Earnings Call Transcript - ARBE Q3 2022

Unidentified Company Representative, Moderator

Thank you. Good morning, everyone, and thank you for joining us. Please take a minute to review the forward-looking statement. In the third quarter, we made significant progress with our Tier 1 partners. In fact, we are excited to share recent news. We have received a mass production preliminary order from hiring for the next year, which officially marks the beginning of the next step of our best journey into the mass production phase. I will go over this in more detail shortly. Today, we would like to share with you a deeper understanding of Arbe's ecosystem and our strategy of focusing on Tier 1 is accelerating our progress. As many of you are aware, market conditions across the entire automotive industry are changing, causing some delays in customer launch plans. From the beginning, we made a decision to focus on driver assistance and safety while keeping a realistic vision for the future of full autonomous driving, which we believe won't be commercially available before the end of the decade. To improve our resilience in these market conditions, we are reducing our costs, making sure that we are prepared to adapt to the longer time frames of Level 2+ and Level 3 ramp-up. In the automotive industry, the Tier 1 suppliers do the heavy lifting of radar system development as well as tech integration for OEMs. The combination of Arbe's breakthrough imaging radar chipset with Tier 1's innovative technology results in an advanced radar system that we believe will provide unmatched safety to the industry. I want to share with you the perspective of some of our Tier 1 partners in their own words. After 5 years of extensive research among 40 radar chips and developers across the globe, Veoneer, a world leader in automotive safety, chose to partner with Arbe. The combination of Arbe's patented imaging radar chipsets and Veoneer's patented waveguide technology will push the boundaries of perception performance. We are honored to have been selected by Veoneer, who intend to provide the automotive industry with revolutionary radar-based solutions, ensuring unmatched safety and Level 2 plus and higher autonomy. Let's hear what Chris Van Dan Elzen, the Executive Vice President of the Radar Product Area, had to say about Veoneer's expectations from imaging radar, the role in the industry, and the added value of our base chipset.

Chris Van Dan Elzen, Executive Vice President of the Radar Product Area

My name is Chris Van Dan Elzen, and I'm the Executive Vice President of the Radar Product Area at Arbe. Veoneer is a world leader in automotive safety. We participate in the market segments of active safety and restraint control systems as a Tier 1 hardware supplier and systems integrator. We were founded in 2018 as a spin-off from Autoliv, and we have close to 70 years of automotive safety development. The radar portion of the year dates back to the early 1990s. We were one of the first to launch radar adaptive cruise control in 1999 with Mercedes and have built the product line up to having 16 customers around the world in every segment of radar from corners to front looking, rear looking. Veoneer is looking at this new segment that's growing in the radar world around imaging radars. We have been tech scouting this space for the past 5 years, looking at new technologies and start-ups that are bringing innovations in this space. After researching multiple companies and multiple approaches to the technology, Veoneer chose the Arbe chipset because of a couple of main points. One is the strength and the capability of this chipset to do unique use cases like trying to get through a toll booth, determining if it's occupied or the arm is down. In addition to that, the business model around being able to use their chips and create a unique radar for Veoneer really fits within our business model of being a Tier 1 and bringing that value to the OEM. In terms of the imaging radar market, we see this as an expanding new space. Customers today are implementing 3 to 5 radars per car in a base case just to meet the 5 Star program. Going forward, to be able to meet the use cases of having the vehicle do more and more levels of autonomy when you push that cruise control button, we see the need for imaging radars looking at great distances with great accuracies. The number of customers that are already asking for information about this, leading up to designs that will turn into requests for quotation, is numerous. And it's around the world. It's not one location or one segment of automotive. We're seeing this across the board. Arbe has just signed an agreement with Arbe to expand into this new and growing market. And we look forward to our time together sensing our space, our portion of this fantastic opportunity.

Unidentified Company Representative, Moderator

In a separate statement, Chris added, Veoneer is now passing 50 million radars produced, and we see the overall market growing to roughly $250 million per year by the end of the decade. As this market grows overall and the imaging radar segment of the market rapidly grows with it, we are looking forward to the journey together with Arbe. High-definition radar is an important part of advanced ADAS. Valeo, the world's leading ADAS Tier 1 player, has also selected our best chipset for its radar systems. We are very excited to be partnered with such a technological leader in areas that are at the heart of the transformation of the automotive industry and sustainable mobility across the globe. Valeo is a leader in the LIDAR market, and adding imaging radar to its offering contributes to a comprehensive sensor suite, which is highly important for OEMs. Martin Mandy, the Vice President of the Ranging Sensor Product Line of Valeo, shares a few thoughts about the opportunity for imaging radars and how the solution with Arbe’s chipset stands out.

