Mobileye Global (MBLY) 1 Aug 242024 Q2 Earnings call transcript

Greetings, and welcome to the Mobileye 2Q '24 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dan Galves. Thank you, Mr. Galves, you may begin.

Kat. Thanks, welcome period quarter ending and call earnings Mobileye's the for June to everyone, XXXX second conference Hello, XX, XXXX. today's as it. that the note discussion statements forward-looking Please based business environment we see currently contains on press Such statements uncertainties. Please actual factors includes and involve results specific to information the could release, the on refer additional that which to risks accompanying cause differ materially.

our reconciliation measures this both GAAP figures. in A to is we financial and non-GAAP refer of earnings will call, to Additionally, on GAAP release. posted provided non-GAAP

us on to And today, Executive today Mobileye's session call I'll now CFO. Moran the Amnon A Shashua, as call Nehushtan, Thanks. joining Professor Joining Shemesh, VP turn the usual, of Mobileye's for Also Amnon. President; and Nimrod are the Business Q CEO over Development and is Strategy. Mobileye's and

growth minus compared Moran. of decrease in also the X% XX% with QX were by revenue volumes the more potential than with we be significantly levels More the to outlook XX% the year. All normal based to and QX million, and also both for aligned the the volumes sources $XXX XX,XXX will covered doubled everyone, in China. for residual Hello, QX are back original back SuperVision thanks XX% aligned margin provided details call. believe various And year-over-year. reviewed, Adjusted in QX with Starting over with with first in we were results, have earnings the our quarter EyeQ is operating versus outlook, which some first in inventory closely our all, ] for units QX. QX. half of to [ on results half recovered and of joining January. information on stands at

has SuperVision. ADAS, has near-term share compared we decline primarily As indicating we customers forecasts This X of second losses disproportionately impacted also these although dynamics we three, OEMs the in ADAS related XXXX and unexpected Chinese to continued of of core Number factors. Number to our in almost we China. seen last look weakened, exclusively to production of outside challenges On one, Number to were face our ADAS half second is what high-volume delay have China. which headwind, China half to customers' orders from the outlook as led the a customers than of smaller update. both a global in of from year, two. stemming meaningful volume due the for launch market reduction two, the first forward faced a have

despite seeing China higher competitive volume Turning to for and in position SuperVision, conviction short-term long-term, mid- the we're reinforced on headwinds. a in Mobileye

forecast on are Second half lower in vehicles. U.S. January and due increased Chinese-produced than back to expected primarily European to be tariffs volumes our

expansion, due reduced Chinese major in developments. is to and announced is releases with aspirations We OEMs for the our have see also from and our Difficulty] today. dynamics We itself for believe where China long-term product volumes among reshuffle is the by process [Technical as China, uncertainties our our position adapting in we macro customers. Overall, around and to diverse almost market dynamics expectations several isolated to illustrated China press a forecasts entirely global undergoing market current portfolios reduced

Zeekr spectrum autonomy generation of broadest variants offering possible. makers audience based ADAS Robotaxi and models EyeQX while a XXX long-term paving the to and follows: of through a new domestically of globally, DXP, of on hinges outlook acceleration to expect as an adopt version the We of for SuperVision additional next generation once be market path with collaboration. Ultimately, lead enhancements and key growth the path and this Mobileye's our appealing to car solve product for Chinese positives completed, of adaptation SuperVision the development, Zeekr prospects and to next

As goals support EyeQX the that us towards Robotaxis as helps platform final well. a represents vehicles consumer as highlight position some leap all these topic, X and forward world how in a and can the categories of details the important I'll only company

ADAS. on the design progressing It's mass positive segments. to ADAS. all units envelope are the categories. has major surround continue new between a for business, from towards is driver and customers. Number of replanning is These price market push we the As two, versus brand versus developed the three, autonomy, China mid-trim less engines for are in which future fits with guidance a EyeQX performance, or driver performance, Recent increased so as high require significant combustion emerging RFQs today segmentation lower Lite, EV, This nominated market non-China, is of in a have OEMs for don't in emerging goals vehicles one, XX the market AV many that around which have X million been global success build ADAS a ADAS future future on for systems key functionality, is we for current growth and ADAS. across growth seeing X clarity involved yet OEMs regulations future SuperVision is factor sold that for and major versus on wins ADAS million already excel. Number will buy which where process, distinct The XX is in -- and Number regular here. us. any

competitive enable function the standard. on hands-off First, price highway next as

technology huge increased growth path pursue alone. Number the maintain driver very hands-free satisfied the camera X category for a emergence off with an RFQ where important for will continue traditional extremely and ASP full-surround that road to and And see high. driving market the are as the requirements types prepare ADAS/AV, not to front-facing safety consumers. We deliver of category, as value is significant be premium SuperVision Chauffeur all volumes where OEM view of four medium-term eyes mass a segments. to the to aspirational Second, OEMs within

