Q3 2025 Arbe Robotics Ltd Earnings Call

Speaker #1: Good day, everyone, and welcome to the Arbe Robotics third quarter 2025 results conference call. All participants will be in a listen-only mode. Following management's formal presentation, instructions will be given for the question-and-answer session.

Speaker #1: For operator assistance, please press * and 0. As a reminder, this conference is being recorded. You should have all received by now the company's press release.

Speaker #1: If you have not, please check the company's website at www.arberobotics.com or call EK Global Investor Relations. I would now like to turn the floor over to Mr. Kenny Green from EK Global Investor Relations.

Speaker #1: Mr. Green? Would you like to

Speaker #1: begin?

Speaker #3: good day Thank you, Alfred. to all of you, and welcome to Arbe's conference call to discuss the results of the third quarter of 2025.

Speaker #3: Before we begin, I would like to remind our listeners that certain information provided on this call may contain forward-looking statements, and the safe harbor statements outlined in today's press release also pertain to this call.

Speaker #3: If you have not received a copy of the release, please view it in the Investor Relations section of the company's website. Today, we are joined by Kobe Marenko, Arbe's co-founder and CEO, who will begin the call with a business update, and then we will turn the call over to Karim Pinto Flemingbaum, CFO, who will review the financials.

Speaker #3: Finally, we'll open the call to our listeners for the question-and-answer session. With that, I'd like to turn the call over to Kobe Marenko.

Speaker #3: Kobe, please go

Speaker #3: ahead. Thank you, Kenny.

Speaker #4: Good morning, everyone, and thank you for joining us to discuss our results and recent business developments. I'll begin with an update on the most important aspect of our current activities: our strategic progress with OEMs.

Speaker #4: We are pleased with a solid strategic progress made in the third quarter. As you know, our main goal is to secure design wins with OEMs and become the radar technology provider and core enabler of their ADAS and autonomous driving programs.

Speaker #4: While it is a long process, we are moving forward and making solid progress, each and every quarter. We believe that we are well-positioned and in the lead to be selected as the key enabler for an eyes-off, hands-off, automated driving program for serial production retail vehicle by one of the major European OEMs in the near future, and we hope to share further information as soon as we hear.

Speaker #4: In addition, another premium European OEM is conducting data collection for a level three program using radars based on Arbe's chipset. We continue to make strong progress with other OEMs as well.

Speaker #4: A top Japanese OEM ordered our A radar kit for its level four development activities and approved the expansion of the project it initiated last year based on our chipset, including proved development activities.

Speaker #4: I also want to add that in terms of our highly strategic non-OEM collaborations, a global leader in artificial intelligence computing has ordered radar development kits for its full-stack autonomous driving software development. This represents a strong validation from one of the most influential players shaping the future of autonomous driving technology, as well as AI in general.

Speaker #4: Global economic shifts are causing some OEMs to postpone new model launches and lengthen their decision timeline for autonomous driving solutions. Despite this, Arbe's market position continues to grow stronger.

Speaker #4: We remain encouraged by the steady progress we have achieved throughout 2025, and as the year comes to a close. Based on what we see now, we believe we are well-positioned to secure the key European OEM program I discussed earlier in the short term, and an additional three program wins within the next three quarters.

Speaker #4: Our initiatives are aligned with the path to OEM selection and we continue to expect that Arbe's radar technology will serve as a key enabler for 2028 passenger vehicle platforms.

Speaker #4: We expect the initial revenues will begin in 2027 with a ramp-up in 2028 as our chipset are used in high volume production. Thanks to our strong balance sheet, with over 52 million dollars in net cash, we have the runway to support all programs as our revenue reaches the ramp-up stage.

Speaker #4: With regard to our focus on non-automotive projects, we are seeing increasing global demand in the defense sector. We are currently supplying radar systems for defense pilot programs and evaluation projects, and last quarter we announced a new defense client.

Speaker #4: In addition, in the third quarter, we expanded into the maritime domain, since that was still one supplier for non-automotive applications, announced an order from Wattsheet for radar systems powered by our chipset.

Speaker #4: These systems will support collision prevention for boats in all weather and lighting conditions. Boating represents another promising new vertical for our radar technology. During the quarter, we won two prestigious automotive technology industry awards: the Just Auto Excellence Award for leading technology in the perception systems category, and the Autotek Breakthrough Awards for Sensor Technology Solution of the Year 2025.

Speaker #4: Both awards are a proof of Arbe's contribution to the automotive industry and leading technological advantages. We are bringing unparalleled safety for drivers and advancing ADAS and autonomous driving.

