Hello, everyone. Welcome to Mobilize's fourth quarter and full year 2025 earnings conference call for the period ending December 27, 2025. Please note that today's discussion contains forward-looking statements based on the business environment as we currently see it. Such statements involve risks and uncertainties. Please refer to the accompanying press release, which includes additional information on the specific factors that could cause actual results to differ materially. Additionally, on this call, we will refer to both GAAP and non-GAAP figures. A reconciliation of GAAP to non-GAAP financial measures is provided in our posted earnings release. Joining us on the call today, as usual, are Professor Amnon Shashua, Mobilize CEO and President, Muran Shemesh, Mobilize CFO, and Nimrod Nihistan, Mobilize EVP of Business Development and Strategy. Thanks, and now I'll turn the call over to Amnon.

Hello, everyone, and thank you for joining our earnings call. As I look back on 2025, there are a number of meaningful positives to highlight, both for our company and the industry. In a very uncertain geopolitical environment, demand for our products came in higher than expected throughout 2025, demonstrating the resilience of the auto industry and our product offerings. Results were quite strong, with revenue up 15%, adjusted operating profit up 45%, and operating cash flow up more than 50%. The industry began to clarify the structure and features of the next generation of ADAS for mass market vehicles. Several forces are coming together here. Demand for incremental safety, demand for convenience in the form of highway hands-off driving, and the need to consolidate the technology on a single ECU to keep the system's cost low. Mobilize IQ6 high chip is very well positioned, and we won the first two major programs with two of the biggest fixed OEMs in the world. Waymo's commercialization provided a number of supporting proof points on consumer acceptance and demand for autonomous mobility services. This led to a major uptick in demand signals from transportation networks, companies, and public transport groups, which led to an expansion of expected volume through our Volkswagen ecosystem to 100,000 units by 2033. We are now one year closer to the launch of our advanced products with the Volkswagen Group. We expect the first major public milestone to be removal of the safety drivers in Moya's robotaxi fleet in 2026. We are implementing a unique first think, slow think structure to our advanced products that we believe accelerates both precision and scalability. This includes novel technologies like vision language semantic action models and artificial community intelligence and finally mobile like took a decisive step to expand its footprint into the humanoid robotics field with acquisition of mentee robotics mentee has achieved a fully vertically integrated low-cost highly capable robot that has a clear path to commercialization into the structured environment of industrial and logistic services field and with its distinctive technology to cater to unstructured environments like home use cases. Aside from our 2025 results, we detailed all of these areas in my CES talk on January 6th. I encourage anyone with an interest in mobile eye or just physical AI in general to make sure to view that presentation. Turning to guidance, Moran will spend some time on it but I'll address it briefly. We're encouraged by the volume growth we are expecting despite global auto production that's expected to be flattish again and while we don't expect the volume levels of Q1 to be sustained throughout the year, it's a strong signal for the year and all the flows for Q1 has been rising for the last month or two. Turning to technology, at CS, I talked a bit about the debate around approach, specifically this concept of data in, commands out, which is a false debate, because no legitimate actors in our field are actually doing that. There's always a need for structure and architecture, and everyone's architectures have evolved, given and advancement in AI over the last few years, including ours. We introduced two new innovations that are accelerating our path to precision, scalable autonomous vehicles. One is artificial community intelligence, referred to as ACI. This is a simulation concept using a self-play reinforcement learning technique that we are using to train our planning engine, also known as driving policy. This is the first ever productization of a technique proposed in academic research. A strong motivation for ACI is that the sample complexity for planning is much higher than for perception because the multi-agent nature of driving or actions that you take will impact the actions of other world users. Therefore, the amount of data one needs to collect could be unwieldy even for large data collection fleets. As a solution, we have created simulators that can achieve one billion hours of training overnight. Mobili has unique advantages here since our REM maps, which cover much of the globe, can be used as a realistic and diverse baseline structure for the training. The other advantage is we have developed sophisticated sim-to-wheel techniques that have the required understanding of the noise model of our perception engine when transferring the driving policy to the real world. That sim-to-wheel technology is also very relevant to humanoid robotics and will be a key area of technology sharing between Mobileye and Minty. We also introduced a fast-think, slow-think concept that utilizes specialized vision language models to provide contextual information and to address robustness to vehicle decision making this is not necessarily about safety it's more about understanding the semantics of complex scenes for example the scene where a policeman signals that the road they would like to take is blocked the safety layer in two ensures that we won't hit the policeman but we also need to understand the scene figure out that we shouldn't try to overtake the policeman but rather we should either wait or or take a different route. This is what slow thinking gives. Since this is not safety critical, the contextual information can be inputted into the system at a lower frequency than perception, which is typically analyzed at 10 frames per second. Structuring our architecture with fast think and slow think components saves compute and even brings use of cloud-based compute into the picture. As a result, we can put a very sophisticated VLM on the in-car compute, but call on much, much bigger VLMs in the cloud when the situation warrants. This has very positive effect on the mean time between intervention metrics that can also eventually lead to scalability benefits in terms of cars per teleoperator as the VLM can replace a human teleoperator in many cases. Turning briefly to our announced acquisition of Minty Robotics, most of the AI that humans are using every day is in the digital world. The two main applications of AI in the physical world are autonomous vehicles and robotics. It makes sense for these two expressions of physical AI to be together because there's a great deal of technology overlap. Both extensively use computer vision and control, such slow thinking concepts, make heavy use of VLMs, and extensive sim-tier wheel techniques. Mentee itself, compared to other companies we evaluated, has a superior combination of strength, including a high level of vertical integration, a pure AI approach with the ability to demonstrate high-level capabilities with no teleoperation, a design strategy that results in an optimized cost versus usefulness ratio, and above all, a distinctive AI technique to do continuous on-the-job learning from passive demonstration. A truly practical approach to capitalize on the most near-term industrial and logistics markets, and then expand to more challenging markets over time. We believe access to mobilized tools, simulation, and data training infrastructure will accelerate mentee's development. And the number of technologies developed for robots, such as self-play simulation and think-to-wheel techniques, can also bolster mobilized AV development. Finally, there is potential for catalysts as we continue to demonstrate the strong capabilities of the mentee robot and execute on customer proof-of-concept work in the near term. I'll now turn the call over to Moran.

