Innoviz Technologies Ltd. Q3 FY2023 Earnings Call

Good morning. This is Rob Moffat, Vice President of Corporate Development and Investor Relations at Innoviz, and I want to welcome you to our earnings conference call. Joining us today are Omer Keilaf, Chief Executive Officer, and Eldar Cegla, Chief Financial Officer. I would like to remind everyone that this call is being recorded and will be available on the Investor Relations section of our website at ir.innoviz.tech. Before we begin, I want to remind you that our discussion today will include forward-looking statements that are subject to risks and uncertainties regarding future events and the financial performance of Innoviz. Actual results could differ significantly from those anticipated in the forward-looking statements. The forward-looking statements made today reflect our expectations as of today, and we have no obligation to publicly update or revise them. For a discussion of important risk factors that could cause actual results to differ materially from any forward-looking statements, please refer to the risk factors section of our Form 20-F filed with the SEC on March 9, 2023. I will now turn the call over to Omer. Please go ahead.

Thank you, Rob, and good morning everyone and thank you for joining us. Before we begin our business commentary, I wanted to spend a moment on the situation in Israel. The safety and security of our employees is of the utmost importance, and I can report that everyone at Innoviz is safe. With a small portion of the local workforce serving in the reserves, the rest of our team has stepped up to cover what is needed, and I want to thank them for their incredible fortitude at this challenging time. Innoviz was able to remain open with no meaningful operational impact. As a reminder, we are located in the center of the country, a good distance away from the conflict zone. All of our automotive customers are located outside of Israel, and our high-volume manufacturing sites are in the United States and Germany, with a third planned for Asia. Determined to not let the situation slow us down, during the week of the attack, we achieved an important milestone on time, delivering the final SOP version of the perception software for the BMW 7 Series launch. We worked closely with the teams at Magna and BMW to complete testing and lock the final version of the software that will be installed on the vehicles in the coming weeks. Since then, we've also delivered on milestones for the Volkswagen Group program and the BMW Gen 2 program, all while managing audits, testing, and negotiating with multiple OEMs in our RFQ pipeline, and staying on track to deliver record revenues for the fourth quarter. With that said, let's turn to our BMW SOP. In the early weeks of the third quarter, we moved forward on a very important milestone in our company's history, moving into SOP with our BMW Gen 1 program. The components are shipped to Magna for final assembly at a plant in Michigan and then head to BMW for installation on the 7 Series. And as I mentioned earlier, we also locked in the final SOP-ready version of our AI-enabled perception software and shipped it on time to BMW as well. We've been pointing to the back half of 2023 launch for a while. So to get to this phase is a huge win, and I believe we are building a track record of credibility that includes delivering on our goals and timelines. I mentioned this on the last call, but we still get a lot of questions from investors on BMW's plan for LiDAR and Level 3 driving. In August, a wonderful article and video by BMWBLOG summarized BMW Group's plan for the Level 3 7 Series. In the video, you can see the car driving seamlessly through a variety of scenarios and hear more about BMW's plans and timeline for deploying the technology. If you haven't watched it yet, I encourage you to go to BMWBLOG.com or search for it on YouTube. As we go through the rest of the year, I'm sure you will continue to hear more details about BMW's strategy for automated driving. I also suspect you will see a growing amount of media coverage on the vehicles, particularly as they start to arrive in dealerships and get on the road. We continue to expect vehicles on the road later this year. We will also be amplifying this huge milestone on our end, particularly at CES, where we plan to have a version of the LiDAR-enabled 7 Series at our own booth. If you're going to be in Las Vegas for the show, we would love to have you stop by. While the 7 Series was always planned to be our initial flagship launch for the InnovizOne, we've said in the past that our technology was certified on several models and variants within the BMW Group, and our efforts are now shifting towards integration with additional models. We hope to be able to update you with more developments on this topic in the coming quarters. Moving forward on this important program is a source of great pride at Innoviz, not only internally but also externally. It sends a strong signal to other OEMs that we can reach SOP and hit our goals and milestones. It also further differentiates us from our competition. There are several other LiDAR companies out there claiming to compete with us in the automotive LiDAR space, but some don't have even a single series production award yet, and some have awards but have yet to execute on SOP-related milestones. From our experience, those who haven't executed on these milestones don't even know how much they don't know at this point. As we transition from SOP preparation to steady-state manufacturing, it frees up a lot of bandwidth, both physically and mentally, enabling us to concentrate even more of our efforts on winning the next rounds of business that are currently