Martin Mandy, Vice President of the Ranging Sensor Product Line at Valeo

My name is Martin Mandy. I'm working from Valeo. I'm Vice President for the product line, which is a global automotive supplier established almost 100 years ago. Valeo is operating in the mega trends of the automotive industry: electrification, ADAS acceleration, lighting everywhere, and material experience. Within ADAS, there are sensors required, and we are providing the sensors as a system. The radars that we're providing to our customers fulfill different needs depending on their requirements for automation. We provide side sensors, corner sensors, and front sensors to our customers. These sensors work in a system together with the other sensors that Valeo provides, like cameras, ultrasonic sensors, and LIDAR. Valeo operates globally and has sales of €17.3 billion in 2023, with 13,000 employees and operations in 31 countries. Valeo has shipped more than 20 million radar sensors to date and has 15 years of innovation in radar technology. We believe that Arbe has a specific innovative product with the chipset that we are using. The number of radars per car is significantly increasing, and radars play an important role in achieving functionalities that are not existing today but are in demand for tomorrow. Our ambition is to achieve 15% of global corner radar market share by 2030 and to be number 1 in HD radar market by 2032. The partnership with Arbe as a chipset provider places us uniquely in the market and can achieve great success together.

Unidentified Company Representative, Moderator

Valeo is a great Tier 1 partner, and we are honored to provide the chipset foundation for the radar solution. It is well known that China has the largest vehicle market in the world and is leading the way for an autonomous vehicle future. Another key Tier 1 relationship with the WF Group is helping us make great achievements within this critical market. WF is developing radar systems based on our technology and OEM requirements and has a radar manufacturing plant in China. This collaboration focuses on mass-market production, safety compliance, and providing customized imaging radar solutions to automotive OEMs and for autonomous vehicles, trucks, commercial vehicles, and traffic applications. We are pleased and honored to present the President of the Group, Mr. Zhu Yufeng, to describe the outlook on the market and the value of our joint solution.

Zhu Yufeng, President of WF Group

I'm the President of WF Group, established in 1958. We are a renowned Tier 1 supplier in the Chinese auto market, among the top 3 auto parts industry companies in China and also listed in the top 100 publicly available companies in the Chinese stock market. We now have 21 subsidiaries and 2 joint ventures with nearly 8,000 employees worldwide. The group is a well-profitable public company, with revenue reaching TWD 1.36 billion in 2021. From the beginning, we have adhered to continuous technology innovation and product upgrading. The group has 4 major business segments, which are commercial power, hydrogen energy, intelligence and electrification, industrial, and others, forming a competitive industry chain of auto products. We believe our next generation imaging radars designed with Arbe's chipset, which uses multiple transmitting and receiving channels, will deliver unparalleled performance by leveling thousands of channels, providing a customized imaging radar solution to passenger and commercial vehicles as well as topical applications at a competitive price. Telenet is one of our new business strategies, in which we aim to build groundbreaking radar systems. After extensive market research, we found that Arbe has the most advanced solutions. This is why we chose to work with Arbe. Last year, there were significant vehicle sales in China. We estimate that there will be numerous bidding vehicles manufactured with the radar here in 20 cities. Almost 40% of new vehicles will be equipped with our solutions, of which 20% will use next-generation imaging radars. We believe that through cooperation, our solution will assume a leadership position with a 15% to 20% share in the market in the future. Related to my earlier statements, we believe our partnership with WF will enable us to provide unparalleled safety levels to vehicles and become one of the leading next-generation radar providers in the Chinese market.