Speaker #4: Before closing, I want to welcome Chris Van den Elzen to our board of directors. Chris brings over 30 years of experience in the automotive industry, working with both OEMs and Tier 1s.

Speaker #4: president of Magna International and executive vice president of Bayonier, and He has former vice brings us strong business experience and deep technological expertise and, I'm sure, he will be a very valuable asset.

Speaker #4: In closing, Arbe is well positioned to benefit from current industry trends as the market transitions to high-resolution radar. Now, I would like to turn it over to our CFO, Karim, to go over the...

Speaker #4: financials. Thank

Speaker #5: you, Kobe, and hello everyone. Let me review our financial results for the third quarter of 2025 in more detail. Revenue for the third quarter of 2025 totals 0.3 million dollars compared to 0.1 million dollars in Q3, 2024.

Speaker #5: As of September 30, 2025, backlog stood at 0.2 million dollars. Gross profit for Q2, '25 was negative 0.2 million dollars compared to negative 0.3 million dollars in the same period last year.

Speaker #5: The improved change in profitability is related to revenue mix. Turning to operating expenses, total operating expenses for Q3 2025 were $11.3 million, down from $12.2 million in Q3 2024.

Speaker #5: The decrease in operating expenses was primarily due to lower share-based compensation expenses resulting from the full vesting of prior grants. And to the reduced volume of new grants, which was the result of new grants being in the form of bonus liability.

Speaker #5: The decrease in operating expenses was partially offset by an unfavorable foreign exchange impact and higher labor costs. Operating loss for the third quarter of 2025 was 11.5 million dollars compared to a 12.4 million dollars loss in the third quarter of 2024.

Speaker #5: Adjusted EBITDA, a non-GAAP measurement that excludes expenses for non-cash share-based compensation and non-recurring items, was a loss of $9.2 million in Q3 2025, compared to a loss of $8.2 million in the third quarter of 2024.

Speaker #5: We believe that this non-GAAP measurement is important in management's evaluation of our use of cash and in planning and evaluating our cash requirements for the coming period.

Speaker #5: Net loss in the third quarter of 2025 was $11 million, compared to a net loss of $12.6 million in the third quarter of 2024.

Speaker #5: As of September 30th, 2025, Arbe held 52.6 million equivalent and short-term bank deposits. Turning to our outlook, while global economic shifts are leading some OEMs to delay new model launches and extend decision timelines for advanced driver assistance systems, Arbe's market position continues to strengthen.

Speaker #5: We are actively expanding engagements with leading OEMs for grossing through advanced RFQ stages and building a solid foundation for large-scale adoption. Our goal remains to secure four design wins with OEMs in the coming three quarters.

Speaker #5: For 2025, revenues are expected to be in the range of $1 million to $2 million. The change to our revenue expectation reflects the timing shifts of certain NRE programs.

Speaker #5: However, adjusted EBITDA expectations remain unchanged as a loss of 29 million dollars to 35 million dollars. I want to stress that Arbe enters 2026 with a significantly strengthened balance sheet with over 52 million dollars in net cash.

Speaker #5: Supporting the continued execution of our long-term strategic and growth plan. Now, we will be happy to take your questions, operator.

Speaker #6: Ladies and gentlemen, at this time, we'll begin the question and answer session. If you'd like to ask a question, please press star and then one using a touch-tone telephone.

Speaker #6: To withdraw your questions, you may press * and 2. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality.

Speaker #6: Once again, that is star and then one. To join the question queue, our first question today comes from Sujy DeSilva from Roth Capital. Please go ahead with your question.

Speaker #7: Hi, Kobe. Hi, Karim. First question on the guidance for four design wins. I'm curious if that's four separate OEMs. And second of all, the specific guidance of the next three quarters.

Speaker #7: I'm curious what's driving the near-term visibility.

Speaker #7: there. so yes, it's,

Speaker #8: Four different OEMs. And, basically, we know that for sure there are decisions that should be taken in the next three quarters.

Speaker #8: Of at least five OEMs, we believe that we will be able to win at least four of them.

Speaker #7: Okay, Kobe. Very helpful. Thanks. You said at least five. Okay. And then, the customer programs, do you have a sense whether these model wins or opportunities are for certain premium models or across the board platforms or mainstream? Any color on the penetration you would expect if you secure these wins?

Speaker #7: helpful? we believe

Speaker #8: that, all of the programs will start with premium cars. but with the volumes, as time goes by and the years go by, this will go, to, non-premium, models as well.

Speaker #8: we see it from the numbers. So we're starting, of course, in, very high-end, and it's going to, to, to still, you know, it won't be in, entry-level, vehicles, but it will be in high-end and, and, let's say the top

Speaker #8: cars. Okay.

