Conference Transcript - INVZ 2026-05-28

Operator

Okay, good morning, everybody. Thank you so much for joining us. Very pleased to kick off day two of the TMT conference with a fireside chat session with Innoviz. Let's talk about automotive LIDAR technology as well as physical AI. From the company, we're very pleased to have the CFO, Eldal Segla, with us today. We'll go through some Q&A. If you do have questions in the room, feel free to raise your hand, and we will certainly get to you. So, Dal, great to see you. Thanks so much for being back at the conference.

Eldar Cegla, CFO

Thank you. Thank you very much for having me.

Operator

Great. So maybe just to kick off as a broader question, maybe for those who are also maybe a bit newer, what is the state of the LiDAR industry today, both in automotive and in non-automotive, and kind of how has it evolved in the last few years?

Eldar Cegla, CFO

Yeah, so I think you can put it all, maybe jumping directly into the physical AI theme. So in the past, we didn't know that we are doing physical AI, but it's very clear that you have these kinds of systems that move from digital systems that were residing mainly on our computers, using data, images, movies, clips, and now turning into systems that need to interact with the world in real time and need to do it very efficiently safely they need to understand the environment and under and these are basically the physical AI system that require very good perception and for a very good perception they require very good sensors. So you have already cameras which are very widely used but today you have more and more 3D sensors which are the lidars and the benefit of a 3D sensor for an AI system that once it interacts with the world it can can give it a 3D image pinpointing every object in the environment. So we see actually a very strong momentum for LiDARs, for the need of LiDARs. It started with the automotive industry. I think the automotive industry went through a few cycles, a hype cycle, and then a slow and I think today we are in a much more mature state where the industry understands the problem much better it understands what it needs to do much better it understands the need of the different sensors in order to reach autonomously safe autonomously driving and also you have the ecosystem you have the different players like mobile I like Nvidia that are doing the brains are using the sensors in order to make smart decision and this is we are seeing this momentum both in level four for commercial application like robotaxes shuttles and trucks and we do see it picking up again in level three application for consumers for consumer cars starting with the Europeans mainly the German OEMs and we see more and more momentum in the US and I believe eventually it will trickle down also to Japan and Korea outside of the automotive space again under this umbrella of physical AI we see the need of good sensory because basically in every application that you think of using a camera you actually can use a 3d camera which is the lidar which again gives you some benefits that the camera doesn't have or even coupling a camera together with the lidar has a lot of benefits and we see more and more applications and demand for that from from application like construction smart infrastructure smart cities drones humanoids and also security and defense which became a hot topic again automated systems that use different levels of AI again physical AI again they need good sensors that can capture the environment in 3d and pinpoint every object that is around so yes we for lidars, we see a lot of momentum through these kinds of applications.

Operator

Terrific. So I want to maybe deep dive a little bit here on the non-auto physical AI. I know it's still emerging, it still seems like it's relatively early, but of the end markets that you described, which are the ones that you're most excited about in the next two or three years? And ultimately, how can investors sort of size these opportunities?

