bottleneck.

Nimrod Nehustam: We were not seeing any kind of change to that but we're assuming that we have about a $5 million deterioration versus kind of where we were in the second half really just to be safe and due to the lack of visibility.

Speaker Change: Your industry that you serve the auto industry predominantly the legacy auto industry or the vast majority of it.

Speaker Change: There may be scenarios, where they're just not ready there they're the bottleneck in that if.

Hopefully that helps to kind of size the.

Nimrod Nehustam: China business right now.

Speaker Change: If you anchor all of your talent and IP to that slow moving part that could put your company at risk. So I'm curious how are you viewing how do you see the surface area between your computer vision.

Nimrod Nehustam: Thank you.

Nimrod Nehustam: Thank you next question. Please yes. Our next question comes from the line of Adam Jonas with Morgan Stanley. Please proceed with your question.

Speaker Change: Tech and aviation and drones humanoids are these projects that mobilized.

Nimrod Nehustam: Thanks, everybody.

Speaker Change: Currently exploring right now and if so at what stage at what point could that be material.

Nimrod Nehustam: You said in your comments.

Speaker Change: You do not see significant in house development from Oems, you don't see that as a real trend.

Speaker Change: I think Dr. Jensen is the CES talk I referred to AI in the real World is physical AI.

Speaker Change: Curious on the Zika <unk> example of moving in House is that you see that as kind of a one off limited to China.

Speaker Change: And.

Speaker Change: No.

Speaker Change: A lot of synergies and that.

Speaker Change: Multi line. We are we are now studying this.

Speaker Change: And I'm curious, how you view Nvidia cosmos, even if it's not a direct competitor are they offering tools that could help.

Speaker Change: We're not in any mature place in which we can make their decisions, but we are definitely studying and depth.

Speaker Change: Courage and maybe accelerate in house.

Speaker Change: Synergies between our stack and outside of <unk>.

Speaker Change: Development from your Oems that maybe you haven't.

Speaker Change: Automotive, but it's really early stages.

Speaker Change: Yes, and then I have a follow up.

Speaker Change: I think cosmos is not directly related to empowerment and enabling innate.

Speaker Change: Got you thanks.

Speaker Change: Thank you Adam.

Speaker Change: Enablement.

Speaker Change: Thank you. Our next question comes from the line of Colin Rusch with Oppenheimer and company. Please proceed with your question.

Speaker Change: There's a big difference.

Colin Rusch: Thanks, So much guys can you speak to the cadence of change of incentives within the reinforcement learning platform.

Colin Rusch: And any potential strategies for utilizing elements of any of the emerging architectural models or portions of some of these foundational models.

Colin Rusch: Are starting to come to market.

Speaker Change: Later is is crucial for example in my other company deal Robotics rebuilt foundation models, just on simulated environments and we use a lot of bigger tools.

Colin Rusch: Alright reinforcement learning.

Colin Rusch: <unk>.

Colin Rusch: A very critical role in building Foundation models.

Colin Rusch: And we use a lot of reinforcement learning in our stock.

Speaker Change: And autonomous driving.

Speaker Change: Okay got structured.

Colin Rusch: Well.

Colin Rusch: The reason you want to use reinforcement learning is when you build a probabilistic engine alright. So the next token prediction you'll have in pre training to Populistic engine. There is no concept of correct and incorrect.

Speaker Change: And do you want to rely on real world data and other thing not to create distribution shifts.

Speaker Change: Use the stimulations for edge cases, but you don't build your entire stack on simulators.

Colin Rusch: Reinforcement learning through I think a reward function you're adding the notion of this so you need this and when you are building.

Speaker Change: I don't think that that would be a major enablement.

Speaker Change: 0009, or whatever it's going to in China, I think is separate from what's going in the western.

Colin Rusch: Useful foundation models and Youll need. This also when you are building.

Speaker Change: So when I mentioned about in house development, I was referring to the western World.

Colin Rusch: Outputs that are relevant to autonomous driving because.

Colin Rusch: Readiness is.

Speaker Change: Okay. Thanks for that and just as a follow up and you alluded to it humanoid robots I've been getting a ton of attention lately from cash flows efforts or other Oems in tech firms.

Colin Rusch: Talking about precision right you want to be precise and not just be probabilistic alright.

Colin Rusch: Alright, perfect learning is a crucial crucial element and there's also lots of innovation and reinforcement.

Speaker Change: Your chairman and co founder of <unk> as you mentioned so.

Colin Rusch: Learning.

Colin Rusch: What the deep sea cuts done they use kind of a.

Speaker Change: Really interested in how you think about the adjacent market opportunity for mobile for mobilize computer vision.

Simple reinforcement learning approach called the <unk>.

Colin Rusch: Which allowed them not to use the critics not to use <unk>.

Speaker Change: <unk> technologies and expertise in other markets because.

Colin Rusch: Implicated the reward the functions.

Speaker Change: You said you said mobile is not the bottleneck.

Colin Rusch: And used on the outcome may rewards instead of process modeling process rewards.

Speaker Change: Your your industry that you serve the auto industry predominantly the legacy auto industry or the vast majority of it.

Colin Rusch: And the fact that this works so well is very very nice that we're also looking at it with instead of using <unk> or <unk>, but it's a small thing.

Speaker Change: There may be scenarios, where they're just not ready there they're the bottleneck in that.

Speaker Change: You anchor all of your talent and IP to that slow moving part that could put your company at risk. So I'm curious how are you viewing how do you see the surface area between your computer vision.

Colin Rusch: One once you understand that it's because the useful you simply added to your stock and experiment with it and we're doing this all the time.

Speaker Change: Tech and aviation and drones humanoids are these projects that mobile <unk> are currently exploring right now and if so at what stage at what point could that be material.

Speaker Change: Super helpful. Thanks, guys and then just from from a sensor perspective, you know you talked a lot about the evolution of your imaging radar technology, but can you talk a little bit about what you're seeing in terms of sensor fusion and the ability to to integrate some of the sensor data and a more efficient way to streamline the overall system.

