Q2 2025 Mobileye Global Inc Earnings Call
Forward looking statements based on the business environment as we currently see it.
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. 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.
Shashoua mobile: Joining us on the call today are professor unknown, Shashoua mobile <unk> CEO and president.
Shashoua mobile: And Nimrod Neuston mobilized EVP of business development and strategy. Unfortunately, our CFO <unk> Shemesh recently experienced a death in her family and will not be joining the call today I am sure everyone listening joins me in wishing the best <unk> and her family for today's earnings call I will essentially take on <unk> role, Thanks, and now ill.
Speaker Change: Turn the call over to <unk>.
Speaker Change: Hello, everyone and thanks for joining our earnings call starting with the results Q2 revenue was up 15% year over year as demand for the IQ was strong across regions and Oems.
Speaker Change: Adjusted operating income was up 34% and adjusted operating margin rose three points to 21%.
Speaker Change: Q2 was a good display of the strong operating leverage created by our business model on a year over year basis more than 40% of the revenue growth converted to operating income compared to Q1, nearly 70% of the higher revenue dropped to operating income.
Speaker Change: Operating cash flow was again, a highlight over $200 million.
Speaker Change: For the quarter and over 300 million for the first half about 30 about 33% of revenue.
Speaker Change: Our Adas business is highly cash generative and we are maintaining strong working capital discipline.
Speaker Change: The core <unk> business is performing well with volumes at or above $8 5 million per quarter for the last four periods.
Speaker Change: And we are raising our full year revenue outlook by 4% and our adjusted operating income outlook by 14% at the midpoint.
Speaker Change: Our core <unk> business truly illustrates that mobilized an execution machine IQ six slides, we will be the future high volume chip for this segment and the ramp up of that new system has been seamless only one year. After the first SLP, we already have IQ six light based systems on the road in North America Europe.
Speaker Change: China, Japan and India.
Speaker Change: On the advanced product side, we are the only OEM neutral platform that is cost efficient and scalable and has incredible technology paths to eyes of autonomy and both privately owned vehicles and Robo taxis all four of our advanced products surround Adas supervision show for and drive share common elements, including the <unk>.
Speaker Change: Six high inference chip major portions of the perception and policy AI stacks.
Speaker Change: Crowdsource driving intelligence, our safety frameworks and the company's data and validation infrastructure. This is <unk>.
During the conference, please press star zero on your telephone pad. As a reminder this conference is being recorded. It is now my pleasure to introduce your host Dan gals Chief Communications officer. Thank you Mr. Gal you may begin
Speaker Change: Common backbone creates many synergies for us and our customers enables us to develop and execute all four solutions simultaneously and leaves us agnostic to whether the market moves faster in one way or another.
Speaker Change: thanks Maria. Hello everyone and welcome to mobilize second quarter 2025 earnings conference call for the period ending June 28th 2025
Speaker Change: What are the couple of years ago Oems, who are primarily focused on supervision. We're now seeing broad momentum across our portfolio from next generation Adas to full point a to point B is on hands free to level III system Center Robo taxi.
Speaker Change: The IQ six high based surround Adas system continues to develop as the next generation of standardized driving assist on high volume vehicles platforms.
Speaker Change: This system addresses multiple objectives in a cost efficient package.
Speaker Change: It's designed to meet stricter late decade safety standards enabled highway hands free performance for a lower cost than current systems and supports OEM goes to consolidate ecu's and to integrate technology on a single Soc.
Speaker Change: In recent months.
Speaker Change: We have seen growing demand from Oems to shift away from already sourced single camera programs towards our multi camera surround Adas a bundle.
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. Additionally, on this call, we will refer to both gaap and non-gaap figures. Our 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, mobilized, CEO and president, uh, and Nimrod nhan mobilized EVP of Business Development and strategy. Unfortunately, our CFO Moran shamash recently experienced the death in her family and will not be joining the call today. I'm sure everyone listening. Joins me in Wishing the best to Moran and her family for today's earnings call, I will essentially take on Moran's role. Thanks and now I'll turn the call over to amnon
Speaker Change: Overall opportunity to substantially grow content per vehicle in the Adas space have improved over the last six months.
Amnon Shashua: Hello everyone and thanks for joining our earnings. Call starting with the results Q2 Revenue was up. 15% year-over-year as demand for the IQ was strong across regions and oems.
Speaker Change: Supervision activity.
Speaker Change: Remains robust, but lack of competitive pressure is enabling Oems to continue to take their time with decision, making Meanwhile, chauffeur has generated multiple new OEM prospects that CS is off on highway is a breakthrough feature that allows that allows drivers to reclaim their time during commutes the central question.
Amnon Shashua: Adjusted operating income was up 34% and adjusted operating margin Rose. 3.21%
Speaker Change: Turnaround is off consumer AAV programs is simply technological maturity, how likely is it for a technology provider like mobilized to execute assistant with human level of safety and then expensive ODT.
Amnon Shashua: Q2 was a good display of the strong operating leverage created by our business model on a year-over-year basis, more than 40% of the revenue growth converted to operating income compared to q1, nearly 70% of the higher Revenue dropped to operating income
Speaker Change: In this context, our full production programs with Volkswagen group are significant strategic assets. They showcased our rapid progress in transforming our core technologies into scalable products, our ability to demonstrate these products to other customers, including production level of hardware and software associated Kpis is the NIM.
Amnon Shashua: operating cash flow was again a highlight over $200 million for the quarter and over 300 million for the first half about 33 about the 33% of Revenue.
Amnon Shashua: Our AAS business is highly cash generative and we are maintaining strong working capital discipline.
Amnon Shashua: The core AAS business is performing well with volumes at or above 8.5 million per quarter for the last 4 periods.
Speaker Change: Potent proof point that our competitors do not have and will drive increasing competitive pressure as we approach launch.
Amnon Shashua: And we are raising our full year Revenue Outlook by 4% and our adjusted operating income Outlook by 14% at the midpoint
Speaker Change: Turning to Robo taxi Weibo's achievement of 25% market share in San Francisco.
Speaker Change: Despite offering no time or cost advantage over human driven alternatives is very encouraging and has reignited the industry enthusiasm.
Speaker Change: When you look at the Robo taxi opportunity two pillars are critical safety and scalability on safety. This means reaching the meantime between failures that exceeds human statistics as well as other critical safety standards.
Amnon Shashua: I will call Adas business, truly illustrates that mobilize, an execution machine iq6, light will be the future, high volume chip for this segment and the ramp up of that new system. Has been seamless only 1 year after the first, so we already have iq6 light based systems on the road in North America, Europe, China, Japan, and India.
Speaker Change: Safety has long been a strength of mobilized supported by foundational innovations like our Rss model, which we developed in 2017 and the PGS. Our recently published framework for using multiple subsystems.
Amnon Shashua: On the advanced product side. We are the only OEM neutral platform that is cost efficient and scalable and has a credible technology path to eyes of autonomy in both privately owned vehicles and robot taxis.
Speaker Change: One safety goals have been reached the second pillar is scalability. The name of the game here is how fast can you scale. This should be evaluated across three different vectors. The first scalability Victor is geographic how fast can you expand from city to city rim is a huge asset here the.
Amnon Shashua: All 4 of our Advanced products, surround Adidas supervision chauffeur and drive. Share common elements, including the iq6. High inference chip major portions of the perception and policy AI Stacks Ram crowdsourced Rising intelligence, our safety Frameworks and the company's data and validation infrastructure.
Speaker Change: Second is cost what are all the all in operating cost of the system. Our in house designed compute imaging radar efficient AI supply chain synergies. These all combined to create significant cost efficiency advantages relative to the competition.
Amnon Shashua: This common backbone creates many synergies for us and our customers enables us to develop and execute All 4 Solutions, simultaneously and leads us agnostic to whether the market moves faster in 1 way or another
Speaker Change: Finally, scalability also entails production capacity and business model. The fact that we work in partnership with Oems to produce vehicles, where our system is integrated during the mass production line, rather than being uplifted and a different facility. After the vehicle has been produced is very important this approach allows us to be capped.
Amnon Shashua: Whereas a couple of years ago oems were primarily focused on supervision. We are now seeing broad momentum across our portfolio from Next Generation Adas to full point. A to point B eyes on hands-free to level 3 systems and to robot Taxi.
Amnon Shashua: The iq6 high based surround Ada system continues to develop as the next generation of standardized, providing assist on high volume Vehicles platforms.
Speaker Change: Light, but it's not just about capital light. It also allows us to scale fast even if we had all the capital to go and purchased 100000 vehicles and then build production plants that would uplift the self driving technology. It would have slowed us down.
Amnon Shashua: This system, addresses multiple objectives in a cost. Efficient package. It's designed to meet stricter late, decade safety standards enabled, Highway hands-free performance for a lower cost than current systems and supports OEM goals to consolidate ecus and to integrate technology on a single SOC.
Speaker Change: We are working with Volkswagen of course, but also Holland, which has a production facility underway and have advanced engagements with other high scale Oems.
In recent months. We have we have seen growing demand from oems to shift away from already sourced. Single camera programs toward our multi-camera surround Adas Mundell.
Speaker Change: On the operations and distribution side, we have arrangements with false or against mobility, Armenia, and Japanese fleet manager My Roubini to provide operations and the customer facing technology. Finally, we have announced really engagements with demand generators, Uber and lyft in the U S and public transport operators in Europe to provide the demand.
Amnon Shashua: Overall opportunities. So to substantially grow content for vehicle in the Ada space have improved over the last 6 months.
Speaker Change: Platform all of these actors have skin in the game, which is ultra important to drive scale.
Speaker Change: So I'm on the line with the kind of partnerships that we're building is in a very good position to scale rapidly once we start commercial deployment in 2026.
Speaker Change: In terms of a technology update on Robo taxi, we recently successfully transitioned into a full production hardware inside the I'd Buzz test vehicle.
Amnon Shashua: Remains robust, but lack of competitive. Pressure is enabling oems to continue to take their time with decision. Making meanwhile chauffeur has generated multiple new OEM prospects. That sees eyes off on Highway as a breakthrough feature that allowed that allows drivers to reclaim their time during commutes. The central question, around eyes of consumer Ave programs is simply technological maturity. How likely is it for a technology provider like mobili to execute a system with human labels? Safety and an expansive odd?
Speaker Change: Meantime between failure performance is tracking well to the Kpis that were laid out at the start of the program, we expect to reach our our kpis goals by the end of 2025, then start adding tail operations and then remove the driver in 2026, so it's all on track.
Speaker Change: In summary, the opportunity set in front of US today is larger broader deeper and more urgent than it was when we went public in 2022.