Eldar Cegla, CFO

Yeah, sure. So we, Innovis, has announced over a year ago that it started to pivot or to add additional market segments to its its marketing efforts and interests so we were in a sort of an exploration mode understanding what the market needs where can lidars do the best work or fit the best where is the need where are the low-hanging fruit we focused initially in application like smart cities ITS basically smart infrastructure smart smart cities and then we looked at construction applications and different kinds because we are also constantly approached from different layers and lately and this is something also we have announced publicly we see a growing demand from security and defense application from situational awareness applications through perimeter security through automated systems that need to operate in an environment or navigate in an environment and we see that there is a real sense of urgency in these kinds of applications and an actual missing link or sensory level which is not accommodated for by cameras and radars because they have certain shortcomings not that the world will stop using these kinds of sensors but they need to add another sensor and a lidar is a perfect fit and we see a lot of momentum and security and defense. Our latest partners are from these kinds of sectors. We are not trying to be a tier one as we are in the automotive sector. In the automotive sector we are approaching, we are competing directly on programs, we know how to run a program, we know how to qualify for it and so on and so forth. In the non-automotive space, specifically in security and defense there are very strong players integrators and there we will play as a tier two or tier three providing our products and solution coupled with software to these kinds of applications again and again we see there the greatest sense of urgency the biggest market so we've we tried to size it's very hard to size these kinds of market in terms of time but if we are looking that the market research is mainly on the system as a system or specifically around well-known sensors like cameras and radars so our understanding of this market is that it's at least 10 billion and beyond TAM for the next few years up to 2030 very fast growing a lot of interest interesting and so within defense security maybe could we dig a little bit more in terms of what the innovative ladder is being used for is it mostly perimeter is a lot of drone detection which has become obviously a greater focus kind of where is that and I think you mentioned software as well I'm curious kind of your role in software within defense as well yeah so I guess all of the above basically and even more I think maybe I'll address a few applications the ones you mentioned so for perimeter security there are already solution in place today that are mainly using cameras and radars the problem is that the reason why they are using cameras and radars that the radar has a wide field of view and it can scan a wide area and once it detects something it can turn the camera which doesn't have this field of view and needs to be focused around a very specific area it can turn the camera into however a radar unfortunately has a lot of shortcomings especially when you take a radar that usually looks to the sky which is very clean and unnoisy environment and pointed to the ground there you have a lot of noise you have trees you have vegetation you have metal object fences which radars are not very good at and if the vegetation moves or you have wind then you get a lot of false alarms and there are other shortcomings and if you replace the radar with with the lidar you solve the problem the lidar has the resolution the lidar has the field of view it has the resiliency and it can provide for already an existing solution and much better solution at the same price point so we see a lot of demand in perimeter security both mainly for civilian application like airport defense utility defense but it can go also to special government facilities it can protect borders if needed so and and this is it seems like a very potent application and with the ability to grow very fast because they are looking the integrators have already the programs the project in place they just need to set the right technology in in place so this we see as a very interest interesting area that we are focusing today. We are working in the U.S. We have a special guy and team that is working in the U.S. For that matter, usually you don't provide just the LiDAR. You need to provide also some kind of software that interfaces with the LiDAR that gives meaning to what you see. So we have partners that we are using in order to provide also the software side. This means obviously that the business model can be not only selling LiDAR but also selling software recurring revenues and so on so this is on the security on the perimeter security situational awareness is it means many things the one of the hottest topic I think in the world today you see it in Ukraine you see it in Europe you see it in the Middle East is the threat of drones and the reason drones are such a great threat because nothing can detect effectively today because radars again they are very good if you fly high but drones these kinds of drones practically literally fly under the radar it's very difficult to identify them they are small they fly very close to the ground so it's a very noisy environment how do you differentiate between a flying drone and a bird. You don't want to protect yourself against a bird, it's a false alarm, you would like to identify the drone. So again here, where all other sensing technologies fail, a LiDAR is a very good solution. Again, you need a very good LiDAR with high performance, resolution, enough range, frame rate, ability to work in outdoors rather than indoors so we are a perfect fit for that this is also a very hot topic as I said so we see also a lot of applications and a lot of companies are moving towards offering these kinds of solutions with a LiDAR so basically whenever you need sensing wherever you think of a camera think of a lidar doing a better job might do a better job terrific maybe one more

Operator

then we'll go to audience question or maybe a two-part question one sticking with defense maybe broader non-auto maybe talk about the ASP ranges that you can have relative to auto and of course the margin profile yeah and then secondly what does a sales cycle look like in defense non-auto we know auto can take years to go from the first phone call to a production program. Given the urgency, particularly in the defense, what could that sales cycle look like from the moment you're engaging with prospective customers?

Eldar Cegla, CFO

Yeah, so first answer on the ASPs. So in the auto industry, the name of the game on one hand is volumes. You get these very high volumes. It's still the biggest opportunity for InnoVis in terms of volumes and revenues, aggregated revenues, and with that comes a very high pressure on pricing. So the industry at the end of the day, or partially, is working with consumer, consumer vehicles. You need, you cannot offer a solution that costs hundreds, sorry, thousands of dollars. It it doesn't make sense so the industry wants to see that you scale up to high volumes but then in return they want to see very cost-effective solutions so there is a constant price pressure there once you pivot to other applications like security and defense a the volumes are different at least initially the volumes if we are talking about in the auto industry hundreds of thousands per year and maybe can go up to even to more than that in aggregate and currently what we are seeing in security and defense is thousands tens of thousands so obviously the ASP is much higher so if in the auto industry for high volumes you send you sell your riders at hundreds of dollars obviously if you sell somebody few hundreds or few thousands you will sell it at much higher ASPs maybe a few thousands which result in a very financially positive contribution to top line and a very positive contribution to the gross margin so the margin profile is much better and basically you can sell lower volumes have a very meaningful contribution to the top line and a very meaningful contribution to the gross margin profile. In terms of the cycles so automotive yes is a very long cycle to win an automotive program may take even a few years and then the development process takes another two to three years until so until you get to SOP start of production may take four or five years even from the day you meet the first time the customer in the non-automotive space at least from what we see and the sense of urgency that we encounter today we see much shorter cycles even within months the decisions are being taken from the moment you meet somebody then you do a pilot and to deployment agreement so cycles here can be shorter yes in the defense industry sometimes it takes more time but currently what we are seeing is a great sense of urgency to bring in good solutions with good sensors and you must remember I'm acting as a tier two or tier three so I'm meeting the program in a much more mature state than when I'm a tier one and I'm starting with very early with an RFI and then RFQ and so on and so forth so there is a good momentum also in terms of timing where a solution pertaining to that is within the tier supply.