Unidentified Company Representative, Moderator

The last key partner I will introduce today is Hiring Technologies, a leading Chinese ADAS Tier 1 supplier. As I mentioned earlier, Hiring has placed a preliminary order for 340,000 chipsets for Q3 2023 until the end of 2024, which marks the beginning of Arbe’s mass production phase. In Q3, we announced that Hiring was selected by the Port of Resha in Shandong province to provide perception radars based on Arbe’s chipset. This announcement is significant because trucks require the highest standard of safety and there is a huge need for advanced sensor solutions due to their collision records and the high risk associated with the size of commercial vehicles. As we reported in Q2, Hiring announced that it is undertaking major OEMs and autonomous driving projects with our radar solution and has projected reaching mass production next year. Our connections with each and every Tier 1 partner broaden our outreach and accelerate our path to market. We thank all of our Tier 1 partners for choosing and trusting Arbe and for working hard to secure customer wins. As we mentioned last quarter, our Linx RADAR is the industry's first imaging radar. Linx addresses a significant market need for 360-degree long-range high-resolution sensing at an affordable price. During the third quarter, Linx won the AutoSense Award for Hardware Development of the Year. We view this award as strong market recognition for our technology, and we are confident that this will enhance our market position. As we look to the fourth quarter, we are proactively adjusting to changes in the market, and we believe we are prepared for any global uncertainties. Most importantly, we believe that our focus on ADAS and safety will prove to be the right strategy, and our relationships with Tier 1 will drive success. Now, I'd like to turn it over to our CFO, Karine, to go over the financials.

Karine Pinto-Flomenboim, CFO

Thank you, Kobi, and hello, everyone. Let me review our financial results for the third quarter of 2022 in more detail. Total revenue in the third quarter was $1.3 million compared to $0.6 million in the third quarter of 2021. Backlog as of September 30, 2022, was $0.3 million. This does not include the recent Hiring preliminary order. Gross margin in Q3 2022 was 72.5% compared to 30.3% in the same period in 2021. The gross margin increase was primarily related to economies of scale, revenue mix, and lower cost per unit as we progress toward production. Moving on to expenses. In Q3 2022, we reported a total operating expense of $11.8 million, an increase from $8.5 million in the third quarter of 2021. The increase in operating expense was primarily driven by non-cash share-based compensation expenses, labor cost increases, and, to a lesser extent, expenses associated with being a publicly traded corporation, partially offset by a decrease in research and development material expenses. Net loss in the third quarter of 2022 was $9.9 million, which included $1 million of financial income compared to a net loss of $13.3 million in the third quarter of 2021, which included $5 million of financial expenses. Q3 2022 financial income resulted from interest from deposits and favorable exchange rate revaluation, partially offset by warrant revaluation expenses. Looking at adjusted EBITDA in Q3 of 2022, a non-GAAP measurement, which excludes expenses for non-cash share-based compensation and for nonrecurring items, was a loss of $8.4 million compared to a loss of $8 million in the third quarter of 2021. Moving to our balance sheet. As of September 30, 2022, Arbe had $63.2 million in cash and cash equivalents with no debt. With respect to our guidance for 2022, we would like to update our forecast based on recent market changes. Revenue is expected to be in the range of $4 million to $7 million. At this stage, our revenue is based mainly on sample sales that can shift between quarters. Despite this revenue reduction, adjusted EBITDA is expected to remain in the range of a $34 million loss to a $38 million loss. As Kobi said, we are actively taking certain measures to adjust to market changes, adjusting the timeline of production, reducing costs, and keeping our focus on ADAS technologies with our Tier 1 partners. We believe that our strong balance sheet and adjusted cost structure will support our progress until market conditions have stabilized. Now, please join us for a chat on the state of the automotive industry in light of the changing market conditions with Filo Khislavsky, a member of our Board of Directors. Filo is an executive adviser focused on technology strategies in the automotive and smart mobility markets. He previously founded Porsche Digital and served as its CEO. Before Porsche, Filo founded and served as Vice President of the Automotive and Smart Mobility practice at Gartner. Filo, we're thrilled to have you with us. Okay. So thank you, Filo, for joining us today and for this conversation about the state of the industry.