In this context, our 4 production, programs of Volkswagen group are significant strategic assets. They showcase our rapid progress in Transforming, Our core Technologies into scalable products. Our ability to demonstrate these products to other customers, including production level hardware, and software Associated. Kpis is an important proof point of our competitors. Do not have and will drive increasing competitive pressure. As we approach launch.
Speaker Change: <unk> are indicating increased clarity and planning and decision, making near term volumes are strong demand for both higher performance and lower cost is intensifying and idose performance whether for personal cars. A robo taxi is no longer seen as a science experiment, but as an achievable and commercially viable product.
Amnon Shashua: Turning to robot taxi way more as achievement of 25% market share in San Francisco.
Amnon Shashua: Despite offering no time or cost advantage over human-driven. Alternatives, it's very encouraging and has reignited industry. Enthusiasm.
When you look at the robot, taxi opportunity, 2 pillars are critical safety and scalability.
Dan: This is exactly where mobilized twice I'll turn the call over to Dan to cover the finance section.
Dan: Thank you <unk> before I begin please be aware that all my comments on profitability, we will refer to non-GAAP measurements, the primary exclusion and mobilized non-GAAP numbers as amortization of intangible assets, which is mainly related to <unk> acquisition of <unk>. In 2017, we also exclude stock based.
Amnon Shashua: On safety. This means reaching the meantime between failures that exceeds human statistics as well as other critical safety standards. Safety has has long been a strength of mobilize supported by foundational Innovations, like our RSS model, which we developed in 2017. And the pgf, our recently published framework from, for fusing multiple subsystems,
Dan: Sure.
Dan: Our Q2 results significantly exceeded the color we provided on the Q1 2025 earnings call in April and were slightly better than our pre release numbers from earlier. This month revenue was up 15% year over year versus the outlook of plus 7%.
Amnon Shashua: 1 safety goals have been reached. The second pillar is scalability. The name of the game here is how fast can you scale this should be evaluated across. 3, different vectors.
Dan: Strength was due to several factors multiple Oems, including China Oems showed modest outperformance, which taken together contributed to significant overall gains supervision volume was also a bit stronger than expected as production of the vehicles. We are on is running better than expected year to date.
Amnon Shashua: The first scalability, Vector is geographic, how fast can you expand from City to City? Ram is a huge asset here. The second is cost, what are all the all-in? Operating costs of the system, our in-house designed compute Imaging radar. Efficient AI supply chain synergies, these all combined to create significant cost efficiency advantages related to the competition,
Dan: I'll spend a minute on inventory as we continue to monitor it closely based on our discussions with customers inventory was relatively tight entering the year and there was some direction from certain Oems to increase safety stocks due to the volatile macro environment, even so a variety of analyses we run on a regular basis indicates that shipments were relatively consistent.
Amnon Shashua: Finally scalability also entails production capacity, and business model. The fact that we work in partnership with oems that produce Vehicles where our system is integrated during the mass production line, rather than being uplifted in a different facility. After the vehicle has been produced is very important. This approach allows us to be capitalized, but it's not just about Capital light. It's also allows us to scale,
Dan: First it with demand on a year to date basis.
Dan: To frame it IQ volumes in the second half of 2024 were $17 8 million units and inventory ended the year at a low level volumes in the first half of 'twenty five 'twenty 'twenty, five or $18 1 million and what we believe was a comparable demand environment to the second half of last year we.
Amnon Shashua: even if we had all the capital to go and purchase 100,000 vehicles and then build production plans, that would uplift the self-driving technology, it would have slowed us down
Amnon Shashua: We are working with Volkswagen, of course, but also Holland which has a production facility underway and have advanced engagements with other high-scale oems.
Amnon Shashua: On the operations and distribution side. We have arrangements with false and against Mobility arm Moya.
Dan: To believe that inventory out of our customers remains well aligned with underlying demand turning to gross margin. It was down slightly year over year versus Q1.
Speaker Change: And Japanese fleet manager maruani to provide operations and the customer facing technology.
Dan: Gross margins are stable by product and by region. The exact results. However depend on mix of China volumes in the Adas business and supervision each of those segments carries gross margins somewhat lower than the corporate average supervision in particular was a higher percentage of revenue in Q2 versus Q1, causing a bit of a gross margin.
Finally, we have announced real engagement with demand generators Uber and Lyft in the US and public transport operators. In Europe to provide the demand platform, all of these actors have skin in the game which is also important to drive scale.
Speaker Change: So model, I with the kind of Partnerships that we are building is in a very good position to scale rapidly. Once we start commercial deployment in 2026,
Dan: Reduction operating expenses were up 7% year over year and flat compared to Q1 versus the prior outlook that indicated Q2, opex would be slightly higher than Q1.
Speaker Change: In terms of a technology update on robot taxi, we recently successfully transitioned into our full production Hardware inside the ID, Buzz test vehicle.
Dan: Non mentioned operating cash flow was over $300 million in the first half. This is primarily due to strong cash flow from the core business. However, we have also managed tight control over working capital accounts, particularly balance sheet inventory, which came down by about $90 million in the first half, we're now well aligned with our <unk>.
The meantime between failure of performance is tracking well, to the kpis that were laid out at the start of the program. We expect to reach our, our kpi goals by the end of 2025, then start adding T operations and then we move the driver in 2026 so it's all on track.
Dan: Six month target on balance sheet inventory, and we expect working capital to be more cash neutral in the back half.
Dan: Turning to the full year guidance, we are increasing the revenue midpoint by 4% and the adjusted operating income midpoint by 14%.
Dan: On the last call. We noted that the implied step down in second half 2025 revenue versus the first half did not reflect any specific indication of production weakness, but rather a cautious stance given the elevated uncertainty around automotive tariffs at the time.
Speaker Change: In summary the opportunity setting set in front of us today is larger broader deeper, and more urgent than it was when we went public in 2022, oems are indicating increased Clarity in planning and decision-making near-term. Volumes are strong, the demand for both higher performance and lower cost is intensifying and eyes of performance. Whether for personal cars or robot taxi is no longer seen as a science experiment, but as an achievable and Commercial viable product, this is exactly where mobilize thrives.
Dan Gals: I'll turn the call over to Dan to cover the finance section section.
Dan: Then while tariffs remain in place the actual impact on production and consumer demand.
Dan: Appears rather limited and third party forecasts have risen since April our current outlook releases some of the conservatism in Q in Q3.
Dan Gals: Ability will refer to non-gaap measurements.
Dan: Visibility is high at this point.
Dan: That said visibility into Q4 remains more limited as is always the case in July and we believe it's prudent to maintain a cautious stance and a wider than usual range for that Q4 period to be 100% clear. The business is performing very well, we are not seeing any tangible headwinds and we've.
Dan Gals: The primary exclusion and mobilized non-gaap numbers is amortization of intangible assets, which is mainly related to Intel's acquisition of mobile. I in 2017, we also exclude stock-based compensation, our Q2 results significantly exceeded the color, we provided on the q1 2025 earnings call in April and we're slightly better than our pre-release numbers from earlier this month.
Revenue was up 15% year-over-year versus the Outlook of plus 7%.
Dan: Not received any indications from customers that Q4 volumes will weaken we are simply choosing to remain conservative beyond the very near term.
Dan: Our full year outlook is based on IQ volumes of $33 5 million to $35 5 million up from 32 to 34 million previously as noted above supervision volumes are running better than expected and we are modestly raising the outlook to about 40000 units at the midpoint versus the prior outlook.
Dan Gals: The was due to several factors multiple oems including China, oems showed modest outperformance which taken together contributed to significant overall. Gains supervision volume was also a bit stronger than expected as production of the vehicles we are on is running better than expected year to date.
Dan: The low 20 thousands.
Dan: We expect gross margins to be up about half a point year over year. In 2025. This is slightly worse than our prior outlook, but this is simply due to supervision and China IQ being a bit of a higher higher percentage of revenue.
Dan Gals: I'll spend a minute on inventory as we continue to monitor it closely. Based on our discussions with customers inventory with relatively tight entering the year and there was some direction from certain oems to increase safety stocks due to the volatile macro environment. Even so a variety of analyses, we run on a regular basis indicates that shipments were relatively consistent with Demand on a year-to-date basis.
Dan: <unk> operating expenses do not typically flex according to revenue and remain in line with our prior expectations. We continue to expect an increase of about 7% year over year to slightly below $1 billion looking at the balance of the year, we would expect Q3 to be somewhat higher than Q4 consistent with.
Dan Gals: To frame it IQ volumes in the second half of 2024 were 17.8 million units and inventory ended the year at a low level.
Dan: Historical seasonality.
Dan Gals: Volumes in the first half of 25, 2025 were 18.1 million in what we believed was a comparable demand environment to the second half of last year. We continue to believe that inventory at our customers remains well aligned with underlying demand turning to gross margin. It was down slightly year-over-year and versus q1.
Dan: Turning to Q3, we expect to deliver approximately $8 7 million to $9 3 million IQ units and for our revenue to be roughly flat on a year over year basis, we expect gross margins to be slightly below the Q2 level levels and for operating expenses to be seasonally higher in Q3 versus.
Dan: Q2 aligned with previous expectations. Thank you and we will now take your questions.
Dan: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
Dan Gals: Gross margins are stable by product and by region the exact results, however depend on mix of China volumes in the 8 as business and supervision each of those segments, carries gross margins. Somewhat lower than the corporate average Supervision in particular, was a higher percentage of Revenue in Q2 versus q1 causing a bit of a gross margin. Uh, reduction operating expenses were up 7% year-over-year and flat compared to q1 versus the prior Outlook that indicated Q2 Opex would be slightly higher than q1.
Amnon Shashua: As amnon mentioned, operating cash flow was over $300 million in the first half.
Dan: You May press Star two if you would like to remove your question from the queue. We ask analysts to limit themselves to one question and a follow up to ensure that others have the same opportunity to do so.
Dan: <unk> been using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Dan: One moment, please while we poll for question.
This is primarily due to strong cash flow from the core business. However, we've also managed tight control over the working capital accounts, particularly balance sheet inventory which came down by about 90 million in the first half. We're now well, aligned with our 6-month Target on balance sheet inventory and we expect working capital to be more cash neutral in the back half.
Speaker Change: Our first question comes from Chris Mcnally with Evercore ISI. Please proceed with your question.
Amnon Shashua: Turning to the full year guidance. We are increasing the revenue midpoint by 4% and the adjusted operating income midpoint by 14%
Chris Mcnally: Thanks, so much.
Speaker Change: Maybe we could just double click on it.
Chris Mcnally: Your comment around.
Chris Mcnally: Higher.
Chris Mcnally: Higher momentum at Joe for maybe a little bit of a slower momentum on on supervision decision, making.