in our RFI and RFQ pipeline. The other program that we have that is moving into SOP is our Shuttle program. As a reminder, this is a full Level 4 program. The customer is a leading automotive supplier who is building this vehicle directly in order to become an early leader in the rapidly growing autonomous shuttle market. We expect this program to be a fully driverless electric vehicle capable of carrying over 20 passengers and the ability to operate 24 hours a day. The earliest applications are likely to be people movers in environments like airports, college campuses, private communities, and corporate campuses. But the shuttle is also expected to be capable of operating in mixed traffic and dedicated lanes. This opens it up to urban centers and possibly even suburban environments where it could become a lower-cost or much more flexible alternative to legacy public transportation models. The public transportation operating model has barely changed since the move from trolleys and cable cars to buses nearly 100 years ago. This is an end market that we believe is primed for disruption through automation. In the initial stages, the shuttles can complement existing bus and train transportation systems, possibly linking different modes of transportation together or connecting otherwise uneconomical routes. Over time, it’s not hard to imagine the autonomous routes increasingly displacing the legacy routes as adoption grows. This secular growth opportunity could also extend to the other Level 4 program that we are working on, the light commercial vehicle program that we announced during the first quarter, which remains on track for a mid-decade SOP with a healthy growth in samples between now and then. Another thing to keep in mind with these Level 4 programs is that they utilize multiple LiDAR units. Most Level 4 typically deploy anywhere between three to six LiDARs per vehicle. In fact, the shuttle program that we're SOP'ing later this year initially planned for four LiDARs per vehicle, one in each corner of the shuttle. But they have since moved to a six-LiDAR design after incorporating two additional units on the sides for a wider field of view. Not only does this increase the dollar content per vehicle, but it also shows the flexibility of what our LiDAR can bring to the table, ranging from ultra long-range forward-facing LiDAR to wide field of view mounted LiDAR and anything in between, with only a minimal change to our hardware or software. While we are on the topic of growing content per vehicle, I wanted to offer a little more insight on the second-generation program that we are developing for BMW. Last quarter, we shared that we have begun developing a new second-generation platform built around the InnovizTwo sensor and our AI-enabled perception software stack. We also spoke in detail about how we have the potential to meaningfully grow our software content and dollar value. This quarter, I wanted to provide additional clarity on what the overall change in content per vehicle could look like. A key part of our long-term strategy is to drive the price of the LiDAR sensor lower in order to increase adoption rates. Tailwinds from potentially rapid increases in volumes as we move up the S-curve have the opportunity to be a significantly positive net contributor to both revenue and profit lines. As we drive sensor costs lower, our goal is to continue to drive content per vehicle higher by expanding into new product categories. To articulate this point, I think it would be helpful to compare how our business model and content per vehicle have evolved over time. In the first-generation program with BMW, we were operating as a Tier-2 supplier, selling only components to Magna, not a full LiDAR to BMW. Magna takes those components, integrates them into other parts of the hardware, and then sells the finished LiDAR to BMW. We were only capturing a portion of the total system value, around $600 to $700 per vehicle. Since winning that contract in 2018, we've undergone two transformative changes. First, we transitioned from a Tier-2 supplier to a Tier-1 supplier, capturing a much larger portion of the economics and moving from selling components to selling full systems. This transition also increases the amount of non-recurring engineering, or NRE revenues, available to us. The second transition was moving from InnovizOne to InnovizTwo. Thanks to several technological and engineering breakthroughs, we moved from a design built on four lasers and four detectors to a design built on a single laser and single detector. This, along with other changes, resulted in a bill of material (BOM) that was roughly 70% lower than InnovizOne. This was a massive reduction in cost, and these changes were a key catalyst for our Tier 1 design win with Volkswagen in 2022 and the subsequent acceleration in commercial activity we have seen since then. Despite the 70% reduction in material costs, we were still able to grow the total content per vehicle into the $500 to $1,000 range, thanks to our pivot to being a Tier-1, which enabled us to capture the full system value. Looking ahead, we believe we can use the Gen 2 system we are developing as a potential template for our future programs. Here, we would continue to leverage the 70% lower BOM from InnovizTwo to drive higher LiDAR adoption while pairing it with a more robust version of our perception software and all-new products like the InnovizCore AI Compute Module and the Minimum Risk Maneuver software. By providing more value and functionality to customers, we believe we can get the content per vehicle nicely over the $1,000 mark while also increasing our mix of higher-margin software revenue. We are very focused on making this