Speaker Change: I think Jenson ended the CES talk I referred to AI in the real World is physical AI.

Speaker Change: No.

Colin Rusch: That will develop over the next 12 to 24 months.

Speaker Change: Lot of synergies and at <unk>. We are we are now studying this.

Speaker Change: We see imaging radar as a game changing sensor and we see a lot of acceptance from the Oems.

Speaker Change: We're not in any mature place in which we can make their decisions, but we are definitely studying and deaths.

To include the imaging radar into four ratio for platform.

Speaker Change: Synergies between our stack and outside of <unk>.

Speaker Change: And.

Speaker Change: In automotive, but it's really early stages.

Speaker Change: We'll have more to say about it during 2025, but it's really a game changing sensor.

Speaker Change: Got you thanks.

Speaker Change: Thanks, so much guys.

Speaker Change: Thank you Adam.

Speaker Change: Thank you. Our next question comes from the line of Colin Rusch with Oppenheimer and company. Please proceed with your question.

Tom: Thanks, Tom.

Speaker Change: Thank you. Our next question comes from the line of Mark Delaney with Goldman Sachs. Please proceed with your question.

Speaker Change: Thanks, So much guys can you speak to the cadence of change of incentives within the reinforcement learning platform and any potential strategies for utilizing elements of any of the emerging architectural models or portions of some of these foundation models.

Speaker Change: Yes. So thank you very much for taking my questions. So when you could share an update on how mobile I drive technology is progressing for robo taxis and the timing of when do you think there will be a vs on roads for commercial operation not only in Germany, but I think VW had plan to watch in Texas are using mobile I drive.

Speaker Change: We're starting to come to market.

Speaker Change: So our activity with the mobilized survive.

Speaker Change: Alright, great.

Speaker Change: <unk> learning is becoming.

Speaker Change: Under these customers.

Speaker Change: Very critical the civil and building Foundation models.

Speaker Change: Full target the IC bus we have also additional activities.

Speaker Change: We use a lot of reinforcement learning and our AI stock.

Speaker Change: Okay.

Speaker Change: How long and Walter which is now starting paid.

Speaker Change: Well.

Speaker Change: The reason you want to use reinforcement learning is when you build a probabilistic engine alright. So the next token prediction, you'll have in pre training and Populistic engine. There is no concept of correct and incorrect with reinforcement learning through I think a reward function you are adding the notion of competitiveness. So do you need.

Speaker Change: <unk> city driver pay the.

Speaker Change: Paid that drives in Oslo.

Speaker Change: We have an additional.

Speaker Change: Bentler additional activity with the hold on.

Speaker Change: Platform.

Speaker Change: We're working with additional opportunities and it's all targeting <unk>.

Speaker Change: And when you are building.

Speaker Change: Useful foundation models and you'll need US also when you are building.

Speaker Change: End of 2026 2027, so throughout 2025, we're replacing the compute hardware from 95 base due to IQ six <unk> 64.

Speaker Change: Outputs that are relevant to autonomous driving because co readiness is.

Speaker Change: Talking about precision right you want to be precise and not just the probabilistic.

Speaker Change: The imaging radars, our liquidity sources is working.

Speaker Change: First I am wondering is the crucial crucial element and there's also lots of innovation and reinforcement.

Speaker Change: On this platform by using the interface.

Speaker Change: Or is there we finished training all the networks for those sensors.

Speaker Change: <unk>.

Speaker Change: What the deep sea has done they use kind of a.

Speaker Change: And by end of 2025, we should be at the Reits meantime between failure to start experimenting with the removing does Michael.

Speaker Change: Simple reinforcement learning approach called the <unk>.

Speaker Change: Which allows them not to use the critics not to use <unk>.

Speaker Change: Implicated to reward the functions.

Speaker Change: But.

Speaker Change: So at the end of 2026 2000 2040 buildings, it's Mike.

Speaker Change: And used on the outcome may rewards instead of <unk>.

Speaker Change: Thanks for that and you should see you should see milestones occur you know over the course of 2025. The first milestones are closed user group tough thing, where you're you're taking actual numbers of the public in the system.

Speaker Change: Process modeling process rewards.

Speaker Change: And.

Speaker Change: The fact that this works so well is very very nice that we're also looking at it with instead of using <unk> or <unk>, but it's a small thing.

Speaker Change: Shall launch in terms of starting to charge those customers. This is all kind of in the near term during 2025.

Speaker Change: One once you understand that it's because the useful you simply added to your stock and experiment with it and we're doing this all the time.

Speaker Change: To hear more about this.

Speaker Change: Thanks for that then my second question was just following up on some of the earlier commentary around the RFID in RF Q.

Speaker Change: Super helpful. Thanks, guys and then just from from a sensor perspective, you talked a lot about.

Speaker Change: The evolution of your imaging radar technology, but can you talk a little bit about what youre seeing in terms of sensor fusion and the ability to integrate some of the sensor data and a more efficient way to streamline the overall system and how that will develop over the next 12 to 24 months.

Speaker Change: Pipeline and at the capital markets day in December there were five Oems in the negotiation or due diligence phase for supervision.

Speaker Change: Three of those more advanced stages of evaluation for Friday to ask you you said today, you're continuing to make progress on that pipeline, but could you clarify if any of those opportunities are no longer available to you or have meaningfully pushed out, especially in Japan with some of the major Oems, there or announcing M&A or our plans to work with some other chip vendors at least for full evs.

Speaker Change: Yes.

Speaker Change: See imaging radar as a game changing sensor and we see a lot of acceptance from the Oems.

Speaker Change: To include the imaging greater into four ratio for platform.

Speaker Change: I am hoping to get a bit clearer for an update on where some of those opportunities stand. Thank you.

Speaker Change: And.

Speaker Change: We'll have more to say about it during 2025, but it's really a game changing sensor.

Speaker Change: There hasnt there hasnt been a change has not been a change negatively in these opportunities so far.

Speaker Change: Thanks, so much guys.

Speaker Change: So there is no one that is dropped.