Chris Mcnally: How much do you think this is sort of Oems, having more of a question around their own pricing ability to pass through sort of a level two plus.
Amnon Shashua: On the last call, we noted that the implied step down in second half 2025 Revenue versus the first half did not reflect any specific indication of production weakness. But rather a cautious stance given the elevated uncertainty around Automotive tariffs at the time.
Since then, while tariffs remain in place, the actual impact on production and consumer demand.
Chris Mcnally: Our product versus something something else.
Chris Mcnally: Because I think we've all seen this sort of delay in implementation and there is some fear that we're seeing these products given away almost for free and in China. So a lack of clarity, let's say for how Oems would price such a product would love your thoughts on that.
Amnon Shashua: Appears rather limited and third-party forecasts have risen since April.
Chris Mcnally: I think there is a lack of competitive pressure for these systems in Europe and U S. Youll see this systems a lot in China.
Amnon Shashua: Our current Outlook releases some of the conservatism in queue in Q3 as V. Visibility is high at this point that said, visibility into Q4 remains more limited, as is always the case in July and we believe it's prudent to maintain a cautious stance, and a wider than usual range for that Q4 period.
Chris Mcnally: And in the end outside of China, It's only the first life is deep.
Chris Mcnally: And Oems.
Chris Mcnally: I've seen the test life is day for more than a decade, so we need more competitive pressure too.
Amnon Shashua: To be 100%. Clear? The business is performing very well. We are not seeing any tangible headwinds and we've not received any in indications from customers that Q4 volumes will weaken. We are simply choosing to remain conservative beyond the very near term.
Chris Mcnally: To kind of bring Oems to a sense of urgency I think the last news about penetration rates of test life as they are encouraging it's more than 25, 25% take rate.
Chris Mcnally: And it looks like it's climbing so I think the news are good in terms of public interest in these kinds of features and willing to and willing to pay for them.
Amnon Shashua: Our full year outlook is based on IQ volumes of 33.5 million to 35.5 million up from 32 to 34 million previously. As noted above supervision volumes are running better than expected and were modestly raising the Outlook to about 40,000 units at the midpoint versus the, prior Outlook and the low 20,000.
Chris Mcnally: But regardless.
Chris Mcnally: Oems.
Chris Mcnally: <unk> are still in planning stage, because it's not only the level two plaza supervision.
Chris Mcnally: For they want to be part I want to have skin in the game and robo taxi not just produce cars.
Amnon Shashua: We expect gross margins to be up about half a point year-over-year in 2025, this is slightly worse than our prior Outlook, but this is simply doing due to supervision and and China IQ being a bit of a higher higher percentage of Revenue.
Chris Mcnally: And just sell them to the likes of the way Mona and others them on skin in the game and the Robo taxi.
Chris Mcnally: It's actually a domain so it's all part of our planning.
Chris Mcnally: Surround adas, whether they should it should take over the front facing camera or just be a premium product that has lots of planning to do but.
Amnon Shashua: Looking at the balance of the year. We would expect Q3 to be somewhat higher than Q4 consistent with historical seasonality.
Chris Mcnally: The more.
Chris Mcnally: We deep dive into it I think that planning phase is coming to a close.
Chris Mcnally: So we see a lot of activity by Oems.
Chris Mcnally: Talking about supervision, but in addition, also surround Adas and so forth.
Chris Mcnally: With a number of high scalar is Oems also about the robo taxi.
Amnon Shashua: Turning to Q3 we expect to deliver approximately 8.7 million to 9.3 million IQ units, and for our Revenue to be roughly flat on a year-over-year basis. We expect gross, margins to be slightly below the Q2 level levels and for operating expenses to be seasonally higher in Q3 versus Q2 aligned with previous expectations.
Chris Mcnally: If I may add this.
Amnon Shashua: Thank you, and we will now take your questions.
Chris Mcnally: I'm sorry.
Speaker Change: May I add one comment we recently started inviting Oems to see our generation two supervision system.
Amnon Shashua: Operator, can you please generate the Q?
Speaker Change: <unk>, which is now operational in various locations and shows our IQ six platform with new technologies and we've seen increased interest in pretty much a lot of a lot of excitement by Oems to see these demonstrations in it.
Amnon Shashua: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue.
Kind of.
Speaker Change: Another positive momentum.
Speaker Change: Round supervision, so it's not just the.
Speaker Change: So the competitive pressure, it's also seeing kind of more evidence to our generation two system and how it performs in the field that now is available and it's been sort of in the past few weeks and so far it's been very successful.
Amnon Shashua: You may press star 2. If you would like to remove your question from the queue, we asked analysts to limit themselves to 1 question and a follow-up to ensure that others have the same opportunity to do. So, for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Amnon Shashua: 1 moment, please while we pull for questions.
Speaker Change: That's really helpful and just my quick follow up is it is it fair to characterize or paraphrase as the sort of the flag slide that you showed at December is more of a.
Speaker Change: Our first question comes from Chris McNally with evercore. Isi, please proceed with your question.
Speaker Change: Limitation delay rather than a full pause on supervision and that you still see supervision as essentially the stepping stone for a lot of these OEM programs.
Speaker Change: So far given that the software overlapping obviously.
Speaker Change: Additional hardware needed for chauffeur.
Speaker Change: Nimrod started our complement its necessary.
Speaker Change: I don't I don't think that necessarily.
Speaker Change: We have suggested that supervision is a prerequisite for chauffeur.
Speaker Change: I think thats what.
Speaker Change: It remains true is that there is a consensus at least from our perspective amongst the Oems that you <unk> it.
Speaker Change: Very compelling value proposition for consumers and as Alan said in his opening comments, it's a question of whether or not the technology is mature and it's about price and which timeline and we are making consistent progress not just in <unk> directly but also through robo taxi, which is now.
Chris Mcnally: Uh, thanks so much, uh Team. Um, maybe we could just um, double click Amazon into your comment around sort of the, you know, higher momentum at chauffeur, maybe a a little bit of a slow momentum on on supervision decision making. Um, you know, how much do you think this is sort of oems having more of a question around their own pricing ability to pass through sort of a level 2 plus, um, a product versus, you know, something something else. Um, you know, because I think we've all seen this sort of delay in implementation. And there is some fear that, you know, what, we're seeing these products given away almost for free in in, in China. So a lack of clarity let's say for how oems would would price such a product would love your thoughts on that.
Chris Mcnally: I, I, I, I think there's lack of competitive pressure for these systems in Europe and, and E us. You see these systems a lot in China and in the and outside of China, it's only the test life is the
Speaker Change: Knowing a lot more about our robustness and the maturity of our technologies for ISR Fornell driver.
Speaker Change: Which requires very high.
Chris Mcnally: And and oem's, you know, have seen the test life SD for more than a decade. So we we need more competitive pressure to
Speaker Change: Precision levels and the more we are making progress and where we are convincing Oems that this is a technology that is for here and now and not for the next five years and and therefore, we see we see some Oems that are considering going straight to chauffeur.
Speaker Change: For that let's say 2027 and 2008 timeframe.
Speaker Change: Think what we've learned is that the Oems are a spectrum of needs and interests and planning strategies.
Chris Mcnally: To kind of bring oems to a sense of urgency. I think the last news about, uh, penetration rates of test life, as they are encouraging, it's more than 25 258, and it looks like it's climbing. So I think the the news are good in terms of uh, public interest in these kinds of features and willing to, uh, and willing to pay for them.
Chris Mcnally: uh, but regardless
Speaker Change: Our strategy is that our products are playing on the complete spectrum of solutions and so we can offer the entire product portfolio like we have with the Volkswagen we can offer parts parts of it but what's important is that we are progressing towards slp's towards launching these products in the market regardless of how Oems are.
Oems are, are, are still in planning stage because it's not only the level 2. Plus the supervision. There is a chauffeur uh they want to be part, they want to have skin in the game in Robo taxi. Not just you know, produce cars
Speaker Change: Thinking about their planning and the more we make progress and where we can convince them that the technologies are mature, which product makes the most sense for their segments and so on.
Speaker Change: Yes, I've mentioned that we have a start of production in 2027 without on Schiffer and it's on track and there's also a number of play Homologation steps that also we have passed.
Chris Mcnally: And uh, and just sell them to uh, to the likes of waymo and others. They want skin in the game, in the robot taxi, uh, what taxi domain. So it's all part of planning. There's uh, there's around AAS, uh, whether they should it should take over the, the front-facing camera or just be a premium product. There's lots of planning to do, but the more
We we deep dive into it. I think that planning phase is is coming to a close.
Speaker Change: So.
Speaker Change: As time goes by the maturity level of this system is now becoming more and more evident and that should.
Chris Mcnally: So we we see a lot of activity by oems.
Speaker Change: Should bring Oems to the table and get convinced that the maturity level is good enough to start thinking about the production program for sure.
Chris Mcnally: Talking about supervision but in addition also surrounded us. And so for and with a number of high scalars, oems also about the robo Taxi.
Speaker Change: Thank you Chris.
Speaker Change: Our next question comes from James to Caroline would be N. P. Parents. Please proceed with your question.
Speaker Change: However.
Speaker Change: Just starting with supervision the guide for 40000 units.
Chris Mcnally: This, uh, sorry, I just may add 1 1. Um, comment. We recently started. Um, um, inviting oems to see our generation too supervision system, um, which is, which is now, um, operational, uh, in various locations and shows our iq6 platform with new technologies and we've seen increased interest and, and pretty much a lot of, um, a lot of excitement by oems to to see these demonstrations. And it's
Speaker Change: Doubling of the expectation for the full year.
Speaker Change: Just speak to what's driving that how the relationship is trending.
Chris Mcnally: Kind of uh um, you know it's a another positive momentum um, around supervision. So it's not just
Speaker Change: And then just looking ahead any thoughts on the timing for next year concerning the portion of Audi launches for supervision and chauffeur.
Chris Mcnally: The competitive pressure. It's also seeing kind of more evidence to our generation 2 system and how it performs in the field that now is available. And and it's been so in the past few weeks and so far, it's been very successful
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay. Thanks.
Speaker Change: Yes, we took a conservative stance on supervision volumes for this year. Since then what we've seen is Zika <unk> for export markets has been selling more vehicles than we probably expected.
Speaker Change: I'll start for production and demand has been pretty good as well I think key here is that any zika or vehicles that are being shipped outside of China are still using the supervision system, which kind of indicates the majority of our system for kind of non China markets.
Speaker Change: As the the sort of the flag slide that you showed at December is more of a an implementation delay rather than a full pause on on supervision and that you still see supervision as essentially the stepping stone for a lot of these OEM programs into chauffeur given the the software overlap and just obviously you know, additional hardware needed for chauffeur.