Thank you, Amnon, and thanks for joining the call, everyone. Before I begin, please be aware that all my comments on profitability will refer to non-gap measurement. The primary excluding Mobili's non-gap number is amortization of invangible assets, which is mainly related to Intel's acquisition of Mobili in 2017. We also exclude stockpick computation. Our full year 2025 revenue of $1.9 billion slightly exceeded the high end of our prior guidance. Full year revenue was up 15% year over year compared to our regional guidance of 6% growth at the midpoint. It was a very good year where a combination of minor upside in global production trends, IQ program launches, and higher than expected ADAS and supervision volumes from China OEM led to significant growth. Full year adjusted operating income was $280 million, up 45% year over year, and margin was 15%, up about 300 basis points versus 2024. The fourth quarter included a non-recurring expense of $7 million related to workforce efficiency initiatives we undertook in Q4. That expense was not part of our guidance as of the October earnings call. So if you exclude that, adjusted operating income would have also been slightly above the high end of the guidance. Like I said earlier, we saw consistent positive revisions from our customers throughout 2025, and we've continued to see that over the last month or two during our 2026 planning process. 2025 IQ volume was $35.6 million across the full year, which was well above our regional expectations of 32 to 34 million. We've seen a fairly consistent demand trend of 9 million units per quarter with some minor fluctuations across quarters. For example, in 2025, Q2 and Q3 were higher than trends. Q1 and Q4 were a bit lower. One more point on Q4 before turning to the future. Modest upside to the higher end of our prior guidance was related to higher than expected supervision. IQ volume was consistent with the high end of our guidance of about 8.2 million years. This level, at the start of the quarter, looked a bit below the demand trend as our customers desired to end the year within inventory. But the demand trend in Q4 ended up higher than we expected. As a result, we believe that inventory at our Tier 1 customers ended 2025 extremely low. We believe there is some level of adjusting safety stock that will occur in Q1 to get back to normal level. We expect about 10 million IQ units shipped in Q1, which supports an outlook of approximately 19% year-over-year growth in the first quarter. After that, customer forecasts indicate a reversion to the trend of slightly above 9 million units per quarter. Turning to the full-year guidance, we are expecting revenue in the range of $1.9 billion to $1.98 billion, representing flattish to 5% growth. The midpoint of our guidance incorporates RQ volume of slightly above 37 million units, which again consists of 10 million units in Q1, and an assumption of a bit over 9 million per quarter in the balance of the year. If we look specifically at our top 10 customers, we are assuming that their overall production is down 2%, but our volume with those customers is up 6% at the midpoint. This includes about 700,000 units for a new OEM program that requires two IQ4 chips per That program is clearly a positive, and we will generate higher gross profit in dollars per vehicle. But since the second chip is lower priced relative to the first, it has an impact on overall ASP and growth margin. For Chinese OEMs, we are expecting a decline of about half a million units compared to 2025, which was a bit above 3 million. We are encouraged by the significant growth in China OEM volume in 2025. It aligns with their export volume growth, the area where our business is the strongest with those customers. We see no reason why that wouldn't continue into 2026, but prefer to remain conservative given we only have a short-term visibility into older flow with China OEM. Gross margin will be down some out on a year-over-year basis, driven by continuation of IQ5-related cost-heading. We discussed this on the October earnings call as an impact to the second half of 2025 that would continue through 2026, and then will gradually decline beginning in 2027. We also have modest vehicle mix headwinds and the impact of the dual-chip program mentioned Turning to operating expenses, 2025 ended up at $1.003 billion. This was slightly above our original budget of $995 million, accounted for by the non-recurring termination-related bookings in Q4 mentioned above. In 2026, we are expecting around $1.1 billion, or 10% growth. The underlying growth in OPEX is approximately 5% consisting of normal salary and benefit inflation, as well as additional infrastructure to support execution of the advanced products in 2026 and 2027. On top of that, we are including mentee R&D expenses. Finally, we are experiencing an FX headwind related to appreciation of the Israeli currency versus the U.S. dollar that meaningfully raises our headcount costs in dollar terms. This is being mostly offset by the workforce efficiency initiative noted above, but not completely. To conclude, we are almost one month into 2026 and continue to see positive demand signals from our customers on the core business. As Amnon discussed, we are also seeing very good execution progress ahead of a large number of advanced product launches over the coming one to two years, as well as accelerating momentum in customer demand for next-gen, higher ASP ADAS, and the transformative robot Thank you, and we will now take your questions.