Unidentified Company Representative, Moderator

Thanks for having me, first of all. It's an interesting time for the automotive industry. The industry always goes in cycles; there's nothing new. Right now, I would actually say that the auto industry is still in a very positive operating mode. Why? Because for the most part, most companies still make good money in the automotive industry. They have attractive products that they're launching and selling. They are highly optional, meaning their margins are pretty high, and there's still a lot of pent-up demand from the pandemic that occurred over the last 2 years. So that's all good news for the automotive industry, and cars are highly desirable for consumers again. Of course, at the same time, we do see a little bit of clouding on the horizon, particularly with regards to sentiment that isn't clear from a consumer demand perspective, how it will evolve over the next couple of years, maybe even a couple of months. And, of course, there are the economic challenges that we're facing everywhere, including inflation, which is causing interest rates to go up, making it more expensive to buy a vehicle loan in the automotive industry. And of course, there is a consumer concern about used car values, which are beginning to soften a little bit. Most people trade in their used vehicle to get a new car, etc. So there are some clouds on the horizon, but overall, I think the auto industry is still in pretty good shape. In this industry, what is the status of the ADAS from NAND and from autonomous vehicles on the other hand? We are hearing about Robotaxi companies like ErgoAI shutting down. On the other hand, companies that are mainly based today on ADAS, like Mobileye went public, and their share price increased. What do you think about the status of ADAS versus automotive or full autonomous driving? That's a really important question, actually. I hope I can shed a little bit of light on this whole thing. To me, this is not surprising what's happening in the industry. Every time there's a new technology, it goes through a maturity cycle. Those cycles typically imply that there will be a consolidation in terms of R&D activities as well as market consolidation in the industry. The company Gartner has a term for this; they call it the hype cycle. You have an initial technology trigger, then you have overinflated expectations, which then go to the other extreme, followed by the slope of enlightenment, culminating in a plateau of productivity where the technology matures and provides real value. What's happening right now with regards to ADAS and autonomous vehicles follows that line. However, there's an important distinction to be made between both of these areas: ADAS and autonomous vehicles, which the latter means the merging of all of these ADAS technologies into something that might eventually lead to a self-driving, or even driverless, vehicle at some point. People had high expectations, and it takes a long time to figure these things out; it's highly complicated. As we progress towards the goal of self-driving cars, there will already be value presented to consumers, the automotive industry, and society at large. It's important to really differentiate between both of these areas going forward. So where would you place ADAS on the plateau side of the Gartner hype cycle, and autonomous driving on the trough today? Definitely. I see that autonomous vehicles are at the bottom of this trough right now. We are entering this trough quickly, which was expected; there were way too many companies doing the same thing, and not everyone can succeed. I see ADAS as being much more progressed in a positive way. ADAS technologies are already relevant today; they provide value to consumers and the industry. I anticipate that over the next 3 years, particularly advanced sensor technologies like imaging radar technology will come to a price point and capability point where they offer reliability and value, which the industry will increasingly use to provide better ADAS functionality and applications to consumers. That's a big deal. As we're all pursuing the self-driving car, in the meantime, there are real technologies that provide real value today and tomorrow. By the end of this decade, I anticipate that every vehicle will at least have some basic form of ADAS capabilities. Consumers are expecting that, and it presents an upsell opportunity for the automotive industry. Self-driving cars will take longer; I also believe that by the end of this decade, more people will at least occasionally experience self-driving technology, maybe even driverless technology, likely on the trucking side, commercial vehicles on highways or through delivery bots. It's not going to be something we'll experience every day, but that was an overinflated expectation in the beginning. The technology is definitely evolving; the ADAS side is maturing well, and I think it's important to understand that. Technology is maturing in a good way, and it will be democratized, meaning more vehicles will have this technology by leveraging new electronic architectures launched by mid-decade. This is significant, and it would be a mistake to lump ADAS in with self-driving vehicles in a negative light. This poses a challenge both from an innovation perspective and from a market perspective. Thank you, Filo, for this perspective, and thank you, everybody, for listening to us. We are happy to take your questions now.

Operator, Operator

We'll take the first call from Josh from Cowen. Josh is here with us.

Joshua Buchalter, Analyst

Thanks for the forward presentation. I guess to start, can you walk me through what's changed materially from your perspective over the last few months that is driving the guidance down? And most importantly, how do you feel about the long-term outlook and some of the revenue projections you had given previously for, let's say, the middle of the decade given the changing environment?

Unidentified Company Representative, Moderator

In Q4, we have noticed a change in the timing of some orders for preliminary samples from our customers across the quarters. As you are aware, in 2022, our revenues did not stem from full production, which we anticipated would begin in the second half of 2023 as we started production in China. With the recent announcement regarding hiring, we expect our initial revenues and early civil production to originate from China. The next step is to secure contracts in Western markets, which we anticipate will occur in Q1 and Q2 of 2023. These contract wins are expected to enhance our revenues by the end of 2024 and into 2025.