Speaker Change: Uh, new remote start and I'll compliment if necessary.
Speaker Change: But yes, I think it's just a reflection of kind of conservative start of the year.
Speaker Change: No, I thought I don't uh I don't think that necessarily um we have we have suggested that supervision is a prerequisite for chauffeur.
Speaker Change: And kind of production of these of these vehicles running better than expected.
Speaker Change: Yep.
Speaker Change: As for the portion of our D. The startup production at the end of 2026, so the effect on revenues should be seen in 2027.
Speaker Change: We see 2027 is really an inflection year in terms of the revenue where supervision by Porsche and Audi and we believe more would come out robo taxi will start generating revenue as well because we are removing the driver mid of 2026, and we have a very strong plan of scalability.
Speaker Change: So in 2027 is really the inflection year in terms of revenue.
Speaker Change: Yeah, and if we look at the kind of a consensus expectations for supervision in 'twenty effects. It can be it can be.
Amnon Shashua: Um, I think that what what remains true is that there is a consensus that is from our perspective, amongst the oems that you offer is a, is a very compelling value proposition for consumers. And as Ammon said, it is opening comments, it's a question of whether or not the technology is mature and, you know, it's part price and in which timeline and we are making consistent progress. Um, not just in show for directly but also, through a robo taxi, which is, you know, showing a lot more about our robustness and the maturity of our Technologies for ISO for no driver, uh, which requires very high, um, you know, Precision levels. And the more we're making progress, the more we are convincing oems that this is a technology that, you know, is, is for here and now and not for next, uh, you know, 5 years and um and therefore we see we see some oems that are considering going straight to shower.
Speaker Change: Almost exclusively covered by the current vehicles and production.
Speaker Change: Got it.
Speaker Change: Helpful. And then just my follow up in regards to the recent secondary offering tied to Intel's stake.
Amnon Shashua: Um, you know, for the let's say 2027 28 time frames. Um, so I think you know what we have learned is that the oems are a spectrum of needs and interests and planning, um, strategies.
Speaker Change: Should we be thinking about any future intentions, there and the potential timeframe.
Speaker Change: Yes.
Scott: Scott do you want to take this.
Speaker Change: Complement.
Speaker Change: Yes, no I think Intel shown quite a bit of patience.
Speaker Change: With their stake and mobilize they haven't sold any shares for two years, they still maintain more than 80% ownership I think they've made public comments that they have.
Amnon Shashua: And our strategy is that our products are playing on the complete spectrum of solutions and so we can offer the entire product portfolio. Like, where would folks? Again, we can offer part parts of it. But what's what's important is that we're progressing towards Sops towards launching these products in the market, regardless of how oems are kind of thinking about their planning. And the more we make progress, the more we can convince them that the you know Technologies are mature, which product makes the most sense for their segments and so on.
Speaker Change: How about kind of a very strong view of the kind of the potential of mobile I and want to participate in that upside. So we weren't really surprised that they'd want to sell some shares. After the next couple of years, but we can't really speak to any future plans that they have.
Speaker Change: Thanks, Thank you.
Speaker Change: Thank you James.
Speaker Change: Our next question comes from George <unk> with Canaccord Genuity. Please proceed with your question.
Speaker Change: Everyone. Thank you for taking my questions I'd like to concentrate a little bit on robo taxis. Thank you sort of characterize the interest is.
Amnon Shashua: I I mentioned that no we have a a startup a production 2027 with Audi on on chauffeur and it's it's on track and there's also a number of homologation steps that also we have passed. Um, so as time goes by, the maturity level of this system, is now becoming more and more evident and that should uh, should bring oems to the table and uh, get convinced that the maturity level is good enough to start uh, thinking about the production program for sure.
Speaker Change: Accelerating from Oems and deploying.
Chris: Thank you, Chris.
Speaker Change: Our solution can you just help us understand a little bit about what youre seeing in the marketplace the potential for new wins and what's the competitive set looks like.
Speaker Change: Our next question comes from James pick, Carol BNP therapist, please proceed with your question.
Speaker Change: You are offering your solution to Oems. Thank you.
Speaker Change: We have a relationship with Volkswagen on the IV Buzz where Maria.
Speaker Change: Operator, and customer facing Theres also deals with the Uber.
Speaker Change: Regarding this the platform.
Speaker Change: Platform.
Speaker Change: The volume expectation towards the end of the deal at the end of the decade is very substantial.
Speaker Change: Hi, everyone. Um, just starting with supervision, uh, the guide for for 40,000 units, you know, a near doubling of of the expectation for the 4 year. If you just speak to, you know, what's driving, that how the relationship is trending, uh, with xikar. And then just looking ahead, any thoughts on the timing for next year concerning? Uh, the portion out, he launches for supervision and chauffeur. Thanks,
Speaker Change: There is a whole loan.
Speaker Change: With the platform called mover.
Speaker Change: Conservative.
Speaker Change: Do you have the prototypes equipped with our system and testing it should it should come out six months later also volume predictions.
Speaker Change: <unk> are very high.
Speaker Change: In addition, we have we have relationship with marubeni.
Speaker Change: We're working with additional Oems to supply vehicles, both for ammonia and.
Speaker Change: And also for <unk>.
Speaker Change: And hopefully.
Speaker Change: Hopefully, we'll be able to update the market.
Speaker Change: Soon about additional the additional Oems, but false market alone is a very high volume.
Speaker Change: Opportunity for for robot taxis.
Speaker Change: Yes.
Yeah, go ahead. Okay. Thanks. Um, yeah, we we took a conservative stance on supervision volumes for this year, uh, since then what we've seen is uh, Zeke or 009 for export markets, uh, has been, you know, selling more Vehicles than we probably expected uh, Paul Starr for uh, production and and demand has been pretty good as well. I, I think he here. Is that any Zeke or vehicle that are being shipped outside of China, are still using the supervision system, which kind of indicates the the maturity of our system for kind of non-china markets. Uh but yeah I think it's just a reflection of kind of conservative uh start of the year um and and kind of production of these of these vehicles running better than expected.
Speaker Change: Did.
Speaker Change: Yes.
Speaker Change: I'm, sorry, sorry, George.
Speaker Change: Please go ahead Sir.
George: Just wanted to add maybe a little bit more color on what we're seeing in the market.
Speaker Change: And the competitive environment I think that there is a.
Speaker Change: We need to distinguish between the U S and in Europe in that regard.
Speaker Change: Which are our two primary markets for the first launches.
Speaker Change: In the U S of course, Theres way Moe in Tesco that has been making statements about this.
Speaker Change: As for the portion out the the start of production is end of 2026. So the effect in Revenue should be seen in 2027, we see 2027 as real, an inflection here, in terms of the revenue, where supervision by Porsche and Audi and we believe more would come out, robot taxi will start generating Revenue as well because we are removing the driver made of say 2026. And we have a very strong plan of scalability.
Speaker Change: Beyond these two as a technology provider that can provide the full self driving system, which includes the hardware the software AI technologies until on in a scalable way in a cost efficient way.
Speaker Change: So in 2027 is really the inflection year in terms of Revenue.
Speaker Change: Leave enough room for all parties involved to generate a profit we're.
Speaker Change: Vehicles in production.
Speaker Change: We're seeing normalized kind of a unique company at this stage so way more into Florida of course have their own business model being vertically integrated.
Speaker Change: At this stage and for the Oems want to basically build a business of producing robo taxis and a serious production fashion and then find a business model with the <unk>.
Speaker Change: Got it and that's helpful and just my my follow-up in regard to the recent secondary offering tied to Intel's fake. How should we think about any future intentions there and the potential time frame?
Thanks.
Speaker Change: You want to take this and I'll compliment.
Speaker Change: Demand generators.
Speaker Change: The primary if not the only candidate at this stage. It is from what we're seeing in Europe, where I think that we are in the pole position in the race and just recently the German Chancellor.
Speaker Change: Took a test drive with our with the.
Speaker Change: Bus vehicles is mobilized technology in Germany.
Speaker Change: Which is kind of putting a lot more public attention in some.
Speaker Change: Let's say.
Speaker Change: Political.
Speaker Change: [noise] attention into enabling robo taxis in Europe.
Speaker Change: Yeah, no. I I think, uh, you know, Intel's shown quite a bit of patience, uh, with their stake in Mobile. I they, they hadn't sold any shares for 2 years. They still maintain more than 80% ownership. I think they've made public comments that they, you know, have a kind of a very strong view of the kind of the potential of mobile I and, and want to participate in that upside. Um, so you know, we weren't really surprised that they'd want to sell some shares after the next couple of years. Uh, but we, we can't really speak to any future plans that they have.
Speaker Change: In that sense being partnering with.
Speaker Change: Thank you.
Speaker Change: Folks noggin is hugely beneficial for our interest.
James: Thank you, James.
Speaker Change: Can you just as a follow up can you just on the Robo taxi does help us maybe understand a little bit more about the business model opportunity the price per system, and also particularly Europe and the potential for you to participate in the revenue per mile. As you deploy these systems and thats can be replicated across Oems.
Speaker Change: Our next question comes from Jorge Guillen Urus with canaccord genuity please. Proceed with your question.
Speaker Change: Okay.
Speaker Change: Yes, so we received.
Speaker Change: Revenue for the system and will receive also recurring revenue or the cost per per mile.
Speaker Change: Number 1, thank you for taking my questions. I'd like to concentrate a little bit on Robo taxi. I think you sort of characterize the interest as uh accelerating uh from oems and deploying uh Your solution. Can you just help us understand a little bit about what you're seeing in the marketplace, uh, the potential for new wins and and what the competitive set looks like, uh, when you're offering your solution to oems, thank you.
Speaker Change:
Speaker Change: We have both maybe in the future we could reduce the cost of the system and add more in terms of the contribution of per mile.
Speaker Change: But even the current setup is very good in terms of the revenue potential the recurring revenue potential over time.
Speaker Change: Thank you.
Speaker Change: Thank you George our next.
Speaker Change: Our next question comes from Dan Levy with Barclays. Please proceed with your question.
Dan Levy: Hi, Thank you for taking the questions I wanted to just first start with a question on the near term IQ shipments and maybe you could just.
Dan Levy: Given a bit more color on where the strength is coming from and specifically the trends within China, which had obviously been quite weak intuitively. It seems like the last couple of quarters has been pretty good what's the right run rate to think of it now.