template for future customers. Next, I want to give a quick update on Volkswagen. Overall, our program with VW continues to progress nicely, and the sensor suite for the initial program continues to evolve. We moved from the A-Sample to the B-Sample back in March, and we continue to test and fine-tune within the B-Sample stage. Having released our new B2.0 sample this quarter, each new version unlocks incremental levels of performance, functionality, industrialization, and the newest version is based on our second-generation custom ASIC. Last quarter, we shared that we completed the tape-out of the ASIC. The new chip has two key benefits. The first unlocks a configuration that enables much greater range, taking our maximum detection from 300 meters to 450 meters, and the second is that it can support a much higher resolution. The more powerful chip enables us to produce millions more points, nearly doubling the total number of points we can process per second. This can power a higher density point cloud with even better resolution than before. Continuous improvements like this in both our sensor and software suite are aiding our conversations with OEMs. With Volkswagen specifically, we are in advanced discussions exploring the potential addition of multiple platforms that would be incremental to our initial series production award. We hope to have more to share on this in the coming quarters. But as I always say, video speaks better than words. I'm excited to share with you some early point-cloud footage from the new ASIC. Last quarter, when I shared the update, we said that we hope to get close to high-definition camera-like levels of resolution with the added benefits of true 3D dimensional LiDAR-based mapping. As you can see in the video, we're essentially there, and this is still an early version of the point cloud. We are confident that it will only continue to improve from here. We are working quickly to bring this new level of functionality into the hands of our customers and prospects. Customer interest has been strong, and InnovizTwo shipments were 102% up quarter over quarter in the third quarter. Keep in mind, the benefits aren't just on the sensor side. The dramatically higher range and resolution translate into more points of data. That data is what fuels our AI tools, including the neural networks that are a critical part of our software development. Faster neural network training translates into better perception software, and better perception software unlocks new features like enabling vehicles to travel at higher speeds or operate in more complex environments. Continuous improvements in both our sensor and software suite are a big part of why we are seeing so much commercial momentum, including in our RFI and RFQ pipeline. As a reminder, we had a record number of programs move from the RFI to the RFQ process in the first quarter of ’23. Now, over half of the 10 to 15 programs in the pipeline are in the RFQ stage. There are big differences between the RFI, request for information, and an RFQ, request for quotation. An RFI is a much less structured process. We’ve seen some programs remain in the RFI stage for over two years, while others have transitioned to the RFQ in less than six months. At the RFI stage, OEMs may just be testing systems, performing R&D activities, collecting data. Typically, the programs are working towards a production launch, but they don't move into the RFQ stage until a clear decision to move forward with the program has been made. At that point, the OEM has typically fully decided that the vehicle is going to series production, committed to a timeline for production, and decided the vehicle will include a LiDAR. The OEM dedicates costly resources to the program, including entire engineering, supply chain, finance, and product management teams. This represents a meaningful investment from the OEM, and it’s a much more tangible signal of a commitment to that program. The recent increase in RFQs we have seen in ’23 appears to signal that the LiDAR industry is maturing and the Level 3 autonomy mega trend is beginning. We believe it’s solid evidence that OEMs are increasingly in a race to deploy the technology. Failure to stay ahead of the curve, particularly for luxury brands, runs the risk of potentially competitive irrelevancy and resulting market share losses, which could damage a brand long-term. It also risks missing an important source of profit in the transition to recurring revenues for OEMs. Missing the opportunity to deploy a must-have consumer tech like Level 3 autonomy may not only lead to lost volumes and market share, but could also translate into lost profit from advanced features. Many of the OEMs that we talk to are seeking opportunities to grow their recurring revenue streams, with vehicles lasting increasingly longer, and with EVs potentially driving that trend even further. It appears the OEMs are eager for opportunities to complement their one-time sale with recurring revenues. The industry has found some success with products like telematics and connectivity, but in my opinion, the best opportunity for recurring revenues lies in monthly subscriptions for autonomous driving packages and the ongoing over-the-air software that will underpin them in the future of software-defined vehicles. I believe this has been a driving force behind multiple OEMs pivoting from RFIs to RFQs more or less simultaneously. There seems to be a growing fear of missing this opportunity — this potentially massive mega trend. Essentially, it is corporate FOMO. If you look at our RFQs, the majority of the programs are with a top 10 global OEM. This provides a lot of shots on goal for us. We don’t need to win them all. We