Good day, and welcome to the Arbe Robotics First Quarter 2025 Earnings Results Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Miri Segal of Arbe's Investor Relations. Please go ahead.

Thank you, operator, and good day, everyone. 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 statement outlined in today's press release also pertains to this call. 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 Kobi Marenko, Arbe's Co-Founder and CEO, who will begin the call with the business update. Then, we will turn the call over to Karine Pinto-Flomenboim, CFO, who will review the financials. Finally, we will open the call up for the question-and-answer session. With that, I'd like to turn it over to Kobi Marenko. Kobi, please go ahead.

Good morning, everyone, and thank you for joining us. I will begin by reviewing some of our recent business highlights. During the first quarter, we continued to make meaningful progress in Europe, getting closer to potential design wins with leading OEMs. We secured radar systems orders supporting an advanced data collection program. The OEM's data collection program is one of the final steps in the automotive sourcing process. We are seeing increased investment from our Tier 1s and from OEMs who are developing their own AI-driven perception algorithms that leverage our radar data. These initiatives are aligned with the path to OEM selection, and we anticipate that Arbe's radar technology will serve as a key enabler for high volume 2028 passenger vehicle platforms in Europe. We believe that our solid balance sheet, coupled with the capital we previously raised positions us well to support these programs, with revenues projected to begin in 2027. In China, our Tier 1 HiRain technology reached a critical milestone in April with the launch of its LRR615, a production-intent long-range imaging radar system built on our high-performance chipset. Designed for the demanding needs of the Chinese autonomous driving market, the LRR615 offers ultra-high resolution and dependable performance in all weather and lighting conditions. This achievement highlights the industrial scalability of our platform and demonstrates our partners' capability to bring Arbe-powered solutions to the market. We also saw continued traction beyond the automotive sector. Our Tier 1 Sensrad placed a significant order for over 1,000 imaging radar chips to serve diverse customers across multiple use cases. This order reflects growing commercial demand and the versatility of our technology in broader industrial and mobility markets. One of the most significant collaborations in the first quarter was with NVIDIA, a leader in advanced in-vehicle computing. Through its DRIVE platform, NVIDIA is a frontrunner in providing the computing backbone for autonomous driving and ADAS together with advanced radar-based free space mapping and AI-driven precision capabilities, a critical enabler for next-generation autonomous systems. By integrating our high-resolution imaging radar with the NVIDIA DRIVE AGX platform, we are delivering a powerful combination of sensing and computing performance. This collaboration was prominently featured at CES 2025, where Arbe showcased the integration in a real-world driving scenario. It's a strong validation of our technology and a clear signal of our expanding role in the software-defined vehicle ecosystem. Since January, we've demonstrated what we believe is the most advanced radar solution available at premier automotive trade shows across China, Japan, Germany, and the United States, featuring on-chip super-resolution processing and real-time performance at 20 frames per second. Our perception radar sets a new industry benchmark for radar image quality. The response from OEMs and Tier 1s has been overwhelmingly positive, further reinforcing our leadership in next-generation radar sensing. Finally, in January 2025, we successfully raised $33 million through an underwriting registered direct offering, including a $4 million over-allotment option fully exercised by the underwriters led by Canaccord Genuity. In addition, in January 2025, $21.5 million was released to Arbe from the escrow account following the conversion of convertible bonds we issued on the Tel Aviv Stock Exchange in 2024. This capital strengthens our balance sheet and enhances our financial stability as we scale operations, invest in productization, and support expanding global engagement. In closing, the progress we've made across OEM partnerships, Tier 1 integrations, and cross-sector adoption demonstrates the maturity of our execution and the strength of our ecosystem. Backed by a solid financial foundation, we are positioned to lead the industry in the adoption of ultra-high resolution radar and unlock long-term value for our stakeholders. We look forward to sharing more as we continue to move forward. Now, I'd like to turn it over to our CFO, Karine, to go over the financials.