Speaker Change: Well, we we have a, uh, a relationship with the Volkswagen on the ID, Buzz, where Moya is the operator and and customer facing. There's also deals with the Uber, uh, regarding this, uh, platform, um, the volume expectation towards the end of the. Till the end of the decade is, is, is very substantial. There is a hollon, uh, with the platform called the Mover, we already have the prototypes equipped with our system and, and testing it could, it should come out, 6 months later, also volume Productions. Uh, projections are are, are very high. In addition, we have uh, we have relationship with the marui.
Speaker Change: uh, we're working with additional oems to supply uh Vehicles, both from Moya and also for more Benny
Dan Levy: From China, both from the domestics and from the multinationals there.
Dan Levy: Well I can start on that.
Dan Levy: Go ahead.
Dan Levy: So I think from a kind of from an overall comment.
Speaker Change: And uh, hopefully we'll be able to, to update the market, uh, uh, soon about additional, uh, additional oems, but, but Volkswagen alone is, is a very high volume, uh, opportunity for, uh, for robot taxes.
Dan Levy: It was difficult to analyze the IQ volume growth.
George: Sorry. Sorry. George.
Dan Levy: The last year or so because of some disruptions on inventory in China now you're starting to really be able to analyze that so in in Q2, if we adjust for inventory digestion last year.
Speaker Change: Oh, please go ahead. Sorry.
Dan Levy: Volume grew around 13% year over year in Q2 for IQ volume and our top 10 customers were minus 3% so significant growth over market. If you look at the Q3 outlook.
Speaker Change: I just wanted to add um, maybe a little bit more color on what we're seeing in the market. Um, and the competitive environment, I think that there is a, um, we need to distinguish between, um, the US and in Europe, in that regard, uh, which are our to, to, uh, primary markets for the first launches.
Dan Levy: It's for growth around 5% year over year, our top 10 customers are minus two so this kind of comparison to our top 10 customers.
Dan Levy: Starting to show up as kind of very favorable for us.
Dan Levy: On China, the China business has been.
Dan Levy: Running better.
Dan Levy: We did slightly over 1 million units in the back half of last year.
Dan Levy: We did we thought we would do around $1 million in the first half that was the outlook. We did more like one five so there was some upside there.
Um, in the US, of course there's way more and and Tesla that has been making, um, you know, statements about this, uh, Beyond these 2 as a technology provider that can provide the full self-driving system, which includes the hardware the software, you know, AI Technologies and so on, in a scalable way, in a cost efficient way that will, you know, leave enough room for all players involved to generate a profit. Um, we're seeing mobilized kind of a unique, um, company at this stage, so way more in Tesla are, of course, have their own business model of being vertically integrated, um, at this stage. And, and for the oems, that want to basically build a business of producing Robo taxes in a serious production fashion,
Dan Levy: We're not assuming that type of volume for the back half just because we don't have as much visibility and.
Dan Levy: We want to stay conservative.
Dan Levy: But it does look like that.
Dan Levy: It's a fairly stable run rate for us.
Dan Levy: But yes, I think overall there.
Dan Levy: Revenue outperformance has been pretty broad based.
Dan Levy: If you look at kind of all of our top 10 customers.
Speaker Change: And then, you know, find a a business model with the uh uh demand generators. Um, we are the primary. It's not the only candidate at this stage, at least from what we're seeing and and in Europe we are I think that we are in the in the full position in the race and just recently, the German Chancellor uh took a test drive with with the idb vehicle, with mobilized technology in Germany. Um which is kind of putting a lot more public attention.
Dan Levy: Most of them. There were there was at least a bit of outperformance. It added up to a bigger number there was outperformance in China. There was outperformance in supervision. So it's all pretty broad based.
and and and you know some um uh let's say uh uh political
Speaker Change: Attention into enabling uh, robot taxes in Europe.
Dan Levy: Okay, great. Thank you.
Speaker Change: Um, in that sense, being partnering with uh, you know, with Volkswagen is hugely beneficial for our interests.
Speaker Change: The second question is as Youre ramping on.
Speaker Change: Your efforts and drive wanted to get a sense of the type of resource allocation and I go back to.
Speaker Change: The CMT you had last year, where I think you gave a pie chart of your spend that 11% of your spend is on drive.
Speaker Change: Okay, just as a follow-up you just on the robo taxi. Does does help us maybe understand a little bit more about the business model opportunity. The the price per system and also particularly your potential for you to participate in the revenue per mile as you deploy these systems and if that can be replicated across oems, thank you.
Speaker Change: It seems like your efforts are accelerating here can you just give us a sense of how extensive the resource requirement is on drive.
Speaker Change: Revenue of the cost per per mile.
Speaker Change: And what this could do on the Opex. The next couple of years.
Speaker Change: Well.
Speaker Change: Our opex grew substantially in 2023.
Speaker Change: Also grew in 2024, we see the opex as more or less flattish in the coming in the coming year that means all of the growth to prepare for drive in schiffer and supervision. So the transition from tier two to tier one on some of the.
Um, we we we we have both maybe in the future. We, we could reduce the cost of the system and add more in terms of the, the contribution of per mile. But even the, the current setup is is is very good in terms of the revenue potential, the recurring Revenue potential over time
George: Thank you, George. Our next.
Speaker Change: Programs like with the Porsche and Audi.
Speaker Change: Our next question comes from Dan Levy with Barclays. Please proceed with your question.
Speaker Change: All of that.
Speaker Change: Accounts for the growth that we have already we have already experienced so we don't see substantial growth.
Speaker Change: In the near future in terms of.
Speaker Change: Opex growth.
Speaker Change: Yeah.
Speaker Change: Great. Thank you.
Speaker Change: Thank you Dan.
Speaker Change: Our next question comes from Sydney Chatterji with J P. Morgan Chase. Please proceed with your question.
Speaker Change: Hi, Thanks for taking my question. This is <unk> on for something Saturday, So I just wanted to.
Dan Levy: Hi uh thank you for taking the questions. I wanted to just first start with the question on the near-term, uh, IQ shipments. And maybe you could just um, give a bit more color on where the strength is coming in from, in specifically, the trends within China, which had obviously been quite weak in 2 H. But it seems like the last couple quarters has been pretty good. What's the right run rate to think of now, uh, from China, both from the domestics. And from the multinationals there,
Dan Levy: I can I can start on that.
Dan Levy: Okay, go ahead.
Speaker Change: Double click on the imaging radar, which you did during the quarter and like how should we think about the size of that particular business and like will you be open to doing more assuming a similar deals in food you have it you will be selling individual components other than full systems.
Speaker Change: Um so I mean, I think from a kind of from an overall comment, you know, that it was difficult to analyze the the IQ volume growth.
Speaker Change: And I have a follow up.
Speaker Change: Yes, so the imaging greater for us, it's a strategic sensor.
Speaker Change: The last year or so because of some disruptions on inventory and China, you know, now you're starting to really be able to analyze it. So, you know, in in Q2, you know, if we adjust for inventory, digestion, last year.
Speaker Change: The deal we had with that particular OEM is just for the sensor.
Speaker Change: It's a very reputable OEM and we thought that this would drive credibility because the.
Speaker Change: Our SKU phase was very lengthy and all.
Speaker Change: Volume grew, you know, around 13% year-over-year in Q2 uh for IQ volume and our top 10. Customers were were minus 3%. So, so significant growth over Market. If you look at the, the Q3 Outlook.
Speaker Change: Competitors of imaging radars participated in our radar was was shining through.
Speaker Change: So we sold it as a.
Speaker Change: As a separate sensor, but we do not expect to do that in the future. It's part of the bundle of EIS office systems on shelf for and drive for example, the IC bus.
Speaker Change: Has the five of our imaging radars.
Speaker Change: Front facing imaging radar in coronary imaging radars.
Speaker Change: We believe that all future.
Speaker Change: For our programs, we'll have our imaging radar because it allows you to get the speed that you need in terms of highway driving do you need to see hazards very far away.
Speaker Change: More than 150 meters away.
Speaker Change: The sensor that we have can do that in a very high resolution and high dynamic range and.
Speaker Change: It's simply an enabler for ISR systems at scale.
Speaker Change: So it's part of a bundle we don't see it as a.
Speaker Change: It's for growth around 5% year-over-year. Our, our top 10 customers are are minus 2. So, you know, this kind of comparison to our top 10 customers. Uh, you know, it's starting to show up as kind of very favorable for us, um, on China that the China business has been, um, you know, running better. Uh, you know, we did slightly over a million units in the back half of last year. Uh, we did, uh, we, we thought we would do around a million in the first half, that was the Outlook. Uh, we did more like 1.5, so there was some upside there, um, you know, we're not assuming that type of volume for the, the back half just because, you know, we don't have as much visibility and, um, you know, we want to stay conservative. Um, but it does look like, uh, you know, that's a, a fairly stable, uh, run rate for us. Um, but yeah, I think overall, you know, the, the revenue outperformance has been pretty broad-based, you know, you know, if you look at kind of all of our top 10 customers, you know, for most of them, there were, there was at least a bit of
Speaker Change: Another source of business is a sensor business.
Speaker Change: Outperformance. It added up to a bigger number. There was outperformance in China, there was outperformance in supervision so it's it's all pretty broad-based.
Speaker Change: Okay got it and.
Speaker Change: Another question, which I had was regarding a 2027 Ram. So you will read ramping on supervision and so forth and in that.
Speaker Change: Yeah.
Speaker Change: Any way to understand like which will be the biggest driver of those and how would you rank order those opportunities in 'twenty seven.
Speaker Change: So we have the 2027 schiffer and the Schiffer and supervision we mentioned in the past is more than 19 car models coming out with those for.
Speaker Change: But those systems, we're not yet ready to make a guidance for 2027.
Speaker Change: In terms of drive there is a significant plan of expansion to multiple cities starting from end of 2026, both in Europe and in the U S.
Speaker Change: Okay, great, thank you. Um, the second question is, has your ramping on, uh, your efforts in in Drive, wanted to get a sense of the type of resource allocation. And I go back to uh, the CMD. You had last year where I think you gave a pie chart of your spend, that 11% of your uh, spend is on Drive. Um, it seems like your efforts are accelerating here. Can you just give us a sense of how extensive the, the resource requirement is on Drive. Uh, and what this could do on, uh, on the Opex. The next couple of years
Speaker Change: Well, I I our Opex grew substantially in 2023.
Speaker Change: So it should drive substantial growth.
Speaker Change: A position to put a dollar number towards right now.
Speaker Change: Exactly but I think what's new here is that we do now expect drive to be a significant contributor in 2027 and Thats a reflection of the confidence we have in commercial deployment during sometime during 2026.
Speaker Change: Um, also grew in 2024, uh, we see the Opex as more or less flattish in the coming in the coming year. That means all the growth to prepare for drive and chafer and supervision to the transition from tier 2 to Tier 1 on some of the problem uh programs like with the Porsche and Audi, um, all of that.