Speaker 2

But when we think about the defense and aerial opportunity that exists for you guys from a detection perspective, point cloud, is that something that you guys are working on from a classification standpoint, or is that the integrator that we're responsible for taking the point cloud and creating the perception-oriented classification around that?

Eldar Cegla, CFO

So basically, InnoViz offers a wide range of software solution. basically we can do perception we have done it for automotive in these cases we are not at this point of time we are not doing it we have announced a partnership with a company by the name of Cogniteam so they are doing the perception they are providing the software solution but we are the tier two they are the tier three they are providing a solution their solution and we are offering not only the lidar but the lidar with the software as a solution so this is the role we are trying to to play because there are different applications we try not to to be fast and efficient when approaching this market and our go-to market strategy so we are trying to focus on what we are good at it's lidar and some supporting software and then bring some partners to do the the perception layer for the software yeah you are correct we it's an add-on so we are pricing it as an add-on as an addition so that the lighter itself can can be few thousands of dollars and then you have the software components and we are selling it together. The software, we provide all the regular software like services, recurring revenue elements to it. It's less as a SaaS service but more than maintenance service.

Operator

So maybe I'm switching to Otto. Wanted to cover your latest observations on the kind of level three, level four sourcing pipeline? You know, it seems like we've been kind of waiting for this sourcing inflection. It's taken a little bit longer, but we have seen some signs from at least a few automakers starting to put L3, including LiDAR standard on some programs, I think mostly for a few EV makers. What are you seeing?

Eldar Cegla, CFO

What are your direct expectations for decisions and wins along these fronts this year? okay so I think we need to differentiate between the German OEMs and the American OEMs basically the Germans are usually or also higher and because in the German OEMs it's already a standard it's not a question if there will be an autonomous feature in the car it will be it will be a level three this is true for Mercedes this is true for Volkswagen, Audi, Porsche cars, this is true for BMW, this is already embedded and as part of their offering. The American OEMs we are seeing now re-engaging in these kinds of offering, level three offerings, both Ford, GM, Stellantis all of them are thinking and also the newcomers like Rivian and other players are all into it or thinking how and announcing also their timelines in order to introduce level three applications. Maybe Stellantis took a step back in that in that respect but definitely Ford and GM have announced publicly so and also Rubian so we see the momentum is back in place there was a certain delay a certain setback in the in the US market but I see reinstated and the understanding that this is important for them this is a differentiator and if they don't do it they will lose the competition with other players from the germans through the chinese so i think the japanese and the koreans will probably adopt it a bit later we see a lot of momentum in level four applications all over the world for the commercial application makes sense in terms of the business model is different you take a vehicle you can you convert it in to a level 4 vehicle that can drive itself you eliminate the need for a driver and then you have a platform that you can monetize off 24 7 so it makes a lot of sense to put such to to do the investment because you need to load the car with a lot of sensors you need a stronger compute model inside the car but it makes more sense because the business model makes sense so we see many programs we had there yesterday a roundtable and we saw many players in that many newcomers new companies new OEMs that are playing in this field like Kodiak and mobility and others so we see a lot of momentum in the level 4 commercial application and this is true by the way, for the ID bus of Volkswagen, which we launch towards the end of this year, beginning of next year, together with Mobilize. And they are putting a lot of strategic value in this platform.

Operator

Absolutely. And maybe sticking with level three, the pushback sometimes one gets on level three is, well, the automakers will do it, but on very low volume, like the highest trim levels, most expensive vehicles. We've seen at least a couple of automakers sort of say, hey, you know what, we're going to do this on all of the next generation vehicles, like the R2 from Rivian being one.