Thank you, Kobi, and hello, everyone. Let me review our financial results for the first quarter of 2025 in more detail. Revenue for Q1 2025 was $0.04 million compared to $0.1 million in Q1 2024. Backlog as of March 31, 2025, was $0.25 million. Gross profit for Q1 2025 was negative $0.3 million, unchanged from Q1 2024, primarily reflecting the impact of fixed cost components due to reduced revenue year-over-year. Turning to expenses, total operating expenses for Q1 2025 were $13.1 million compared to $12.5 million in Q1 2024. The increase was primarily driven by a one-time expense associated with the progression of our chip development towards final production, most notably tape-out. A decrease in non-cash share-based compensation expenses related to the finalization of certain vesting periods was offset by a year-over-year provision adjustment. Operating loss for the first quarter of 2025 was $13.4 million compared to a $12.8 million loss in the first quarter of 2024. Adjusted EBITDA, a non-GAAP measurement that excludes expenses for non-cash share-based compensation and non-recurring items, was a loss of $9.7 million in Q1 2025, compared to a loss of $8.5 million in the first quarter of 2024. 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. Net loss in the first quarter of 2025 was $13.8 million compared to a net loss of $12.8 million in the first quarter of 2024. As of March 31, 2025, Arbe held $36.7 million in cash and cash equivalents and short-term bank deposits and $35.2 million in long-term bank deposits. With respect to our guidance, we would like to reiterate what we previously said. Arbe's leading radar technology remains a top priority for key decision-makers in the automotive industry. Recent cash infusions totaling $70 million further underscore investors' confidence in our market potential and growth trajectory. While recent economic shifts have led to short-term delays in automakers' rollout of advanced driver assist systems, decision timelines have been extended. As a result, Arbe continues to engage closely with industry leaders, advancing through RFQ stages and strengthening its position for adoption. We continue with our goal to pursue four design-ins with automakers in 2025. Annual revenues for 2025 are expected to be in the range of $2 million to $5 million and will be weighted toward the end of the year. Adjusted EBITDA for 2025 is projected to be in the range of $29 million loss to $35 million loss. Now we will be happy to open the call for questions.

Thank you. We will now begin the question-and-answer session. Our first question will come from George Gianarikas with Canaccord Genuity. Please go ahead.

Hi, everyone. Thank you for taking my questions. Maybe to start, can you just sort of please outline for us maybe in a little bit more detail the negotiations or discussions you're having with OEMs and why you continue to expect wins to happen possibly in the second half of this year? Thank you.

Yeah. So basically, just to clarify, Arbe is not selling directly to OEMs. Arbe is selling to Magna the chips, and Magna is selling the total radar to the OEM. But we are deeply involved with all of the phases that are leading to the stage that Magna will get the order, and Arbe will get, of course, from Magna the order for the chips. So it's a kind of a three-way cooperation. With the leading OEMs in Europe today, we are working closely with Magna, and they have already delivered systems that are used to start data collection for their stock. They were back and forth in the last quarter of requests related to final production. Most of them are on the software side, and we supported Magna heavily in providing those. We believe that today, the solution that we have, or Magna has with those OEMs, is final and ready for final selection. Also, since Magna radars are used as the main data collection platform, we believe that our chances to win are very high.

And can you just reiterate which geographies you believe these OEMs are headquartered in?

Europe. I think, Europe, right now, we're leading the path towards hands-free, level 2 driving, with the U.S. coming a bit behind. China, of course, is a different story. In China, we are engaged with HiRain, and we believe that revenues and production there will come a year before.

All right. Maybe to discuss a little bit about any momentum you're seeing in your industrial applications. There seems to be a little bit of recent momentum in that market. Any discussions you're having? Any color on those would be appreciated. Thank you.

With industrial application, we decided not to directly do those sales. So we have this partnership with Sensrad since there are a nice amount of applications, but each one of them has quite low volume per application, hundreds or thousands of units per application. We see it right now talking to Sensrad. We understand that they have clients in smart cities, tools, heavy industrial applications, heavy machinery, and even in factory applications. All of these applications need a customized software primarily, which is the reason that Sensrad supports it and provides those customizations to the customers across Europe and China.

And maybe a final one from me, your revenue guidance for the year implies a pretty material ramp in the third and fourth quarters. Can you just sort of illuminate for us again where you expect that revenue to come from? Thank you.