Speaker Change: Thanks, Tom.

Speaker Change: Thank you. Our next question comes from the line of Mark Delaney with Goldman Sachs. Please proceed with your question.

Speaker Change: Thank you.

Speaker Change: Thanks Mark.

Mark Delaney: Yes. So thank you very much for taking my questions. So when you could share an update on how mobile I drive technology is progressing for robo taxis and the timing of when do you think there will be aves on roads for commercial operation not only in Germany, but I think VW had plan to watch in Texas using mobile I drive.

Speaker Change: Thank you. Our next question comes from the line of George <unk> with Canaccord Genuity. Please proceed with your question.

George: Hi, everyone. Thank you for taking my questions I'd like to ask also about the bake offs that you're in with the Oems.

Mark Delaney: So our activity with mobilized survive.

George: You talked about the in house development, but could you also maybe discuss what you're seeing from other alternatives, whether its emerging competitors like wave.

Mark Delaney: Under these customers.

Mark Delaney: Full target the IC bus we have also additional load activity.

Mark Delaney: Okay.

Mark Delaney: How long and Walter which is now starting paid.

George: <unk> has made some noise about trying to sell to Oems Tesla, how often are you seeing them in your discussions as well. Thank you.

Mark Delaney: <unk> safety driver pay the.

Mark Delaney: Page drives in Oslo.

Mark Delaney: We have an additional.

George: We did not see.

George: And those are discussions real competition.

Mark Delaney: Bentler additional activity with the hold on.

George: Side of in House.

Mark Delaney: Platform.

George: Element.

Mark Delaney: We're working with additional opportunities and it's all targeting <unk>.

George: All of those that you mentioned, we don't see them in competition I think that those are demo and demo vehicles.

Mark Delaney: End of 2026 2027, so throughout 2025, we're replacing the compute hardware from 95 days due to IQ six <unk> 64.

George: And.

George: Could be relevant for the end of the decade, maybe production, but it's still a long way long way to go. So if an OEM is interested in in 2027 and 2028 the timeframe for a supervision our chauffeur.

Mark Delaney: No.

Mark Delaney: The imaging radars, our liquidity and sources is working.

Speaker Change: On this platform by using the interface.

George: Then the best path to get there is.

Speaker Change: Or is there we finished training all the networks for those sensors.

George: It's <unk>.

Speaker Change: And by end of 2025, we shouldn't be at the Reits meantime between failure to start experimenting with the removing does Michael.

Speaker Change: Thank you and then maybe as a follow up but just curious as to what your collective thoughts are on Tesla's FSD version 13 point too and any progress you think they've been excellent.

Speaker Change: But the S&P is end of 2000 26024 rebuilding its Michael.

Speaker Change: That's why I think that is licensed.

Speaker Change: Thanks for that and you should see you should see milestones occur over the course of 2025. The first milestones are closed user group testing, where you are you.

Speaker Change: Version 13.

Speaker Change: We have strong convention conviction that our ITI <unk> platform will greatly exceed whenever we experienced with the FSD.

Speaker Change: We're taking actual members of the public and the systems commercial launch in terms of starting to charge. Those customers. This is all kind of in the near term during 2025.

<unk> 13.

Speaker Change: I would like to note that not really the Holly deals that we're pursuing.

Speaker Change: Is not just a good driving experience we are pursuing very high precision high precision, meaning that we can perform and ice off driving experience.

Speaker Change: To hear more about this.

Speaker Change: Thanks for that then my second question was just following up on some of the earlier commentary around the <unk> and <unk>.

Speaker Change: Sure.

Speaker Change: So there is way more to address than just the driving experience is how do you reach a very high meantime between failure.

Speaker Change: Pipeline and at the capital markets day in December there were five Oems in the negotiation or due diligence phase for supervision.

Speaker Change: Three of those more advanced stages of evaluation for Friday to as you said today, you're continuing to make progress on that pipeline, but could you clarify if any of those opportunities are no longer available to you or have meaningfully pushed out, especially in Japan with some of the major Oems, there or announcing M&A or our plans to work with some other chip vendors at least for full evs.

Speaker Change: In the meantime between failure of that exists today is around 10 hours, even with the best systems like the SSD version 13.

Speaker Change: H tens of thousands of hours. So this is really the Holy Grail.

Speaker Change: We believe we can reach this with our <unk> platform.

Speaker Change: I am hoping to get a bit clearer for an update on where some of those opportunities stand. Thank you.

Speaker Change: Thanks, Thank you George.

Speaker Change: Thank you. Our next question comes from the line of Allison you with Deutsche Bank. Please proceed with your question.

Speaker Change: There hasnt there hasnt been a change has not been a change negatively in these opportunities so far.

Hi, Thank you for taking our questions first I was just wanted to come back to kind of the AI deep sea.

Speaker Change: So there is no one that.

Speaker Change: Dropped.

Speaker Change: Thank you.

Speaker Change: Developments would there be anything you would call out that you found maybe interesting in terms of their approach and what they did I know you highlighted a couple of things earlier, but it seems to be this kind of a read through that some of the some of the companies in the states.

Speaker Change: Thanks Mark.

Speaker Change: Thank you. Our next question comes from the line of George <unk> with Canaccord Genuity. Please proceed with your question.

Speaker Change: Hi, everyone. Thank you for taking my questions I'd like to ask also about the bake offs that you're in with the Oems.

Speaker Change: Apply some learnings from that yet.

Speaker Change: That you would do something like that or you would kind of modify anything you do right now differently.

Speaker Change: You talked about the in house development, but could you also maybe discuss what you're seeing from other alternatives, whether its emerging competitors like wave.

Speaker Change: I think what well do.

Speaker Change: We're talking about the stack of.

Speaker Change: Ophthalmic.

Speaker Change: Driving.

Speaker Change: <unk> has made some noise about trying to sell to Oems Tesla, how often are you seeing them in your discussions as well. Thank you.

Speaker Change: What was interesting there is the use of <unk>.

Speaker Change: Instead.