Thank you. The floor is now open for questions. If you would like to ask a question, please press star 1 on your telephone keypad at this A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. We do ask that you please limit yourself to one question and one follow-up to allow as many people the opportunity to ask as possible.

Again, that's star 1 to register a question at this time. our first question today is coming from george genericus of canaccord genuity please go ahead hi everyone uh thank you so much for taking my questions um i'd like to ask first maybe on the on your view on the competitive environment particularly in light of some announcements at ces from nvidia and others just your view on on what's happening in the advanced autonomous solution space thank you so I think that we have been we've obviously seen a lot more announcements and excitement around advanced solutions and

autonomous driving in general and also robotics it was one of the key things at CES this year for everyone who attended we still believe that we are closer to launching our advanced products than other competitors and this is one of our strongest advantages combined with the maturity of our technologies and the advancements of our technologies, and we are, as we said, one year closer to launching a spectrum of products that spans from surround data, supervision, chauffeur and robotaxi, and starting from 26 and through 2027. We believe this will be a major transformation for kind of positioning mobile in the market. It's having proven products on the field. Right now, there is a lot of demos, a lot of referral to technologies and emerging technologies, and there's some, we think, noise and maybe simplistic description of some of these technologies and how useful they could be for a reliable system. There is a recent announcement by NVIDIA about their open source model, AlfaMail, that they announced supposedly given others' ability to, Amon will maybe want to say a word about this, but we don't see that as something that changes kind of our positioning in the market.

Thank you. And maybe I can ask a follow-up on Mentee specifically. I mean, you mentioned yourself that there were a significant amount of startups and competitors at CES in the humanoid space. And just maybe a synopsis, a brief bullet point or two as to what the differentiation for Mentee will be as you try to attack the marketplace and commercialize the product.

I think there are a lot of startups, mostly in China, There are a lot of startups in the area of the humanoids. Many of the demonstrations that you see out there are teleoperated. To win this game, you need to have a fully autonomous control of the robot from perception to action to understanding the theme, having an AI stack that can control the robot autonomously. And this is what Menti has been demonstrating quite consistently over the past year, year and a half. And the APT, as I showed a number of clips, Mentee is also fully vertically integrated with the design of the actuators, the gear, the AI itself, all the software components and the electronics, which is crucial if you want to have a true end-to-end system. Another, I would say, distinctive element is the ability to do continuous learning. So Minty has developed an AI technology that allows the robot to passively view a human performing the task and imitate that task in a very, very short period of time without having any special equipment, no VR goggles or special suits, just passively observing a human performing a task. This is, I think, very important as we move from structured to unstructured environment like home use. So taking everything together, we have here a company that is both thinking, you know, practical what is going to be the first domain launch, which is structured environment like fulfillment centers, assembly, assembly plants, detail, and also developing the technology for the next deployment for unstructured environments like home use, fully vertically integrated, very strong in AI components, whether it's reinforcement learning, simulations, simple wheel, very strong, very interesting overlap, technology overlap with Mobilize that can go both ways with synergies, so overall this is a very good step for Mobilize to take decisive steps towards owning physical AI in its full scope.