So first of all, we just announced today on the call a major order from Sensrad. The order came after the end of Q1. So in terms of revenue recognition, we need first to give them the chips to collect the money. So the revenues will be recognized later. We also have some support and NRE agreement with them to help them increase their ability to support applications. The other revenue sources should come mainly from the selection of one of the leading OEMs. We believe that this will lead to hundreds of systems more for data collection, as well as a small NRE. By Q4, we will be able to start ramping up production in China with HiRain, and this will generate real revenues for final production of chips.

Thank you.

Our next question will come from Suji Desilva with ROTH Capital. Please go ahead.

Hi, Kobi. Hi, Karine. So when I look at the RFPs from other auto customers that you're targeting other than the one you discussed, where are those in the process right now? How far along are they relative to the one you discussed previously?

I think in all of the programs that we are involved in, we are making progress, and the car manufacturers are making progress in parallel. The delays on selection are not related to our technology but more to the market itself and the ability of the OEMs to allocate the resources that they need for their programs. I think that the last few months, due to tariffs and other issues, have caused some delays in the decisions of the OEMs because it wasn't clear what would happen with the hardware they are purchasing and the manufacturing of the cars. Now I believe we are coming closer to agreement, and they understand what will happen, which should ease the decision process of the OEM.

Great. And then my other question is on China and the autonomous market with HiRain. Do you also have partnerships with the central auto processor companies that have traction in China? Is it NVIDIA or local vendors? And are you working with all those you need to for the solution to gain traction in China?

Yes, we are also working with Horizon Robotics, same as with NVIDIA, but basically, our channel there is HiRain. HiRain is also building their full stack for Level 2++ and eventually will be idle driving. They are using the central process, as well as our radar and cameras, to provide a full solution. HiRain is our channel to the robotaxi companies in China.

And Kobi, did I hear you on the call mention a timeline for volume ramp in China? It sounds like it might have been earlier, but I might have misheard that.

We didn't mention a specific timeline on the script, but it remains unchanged. We believe that by the end of this year, we will start ramping up production in China. The announcement from HiRain that they have a production-ready radar signifies that we are in the final stages. Whether the start of real mass production happens in Q4 this year or it slips a few weeks into next year, all necessary steps are complete.

Okay. Great. Appreciate all the color. Thanks, Kobi.

Our next question will come from Matthew Galinko with Maxim Group. Please go ahead.

Hey, thanks for taking my questions. First, maybe can you clarify— I think you mentioned you had a tape-out expense in the first quarter. What would be a reasonable R&D number to use for the balance of the year?

Hey, Matt. Our OpEx burn for the year is about $32 million, between $32 million to $34 million. Out of which, the R&D budget for the year could be about $25 million annually.

Great. $25 million annually. Got it. And then I guess as far as timing for North America, it sounded like it's maybe—did you say it was about a year behind Europe? So we would be looking at 2029 model years and maybe startup revenue in 2028. Is that a realistic timeline?

Yes. I think there are a few issues. All of the American companies had some challenges. GM had issues with Cruise that needed to be integrated within GM, generating delays. Ford faced similar issues with Argo. They are currently trying to stabilize and select their partners. GM just announced they are going with NVIDIA, which is good for us as a partner, and we believe that in the U.S., we will begin to see our revenues coming in 2028.

Got it. Thank you. Maybe last question for me, going back to gross margin expectations as we approach the beginning of the ramp in China and Europe. What should we expect from gross margin and that early ramp-up?

So gross margins during those early ramp-up years should be in the range of 50% to 60%, targeting about a 55% margin. However, during our first ramp-up year, with the first 100,000 to 200,000 units, we will have what's called the SAFE launch, which involves extra testing on each chip, and this increases costs, reducing margins to around 30% to 35% during this timeframe.

Great. Thank you.

Sure.

With no further questions, this will conclude our question-and-answer session. I would like to turn the conference back over to Kobi Marenko, Arbe's CEO, for any closing remarks.

Thank you, everyone. We are so pleased to have you join us today. For our employees and partners, your continued dedication is deeply appreciated. We look forward to updating you further on Arbe's progress in the coming months. Look out for updates as we prepare for several investor events, including the Ladenburg Tech Expo tomorrow, May 21 in New York, and the ROTH London Conference on June 25. We'd love to meet you in person for further discussion. Please contact us at [email protected] or visit our site to schedule a meeting. Thank you all.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.