Speaker Change: Reinforcement learning stack instead of CPO in Epo and then we're looking into it it was very interesting, but I think that this is a very small very small thing.

Speaker Change: We did not see.

Speaker Change: And those discussions real competition.

Speaker Change: Side of in House.

Speaker Change: Element.

Speaker Change: Their achievement.

Speaker Change: All of those that you mentioned, we don't see them in competition I think that those are demo and demo vehicles.

Speaker Change: Being able to.

Speaker Change: <unk> developed a very tight flow very tight trading flow.

Speaker Change: And.

Speaker Change: Taking into account every small bits of memory bandwidth and processing of the available chips that they had.

Speaker Change: Could be relevant for the end of the decade, maybe production, but it's still a long way long way to go. So if an OEM is interested in in 2027 and 2028 the timeframe for a supervision our chauffeur.

Speaker Change: And reach a very low cost.

Speaker Change: Training, whether that is $5 $6 million or $50 million I don't I don't know, but when you read our technical report.

Speaker Change: That is the best path to get there is.

Speaker Change: It's <unk>.

Speaker Change: See a lot of engineering innovation.

Speaker Change: So I think that is and what we take out of it which is relevant to us is really the use of <unk> in the reinforcement learning stock.

Speaker Change: Thank you this is really interesting.

Speaker Change: That's why I think that is licensed.

Speaker Change: Second one on the I know there was a lift partnership announced and in fact back in November and I think you.

Speaker Change: Version 13.

Speaker Change: We have strong convention conviction that our ITI <unk> platform will greatly exceed whenever we experienced with the FSD.

Speaker Change: You mentioned several times there is urgency from some a lot of Oems.

Speaker Change: Are you getting any increased urgency from kind of the mobile operators a ride hail operators, whether it's left or other parts of the world to try to get the robo taxi.

Speaker Change: 13.

Speaker Change: <unk>.

Speaker Change: I would like to note that not really the Holly deals that we're pursuing.

Speaker Change: Is not just a good driving experience we are pursuing very high precision high precision, meaning that we can perform and ice off driving experience.

Speaker Change: Place faster because of what Tesla is doing because of what women assuming if there is more urgency.

Speaker Change: Could we get kind of accelerated discussions along with that.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: So there is way more to address than just the driving experience is how do you reach a very high meantime between failure.

Speaker Change: Sense of urgency to come up with announcements on that.

Robert Taxis: Robert Taxis.

Speaker Change: We need to we need to align all of the partners together, it's not just on the operator, we need also the vehicle platform to be aligned. So so this is fully aligned with the IV bus.

Speaker Change: In the meantime between failure of that exists today is around 10 hours, even with the best systems like the SSD version 13.

Speaker Change: Each tens of thousands of hours. So this is really the Holy Grail.

Robert Taxis: And with the other two opportunities we have and we're building value fourth opportunity.

Speaker Change: We believe we can reach this with our <unk> platform.

Robert Taxis: Which which also will be meaningful so.

Robert Taxis: I do see kind of a revival.

George: Thanks, Thank you George.

Robert Taxis: The robot taxis.

Speaker Change: Thank you. Our next question comes from the line of <unk> with Deutsche Bank. Please proceed with your question.

Robert Taxis: Opportunity.

Robert Taxis: Mostly due to the success of Weibo and <unk>.

Robert Taxis: And we see indications from that from funding from the market in terms of partners whether its operators.

Speaker Change: Hi, Thank you for taking our questions first I was just wanted to come back to kind of the AI deep sea.

Robert Taxis: Vehicle platform builders, who would like to play a more meaningful.

Speaker Change: Developments would there be anything you would call out that you found maybe interesting in terms of their approach and what they get I know you highlighted a couple of things earlier, but it seems to be this kind of a read through that some of the some of the companies in the states.

To be a more meaningful actor in this emerging market.

Robert Taxis: Thank you very much.

Speaker Change: Thank you. Our next question comes from the line of Antoine to Cai von <unk> with New Street Research. Please proceed with your question.

Speaker Change: Apply some learnings from that yet.

Speaker Change: You would do something like that or you would kind of modify anything you do right now differently.

Speaker Change: Hi, good afternoon. Thank you for taking my questions.

Speaker Change: I think what well do.

Speaker Change: I have a question on your current supervision design win so can you maybe tell us about your collaboration efforts.

Speaker Change: I'm talking about the stack of.

Speaker Change: Ophthalmic.

Speaker Change: With polestar Volvo and loads of again, how the relationship is going.

Speaker Change: Driving.

Speaker Change: What was interesting there is the use of <unk>.

Speaker Change: Any interesting development over the last 90 days and hope to expand the opportunity with those customers.

Speaker Change: Instead.

Speaker Change: Reinforcement learning stack instead of CPO and GPO.

Speaker Change: I think our first generation their supervision from sort of development. We are kind of in the low margin on returns we have been adding automated the arcades to length of the stack and the recently launched it in China, and we will continue to develop it further.

Speaker Change: We're looking into it.

Speaker Change: Interesting, but I think that this is a very small very small thing.

Speaker Change: <unk> achievement.

Speaker Change: And being able to.

Speaker Change: <unk> developed a very tight flow very tight trading flow.

Speaker Change: But in terms of improving that stack, we reached a point in which our focus is on the IQ six platform.

Speaker Change: Taking into account every small bit of memory bandwidth and processing of the available chips that they had.

Speaker Change: We are doing a complete software.

Speaker Change: And reach a very low cost.

Speaker Change: Training, whether that is $5 $6 million or $50 million I don't I don't know, but when you read our technical report.

Speaker Change: So on the IQ six.

Speaker Change: Platform to make better use of the benefit that we have from the IQ six.

Speaker Change: See a lot of engineering innovation.

Speaker Change: The 10 times the more compute that we have.

It requires some software may revise the all our focus is now on the IHS.

Speaker Change: So I think that as well.

Speaker Change: But we take out of it which is relevant to us is really the use of <unk> in the reinforcement learning stock.