If I may add to this, I think to kind of differentiate between the different actors, Minty are, as we know, probably the only Western humanoid robot company that is actively engaging with customers on proof-of-concepts and pilots that involve pure AI operations with no remote operation. It shows something about the advancement of the use of robots in a setting that a customer is willing to evaluate and deploy in a kind of a non-sterile setting. Unlike maybe some hype videos that show something on a YouTube clip this is an actual testing environment, this is a different stage of maturity and having engagement with potential customers. And we believe that through integrating mobilized technologies, we have obviously strong strength in computer vision, in AI using cameras and using sensor fusion and designing systems for safety and reliability and how to integrate systems in a very cost-efficient manner and efficient compute. All of these will help them even accelerate the progress they made so far.

Thank you, thank you, George. Next question, please.

Thank you. The next question is coming from Mark Delaney of Goldman Sachs. Please go ahead.

Yes, good morning and good afternoon. Thank you very much for taking the questions. For Surround ADAS, the company has already reported on some strong momentum. You spoke about the two big OEMs that have already committed and given serious production awards. As you look at the opportunity set in 2026, could you give a bit more details on the number of OEMs you're engaged with for Surround ADAS and how many might be able to convert into awards this year?

Well, I think the important point about Surround ADAS is that this is a product that addresses a very clear pain point for customers and for OEMs, I mean, in the sense that it simplifies the system, it reduces costs, it provides advanced functionality, it meets future regulation. So it ticks most of the boxes that OEMs want to tick for the high-volume vehicle segments in the upcoming years. Therefore, the first OEM that we announced with Volkswagen was kind of starting a trend that created a flywheel effect of more and more OEMs being interested. Now having announced the second design win, we now have two out of the top six OEMs in the planet in major markets adopting this and launching this in a few years. This has definitely created a stronger realization amongst other OEMs that this has to happen for them also, please to some degree. We've seen an increase in the amount of engagements we have. I don't want to predict timing and quantities, but we're definitely encouraged by the increase in different engagements we have with multiple OEMs across our customer base. And we also believe that we have inherent advantages for this product category because it requires a very reliable system performance, very high safety standards, advanced functionalities like, you know, hands-free driving in primary roads and so on, but also be extremely cost efficient. And just to give you some sense, these two programs, in one, are going to be integrated in the kind of a standard fit across the highest volume vehicle categories for these two OEMs. So every dollar counts, and also the implications for the OEMs to adopt this product means how much conviction they have that they need such a product for, you know, it's not a balloon project in a small amount of vehicles, you know, that if it failed, then nothing happened. If this project is delayed, for example, this is obviously affecting tire vehicle portfolio. So it shows about the confidence they have immobilized, how much conviction they have in this product, and it's definitely an encouraging sign.

Thanks. My other question was on Mentee. Given the announcement and engagements that you've had with potential future customers and industry participants, can you help us better understand to what extent and it's catalyzed additional interest in partnering with Menti Robotics, including opportunities to have your humanoid robots in factory and commercial environments to gather data. As you think about that 2028 commercialization target you shared at CES, how important is that data collection and gathering for hitting that time frame?

I think it's a very interesting question. And we've had since two weeks since the announcements at TS, and I've received reach-outs from a significant number of customers asking about our interest and readiness to support on-site pilots and food concepts, and kind of starting from our industrialization partners that want to contribute in manufacturing and components because they understand we do the food robot, But starting from that and really trying to attract us to work with them for manufacturing and for all of our industrial partners, whether it's Tier 1s, OEMs, and others that want to see how they can work with mobile and integrating robots into their logistics centers, warehouses, manufacturing lines. The need is definitely there, and for them it made perfect sense. I think one of the encouraging signs that we've seen is that already at CES we've had meetings with OEMs. And in most of these meetings, it came up as, you know, let's take a follow-up and schedule when we can actually talk about a plan to deploy this in our environment. And I think that the fact that they know Mobileye from the automotive business and they trust the standards of the company and that they have a need for, in the longer term, finding solutions for human labor that is becoming a bigger and bigger problem for them, especially in developed countries, this gives them an easier path to evaluate a new technology with the partner they trust, as opposed to working with a startup, you know, in humanoids that, you know, who knows what you can get from them and whether or not they can deliver. And definitely, we're leveraging these relationships. So, we definitely think of this as an area to continue to develop in the next few months.

Thank you. Thank you, Mark. Next question, please.

Our next question is coming from Chris McNally of Evercore ISI. Please go ahead.

Good morning. this is John Sager on for Chris McNally. Thanks for taking the questions. Amron, you made this sandwich analogy for ADAS and AV demand, basically with high demand for surround at the low end or drive at the high end. If we could focus on just drive for the time being. You guys announced VW Moya, one of the two big partners, Samara Benny and an unnamed OEM. But the forecast is for a fleet of 100,000 AVs by 2033, obviously a bit of a ways away. So my question, can we get a sense for what the near-term demand for your drive system might be for just like the next two to three years 27 28 or on phase one for a growing on the growing list of cities we are now together with the moya uh six cities to expand to 60 cities in 2027 and that includes also los angeles together with Uber.