Speaker Change: Yeah.
Speaker Change: Accounts for the growth that we have already that we have already experienced. So we, we we don't see substantial growth in the near future in terms of uh, Opex growth.
Speaker Change: Thank you M P and got it thank you.
Speaker Change: Great. Thank you.
Speaker Change: Our next question comes from Vijay at rack.
Dan: Thank you, Dan.
Speaker Change: Mhm Securities. Please proceed with your question.
Vijay Rack: Yes, hi.
Vijay Rack: Question on supervision, obviously nice upside here.
Speaker Change: Our next question comes from Simi. Chattery with JP Morgan Chase. Please proceed with your question.
Vijay Rack: UBS departed from.
Speaker Change: Hi, thanks for taking my question. This is mp on for Sonic strategy.
Vijay Rack: Weaker euro, but any thoughts on how that's going to be six.
Vijay Rack: Shape.
Vijay Rack: Terms of units shipped over here.
Vijay Rack: Especially with some of the newer blocks on that.
Vijay Rack: We're not really we're not really ready to talk about specific expectations for 2026.
Speaker Change: So I just wanted to uh uh double click on the Imaging radar deal, which you did during the quarter and like, how should we think about the size of that particular business and like, will you be open to doing more similar, similar deals in future, where you will be selling individual components, rather than full systems.
Speaker Change: And I have a follow.
Vijay Rack: Well like I said, we're essentially kind of marking to market the and production.
Vijay Rack: Of the vehicles that have supervision today.
Vijay Rack: This still doesn't include any U S volume for Pollstar for they did start producing that vehicle in Korea. So.
Speaker Change: Imaging greater for us at the Strategic sensor. Uh the deal we had with that particular OEM is just for the sensor.
it's a very reputable OEM and and we thought that this would uh, Drive uh, credibility because the the
Vijay Rack: Yeah.
Vijay Rack: In Korea from vehicles produced in Korea, but it's not 100% like it has from China. So they should be able to launch in the U S. And we think that that will create some growth for next year as well the export volume seeker.
Vijay Rack: <unk> has been probably a little bit better than expected. This year, we would expect that to grow a bit next year as well. So it should be it should be some growth in 2006 from the existing vehicles and we will have more to say about kind of the overall supervision.
Speaker Change: Supervision volumes like when we get to 2026.
Speaker Change: Got it and then just a quick housekeeping question on the inventory side I know IQ you raised.
Speaker Change: Quite a 33 million $34 million year, so definitely seeing some improvement, but if you actually look at the inventory level just to.
Speaker Change: The RSQ phase was very lengthy and and all, you know, all competitors of Imaging. Radars participated in our radar was was shining through. Uh, so we we saw that as a as a separate sensor but we do not expect to do that, uh, in the future. It's part of the bundle of Eyes Off Systems on chauffeur and and drive. For example, the idb, uh, has a 5 of our Imaging Radars as a front-facing image in greater and Corner Imaging Radars. And uh, we believe that all future, uh, shop for programs will have our Imaging radar, because it allows you to get the speed that you need in terms of highway driving, you need to see hazards, very far away.
Speaker Change: I know, it's tough because every OEM has a different inventory there, but if you had normalized that how does that inventory level compared now versus.
Speaker Change: Last quarter of last year.
Speaker Change: More than 150 M away and and the sensor that we have can do that in a very high resolution and high dynamic range and uh it's simply an enabler For Eyes Off Systems at scale.
Speaker Change: Some ideas.
Speaker Change: So thanks.
Speaker Change: Do you want to starting tomorrow.
Speaker Change: Yes.
Speaker Change: So it's part of a bundle. We we don't see it as a another source of business as a, uh, sensor business.
Speaker Change: I don't think that we can disclose like inventory levels at the Oems are keeping themselves.
Speaker Change: The safety stock.
Speaker Change: But in general we've been in line with what is a what.
Speaker Change: We can consider modest compared to historic periods.
Speaker Change: So the way we are kind of analyzing this is in multiple ways, we have direct information coming from our tier one customers that they get direct information from their Oems. We also cross referenced this with third party analysis on the vehicle on the overall industry vehicle production.
Speaker Change: Okay, got it. And um, another question which I had was regarding a 2027 ramp, so you will be ramping on supervision software and drive in, in that year, any any way to understand like, which will be the biggest driver of those and how will you rank out of those opportunities in 27?
Speaker Change: Compared to our sales.
Speaker Change: We keep a very close track of this and we.
Speaker Change: We are we keep our eyes on this on a weekly basis.
Speaker Change: So, we have the 2027 this, this chauffeur and the, the, the chauffeur and the supervision we mentioned in the past, as more than 19 car models coming out with those with those systems, we're not yet ready to make a guidance for 2027.
Speaker Change: Alright, Thank you, yes I.
Speaker Change: I think that Thats I think thats right.
Speaker Change: The finance and sales teams have done a great job of kind of.
Speaker Change: Developing tools to as well as kind of direct feedback from the tier ones and everything looks like it was pretty flattish from the end of 2024 until now.
Speaker Change: Um, in terms of a drive, there is a significant plan of expansion to multiple cities, starting from end of 2026, both in Europe, and in the US. So it should drive substantial growth. We're not at a position to put a dollar number, uh, to it right now.
Speaker Change: Our next question comes from Adam Jonas with Morgan Stanley. Please proceed with your question.
Adam Jonas: Hi, Thanks, everybody so.
Adam Jonas: I'm on.
Speaker Change: Exactly. But I think, I think what's new here is that, you know, we do now expect drive to be a significant contributor in in 2027 and and that's a reflection of the confidence. We have in commercial deployment, uh, during sometime during 2026.
Adam Jonas: Just looking at your Capex here $28 million for.
Adam Jonas: For the first half of the year, if I annualize that that's obviously down substantially year on year.
Speaker Change: Thank you, MP got it. Thank you.
Adam Jonas: But even if it's flat.
Speaker Change: Our next question comes from Vijay Securities, please. Proceed with your question.
Adam Jonas: And I think consensus has you guys spending around 100, maybe 110 million Bucks this year.
Adam Jonas: Capex is basically not move its declined over a number of years.
Adam Jonas: Really makes mobile I stand out as for a physical AI hard Tech company really in the second so many exciting programs collecting data growing our fleet.
Speaker Change: Yeah, hi. I just got a quick question on supervision, obviously, a nice upside here. Um, you know, you raised to 40K from, uh, from we call Europe. Any thoughts on how calendar 26, uh, should shape up, uh, in terms of units for supervision um,
Speaker Change: especially with some of the newer ramps.
Speaker Change: Do you do it like what do you where is your capex spending on compute how much compute do.
Speaker Change: Do you have because it would strike me that your compute needs and therefore, your AI capex needs.
Speaker Change: And I follow we're not really we're not really ready to you know talk about specific expectations for 2026. Um, you know, like I said we're we're essentially kind of marking to market the the end production.
Speaker Change: Would would somehow scale at least proportionate to the amount of data that you're feeding.
Speaker Change: And to your simulation in data centers, and so tell me where I'm wrong there.
Speaker Change: How are you able to do it or is your message, we just don't need compute like others and that guys like Elon at Janssen or are wrong.
Speaker Change: And then I have a follow up.
Speaker Change: Of the vehicle that have supervision today. Um, this still doesn't include any us volume for postar, 4. Uh, they did start producing that vehicle in Korea. So, you know, there there's, there's a tariff in Korea from Vehicles produced in Korea, but it's not 100%, like it is from China. Um, so they should be able to launch in the US and we we think that that will create some growth
Speaker Change: Well, we need compute we have compute both on Prem and also on the cloud.
Speaker Change: Our cloud spending is slightly reduced intake.
Speaker Change: And I cannot reveal those numbers, but it is something many tens of millions.
Speaker Change: A large number of tens of millions and in favor of on Prem.
Speaker Change: For next year as well. Um, you know, the export, you know, volume of zikr uh, has been probably a little bit better than expected this year. You know, we would expect that to grow a bit next year as well, so, you know, should be, should be some growth in 26 from the existing, uh, vehicles and and we'll have more to say about kind of the overall uh, supervision volumes like when we get to 2026
Speaker Change: More gpus.
Speaker Change: But we have a different philosophy on how to spend money on computer than what you hear from our competitors.
Speaker Change: We have very good systems very good performance, our IQ six generation our generation two.
Speaker Change: Supervision and so for and drive is really top topnotch.
Speaker Change: Got it. And then, uh, on the how just a quick housekeeping question. On the inventory side. I know IQ you raised from the, like, midpoint of 33 million to like 34 million years. So definitely seeing some improvement, but if you were to look at the inventory level just to, uh, I mean, I know it's tough because every um, it's a different inventory level. But if you normalize that, how does that inventory level? Compared now towards this, you know, last quarter or last year just to get, get some idea of where where the levels are thanks,
Speaker Change: If you look at our dry the vehicle there are more than 100. It buzzes that has been a lot of lots of demonstrations of journalists both in Europe and also in the in the US Then it was mentioned just last week the <unk>.
Speaker Change: Do you want to start in a mod?
Speaker Change: Ancillary of Germany drove the I'd buzz.
Speaker Change: Performance is very very good.
Speaker Change: We know how to train the model in a way that is more efficient.
Speaker Change: Disclosed like time to our levels that the oems are keeping themselves as like the Safety stock. Um, but in general, we've been in line with what is a uh, we can consider modest compared to Historic periods.
Speaker Change: Okay.
Speaker Change: Appreciate that as a follow up what is your stimulation stack what does it look like how much synthetic data are you using to reduce cost for.
Speaker Change: Training on edge cases.
Speaker Change: Because that also seems to be for the problems that you're solving.
Speaker Change: Um so the way we are um kind of analyzing this is uh in in multiple ways, we have direct information coming from our Tier 1, customers that they get direct information from their oems. We also cross reference this with the third party analysis, on the vehicle on the overall industry vehicle production, um, compared to our sales, so we keep a very close track of this. And, uh, you know, we, we are, um, we keep our eyes on this, on a weekly basis.
Speaker Change: And we talked about humanoids, but even in autonomous cars are.
Speaker Change: Very very important loved to love to hear your views there. Thanks Ana.
Speaker Change: Yes, very good question when you when you think about the simulation.
Speaker Change: There are two types of simulation.
Speaker Change: Photo realistic simulation, we use photo realistic simulation in order to simulate aged care for example, putting a car on the road.