Speaker Change: And throughout the 2025, we will be able we have already preproduction vehicles with IQ six already doing testing all of our testing in Germany.

Speaker Change: Thank you this is really interesting.

Speaker Change: Second one on the I know there was a lift partnership announced and.

Speaker Change: And throughout the 2025 will be April.

Speaker Change: We'll be able to show significant.

Speaker Change: Back in November and I think you've mentioned several times there is urgency from some a lot of Oems.

Speaker Change: Significant improvement.

Speaker Change: On the supervision performance with <unk>.

Speaker Change: Are you getting any increased urgency from kind of the mobile operators a ride hail operators, whether it's left or other parts of the world to kind of get the robo taxi.

Speaker Change: Thanks, and maybe as a photo apps you presented the CMV the DXP framework.

Speaker Change: Two to enable Oems to cover that control.

Speaker Change: Place faster because of what Tesla is doing because of what we're most doing it if there is more urgency.

Speaker Change: And this has been affecting the driving experience I'm wondering what feedback you're getting on DXP from the from your current engagements and.

Speaker Change: Could we get kind of accelerated discussions along with us.

Speaker Change: And potential additional design wins.

Speaker Change: Yes.

Speaker Change: Sense of urgency to come up with announcements on the Robo taxis.

Speaker Change: So.

Speaker Change: Our activity and what the supervision DXP is in full use.

Speaker Change: But we need to we need to align all of the partners together, it's not just on the operator, we need also the vehicle platform to be aligns up. So this is fully aligned with the IV bus.

Speaker Change: No.

Speaker Change: It's a very important stack as part of the development stack that we have with the Oems.

Speaker Change: And with the other two opportunities we have and we're building value fourth opportunity.

Speaker Change: Thanks, Antoine operator, the next question will be our last question.

Speaker Change: Thank you. Our final question comes from the line of Tom Narayan with RBC capital markets. Please proceed with your question.

Speaker Change: Which which also will be meaningful so.

Speaker Change: I do see kind of a revival.

Speaker Change: The robot taxis.

Tom Narayan: Hi, Thanks for taking my questions. So my first one is just a quick follow up on.

Speaker Change: Opportunity.

Speaker Change: Mostly due to the success of Weibo.

Speaker Change: I think <unk> question on the well.

Speaker Change: <unk>.

Speaker Change: And we see indications from this from funds from the market in terms of partners whether its operators.

Speaker Change: Famous slides from the Investor day.

Speaker Change: Just wanted to clarify that.

Speaker Change: Vehicle platform builders, who would like to play a more meaningful.

Speaker Change: Two OEM was one first supervision and the other for surrounding you'd ask that are close to nomination I heard something like.

Speaker Change: To be more meaningful after in emerging markets.

Speaker Change: Thank you very much.

Speaker Change: Was there any.

Speaker Change: Instead of being two or three months away Thats still you still believe that will happen. In 2025 is that is that correct or should we just assume let's not.

Speaker Change: Thank you. Our next question comes from the line of Antoine <unk> with New Street Research. Please proceed with your question.

Speaker Change: But.

Speaker Change: Strict timelines associated with this from now on is that kind of the change in the in the way to think about it.

Antoine: Hi, good afternoon, and thank you for taking my questions.

Antoine: I have a question on your current supervision design wins. So can you maybe tell us about your collaboration efforts.

Speaker Change: I don't think that there is any change to the surround Adas is really imminent, but no we.

Antoine: With polestar Volvo and loads of again, how the relationship is going.

Speaker Change: We don't want to start pinpointing, which week.

Antoine: Any interesting development over the last 90 days and hope to expand the opportunity with those customers.

Speaker Change: Each month of 2025 this is going to be nominated.

Speaker Change: But all the indications are that now we're at the end of the process of elimination.

Antoine: I think our first generation supervision of development, we are kind of in the lost margin on returns we have been adding automated archeage two minutes of the stack and the recently launched it in China, and we will continue to develop it further.

Speaker Change: With the supervision the same all the activity within the 2000 22024 is bearing fruit.

Speaker Change: And things should start playing out.

Speaker Change: Within the next few months within 2020, so nothing has changed that would change our.

Antoine: But in terms of improving that stack, we reached a point in which our focus is on the IQ six platform.

Speaker Change: Whatever we presented at the capital market to date.

Antoine: We are doing a complete software.

So the IQ six.

Rob: Rob do you have anything.

Speaker Change: Platform to make better use of the benefits that we have from the IQ six.

Rob: Just don't want to be driven by kind of expectations of an exact time. So so nothing has changed.

Antoine: The 10 times the more compute that we have.

Rob: Spectation for where we stand with different Oems.

Antoine: It requires some software may revise all of our focus is now on the IHS.

Rob: Yes.

Antoine: And throughout the 2025, we will be able we have already preproduction vehicles with IQ six already doing testing all of our testing in Germany.

Rob: Yes.

Rob: Okay cool and my follow up.

Rob: I appreciate the comments on when you compare to what the other Oems are doing with maybe some some other tier ones that are doing that with the mobilized product that.

Antoine: And throughout the 2025 will be April.

Antoine: We will be able to show significant.

Rob: Theres, just a focus on precision and especially as it relates to eyeball, but I guess my question is as it relates to the level two plus and.

Antoine: Significant improvement.

Antoine: On the supervision performance with IQ six.

Antoine: Thanks, and maybe as a photo apps you presented the CMV the DXP framework.

Rob: You know maybe some level three I mean, you have obviously GM this week, saying, they're going to double their super cruise adoption. This year cash flow with their unsupervised FSD launch in Austin in June.

Antoine: Two to enable Oems to cover that control.

Antoine: And this has been affecting the driving experience I'm wondering what feedback you're getting on DXP from the from your current engagements and.

Rob: Live demos demo at a level two plus camera and radar at CES, that's pretty comparable to FSC and then Mercedes increase their speed to 95 kilometers an hour offer their level three from 60 I know these products are probably still not up to up to snuff right, where you guys are or do you want to be but just wondering if there is.