We have another high-volume program with the Holon that will come six months later to have also its expansion. As the CEO of ADMT on stage mentioned that they foresee about 100,000 vehicles in the next eight years, the exact numbers of the rollout will depend on the success of 2027, the deployment of the first six cities, but we are talking about thousands of vehicles this time.

Just to add to this, I think, you know, it may be somewhat challenging to understand what it means 100,000, because it sounds like a big number. I think what we're taking away from this, what it means is that Volkswagen have in place the manufacturing capacity to produce as many vehicles as needed. The 100,000, if we're successful in 2026 and 27, and then in 28, which we have high confidence in our chances, means that 100,000 can also be a small number in hindsight. The manufacturing capacity they have and the funding they've, you know, pulled into this in the past few years to build everything needed to produce robotaxes in scale, eventually it's Volkswagen. So they can produce 10,000 per year, 50,000 per year, 75,000 per year when the demand will be there and the demand from, you know, from mobility operators, TNCs, municipalities is far greater than, you know, tens of thousands per year globally. Once the technology gets to this maturity level and allows quick economic and geographic expansion which, you know, we believe we have clear advantages in, then, you know, the numbers will, the demand will not be a problem. I think, and we have a partner that can scale and give the supply at the best extent possible. understood um and just how do we think about like the volume for a phase one launch and like should that be like a thousand to like fifteen hundred like waymo in san francisco you can think of it as a few hundreds of vehicles per city as a good testing as a good measuring stick um you know just also seeing how waymo roll out that's roughly the numbers they've had in some cities is 200 some cities close to 500 that's a sufficient number to kind of facilitate for the mobility demand in that city and also to build a meaningful business. And that's also roughly what we're planning.

Thanks, John. Just one last follow-up. Do the AV customers pay for anything before the purchase of the $45,000 drive content like R&D in advance? Or do you get any protection if their volumes are less than planned?

Without going into the details of our contracts, we are receiving – We're delivering samples and engineering samples throughout the year, and there's an engineering budget that covers the direct engineering costs and development costs. So there is definitely a good amount of investment well before the commercialization. So I think when we have high confidence in our chances of getting to driverless, I think we're not that concerned about the downside potential.

Okay, thank you so much.

Thank you. The next question is coming from Joseph Spack of UBS. Please go ahead.

Hello, everyone. Just to maybe talk about a couple of more near-term things, obviously memory has become a larger issue and concern in the automotive industry. And I know or I believe you don't really buy a lot of that memory directly, but clearly it is used in the modules at your Tier 1 customers to assemble, to sort of ship on to the OEMs. So I'm just curious, you know, what you're hearing from your customers and the supply chain as to whether this is really a pricing issue, is it an availability issue, is there any sort of volume risk embedded in your Outlook? Because even if it's a pricing issue, I guess you see any risk of decontenting.

So, as you said, Joe, we're not – let's say the exposure we have is not direct because we're not purchasing a lot of these units. It's mostly indirect through the fact that our Tier 1 customers are purchasing memory components. What we've been doing in the past few months, and we have been actively working on this, I think well before it was a public knowledge that this dynamics is developing, is to create, maximizing our supply of these components and working with multiple vendors to ensure that we have enough flexibility to kind of mitigate the direct cost impact from specific vendors, and that we will be able to ensure that vehicle manufacturing will not be impacted by these fluctuations. And we haven't, I think, that like we did last year a forecast for this year is is maybe opting for the conservative side you can see the difference between key one and other quarters it does bake in some level of you know understanding that there is some volatility in the industry so we want it to be on the more conservative side but we haven't seen any let's say direct evidence or indication that there is an imminent change to volume as a consequence but we will keep close monitoring land as it develops, and we're doing everything in our powers with our tier one partners to create the availability of these components.

Thank you. The second question, just on, you know, you mentioned some of the appreciation of the shekel, and I know you give very helpful exposure in your 10Qs on what a change in that currency can do to your cost base. but i believe also like at this time um a year ago or you know earlier in 25 you made a comment on one of the calls about um how a lot of the costs on the shekel were hedged so did something change with the hedging strategy like maybe you just sort of update us on on sort of you know why it's a little bit maybe more of an issue now than than you thought a year ago yeah so i will start

with 2025. So we have a hedging plan that basically, you know, cause that we can meet our OPEX expectation for 2025. So for example, for the second half of 2025, the rate that we had in our financials was like five or 6% favorable than the average market rate. So And these are, you know, transactions that we made in the beginning of 2025. But as the appreciation of the shekel continues into 2026, and we're talking about, I think, 10 or 12% in the last year, we still have hedging in place for 2026. So we are more than 50% hedged on our payroll expenses at a favorable rate. But the risk is obviously heavier as the duration, you know, gets bigger. but we took it into account in our guidance. So we took into account some further hedging, but it would be at a less favorable rate, the fact that we are already more than 50% hedged. I think we're in a good place in terms of the rate, but it's still the year-on-year impact because it's a significant impact. It's worth mentioning.