Speaker Change: All right, thank you. Yeah, no worries. I think that that's I think that's right. Um you know We the finance and sales teams have been done a great job of kind of you know developing tools to uh as as well as kind of direct uh feedback from the tier 1's and and everything looks like it was pretty flattish from the end of uh 2024 until now
Speaker Change: Yes, so two types of simulation in one photo realistic another two to emulate edge cases, alright say.
Speaker Change: our next question comes from Adam Jonas with Morgan Stanley. Please proceed with your question.
Speaker Change: Say you have a car to falling off from a truck on the road right. These things you don't need to wait until you find them in the physical World. You can you can put them in a photo realistic simulator and we have very powerful photo realistic simulators and.
Speaker Change: I uh, thanks everybody. So so I I'm Nan
Speaker Change: I'm just looking at your capex here, 28 million
Speaker Change: For the first half of the year, if I annualize that that's obviously down substantially year on year.
Speaker Change: Another type of simulation is to stimulate the driving policy. This is a piece of technology, maybe we'll talk about it more next year as <unk> TFS that we developed it.
Speaker Change: But even if it's flat, um, and I think consensus has you guys spending around 100 maybe 110 million bucks this year.
Speaker Change: Kind of we call it the ACI artificial community intelligence, where we have.
Speaker Change: It simulator not a photo realistic as synthetic simulator.
Speaker Change: Your capex is basically not moved. It's declined over a number of years and it it's it really makes mobilized stand out as for a physical AI hard tech company really in the thick of so many exciting programs collecting data growing the fleet.
Speaker Change: Simulating hundreds of rhodium.
Speaker Change: Road users over billions of miles of simulation, we run billions of miles of overnight.
Speaker Change: How do you do it? Like what? Where is your capex spending on compute? How much compute?
Speaker Change: Do you have because it would strike me that you were compute needs and therefore, your AI capex needs.
Speaker Change: We use that in order to train the driving policy.
Speaker Change: So that amount of compute that you need there is way below the amount of compute if youre trading at on photo realistic simulations and it's much more much more efficient. So those are the two types of simulations we use.
Speaker Change: Would would somehow scale at least proportionate to the amount of data that you're feeding.
Adam Jonas: Thank you Adam.
Speaker Change: Uh, into your simulation and data centers and and so tell me where I'm wrong there, why, how are you able to do it or, or is your message we just don't need compute like, others. And that guys, like Elon and Jensen are are wrong. And then, I have a follow-up.
Speaker Change: Our next question comes from <unk> Patel with.
Speaker Change: Research. Please proceed with your question.
Speaker Change: well, no, we need to compute, we have a compute both on Prem and also on the cloud
Speaker Change: Hey, thanks, so much.
Speaker Change: For taking the questions.
Speaker Change: And Dan maybe maybe.
Speaker Change: Could you guys talk about the typical lead time between securing awards and surround data and launching programs.
Speaker Change: Believe it's typically two to three years, so given the timing of the new standards in Europe, which I think is too.
Speaker Change: 28.
Speaker Change: That would suggest oem's need to secure contracts in the next.
Speaker Change: 12 months to 18 months or so is that the kind of timeline, we should be thinking about.
Speaker Change: In terms of potential awards.
Speaker Change: Um you know our Cloud spending as a slightly reduced input and I I cannot reveal those numbers. But you know, it's in in the tens of millions uh in a large number of tens of millions and uh in favor of on-prem, you know, more gpus. Uh but you know we we have a different philosophy on how to spend money on on compute than what you hear from our competitors. And, uh,
Speaker Change: So when I was talking about the western Oems.
Speaker Change: Hey timeline is typical two years two two to two five years.
Speaker Change: we have very good systems, very good, uh, performance, our iq6 generation, Our Generation 2,
Speaker Change: Supervision and chauffeur and drive is, is really top top top-notch.
Speaker Change: From nomination to startup production.
Speaker Change: Okay.
Speaker Change: Okay. That's helpful.
Speaker Change: So if these standards are coming on in 2028, it would suggest it would be needed to secure these awards.
Speaker Change: 2026, something like that.
Speaker Change: Yes.
Speaker Change: Do you want to add.
Speaker Change: Yeah.
Speaker Change:
Speaker Change: The majority of the RF Skus that we have and we have our skus with multiple Oems and <unk>.
Speaker Change: If you look at our drive vehicle, there are more than 100 ID, buzzers, there has been a lot, a lot of demonstrations, the journalists both in Europe and also in the in the US as an award mentioned. Just last week, the chancellor of Germany, drove the ID Buzz. Performances is very, very good. And, uh, we know how to train the models in a way that is more efficient.
Speaker Change: The majority of our customers are engaging with us as the solution.
Speaker Change: Our excuse aimed for 27 28 cities.
Speaker Change: Okay, appreciate that. Um, as a followup, what is your simulation stack? What does it look like? How much synthetic data are you using to reduce costs for
Speaker Change: That's.
Speaker Change: The current plans that we're seeing.
Speaker Change: Okay, and then on on Robo taxis their large number of developers in this space.
Speaker Change: Um, you know, training on edge cases. Um because that that also seems to be for the problems that you're solving.
Speaker Change: And some of the <unk>.
Speaker Change: Operators are striking agreements with multiple players for their platforms. So curious how you gain confidence in the number of vehicles and mobile and we'll be supporting.
Speaker Change: Um, and we talked about humanoids, but even in autonomous cars. Very, very important love to love to hear your views there. Thanks a lot.
Speaker Change: Okay. Yeah, that's a very good question. When, when you think about the simulation
Speaker Change: On an uber or lyft type of platform.
Speaker Change: And then what do you want to take this.
Speaker Change: Yes.
Speaker Change: Think that.
Speaker Change: <unk>.
That there are 2 types of simulation. There is a photo realistic simulation, we use Photo realistic simulation in order to simulate age cases, for example, you know, putting a car on the road.
Speaker Change: First of all it makes sense for companies like Uber, who who face pressure and questions from investors about their strategy for for robot taxis as a potential threat for their business to maximize your chances of being one of the winners in this space.
Speaker Change: I'm not.
Speaker Change: I'm not.
Speaker Change: You want on mute?
Speaker Change: And then you want to mute.
Speaker Change: I think that's where at the beginning of the adoption curve and.
Speaker Change: Just when it was getting good.
Speaker Change: Longer term, we believe that the winning solutions will be the most cost efficient geographically geographically scalable with the highest performance highest availability availability rates.
Speaker Change: Okay.
Speaker Change: Oh okay. 1 moment.
Speaker Change: You can hear you again. I'm on your back.
Speaker Change: And we believe that our products are inherently.
Speaker Change: Okay, I'm done.
Speaker Change: If the pole position in these axes.
Speaker Change: All right. Okay. That's 2. 2 types of simulation.
Speaker Change: So today, there might be some some announcements and statements with pretty much everything that can be a potential contender, but we think that within not a lot of time. It will there will be a separation between a very selected few companies that will have advantages in these economics scalability geographic availability.
Speaker Change: The availability of the service.
Speaker Change: Yeah, it's a 2000 simulation 1 is photorealistic in order to to emulate edge cases, right? Say you have a cart falling off from a truck on the road, right? These things you don't you don't need to to wait until you find them in the physical world. You can you can put them in a photo realistic simulator and we have very powerful photo realistic simulators.
Speaker Change: And the others because if you think about this we're still not at a stage of we've been thinking about for example, how many charges do you need to do a per day for the vehicle.
Speaker Change: It doesn't doesn't play any factor and our system is roughly 20% in power consumption compared to windows.
Speaker Change: So these are just small things that today doesn't play a role because it is a question of can you do it or can't you do it we're at the cusp of getting to how well can you do it how efficiently can you do it in our system is designed to be.
Speaker Change: Another type of simulation is to simulate the driving policy. This is a piece of technology. Maybe we'll talk about it more at next year's CS that we developed its. We its kind of a we call it ACI, artificial Community intelligence where we have uh it simulator, not a photo realistic, a synthetic simulator
Speaker Change: Selling these parameters, so that's where we get the confidence that ultimately we will be one of these two to three companies.
Speaker Change: We will see the highest volume of Robo taxi services.
Speaker Change: Simulating hundreds of, uh, of Road users over billions of miles of simulation, we run billions of miles of overnight and we use that in order to train the driving policy.
Speaker Change: Okay, great. Thank you.
Speaker Change: Thanks, Chris.
Speaker Change: Our next question comes from Joe Spak with UBS. Please proceed with your question.
Speaker Change: So that amount of compute that you need, there is is way below the amount of compute if you would train it on Photo, realistic simulations, and it's much more, much more efficient. So that those are the 2 types of simulations, we use
Speaker Change: Thanks, everyone.
Speaker Change: Maybe just sticking on on drive and Robo taxi.
Adam Jonas: Thank you, Adam.
Speaker Change: Could.
Speaker Change: You gave us some.
Speaker Change: Things here on sort of what commercial deployment looks like you have to finalize.
Speaker Change: Our next question, comes from sherz patella with wolf research, please proceed with your question.
Speaker Change: The vehicle, then Theres tell ops and theirs to remove the driver.
Hey, thanks so much uh, for taking the questions. Uh,
Speaker Change: And 26 I was wondering if you could add any more color in terms of maybe where you first see that happening in U S or Europe, and then and also like maybe how.
Speaker Change: Much input do you really have here in terms of things such as the size of the Geofence the number of vehicles like when the drivers actually remove like what how does that relationship with your partners work.
Sherz Patella: I'm not in Dan, maybe, maybe I can you guys talk about the typical lead time between securing Awards and Surround data and launching programs. I believe it's typically 2 to 3 years. So, so given the timing of the new AAS standards in Europe, which I think is 2028, uh, that would suggest oems need to secure contracts in the next
Sherz Patella: 12 to 18 months. So so is that the kind of timeline we should be thinking about in terms of potential Awards?
Speaker Change: Okay.
Speaker Change: Well the leading the leading partner is the Volkswagen a DMT division.
Sherz Patella: Yeah, so when we're talking about Western oems,
Speaker Change: And we have a very tight cooperation we work very well together.
Sherz Patella: A timeline is typical 2 years, 2, 2, 2, 2, 2, 2, 2, 2, 2, 0.5 years.
Speaker Change: The driver would be removed in the first city it'll be in the U S. I'm not at Liberty to say the name of the city, but its theres very concrete plans in terms of how the driver would be removed.
From nomination to start of production.
Sherz Patella: Okay.
Sherz Patella: All right. Okay. That's helpful. Uh, so so if if these standards are coming on in 2028, it would suggest they would be needing to secure these Awards in.
Speaker Change: The design of the telco operators, we have a very unique design of telco operators that allows for scale.
Sherz Patella: 2026, something like that.
Sherz Patella: Yeah, any more do you want to add?
Speaker Change: So.