Antoine: And potential additional design wins.

Antoine: So.

Antoine: Our activity with the supervision DXP is in full use.

Antoine: So it's a very important stack as part of the development stack that we have with the Oems.

Rob: The risk at the the transition to get to is off where these products might just be sufficient for where the consumer demand is is that a risk you see or did.

Speaker Change: Thanks, Antoine operator, the next question will be our last question.

Speaker Change: Thank you. Our final question comes from the line of Tom Ryan with RBC Capital markets. Please proceed with your question.

Rob: You do not or youre not concerned about that thanks.

Rob: It's not a risk because what we're doing both right. We're building supervision was not which is not in the eyes of assistant.

Tom Ryan: Hi, yes, thanks for taking my questions. So my first one is just a quick follow up on I.

Speaker Change: I think <unk> question on the <unk>.

Rob: We're building so far at the same time. So for example, with the Porsche.

Tom Ryan: Famous slides from the Investor day.

Tom Ryan: Just wanted to clarify that the two Oems one first supervision and the other for surrounding asset are close to nomination I heard something like.

Rob: We are building supervision that without the web building shall first so it's all going to simultaneously we believe in the great value of an EIS off but regardless of our belief. We're also promoting very very strongly supervision, which is at the high band system. So.

Tom Ryan: Was there any.

Tom Ryan: Instead of being two or three months away Thats still you still believe that will happen. In 2025 is that is that correct or should we just assume let's not.

Rob: If and I don't tell them, it's what the market would think is good enough. It's fine right. We believe that there is great value in the eyes of is is that this is why we're pursuing that.

Tom Ryan: But strict timelines associated with this from now on is that kind of the change in the in the way to think about it.

Rob: Well.

Rob: Alright.

Rob: Both so there's no risk here, it's not that we are basically on an ice off and not doing an LTE plus their system.

Tom Ryan: I don't think that there is any change to the surround the Adas is really imminent, but no we.

Tom Ryan: We don't want to start pinpointing, which week.

Rob: Okay.

Tom Narayan: Thank you Tom.

Tom Ryan: Each month of 2025 this is going to be nominated.

Mr. Galvin: Thank you, ladies and gentlemen that concludes our question and answer session I'll turn the floor back to Mr. Galvin for any final comments.

Tom Ryan: But all the indications are that now we're at the end of the process of elimination.

Mr. Galvin: Thanks, a lot for everyone's time, and we will talk to you on our next earnings call in April. Thank you.

Tom Ryan: With the supervision of the same all the activity within the 2025 2024 is bearing fruit.

Tom Ryan: And things should start playing out.

Tom Ryan: Within the next few months within 2020, so nothing has changed that would change our.

Tom Ryan: Whatever we presented at the capital market to date.

Ross: Ross do you have anything.

Speaker Change: We just don't want to be driven by kind of expectations of an exact time. So so nothing has changed.

Speaker Change: Spectation for where we stand with different Oems.

Speaker Change: Yes.

Speaker Change: Okay cool and my follow up.

Speaker Change: I appreciate the comments on when you compare to what the other Oems are doing with maybe some some other tier ones that are doing that with the mobilized product that there is.

Speaker Change: Our focus on precision and especially as it relates to ISR, but I guess my question is as it relates to the level two plus.

Speaker Change: You know maybe some level three I mean, you have obviously GM this week, saying, they're going to double their super cruise adoption. This year cash flow with their unsupervised FSD launch in Austin in June active demos demo at a level two plus camera and radar at CES, that's pretty comparable to FSC.

Speaker Change: And then Mercedes increase their speed to 95 kilometers an hour after their level three from 60 I know these products are probably still not up to up to snuff right, where you guys are or do you want to be but just wondering if theres a risk at the the transition to get to is off where these prada.

Speaker Change: It might just be sufficient for where the consumer demand is is that a risk you see or what.

Speaker Change: You do not or youre not concerned about that thanks.

Speaker Change: It's not the risk because what we're doing both we're building supervision was not which is not in the eyes of assistant.

Speaker Change: And we're building so far at the same time. So for example, with the Porsche.

Speaker Change: We are building supervision that without <unk>, we're building shall first so it's all going to simultaneously.

Speaker Change: We believe in the great value of an EIS off but regardless of our belief. We're also promoting very very strongly supervision, which is that the <unk> system.

Speaker Change: If and I don't see them as what the market will.

Speaker Change: <unk> good enough. It's fine right. We believe that there is a great value in the eyes office is that this is why we're pursuing that as well.

Speaker Change: Quite simply this is both so there's no risk here, it's not that we are banking on and is off and not doing an LTE plus their system.

Okay.

Speaker Change: Thank you Tom.

Speaker Change: Thank you, ladies and gentlemen that concludes our question and answer session I'll turn the floor back to Mr. Golf's for any final comments.

Speaker Change: Thanks, a lot for everyone's time, and we will talk to you on our next earnings call in April. Thank you.

Speaker Change: Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.

Speaker Change: [music].

Speaker Change: Quarter and full year 2024 earnings conference call for the period.

Speaker Change: <unk> 28 2024. Please note that today's discussion contains forward looking statements based on the business environment as we currently see it.

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

Speaker Change: Additionally, on this call we will we will refer to both GAAP and non-GAAP figures a reconciliation of GAAP to non-GAAP financial measures is provided in our posted earnings release.

Speaker Change: Joining us on the call today are professor unknown, so sure mobilized CEO and president and Maran Shamash mobilized CFO also joining today for the Q&A session.

Stan: Stan mobilize EVP of business development and strategy.

Speaker Change: And now I'll turn the call over to <unk>.

Speaker Change: Hello, everyone and thanks for joining our earnings call.

Speaker Change: With the results Q4 was closely aligned with our expectations IQ volume was better than expected and was 9%.

Speaker Change: <unk> percent versus Q3.

Speaker Change: Upside was largely related to higher than expected volume from Chinese domestic Oems continue to order above the levels, we talked about back in July.