Okay.

Thank you. That's helpful. Appreciate it. Thank you, Joe.

Next question, please. the next question is coming from aaron rakers of wells fargo please go ahead yeah thanks uh for taking the question i i want to kind of double click on the the porsche and vw and the audi kind of programs i'm curious as you kind of thought about your guidance for this year i think the initial expectation was maybe early volumes on porsche late this year just give me an update on where we stand on some of those programs and how we should think about volumes appreciating that i think 2026 in the past has been more characterized as an execution year 2026 is an is an execution year the supervision on porch and audi should start the q1 uh next year q1

2027 there was some pushback of deadlines unrelated to us um that pushed to add something just to say that it didn't really change the plans of the project it's just a one month change between december 26 to february 27 so it's not not really material it's and we i think made clear in previous calls as well that we do not expect meaningful volumes in these programs in 2026. right right appreciate that and then and then as a quick follow-up in the in the prepared comments you talked about you know inventory levels that your your customers your major oems

being uh fairly lean i know you've guided 10 million you know iq units this quarter uh i'm just curious, can you kind of, you know, go a little bit deeper on what you're seeing as far as the inventory levels your customers are holding? And, you know, do you expect any replenishment when you gave the unit expectations for this year? Or is it more, you know, lean inventories continue? I'm just curious to how you kind of bake that into your guidance. Thank you.

Yeah. So, I think for what we're seeing, and I mentioned it also in the remarks, we are seeing increased demand in terms of order flow for 2025 and then higher than expectation 2026 is you know constantly increasing in terms of production but what happened specifically in Q4 was also that the order the orders were relatively low in the first place as December is a slow month in ordering it's a short month with holidays etc so it was it was low and then production level came up even higher. So it basically means that we believe the inventory levels that our customers are not reaching their inventory target at the end of 2025. So they are tighter than usual. And it has some impact on Q1. But again, we're also seeing very good demand. 2026 production levels are going up. But Q1 does have some impact of Q4 low volume combined with heavier or bigger demand.

Yeah, thank you. Thank you, Aaron.

Thank you. The next question is coming from Edison Yu of Deutsche Bank. Please go ahead.

Hi, thank you for taking our questions. I want to follow up on a mentee. Can you give us a sense of what are the next steps with some of these customers you're talking with? I know you mentioned proof of concept. are you going to basically ship maybe a few units and then if that turns out well, you'll ship, you know, 30, 40 and then much more. How do we think about that, those kind of next steps to commercialization?

I believe that 2026 is going to be maybe high tens of units in terms of POT. 2027 should be more and 2028 should be even further. 2027, we go also into production with the production partners. So 2026 is tens of the units. What we would like also is to have, in addition to the POCs, also to produce more units for the sake of the mobilized to start experimenting with robots, not only maintain themselves. But again, it's going to be a high double-digit number of robots in 2026.

And maybe just to add, from the viewpoint of the customers in these pilots, the purpose is to start with a smaller amount of robots that perform specific tasks with their kind of outlining, and you just go to the logistics center, for example, and there is a few shelves with boxes, and human beings today are moving boxes according to their instructions and so forth and basically want to see how robots can perform over a certain period of time what's the precision you know reliability durability maintenance and so on and you know gradually afterwards expand this to more and more tasks and in larger volume you know we are talking about companies that employ tens of thousands of employees today in these types of positions so I think again going to be a question of supply and that's why it's so important to have a manufacturing partner, as Amman said, that already in 27 is able to produce robots in a serious production manner, which is important both for costs and also for scale.

Understood. Appreciate the color. A follow-up on RoboTaxi, obviously there's a lot of excitement coming out of CES. Has your view on owning more of the, should we say, ecosystem changed at all? And that's just in the context of you obviously have a lot of parties involved. Could that kind of hinder the speed of deployment or some of the logistical aspects? And obviously, it would require capital, but I think that's not that big of an issue anymore.

I think that the current arrangements we have with Volkswagen and Moya it's really optimized for speed of the volume of deployment. So going right now more vertically integrated is not going to increase the volume of deployment. This is something perhaps to be considered for the end of the decade or further than that. I think what we have in place is it's really optimal to where Mobilize asks. Mobilize will be producing the self-driving system as a Tier 1, taking responsibility not only for the electronics, but also for the sensors, of course, the software stack and all the validation. And the revenue per vehicle plus recurring revenue per mile is very, very attractive. The focus is execution now.