Joshua Buchalter, Analyst

Got it. So I think you had previously communicated September to March as a time frame when you would expect to gain clarity on some proposals. Is that still the right time frame, or does it seem like it might be slipping into the second quarter?

Unidentified Company Representative, Moderator

Yes, first quarter and second; yes. What we saw in the last quarter is that most of the OEMs shifted their selection and delayed a bit their selection. Some of them not meaningfully, but some decided to skip to the next year model and to stay with the current low-end radars that they have today and to reselect, reevaluate the radar replacement in the second half of next year, but the majority of the selection has moved to Q1 and Q2 ‘23.

Joshua Buchalter, Analyst

Okay. And then my final question. Veoneer, can you walk me through how that came about? How material of an expansion of the opportunities is that win? And when would you expect that to start contributing to revenue?

Unidentified Company Representative, Moderator

Yes. First of all, Veoneer is one of the largest players in the radar market, the third player in this market, selling today 50 million radars and expecting to reach 200 million radars by the end of the decade, shifting from current radars to imaging radars in the future, a significant shift. We see Veoneer as a main player; they were the first company to introduce ADAS adaptive cruise control based on radar to Daimler to Mercedes, and they remain one of their best customers. We definitely see Veoneer as a major win. The fact that they are basing their entire next-generation radar suite on our chipsets is a significant win for us. They will go to production by the end of '24, early '25. It's aligned with our expectations. We will need to supply them with chips before they are in full production mode. So the second half of '24 is in line with our original plan for the Western market.

Operator, Operator

Thank you, Josh. Now we'll turn to Suji. Suji from ROTH.

Suji Desilva, Analyst

On the progress here, I had a question specifically about Iran. I was curious for the unit forecast you gave here, is that a relatively linear progression through '23-'24, or will it be more back-end loaded?

Unidentified Company Representative, Moderator

It will be back-end loaded, but it won't be linear. It will progress as we head towards the back end as stated, but it's starting strong.

Suji Desilva, Analyst

That's great, fantastic. And you put out this forecast there; it seems like with the high range you're working with, not just automotive but also trucking and the ports, is there potential upside to this number you've given as more customers come on later?

Unidentified Company Representative, Moderator

I think for '25 and '26, definitely. For '23 and '24, it's already a very good number. We're supporting them and working hard to ensure they will be in production on the timeframe they want to achieve, which I believe is in line with their automotive customer expectations. There might be upside towards the end of '24, but those are just the beginnings. Assuming that '24 numbers will be on time, I think in '25 we will see even better performance from Hiring. They are just one of our partners in the Chinese market.

Suji Desilva, Analyst

And then, maybe for the strong gross margin in the quarter. Were there some one-time elements to that? What’s the ongoing opportunity in gross margin?

Unidentified Company Representative, Moderator

Yes, primarily one-time elements driving the revenue mix, as we noted, since these are still early revenues and valuations. They are not really predictive of margins in future production, and they're fairly highly favorable margin-wise. We anticipate being behind the 60% margin in mass production, so I think that's the current margin outlook.

Operator, Operator

Thank you, Suji. Gary will be joining us from Fargo. We cannot hear you, Gary, for some reason.

Gary Mobley, Analyst

Hello, everyone. I was hoping you could provide an update on where you stand with your foundry partners in their ability to support your ramp when the day comes for commercial volumes.

Unidentified Company Representative, Moderator

Great. I'm visiting the fab this week to see our facility there. We have the entire testing facility, and it's working; the chips are in their final stages of full qualification. All required testing facilities and equipment needed for full production are already there. Our team and GLOBALFOUNDRIES are improving test time to ensure we can test the chips at the needed capacity. On the side of the fab itself, we've secured the capacity needed for our current customers. The reason for Hiring to give us this purchase order is to ensure they have the capacity for '23 and '24, and we are working closely with our other customers to obtain their purchase orders for '23 and '24. So we'll be able to secure the necessary capacity.

Gary Mobley, Analyst

Thank you for that update. For my follow-up, I wanted to know to what extent your outlook, long-term forecast for fiscal year '23 and '24, factors in any interruptions that may exist in your China customer base due to COVID mitigation or geopolitics related to U.S. export restrictions?