already have BMW and Volkswagen Group as customers, and they collectively represent 15% of global automotive production. We believe that securing just one or two more major OEMs as customers could give us a substantial lead in what we expect will be a winner-takes-most market. These programs converted to RFQ at different points and are advancing along different timelines. All programs have moved into various phases of audits surrounding technology, focusing on quality, software, supply chain, and more. The first phase typically revolves around the product itself, focusing on the sensor and software suite. There can often be a point in the middle where two, or at most three players are short-listed, and the focus shifts from technology to manufacturing strategy and operations. Within the RFQs group, three of the programs are moving faster, having completed financial audits and certification for high-volume manufacturing in early fall. These programs have since moved into the final stage, which includes definitive price negotiations and detailed planning of post-nomination milestones. This was a crucial factor behind our capital raise in August. When we look at who we are competing against in these RFQs, it’s not the early-stage LiDAR pure-play companies most investors typically assume; instead, it’s more established Tier 1s. While they try to compete on their operating history, we compete on technology, which is a matchup we welcome because we often hear from customers that our technology is superior. We've won against these larger Tier 1s before and we're confident we can do it again. With that in mind, it was important to keep the bidding process focused on our technology advantage, which is why we undertook the capital raise. It was successful in accomplishing three critical objectives: Firstly, it raised an additional $65 million, giving us an even longer cash runway. Secondly, it demonstrated continued support from our largest existing institutional shareholders. Lastly, it allowed us to progress into the final phase of several RFQs. As a marker of our confidence, several of us participated in the deal. My co-founder, Oren Buskila, and I both bought stock during this transaction, and our Chairman of the Board, Amichai Steimberg, made an open market purchase the week after. We are heavily invested in Innoviz alongside you. We are confident that if we win even one or two of these deals, the long-term outcome will justify the short-term volatility. Looking at the LiDAR industry, we believe our next few deals have the potential to permanently shape the industry. You’ve heard me mention the flywheel effect before. We believe that in this industry, wins will lead to more wins. This is critical technology, and each time an OEM selects us as a partner, it sends a confidence message to other OEMs, making it easier for them to choose Innoviz. Each win carries tremendous signal value. Secondly, we already have series production awards with two out of the three main autonomy platform providers, and we are currently reporting an RFQ with the third. Being integrated into the platform software makes it less costly and risky for OEMs to choose us as their LiDAR vendor, speeding their time to market. Lastly, more wins lead to higher volumes, enhancing our purchasing power and lowering unit costs. You can already observe early proof of this flywheel effect for us. After winning BMW in 2018, we took over three years to win our next production award, and it took a full year to announce the next one. The pace of activity has clearly accelerated in the past year. If we can finalize these advanced-stage RFQs, it will offer even more evidence that the flywheel effect is working in our favor. Turning to our 2023 targets, we have already raised portions of our guidance twice this year. In the first quarter, we raised the high end of our targets for additional programs from existing customers following the light commercial vehicle announcement. In the second quarter, we increased our revenue guidance following enhanced visibility into higher volumes and NRE revenues. We also increased the upper end of our net new NRE bookings range based on progress seen in our RFQ pipeline, alongside the scope of the NRE awards quoted on rapidly advancing programs. Today, we are reiterating our targets, including guidance for 2023 revenue of $15 million to $20 million, representing year-over-year growth of 150% to 230%. Coming into the year, we indicated that revenue would reach its lowest point in the first quarter as our BMW program pricing transitioned from sample pricing to production pricing, resulting in a significant decline in initial ASPs, offset by higher volumes in later quarters. Following this pricing reset, we anticipated strong sequential revenue growth, particularly in the year’s second half as we approach SOP and unlock NRE revenues. Revenue grew 45% sequentially in Q2 and surged 138% quarter-over-quarter in Q3. If you take our $15 million to $20 million revenue target range and subtract the year-to-date revenue of around $6 million, it implies fourth-quarter revenue in the range of $9 million to $14 million. At the midpoint, that would represent roughly 230% quarter-over-quarter growth and over 600% year-over-year growth. This has the potential to not only be our largest quarter ever but also surpass any of our prior full-year revenue numbers. I assert this not only with pride in our delivery but also as evidence of our commitment to fulfilling our promises. We claimed that Q1 would be the trough, delivered two quarters of robust sequential growth, and are now on track to deliver our largest quarterly revenue figure ever. With that, I will hand the call over to Eldar.