Thank you very much. Thank you, Edison.

Thank you. The next question is coming from Tom Nrayen of RBC Capital Markets. Please go ahead.

Thanks a lot, guys. The first one I have is on the 26, I guess, adjusted operating expenses. I think you guys said it's up $100 million. And I know that FX was mentioned, some other issues. But then the one that I'm wondering if that's the biggest piece of it is the Mentee R&D, or maybe it's consolidating Mentee, if it's operating at a loss. Just curious how we should think about that OPEC's going higher. What's really, you know, the biggest driver of that? And I've got to follow up.

Okay. So I think I've mentioned that we have incorporated Menti R&D into our guidance. So the guidance includes, in terms of operating expenses, mainly 5% of regular inflation enhancement or compound. And the additional portion is Menti R&D. So these are the significant two items. I also mentioned we have also a headwind from the ethics rate, But that is mostly offset by the efficiencies initiative we did in Q4. So I hope that answers your question.

Yeah, just to follow up, I mean, I think that's pretty clear. But just to follow up, like, you know, we do expect to have normal OPEX inflation per year of around 5%. This relates to, you know, salary and benefit inflation, as well as kind of additional infrastructure to support the AV activities and the advanced product activities. That's normal. On top of that, this year, we are assuming consolidation of the Menti R&D expenses. We talked about that as somewhere in the lower single digits, but probably think towards 4% type of thing. And additionally, we do have this FX headwind, which is mostly offset by the workforce initiative we did in the fourth quarter, but not completely. So that should give you a decent walk from 2025 to 2026.

Yeah, I think you described it quite accurately, right? But take into account that we're also growing in terms of being in a Tier 1 position with our programs with Porsche and Audi and Drive. and sometimes you need to make adjustments in terms of increasing the headcount. Again, this is non-material compared to the overall OPEX, but it adds a few percentage. So take the walkthrough that you mentioned, which was quite accurate, and add to it, you know, a few percentage of growth that we need to account for when we are taking a tier one position and investing heavily into into the future so two years ago now we we calculated our OPEC growth but we cannot be precise to a single percent in an area which is experiencing the rapid growth and for a follow-up on mentee and this I know this is very early to ask this question but I mean

look, we're seeing the market's reaction to the potential news out of, you know, from Hyundai with Boston Dynamics and the credit that Hyundai is getting. Is this something you guys might think about in the maybe the distant future? I don't know about trying to crystallize the value. Right now, there's so much appetite where, you know, the capital market, certainly. Is this something you could consider, you know, monetizing, maintain some way?

Or do you believe that, you know, together is a combined entity that you know that's that's how you kind of view the business I think that the market is taking some time to internalize the news of the acquisition or the news of mobile I entering into humanoids I do believe that in some no near future this would this would create the dividend the like of what's happened between Hyundai and Boston Dynamics, Menti has all the potential to make big steps forward, has demonstrated quite a mature technology as the clips that I have shown and the clips that they have on their website. And then together with Mobileye, they can make rapid steps forward. Now whether we're going to see this dividend in a month or whether we're going to see this in a year. I don't know, but it has the potential to catalyze the same benefits that Hyundai is receiving from 10% dynamics.

Thank you. Thanks, Tom.

Thank you. The next question is coming from Colin Rush of Oppenheimer. Please go ahead.

Thanks so much, guys. Can you talk a little bit about the near-term pricing dynamics on IQ? Just curious how much movement there really is as you see some of these larger volumes move through in the first part of the year and how we should think about that trending through the balance.

So maybe if you refer to the IQ prices, let's just make sure I'm... Volume or prices? I didn't get the question.

I'm concerned about pricing as you ship a higher volume here and then how the pricing trends through the balance of the year as you normalize that.

Yeah, so the pricing is... Every year is affected by the mix of IQs, and as you know, the IQs have different generations with different software features and software packages, and this has somewhat of a different price, but overall, on average, there's no, let's say, meaningful change in the prices. There is a different mix this year compared to last year, as Moran said in her remarks, where we see higher volumes of IQ5-based ADAS products, and IQ5 has somewhat of a higher cost, but still it's advanced products with meaningful volumes this year compared to last So this does have some impact, but it's all natural mix.

And also the second chip that I mentioned, the second chip that I mentioned combined the fact that the second chip is at a lower price than the first one, so it's higher gross profit per vehicle, but lower ASP. I think that the combined natural mix that Nimrod mentioned and the second chip impacts is approximately like 80 cents or so, year on year.