Unidentified Company Representative, Moderator

Firstly, regarding U.S. export limitations, there are currently no limitations on the technologies or chips we are selling as long as Intel can sell their chips for computers and TI can sell their chips for radar. As an Israeli company, a non-American company, we believe there won’t be any problems, and that is the case at present. It's important to note that Hiring has facilities outside of China that support customers who aren't Chinese or serve their Chinese customers producing cars for export. Consequently, not all revenues will directly come from China; some will go to production in the U.S. or Europe. Regarding '23 and '24, we see that we are largely in line with our plans. However, we do see a bit of a shift in the Western world that could influence our longer-term outlook. Additionally, we see delays in non-pure automotive sectors like delivery robots and trucks; it's currently affecting our short-term forecasts but was not a significant part of our overall story for revenues in '25 or '26. For now, we need to see what our expectations for '23 hold from our customers, as many aren't like automotive customers who provide focus forecasts.

Gary Mobley, Analyst

Thank you both.

Operator, Operator

Thank you. Now Matt from Maxim will join us. Matt?

Matthew Galinko, Analyst

I wanted to discuss your efforts in reducing costs in the current environment. Can you provide more details on where you identified opportunities for cost reduction? Are you focusing on trimming down engagements or is it related to ADAS? Any insights would be appreciated.

Unidentified Company Representative, Moderator

Yes. Since the beginning, our primary focus was on ADAS. We've always believed in an evolutionary approach rather than a revolutionary one. The technologies will start with Level 2, Level 2 plus, then transition to Level 3. In parallel, we expect Level 4 to ramp up by the end of the decade. Our main focus has been on traditional ADAS, where we believe that 90% to 95% of the revenues will come from. We announced the Auto-X win a few months ago; Auto-X is today the largest player in the Chinese market. They remain one of the few players in this market as many robotaxi companies have shut down. We are supporting them to showcase that our technology has a long way to go also to Level 4. In terms of revenues, ADAS has been our main focus from the start. As time goes by, we see that this strategy aligns well with our goals, as full autonomy and robotaxi ventures will take longer than anticipated.

Matthew Galinko, Analyst

As a follow-up then, specifically, how are you identifying opportunities to cut costs? What does that look like as we move into Q4? Could you speak to expenses for early 2023?

Unidentified Company Representative, Moderator

We are closely reviewing our cost structure, implementing steps to optimize our capital structure. We aim to run at breakeven for a longer period; we're securing a credit line to ensure financial stability if needed, though not immediately. We're examining every aspect of our costs to enhance efficiency and reduce costs directly related to production. Generally, our expenses in '23 will be lower than in '22. We have reduced costs across the board, from headcount to other contractors and expenses. We are optimizing our costs to ensure adequate cash flow for over 2 years, even without revenues. Our expected revenues and initial purchase orders should support us well.

Matthew Galinko, Analyst

I believe it was last quarter that we discussed restructuring your engineering team. I think it was a two-team structure that you may have adjusted to improve efficiency. Is that restructuring contributing to lower costs in the near term? Was it an operational change? How has that worked out so far?

Unidentified Company Representative, Moderator

So far, yes, the restructuring has been beneficial. It has improved our ability to bring silicon into production and support our customers in telecommunications. We currently have six different customers with their radar systems fully operational; this achievement is due to this new focus. It has significantly enhanced our capabilities and provided some cost-saving benefits. However, the primary reason for the restructure was to enhance our focus on production capabilities.

Operator, Operator

Thank you. Now we have Jamie from RF. Jamie, can you hear us?

Jaime Perez, Analyst

I think there’s been a bit of a delay; sorry for the phone-only connection. You mentioned the orders will be lumpy - not linear. What about the backlog? How are you going to be booking backlog? I know it's going to be significant. Will it come in multiple tranches, or just one large order into backlog?

Unidentified Company Representative, Moderator

It will be broken down into multiple tranches by customers and OEMs. We also get split purchase orders based on their forecast for the next 6 months. The message is that the backlog will indeed grow, and as mentioned in our press release, our current backlog does not include Hiring's preliminary order.

Jaime Perez, Analyst

Right. Okay. And the second question is a comment: Congratulations on partnering with Veoneer. That's a major player, and they were looking to be acquired by Magna. It's a good foothold into the Western market. So, congratulations on that accomplishment.

Unidentified Company Representative, Moderator

Thank you, everybody. We are very pleased to have you join us today. To 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, as well as hosting a booth at CES. We'd love to meet you in person for further discussion; please contact us at investor@arbe.com or visit our site to schedule a meeting. Thank you all.

Operator, Operator

Thank you.