Speaker #7: No, that's helpful, Kobe. And then last question, maybe Karim. The calendar 2025 full-year guide, Karim, implies a wide Q4 range here. I'm wondering what the factors are to swing it from the high end to the low end to the high end.

Speaker #7: Thanks.

Speaker #1: Can you repeat the

Speaker #1: question? Oh, sure.

Speaker #7: Your full 25 revenue guidance of 1 to 2 million? Implies a fairly wide 4Q range of outcomes. I'm wondering what might swing it to the high versus low end.

Speaker #7: Is that product shipments or licensed revenue coming in, or any color there would be?

Speaker #7: helpful? Understood.

Speaker #1: So, as we mentioned, we have some NRE shifts, and based on the decision that is made by our customers, the sooner the decision is made in Q4, the sooner we will be able to push those NRE revenues, rather than push them outside to 2026.

Speaker #1: So this is what's driving mainly the tweak between the low to the high.

Speaker #1: end. Okay.

Speaker #7: All right. Thanks, Kobe. Thanks,

Speaker #7: Karim. Thank you,

Speaker #1: Sujy.

Speaker #6: From George Giannaracus from Canaccord. Please go ahead with your question.

Speaker #7: Hi, everyone. thank you for taking my questions. maybe just to give us a little bit more insights into how these conversations are going with the OEMs and the puts and takes, the, the things that are happening that you see as positive, and maybe some of the reasons you're seeing for, the push-out in decision-making.

Speaker #7: Thank you.

Speaker #8: so I think, so f-first of all, I think that, the dialogues are, are going well. And, we see more and more OEMs, buying

Speaker #1: Stands for Self-Driving What we . see full now think with , I all of the , there was OEMs what will they believe decisions were two quarters of at the caused will postponed know beginning was , there have .

Speaker #1: delay . it look because Right now . And There is at a clear path to decisions . And that I think from now on we will see the taken , decisions are will be taken .

Speaker #1: There is price a from the OEMs on every component in the system . And I think as of have a huge that , we advantage because our high end is almost in radar price a radar of today low end in the car .

Speaker #1: And we will be able away from the beginning designed our system for a price that is affordable . And now we see the benefit of it .

Speaker #2: Thank you. And maybe, just, I know it's early, but I'd like to understand how you think we should think about 2026 and 2027.

Speaker #2: Maybe, and just sort of the way we should model the ramp in your revenue, OPEX, and cash burn just so we can have sort of a sense of a new model over the next couple of years.

Speaker #2: Thank you .

Speaker #1: So I think , first of all , in 26 , of our most revenues will come from Non-automotive , which we see right now , a great ramp up from this business .

Speaker #1: As I mentioned from every almost every vertical that we are touching , we see orders and repeated orders from defense , from , from small cities , all of that are bringing a more more and are orders .

Speaker #1: And we believe that next year we should expect a nice amount of revenues from Non-automotive . And the second part of it is ramp up of revenues from China , from hiring .

Speaker #1: We still don't have the final visibility on the exact month that it will start, but we believe that we will see some revenues from common fractures in China as well.

Speaker #3: Just to add to that, for your question about the optics, as we next mentioned, our current OPEX structure supports those revenues for the upcoming year, which will be non-automotive.

Speaker #3: And also going towards 27 . And so we a stable assume level of opex , not increasing too much . And towards the ramp up of the automotive industry , we will see ramp up .

Speaker #3: Of course, in headcount, mainly customer base to support this ramp-up.

Speaker #2: Thank you .

Speaker #4: And ladies and gentlemen , with that , we'll be ending today's question and answer session . I'd like to turn the floor back to over Mr. Marenco for any closing remarks .

Speaker #1: On behalf of the management of Alb . I would like to thank you . Our shareholders , for your continued interest and long term support of our business to our employees and .

Speaker #1: On behalf of the management of Alb . I would like to thank you . Our shareholders , for your continued interest and long term support of our business to our employees and partners Your continued dedication is deeply appreciated .

Speaker #1: In the coming months , we will be meeting with investors and presenting at various investor which we have conferences , announced , and we hope to see some of you there .

Speaker #1: If you're interested in meeting or speaking with us , feel free to reach to our out Investor Relations team . You can contact us at investors at Arbe Robotics Ltd. .

Speaker #1: To schedule a meeting. And with that, we end our call. Have a good day.

Speaker #4: And ladies and gentlemen , that concludes today's conference call . And presentation . We do . Thank you for joining . You may now disconnect your lines .