Eldar Cegla, CFO

Are you seeing any of those signs in your pipelines where the programs that are coming may have higher attach rates or even, I mean, maybe standard's going a little bit too far, but even standard on some vehicles, or just still in the next three, four, five years, is going to be limited in terms of the penetration of a particular program's volume so what is different today than two or three years ago it's the maturity level and the cost so today in order to introduce an autonomous feature there is a much more knowledge of what does entail in order to put this in place what kind of development what kind of technology you need a be you have the ecosystem the different parts or some of them already ready like mobile I platform like Nvidia platform so it's it's not that it is plug-and-play but you have somebody that has solved for you the problem so chauffeur from the level 3 solution for mobile I chauffeur you can simply adopt it or integrate it into your platform you have the lidars as well much more mature so the sensor is in place and with that with the maturity also the cost is reduced which means you can introduce it to more and more model not only to high-end maybe start thinking about mid-range do I think that level three will be in the next two years very abundant no but I do think it will continue to trickle from the high end down to the mid-range and down and then to be a common standard because volumes will go up pricing will come down and it's this is the regular process I think we we are now starting to see the recovery but it will take time as as is the case in the automotive industry there is one exception which is what happens in china china can be an accelerator for all of these processes because if the world will see that the chinese are starting to push not only evs but these evs are demonstrating autonomous level three autonomous features i think the western OEMs will have no choice but to accelerate their efforts. So that might happen as well.

Operator

And on this journey, maybe talk about the Innivis 3. I'm curious about maybe three parts to that. One, maybe talk about the importance of the behind the windshield. How many automakers are expressing that as a really kind of a must-have in the next several years? Two, maybe the cost of Innivis 3 versus Innivis 2. And lastly, any things you can share on recent feedback conversations as you're kind of developing that next generation.

Eldar Cegla, CFO

So we are saying that the behind the windshield is sort of the holy grail of the industry. They don't like to see this bump of the lidar on the rooftop, they don't like to see the lidar and the grill which is not the best place. You want to have the lidar higher so behind the windshield is the perfect place. It doesn't change the design of the vehicle it's behind the windshield so you have the wipers you have the an embedded cleaning system and it makes the most sense so all the OEMs would if they would have had a lidar that can fit in behind the windshield they would do it the InnoViz 3 is exactly that the form factor is is designed in order to fit behind the windshield we even offer to integrate the camera inside the lidar so you save even additional space and the integration is simpler inside the the car cost reduced we reduce the cost by 35% from the InnoVis 2 to the InnoVis 3 the performance is as good as the InnoVis 2 and we hope that as we continue to develop this platform maybe we can improve it even more. The form factor, the power consumption, all the resolution, range, all of that is a very good solution for the OEMs and they are looking after it. I don't remember the other questions.

Operator

Just the feedback.

Eldar Cegla, CFO

Oh, the feedbacks are amazing. So every OEM that we show him the InnoVis 3 or offer him to test it, there is great enthusiasm. Again, this is something that the industry is looking for and InnoVis 3 is really a great product with many lesson lines from all our years of experience and I think it has gotten a great perception so far.

Operator

Great, so maybe too rapid-fire in the last minute or so. First, maybe a word on the competitive landscape outside of China, in Europe and US and North America. What are you seeing right now?

Eldar Cegla, CFO

So in the automotive space I would say the competition has diminished greatly. Many companies either disappeared or stopped serving the automotive industry and I think there are basically two or three companies that are serving one of them being InnoViz so we always predicted that the industry will consolidate and it happened exactly as we predicted and we hope that InnoViz can keep its seat around the table and be one of the two or three companies that will serve the industry. Outside the automotive space there are many players which are offering different solution I think once you bring an automotive grade LiDAR with the performance of automotive grade, range, resolution, power consumption, form factor, it's a very potent competitor in the market. And I think for specifically for security and defense, there is almost no other LiDAR that can bring the same performance as we do.

Operator

Great.

Eldar Cegla, CFO

And maybe at a high level, without providing guidance, how would you frame the 2030 opportunity whether it's units penetration if our investors to think about what the next few years at least our projection is hundreds of thousands of units a year so maybe north of half a million but we still need to to win these programs and aggregate the volumes but I do believe that we are on this kind of trajectory of hundreds of thousands of units towards 2030 terrific Great conversation.

Operator

I think we'll have to leave it there. But thank you so much for being back in the conference. Thank you all for your participation. Thank you very much. Thank you.