Thank you, Omer. Good morning, everyone. Starting with cash, we ended Q3 2023 with approximately $164 million in cash, bank deposits, marketable securities, and short-term restricted cash on the balance sheet. With our cost structure being largely mature, our operating cash outlays remained mostly stable during the quarter on a normalized basis. We did defer roughly $2.9 million of R&D expense due to booking NRE revenue. While this drove lower-than-normal operating expenses in Q3, we expect to recognize the deferred expenses in the coming quarter as COGS. At a higher level, on a normalized basis, our cost structure has been mostly flat since the second half of 2022. The bulk of the growth in our cost structure occurred during our transition from a Tier 2 to a Tier 1 supplier relating to the Volkswagen Group award in 2022. As we have stated before, with the transition to a Tier 1 mostly behind us, we do not expect material increases in our cost structure. One factor contributing to this flexibility is our transition to SOP with the InnovizOne. As this program moves from development stages to high-volume manufacturing, it frees up headcount to work on the RFQ pipeline or the InnovizTwo SOP. This gives us meaningful flexibility moving forward without the need to significantly increase our fixed costs. Moving to the income statement, Q3 2023 revenue was $3.5 million compared to Q2 2023 revenue of $1.5 million, delivering a 138% quarter-over-quarter increase. On a year-over-year basis, it compares to Q3 2022 revenues, which were impacted by our headquarters move, of $0.9 million, demonstrating nearly 300% growth year-over-year. Operating expenses for Q3 2023 were $27.8 million, down from $31.3 million in Q3 2022. The 2023 third-quarter operating expenses saw $2.9 million of R&D expenses deferred into future quarters and will be recognized as COGS to match costs with future NRE revenues. This quarter's operating expenses included $5 million in share-based compensation compared to $4.9 million in Q3 2022. Research and development expenses for Q3 2023 were $20.7 million, down from $24.2 million in Q3 2022. The quarter's R&D expenses included $3.1 million attributable to share-based compensation compared to $3.2 million in Q2 2022. In conclusion, we are delivering on the growth cadence we outlined coming into the year. Q1 2023 was the trough. We achieved a 45% quarter-over-quarter growth in Q2, followed by 138% in Q3, and have clarity towards another meaningful step-up in Q4. More importantly, we are executing on this growth while managing record levels of RFQ activity. We expect to finish the year strongly with continued momentum for 2024 and beyond. With that, I will hand the call back to Omer.