Speaker Change: <unk> gross margin and operating expenses were aligned with our deal at the beginning of the quarter operating margin of 21% was almost five points higher than Q3.

Operating cash flow was robust in 2020 for finishing up by $4 million.

Speaker Change: $400 million.

Speaker Change: That was flat compared to 2023.

Speaker Change: Quite significantly year over year revenue and earnings declined driven primarily by the previously disclosed inventory digestion periods, we experienced in the first half operating cash flow was approximately double our non-GAAP net income in 2024.

Speaker Change: Brian will cover guidance in more detail in a few minutes with our first set the stage.

Speaker Change: Is that if the yields indications from our customers for the full year, our guidance would be higher as we preferred to take conservative approach that accounts for the risk and uncertainties negatively affect earnings.

Speaker Change: Top 10 customers were assuming global production volumes meaningfully worse than they assume that that's yield by third party forecasters.

Speaker Change: Chinese Oems forecasting remains difficult due to less visibility we receive volumes appear to have stabilized and the $2 million plus annualized range in the second half of 2024 higher than we had expected several months ago.

Speaker Change: We're assuming a deterioration from that level simply to account for the low visibility.

Speaker Change: Supervision, we're assuming about half of the current run rates.

Speaker Change: Of end market demand for the vehicles. We are on on Zika, we are electing to account for the risk that Zika could choose to go with their in house system and 0009, which is currently running up to 2000 units per month.

Speaker Change: We have no indication that this is flat, but we are unwilling to be surprised again on pollstar. We're assuming volumes are posted a four to remain at current levels. This flat. Despite their stated plans for further geographic expansion.

Speaker Change: Turning to seasonality as a percentage of the midpoint of the full year revenue guidance, our assumptions for Q1 revenue is 25% of the full year typically it would be lower so this gives us further confidence that the full year outlook is achievable, even if macro conditions deteriorate.

Speaker Change: Turning to the commercial the new business side, we continue to win new business with our core customers at the same very high rate, we have for years and are seeing good opportunities with some new customers. We've recently won a multimillion unit.

Speaker Change: When data harvest stake and cloud enhanced driving assistance program.

Speaker Change: But very very.

Speaker Change: Very key customer in parallel with continued due diligence for supervision. This deal strengthens our global data harvesting with another leading Oems with significant global volumes data plays a key role in our sixth generation AI stack.

Speaker Change: Additionally, we'll move forward with an Indian OEM on ventilator harvesting for this important growth market a number of.

Speaker Change: Upcoming.

Speaker Change: Launches from this customer will have cloud enhanced driving assist capability.

Speaker Change: On the advanced product side, we have the customer engagements in place to drive a steady cadence of announcements over the course of 2025, which is consistent with the messages we delivered at the December capital markets day.

Speaker Change: While our expectations for advanced product design wins remain intact. The exact timing of those announcements remains challenging to predict the decision for an OEM.

Speaker Change: What path to take towards autonomy, it's very strategic very long term decision and this is why did your diligence process is so intense and takes.

Speaker Change: But it is clear that the customers believe that our approach and that the faster the outstanding products went through a mobile license technology.

Speaker Change: In the past few months, we have revealed through our AI day back in October or the capital markets day in December.

Speaker Change: He asked already this month a lot of technological advancements underlying overstock. The common theme is efficiency of design efficiency in our silicon design and we'll be rebuilding very soon detailed benchmarks of iclusig pie versus competing high performance chips.

Speaker Change: Efficiency of our AI.

Speaker Change: Hi, Dave.

Speaker Change: How to build a transformer network, which is a factor of 100 more efficient than the existing transformer architectures used by practitioners. This efficiency and design is also translated to the amount of resources data and compute which is required by the hour.

Speaker Change: Hi Tech efficiency in our mind matters and goes against the dogma Brute force development with.

Speaker Change: So as opposed to development of the <unk> competitors as reflected by the massive investments in compute and data pipeline.

Speaker Change: <unk> has a long tradition of excellence and efficiency preproduction vehicles powered by our <unk> high stack.

Speaker Change: Great promise for a substantial leap in performance and precision of our next generation supervision and so forth more updates will come in the course of 2025 as we get ready for startup production during 2026.

Speaker Change: Thank you and I will turn the call over to Laura.

Laura: Thank you Amit thanks for joining the call everyone.

Speaker Change: We begin please be aware that all my comments on such can be 18 will refer to non-GAAP measurements.

Laura: In conclusion, if normalized non-GAAP numbers.

Laura: Intangible asset, which is mainly related to the position of <unk>. In 2017, we also exclude stock based compensation as well as the goodwill.

Laura: The decline in Q3.

Laura: Just wanted to.

Speaker Change: Slightly exceeded the Q4 outlook implies a full year guidance, we provided back in October largely due to higher than expected volumes from Chinese Oems.

Laura: It was down 23%.

Laura: Yes.

Laura: And then match insight to begin from that comparison.

Laura: The meaningful inventory would be an impact.

Laura: In fact in the first half of 2025 and 10 in Q4 of 2023.

Laura: Q1 will again be an apples to oranges.

Laura: Even <unk>.

Laura: The decline in Q1 of 2024.

Laura: With Q2 and compared that.

Laura: It will be more than that.

Laura: Last margin was consistent with expectations and up slightly versus Q3 due to lower percentage of supervision revenue in Q4 versus Q3.

Laura: Operating expenses without somehow printed Q3 as expected.

Laura: It is related to the initial impact on the lidar.

Laura: Unique Wanda and increase in net income due to defend an adjustment based on the legislation who benefited tours and other items that are largely timing turning to guidance. We provided 2025 revenue and adjusted operating income guidance into <unk>.

Laura: At the midpoint, we expect $1 $75 billion in revenue and $217 million of adjusted operating income. This represents approximately 6% year over year at the world.

Laura: And more than 10% in adjusted operating income.

Laura: Your revenue guidance is based on actual volume in the range of 30 to 30.

Laura: 34 million.

You mentioned I'm, assuming the vast majority is typically.

Laura: Excellent and expect overall volume in the low 20000 unit.