Speaker Change: From day, one till operator per vehicle to quickly going to 112 X.
Speaker Change: One operator, <unk> vehicles to scale that very skilled at very fast using technology certain cloud computing technology that will enable us to scale it.
I think the the, the majority of, uh, the rfqs that we have, and we have rfqs with multiple oems and um, you know, the the majority of our customers are engaging with us in this solution. Um, these are excused, aim for 2728 Sops. Um so that that's that's the current plans that we're seeing.
And it will all start the middle of 2026 would that forest city in the U S.
Speaker Change: Okay.
Speaker Change: And the second question is.
Speaker Change: There was a report this morning that Volkswagen is looking.
Speaker Change: Or for capital at their autonomous unit and offering a minority stake in a subsidiary that they're searching for a strategic or financial investors like I'm not asking you to comment specifically on that.
Okay. And and then on on Robo taxis uh there are a large number of Av developers in the space uh and and some of the right your operators, such as Uber are striking agreements with multiple players for their platforms. So, curious how you gain confidence in the number of vehicles that mobile, I will be supporting uh, either on an Uber or a Lyft type of platform.
Speaker Change: Potential.
Speaker Change: You know offering but is.
Speaker Change: Our strategic investment in a partner or something mobile I would consider here as you look to scale drive.
Speaker Change: Yes, I think it's a very good development I think also Google did that for Weibo, even though Google has deep pockets and confront way more without any external funding I think it's a very good development, we support it and we will seriously consider also participating as an investor.
Speaker Change: Number. What do you want to take this? Yeah, I think that's um first of all it makes sense for companies like uber um who uh who faced pressure in questions from investors about their strategy for um you know for robot taxes as a Potential Threat for their business, to to maximize their chances of, of being 1 of the winners in this space.
Speaker Change: um, I think that's we're at the beginning of the adoption curve and
Speaker Change: Thank you.
Speaker Change: Thank you Joe Maria this will be our last question in the next one coming up.
Speaker Change: Okay.
Speaker Change: Next question. Our last question then is from Colin Rusch with Oppenheimer. Please proceed with your question.
Colin Rusch: Thanks, So much guys given the leverage that you're seeing off of the compound AI platform can you talk a little bit about the cadence of learning that youre seeing put some metrics around it you know potentially talk about the reduction in <unk>.
Colin Rusch: Hello explanation. So you were saying in our systems at this point.
Speaker Change: longer term. We believe that the winning Solutions will be the most cost-efficient Geographic geographically, scalable with the highest performance, highest availability availability rates. Um, and we believe that our products are inherently, um, you know, at the pole position in these axis. And so today, there, you know, there might be some, some announcements and statements with pretty much everything that can be a potential Contender. But, you know, we think that within not a lot of time. Um, it will there will be a separation between a very Selected Few companies. Um, that will have advantages in these economic scalability, Geographic scalability, the ability of the service, um, and, and the others, because if you think about this, we're still not as at the stage of even thinking about, for example, how many charges do you need to do per day for the vehicle?
Colin Rusch: Yes.
Colin Rusch: You don't have hallucinations endless emissions as a metric for four large language models.
Colin Rusch: What our Kpis is meantime between failure.
Speaker Change: It still doesn't play any factor and our system is roughly 20% in, in, in park consumption compared to whamos.
Colin Rusch: And that is.
Colin Rusch: That is very important and drive because that's the only way to remove the driver that you reach an MTF.
Speaker Change: A small things that today don't play um a role because it's still a question of can you do it? Or can't you do it? We're at the cusp of getting to how well can you do it? How efficiently can you do it? And, and our system is designed to be
Colin Rusch: Which.
Colin Rusch: Which corresponds to a very strict kpis and we are on track.
Colin Rusch: All the indications are that by the end of this year will be at the MTBE if.
Speaker Change: Excelling these parameters. So that's that's where we get the confidence. That ultimately we will be 1 of these 2 3 companies that will see the the highest volume of of robot taxi services.
Speaker Change: Okay, great. Thank you.
Colin Rusch: That is the.
Colin Rusch: That will enable to remove the driver and then the next six months until we actually removed the driver will be working on the tail operation technology, and then start to removing the driver, but all our kpis for MTF and other safety measures are all on track.
Speaker Change: Thanks.
Speaker Change: Our next question comes from Joe's back with you BS. Please proceed with your question.
Speaker Change: Um, thanks everyone. Um, maybe just sticking on on drive and and and Robo taxi. I'm not if you could
Colin Rusch: Yeah.
Speaker Change: you know, you gave us some uh,
Speaker Change: Thanks, So much and that's the last one here is around potential for.
Speaker Change: Reduction on cost of perception suite as you look at you know not only your own internal reduction in costs, but sourcing.
Speaker Change: Other elements can you talk about how quickly you can start driving some cost out of the system as you get into 27, 28 and start seeing some incremental volumes ramp up.
Speaker Change: Things here on sort of what commercial deployment looks like you have to finalize. You know, the the the vehicle, then there's telops and there's the remove the driver um, in 26. So I was wondering if you could add any more color in terms of maybe where you first see that happening and us or Europe and then and also like maybe how
Speaker Change: Well the cost of our system without talking about drive the cost of our system is already very lean.
Speaker Change: Do you have a cameras doesn't cost it doesn't cost much we have our ACO with four six high it doesn't cost much.
Speaker Change: Much input. Do you really have here in terms of things such as the, you know, the size of the geofence the number of vehicles? Like when the driver is actually moved, like what, how does that relationship with your partner's work?
Speaker Change: Well, the leading uh the leading partner is Volkswagen admt division.
Speaker Change: Have imaging radars, which we produce.
Speaker Change: Hundreds of dollars overall.
Speaker Change: We have a lot of ours that are.
Speaker Change: Supplied by our interface also very reasonable a reasonable cost if you look towards the end of the decade.
Speaker Change: And we have a very tight cooperation. We work very well together. Um, the the driver would be removed in the first city. It will be in in, in the US. Um, not at Liberty, to say the name of the city.
Speaker Change: There is a possibility.
Speaker Change: With just having two layers of redundancy cameras, and the imaging radars and reducing the number of ladders or reducing brothers altogether, but this is something that's too early to say.
But it's, um, there there is very concrete plans in in terms of how the driver would be removed. Uh, the design of the tele operators, uh uh we have a very unique, uh, design of tele operators that allows for scale.
Speaker Change: That could be another cost and other cost reduction and other cost reduction towards the end of the decade is moving from IQ six to IQ seven.
Speaker Change: That will be another element of cost reduction, but it's not really a very meaningful cost reduction.
Speaker Change: As we are already starting with a very lean cost.
So uh uh going from say, 1 tele operator per vehicle to quickly going to, uh, 1, 1, 1 to x, uh, uh, 1 operator, for X vehicles to scale that very, uh, scale that very fast using technology certain cloud computing, technology that will enable us to, to scale it.
Speaker Change: Cost platform.
Speaker Change: Great. Thanks, so much guys.
Speaker Change: and to Road, start the middle 2026 with that, first city in the US,
Speaker Change: Okay.
Speaker Change: We have reached the end of our question and answer session and I would now like to turn the floor back over to Mr. Collins for closing comments.
Okay. Um, and then the second question is, um,
Mr. Collins: Thanks, Thanks, Maria and thanks for everyone and thanks to everyone for joining the call. We will see you again at the Q3 earnings call in October. Thank you very much.
There was a report this morning that Volkswagen is looking um for for Capital at their autonomous unit and offering a minority stake in the subsidiary that they're searching for a strategic or financial investors. Like I I'm not asking you to comment specifically on that um, potential, um, you know offering but is
Speaker Change: In uh, a Strategic investment in a partner or something mobile, I would consider here as you look to scale. Uh, Drive
Speaker Change: Yeah, I I think it's a very good development. I think also Google did that for, for a way more, even though Google has Deep Pockets and confront way more uh, without any external funding. I think it's a very good development. We support it and we will, uh, seriously consider also a participating as an investor.
Speaker Change: Thank you.
Joe Muria: Thank you, Joe muria. This will be our, our last question. The next 1 coming up
Speaker Change: Okay.
Speaker Change: Our next question. Our last question then is from Colin Rouge with Oppenheimer. Please proceed with your question.
Colin Rouge: Thanks so much guys, you know, given the leverage that you're seeing off of the compound AI platform. Can you talk a little bit about the, the Cadence of learning that you're, you're seeing puts a metrics around it. You know, potentially talk about the reduction in elusive hallucinations that you're seeing in the systems at this point.
Colin Rouge: Yeah, we we we don't have hallucinations. Uh, hallucinations is a metric for, uh, for large language models. Uh, what what our kpi is is, is meantime, between failure.
And that is a, that is very important in drive because that's the only way to remove the driver that you reach an mtbf.
Colin Rouge: Which which corresponds to a very strict kpis and we are on track. Uh, all the indications are that, by the end of this year, will be at the mtbf that is that will enable to remove the driver. And then for the next, uh, 6 months until we actually remove the driver would be working on the tele operation technology and then start removing the driver. But all all our kpis for mtbf and other safety measures are all on track.
Speaker Change: Of the perception Suite, you know, as you look at, you know, not only your own internal, uh, reduction in cost but you know sourcing, um, other elements, you know, can you talk about how quickly you can start driving some cost out of the system? Uh, as you get into 2728 and start seeing some incremental volumes ramp up,
Speaker Change: Well, the cost of our system, we are talking about Drive. The cost of our system is already very lean, right? We have the cameras, which doesn't cost, doesn't cost much.
Speaker Change: We have our ECU with the 4iq 6 high, you know, it doesn't cost much uh we have Imaging graders, which we produce, you know, it's hundreds of dollars overall. Uh we have ladders that are um, supplied by innovis also very reasonable, uh, reasonable cost. If you look towards the end of the decade,
Speaker Change: Uh, there is a uh, possibility with uh, just having 2 layers of redundancy cameras, and the Imaging Radars and reducing the number of ladders or, you know, reducing ladders all together. But this is something that's too early to to say, um, that that could be another cost, another cost reduction, another cost, reduction towards the end of the decade is moving from IQ 6 to iq7.
Speaker Change: That will be another element of cost reduction, but it it's not really a very meaningful cost reduction.
But we are already starting with a very lean cost uh cost platform.
Speaker Change: Great. Thanks so much, guys.
Speaker Change: Thank you.
We have reached the end of our question and answer session, and I would now like to turn the floor back over to Mr. Gals for closing comments.
Speaker Change: Thanks. Thanks Maria. And thanks for everyone. Thanks to everyone for joining the call. Uh, we will see you again uh at the Q3 earnings call in October. Thank you very much.
Speaker Change: This includes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.