Thank you, Eldar. Okay. Before turning the call over to the Q&A, I wanted to offer a few final remarks. In 2022, we hinted at a major new OEM customer, and months later, we secured Volkswagen. Coming into the year, we stated we were working on a program expansion, and we delivered on the light commercial vehicle program in the first quarter, announcing the development of the second-generation system for BMW last quarter. In the third quarter, we achieved our BMW SOP timeline while also moving three RFQs past financial and high-volume manufacturing audits and into the final phases of price negotiation and post-nomination milestone alignment. My team and I have spent a lot of time visiting OEMs across Europe, Asia, and North America in the past few months, with more trips planned before year-end. We will be in Germany next week, taking our new B2.0 sample with the new custom ASIC to existing customers and new ones and prospects. We are very excited about what we have achieved, and I want to deliver these new samples personally. We have goals we are very close to reaching, and we will work tirelessly until we accomplish them. Thank you very much, and we can move to the Q&A.

Our first question comes from Mark Delaney from Goldman Sachs.

Yes, good morning and good afternoon. Thank you very much for taking my questions. You spoke about having a very active RFI and RFQ pipeline. I'm hoping you can share your latest views on potential timing for new wins and your confidence in reaching two new series production awards with new customers this year.

Yeah. So as I mentioned during my remarks, the team is working intensively on several fronts with different OEMs. As we speak, we are conducting audits. We have several audits lined up this month. We anticipate that at least two out of these three customers we discussed will make decisions this year according to their plans. So we are working toward that.

Understood. Thank you, Omer. Then my other question was around the shuttle program and hoping to better understand how that's developing. You mentioned more LiDAR is now being used with them making that change and also being relatively close to start of production. Can you help us understand if that will impact either the timing or magnitude of the ramp? Also, could you clarify if the additional LiDAR that will be used is definitively going to Innoviz, or is that still being evaluated by the customer?

So possibly, I did not describe it right. This decision was made over six months ago. I reflected that every Level 4 program uses more than one LiDAR. This was an example of a program that initially started with four but later adopted six some time ago. So it’s obviously Innoviz LiDAR, and it's not affecting the timeline.

Understood. I'll pass it along. Thank you.

Our next question comes from the line Andres Sheppard from Cantor.

Hey, guys. Good morning and good afternoon. Can you hear me okay?

Yeah.

Yeah, Andres.

Wonderful. Thank you. Congrats on the quarter and all of the developments, and congrats on the SOP being finally here. Wanted to maybe just ask how we should be thinking about the BMW contract continuing to ramp up as we head into next year. You provided revenue guidance for Q4, which is very helpful. Just curious if you could give us a little more detail regarding what we should expect into 2024. Thank you.

Yeah. I'll start, and probably Eldar will take the lead later. BMW is currently launching with the i7. The additional volume would start in a moderate manner. We do expect another model to launch next year, which is the current plan. In terms of guidance, I'm not sure that we are providing such right now.

We definitely will provide guidance going forward. But we are hopeful based on the pipeline we see that we will have a growing revenue cadence moving forward as well.

Got it. Okay. That's helpful. Can you give us a sense around gross margins? There was a significant improvement this quarter as evidenced by the BMW contract ramping up. Any sense on how we should continue to think about gross margins for next quarter and again into next year? I know you're not providing guidance, but would you expect those to continue to gradually improve quarter over quarter, or what's the best way to think about that? Thank you.

As we achieve production volumes and as the products mature, we expect that gross margin will improve due to factors related to the production and sales of LiDAR. This is one aspect that comes into play. The second factor, which is also important and dominant, is NRE recognition. As we gain more and more NRE and recognize more of it, this will have a positive impact on our gross margins, both this year and next year.

Got it. Very helpful, Eldar. Thank you. If I could squeeze in one last question. With the $164 million now in cash and equivalents, just remind me what the expected run rate is with that cash on hand.