Laura: At the midpoint, assuming no expansion into the U S.

Laura: So at the time needs without Glenn unexpectedly addressing to position volume in the near term until we began launching and with what products.

Laura: <unk> thousand 2006, we don't thank you to be significant enough to call out.

Laura: That expectation, let me know if anybody says to downside on that material.

Laura: On the ICU volume side based on our analysis and information for Q1, we believe this customer inventory that tenancy its normal seasonal levels.

Laura: To give you a better insight on our guidance, we thought it will be helpful to provide a bridge from the second half 2024 annualized run rate of $75 6 million to the mid point of our <unk>.

Laura: 25 volume outcome.

Laura: $3 million, which is somewhat below the indications. We currently have some estimates we don't plan to provide this level of detail on a quarterly basis, but thank you need to have full as context for our initial 2025.

Laura: First of all some pull forward of volume into Q4 is typical given annual track changes in volumes.

Laura: Estimate this added about half a million units annualized in Q4 of 2024 and.

Laura: We are not assuming the securities again in Q4 of 2025.

Laura: We assume 2020 production of <unk>.

Laura: OEM.

Laura: Which represent about half of <unk>.

Laura: Be down almost 7% versus 2024.

Laura: Similar to the decrease.

Laura: 2025, with the 2023 this is meaningfully lower and more conservative than IHS projection of minus 4% and would account for that.

Laura: 2.3 million units of the action.

Laura: Lastly, I'll see NFC data assume production decline, we do expect share gains in Adas adoption built from these customized to that approximately one 5 million units of growth in 2025 or about four points of growth over market.

Laura: No generic expectation, but rather relate to new programs. In addition to our market.

Laura: Typically.

Laura: Regarding seasonality second half production at the top customer is typically 2% higher than first half.

Laura: This would represent almost 1 million unique annualized reductions versus the second half mainly.

Laura: Finally regarding the China.

Laura: We are assuming approximately half a million unit decline as compared to the second half family. This is to reflect the volatility we've seen over the last several quarters.

Laura: Turning to gross margin in 2025, we are assuming about one five points higher in 2024 trillion, primarily due to the lower percentage of supervision related.

Laura: In terms of operating expenses.

Laura: About 250 million per quarter doing 2025 on average which is consistent with our comments on the Q3 call. When we said the run rate at the <unk>.

Laura: Be sustained through 2025.

Laura: This is best Q3 run rate savings.

Laura: Savings from the wind down of the lineup.

This reduction to be offset by capital employee compensation inflation.

Laura: This is our expected military reserve investment.

Laura: Mind, you that head count related expenses represent well above half of our opex.

Laura: Areas of growth such as <unk> and SMA.

Laura: All related expenses, largely offset by efficiencies within our Liberty and <unk> as well as expected higher year over year engineering reimbursement on production program spending.

Laura: In terms of Q1, we expect revenue to be down about 11% versus Q4, which reflects typical seasonality and a bit more than 80% growth year over year against the inventory digestion, we experienced in Q1 of 2020 from a revenue.

Laura: Expectations for Q1 implies about 25% of the midpoint of our full year revenue guidance we.

Laura: We expect overall gross margin about basis.

Laura: Basis points higher than Q4 levels and for the adjusted operating expenses to be at or slightly lower than the 250 million per quarter I indicated.

Laura: Operating cash flow in 2024 was been above adjusted net income even after taking into account capital expenditure $81 million cash flow generation in 2024 was consistent with 2023, despite substantially lower adjusted operating income, reflecting strong management and control of working capital in a variety of areas.

Laura: Additionally, we anticipate continuing to reduce our strategic reserve of cheap inventory on our balance sheet in 2025, we choose support another year of delivering operating cash flow above adjusted net income finally, we expect the full year effective tax rate to be approximately 20% similar to 2024.

Laura: Thank you and we will now take your questions.

Laura: In order to allow for as many questions as possible. We ask that you read to keep to one question and one follow up thank you.

Speaker Change: Our first question comes from the line of <unk> Patel with Wolfe Research. Please proceed with your question.

Shreyas Patel: Okay. Thanks, so much for taking.

Speaker Change: The question.

Shreyas Patel: Maybe just.

Shreyas Patel: At a high level as you were talking to the legacy Oems on adopting advanced automation like supervision.

Shreyas Patel: Just curious what kind of timelines they are considering.

Shreyas Patel: It's kind of autonomy.

Shreyas Patel: You mentioned.

Shreyas Patel: Uncertainty by Oems as it relates to making that decision.

Shreyas Patel: Or the legacy automaker still viewing this as a.

Shreyas Patel: <unk> 2027 or 2028.

Shreyas Patel: Launch.

Shreyas Patel: The real adoption, particularly in markets like North America.

Shreyas Patel: In Europe.

Shreyas Patel: I'll start and then maybe.

Shreyas Patel: Nevertheless, with Joy.

Shreyas Patel: During 2024, we did a lot of buildup.

Shreyas Patel: With the potential customers building and development vehicles with our stock.

Shreyas Patel: Working with them on very.

Shreyas Patel: Very extensive testing and we believe all of that will bear fruit in 2025.

Shreyas Patel: That timing in 2025, it's difficult to pinpoint.

Shreyas Patel: But all the indications that all what we did in 2024 are going to bear going to bear fruit, both in supervision AD and surround us.

Shreyas Patel: Surround data is also a very interesting category that is being is being built right. Now 2027 seems like still looks like the sweet spot in terms of introduction introduction of these kinds of.

Shreyas Patel: <unk> technologies.

Shreyas Patel: The work of Tesla.

Speaker Change: It's really creating a sense of urgency with our OEM. So we still believe that 2027 is really the right timing.

Speaker Change: Towards reduction of the.

Speaker Change: These systems do you have anything to add.

Speaker Change: Mhm.

Speaker Change: I agree and support the majority of the RF Skus that we have and the engagements that we have are addressing or aiming for 2027 2008 timeframe.

Q4 2024 Mobileye Global Inc Earnings Call

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