Yeah, but just to clarify, this second chip or the car has two IQ4 chips, this is a one-off thing. It's not that we see a trend having two IQ chips in the car with one of the IQ chips at the discounted price. This is what we call a bridge. This is a bridge towards IQ6 to IQ6 flight. The carmaker wanted to meet a certain regulatory environment that IQ4 alone could not meet. Therefore, a second IQ4 was added. But again, this is a one-off. We don't expect it.

Okay, perfect. And as you think about doing the driver out demonstration here later this year, Can you talk about the regulatory process and any bottlenecks or hurdles that are still remaining here, things that are of concern that you guys are focused on getting ready to do that demonstration?

Well, in the U.S., it's self-certification. We have stringent KPIs in terms of meantime between failures that we are meeting towards going driverless. But outside of the U.S., there's homologation, and as we mentioned, together with Volkswagen, homologation will occur in 2027 outside of the U.S.

But nothing on a regional basis or a city basis that you guys are concerned about?

No, we don't see. And actually, the homologation in Europe will have a stronger tailwind, given that the vehicles are produced by Volkswagen, level four vehicles, and our cooperation together with AD&T and And MUIA and Volkswagen will allow us to go through the homologation in a much...

And this is a significant entry barrier to the European market, as it involves a lot of activities and direct engagements with regulatory bodies that we are already doing with Volkswagen. So getting this approval in 27, as Amar mentioned, will also separate us in the European market from others.

Yeah, it's an important point. And just to clarify on the timing of homologation, we're saying that it will be completed in 2027 and start in 2026. And the six cities commercialized in 2027 that Volkswagen talked about includes some European cities, which is going to require the homologation process to be completed.

Thanks so much, guys. Thank you, Colin.

Thank you. We are asking remaining analysts to please ask your question and your follow-up at the same time. Our next question is coming from Joshua Buckhalter of TD Cowan. Please go ahead.

Thanks for taking my questions, I guess, both at once. I guess to start, you highlighted the potential for conversions on surround ADAS this year, but you haven't made the same comments about supervision and chauffeur. Maybe you can provide an update there. Are you guys de-emphasizing that in your go-to-market and conversations with customers? And then for my follow-up that's, you know, on a completely unrelated topic, Adnan, you've touched on this in the CES presentation, but I was hoping you could provide some more details about, you know, specifically how your IQ roadmap is going to accelerate mentees' time to market and perhaps as important, you know, how much software development is needed to move further into robotics, you know, given IQ's design specifically for autos.

So we have multiple engagements also on Supervision Chauffeur, so there's definitely an active engagement there with the market. Just to put things in perspective, our relationship with Volkswagen Group with the different brands on these products started maybe in 2021, and it took us a couple of years to kind of cross all the items that is needed, and we are also focused now on opportunities that have a meaningful business potential. as opposed to, you know, smaller scientific projects that some OEMs are trying to explore and maybe in some cases it's in-house development that they're doing and they want to allocate one car in the future and see if it works. We're trying to focus on opportunities that present significant volumes, multiple vehicle models, you know, concrete timelines so that we can, you know, we can scale the products. We're not looking for the, you know, first opportunity. We want to kind of scale and we have several of those. I don't want to predict timing, but we are encouraged by the activity there.

I think we feel that it's too early to talk about IQ chips on humanoid robots. We think this is a longer term, this is a longer horizon issue. Currently, the robots are based on NVIDIA chips and we see that we're very proud of that relationship. And we see that going on for the foreseeable future. Now, when we go into really high volume production where every cent counts, then I think IQ8, IQ9 could be quite relevant, but it's not in the foreseeable future. Okay. Thank you both.

Thank you. We're showing time for one final questioner. Our last question is coming from Samik Chatterjee of J.P. Morgan. Please go ahead.

Hi. Thank you for taking my question. This is MP on First Samik Chatterjee. My first one would be, Since you said that Porsche and Audi programs are now pushed out to 1Q27, will Drive or RoboTaxi be the biggest swing factor for 2026 revenues? And on that itself, any updated thoughts on the monetization for Drive in terms of upfront revenues versus recurring consumption-based revenues? And for my follow-up, I wanted to ask on the second Surround ADAS customer. you said that there could be a potential decision for the second architecture with this customer in one queue. So if that happens, will that potentially double your pipeline with that customer? That's it. Thank you.

MP, the answer to your first question is that we did not expect any meaningful impact from the advanced products in 2026. We've been saying that for the last several quarters. So there's no change related to what you talked about.

And we did not account for drive revenue in 2026 guidance, so there is no, it's not in the guidance. Regarding the second question on the second design analysis on ADAS, so the discussions are obviously ongoing, and I know we are making good progress, and again, I don't want to go into predicting time, but we continue to work on this, and it's progressing.

Thank you, MP. thank you at this time i would like to turn the floor back over to mr galves for closing comments thanks everyone for tuning into our earnings call and we'll talk to you next quarter thank you very