We have a strong balance sheet. We just raised additional funding in August to maintain this strong balance sheet. In addition, this balance sheet, if you project it linearly, brings us well into 2025. Plus, we have growing revenues, which will offset some expenses. We expect to win additional programs, and as we mentioned before, our current pipeline is over $150 million potential in NRE. Winning these additional programs will lead to even more NREs, extending our runway beyond expectations.

Thanks again, guys, and congrats on the quarter. I'll pass it along.

Our next question comes from the line Kevin Cassidy from Rosenblatt Securities.

Yes. Thanks for taking my question and congratulations on the great progress. The number of RFQs that you're working on now, if you close on two of those, the other ones are still in play. As we get into 2024, they're just being delayed. Can you maybe give a timeline on some of the other programs?

We said we expect some decisions to be made this year. Given the progress seen with the other RFQs, I would estimate they are split between the first quarter and the second quarter, taking into account their planned launch timelines. I don’t expect it to take longer than that, but that’s what I see right now.

Okay, great. Just to understand a little more, with the six LiDAR being controlled by the perception software. Is there a maximum number of LiDAR that the software can handle?

It’s not about the software; it’s about the compute platform that needs to process the point cloud. As you increase the density and frame rates, you require stronger compute platforms. I can share that one aspect significantly improved between the first and second generations is the architecture used for performing algorithms. The transition from InnovizOne to InnovizTwo was meaningful. We improved performance by over 50 times and reduced costs by 70%. However, increasing density means you must account for compute limitations. Ultimately, the number of platforms employed by our customers is not extensive, primarily two or three main platforms like NVIDIA, Mobileye, or Qualcomm. We are very familiar with all these platforms, and our interactions with these platform players help optimize performance and minimize power consumption.

Okay. Thanks for that explanation. One last question. As we look at the competitive landscape and discuss market consolidation, are there assets available that would help Innoviz, or do you have any plans to acquire assets from competitors who may fall behind?

We are aware of various companies in the space. Innoviz's motivation to consider acquiring assets from others would be if we perceive a complementary solution that we are missing. However, since our primary focus is automotive and winning RFQs, I don’t see a gap in our offerings presently, but we are continuously monitoring our competitors. So far, I have not seen a good fit.

Okay. Thanks, and congratulations again.

Thank you.

Our next question comes from the line Kevin Garrigan from WestPark Capital.

Yeah. Hey, Omer and Eldar. Thanks for taking my questions. Let me echo my congratulations on the progress. Going back to Mark's question regarding hitting your targets this year, you're in the final stages of these RFQs and just waiting at this point. Wondering if delays in decisions could happen. Would EV programs not working out for some companies cause any delays, or something like we’ve seen with Volvo where software development issues may arise?

No. To clarify the complexities related to an RFQ and what might cause a delay, once you are nominated, you need to execute a plan aligned between both parties. This means a lot of details need to be agreed upon, including integrating the sensor into the vehicle, connectivity, software, thermal interfaces, etc. The amount of detail that needs consideration is substantial. It is crucial to align on everything, as changing the plan after choosing a supplier can lead to costly change requests for the OEM. While some decisions might take longer than expected, it won't necessarily impact the SOP timeline significantly. Even if an RFQ decision takes longer, it often pertains to technical aspects, and the SOP timelines typically remain unchanged, adding pressure to all parties. I wouldn't consider pushing off an RFQ decision a significant factor in the industry.

Got it. That makes sense. I know you have strong relationships with ADAS compute platform companies like Qualcomm, Mobileye, and NVIDIA. How are these partnerships beneficial, if at all, in capturing some of your shots on goal?

In every program we compete on, we try to understand which platform they intend to use. Sometimes they already know; at other times, they are still assessing. These details are important because the RFQ process involves aligning on tasks and associated costs. Showing that we have already accomplished some of those tasks lowers integration risks and helps demonstrate timelines. In some cases, we may also share costs of activities with OEMs, which yields a better NRE offering. We are currently working with two of the three companies you mentioned, and for some OEMs we're competing against, they utilize different platforms. Our partnerships are mutually beneficial since common sensor use across different platforms helps reduce costs and risks.

There are no further questions. Thank you for your participation. This concludes our call today. You may now disconnect.