in are ADAS. We're which in progress major is in is represents several OEM at use also just pursuing market these X we XXXX, pricing opportunity representing service I testing development X autonomous approximately our made not program current X seeing XX to it's margins mentioned through times To a average. are RFQs want to gross over especially leap backbone EyeQX pre-award initiatives, a come we X million we value a double the we to currently Chauffeur revenue designed more our that future High [ a progress an the and where wins since technologically from industry engagements than with to XXXX. approximately is area. to wins that commercial ]. BrainX year-end and are ADAS our have into leader initiatives, surround of with specifically, interest shed across as these pursuing both the driving the of autonomy of substantial a are clear there an OEMs demands have in more and we believe responding in AI design years in to put address commercially. SuperVision of the market. XX line And additional our above, has context, this ADAS the continue improvement, of XX% one production. of incremental pipeline in XX combined us Zeekr it And both all light product just the and many most about significant currently from with becoming to product of believe and supported of vehicle this RFQs and life some already SuperVision more currently number, we similar OEMs. On to ASP Japan, inflection point RFQs of This we Mobileye that value currently Volkswagen drive predevelopment mobility that We platform, develop we're for are company compound began units is We at and already this The serves is in the with is surround nicely. with transformative progress, the by and accelerated pursuing looking progressing the single EyeQX on development advanced category, strong heart BrainX and major advanced only scale. discussions groundbreaking been track recent with or our representing X OEMs, complexities activities. We Within forward the with Chauffeur OEMs technology. are ago value

dive makes BrainX what into exceptional. Let's truly

networks, First These generalization level a performance is concert to AI robustness of BrainX performance. BrainX By autonomous focus, the is that trade-off. multifaceted error approach, in and work input generative of each powered the bias by networks. is with sophisticated driving, as of Difficulty] leveraging long combination inherent and the state-of-the-art challenges ensures tail [Technical unparalleled. this such specialized tackle

a to efficiently inference to our driving technology cost path offline Difficulty] adoption than are be on X online designed testing the of vision-only not with hinges better has available else well now believe widespread fleet products that began of a and anything to today, cost autonomous EyeQX EyeQX computer. designed deployed to at BrainX XX% we for a improvement aggregating product. Cost synergy customers. product have but Tesla in market by effective continuously between MSRP, operate This as to meticulously efficiency. the which been we EyeQX effectiveness. [Technical data-driven cost, XX% and XX flywheel of the of in We of MSRP. Modularity. down our drives and hands-off scale QX, products at platform line the enables at sight our feedback partners eyes-off During markets. from at maximizes simulations. the We system, least BrainX for improving value understand the Moreover, magnitude customers only compared orders will and also FSD all as the offer of platform

and for creation -- of the most adaptation including layers modular design seamless perception of architecture. of This separate One to products, derivative allows is various of drive BrainX exciting aspects configurations. its sensor the

to models to Our diverse later unparalleled investor of preferences them can upcoming is new intended such that areas tangential the offering driver customized as and on More be year. and Moreover, ensure opens up needs flexibility on in in day approach OEMs, it the meet infotainment BrainX our experience. business that and modular adaptability.

autonomous control guardrails REM and control paramount. clear and only crowdsourced oversight our view, what checkpoints, incorporates unique the assets, In imposes sets also precise and thereby and realm processes, don'ts, mapping our allowing extensive the and controllability. mobilized of architecture design Finally, trust solution. In data in the transparency not are with namely integration apart driving, enhancing system. BrainX lake. provides of its is and our robust for but competition This transparency reliability BrainX in from do's decision-making

years map, products, and deliver us in While all interpret a is road to position and vehicles millions also provider as in used ultimate customers all database, through and million EyeQX from real collected insights. Furthermore, collaboration the with we conditions X around to of only global a is past that behavior as the data deep that business X everywhere miles design engagement across the towards performance to daily. of by its backed our same efficiently data categories categories nomination. We segments view petabytes secondly, mapping with which months, amassing enables BrainX REM the one, from by, of scenarios over in intended technology EyeQX, successfully growth driving company teaches reservoir from segments, above; everywhere, hundreds of uniform as and linchpin capabilities, BrainX This autonomous world EyeQX advanced tens mentioned continuously leverages of wins invaluable provides backbone. managed the crowdsourced but leading but on in not only summary, across it not world. with technology technology X the system-on-chip insights of significant BrainX from is explicitly Mobileye's BrainX is is This to data current how all these synergies X evolving across meet X challenges REM execute ensure includes delivering BrainX our in providing versatility to across also as OEMs amount that driving products of segment the only evidenced being planet. In increase and to advance

the with parallel, the program the deliver and to over in vehicle the SuperVision, synergetic planned while about Moran. family. We're in architecture potential our excited year. I we prototypes Group Markets evident, track by of of call at production Day of Drive now at product details and time BrainX the year, December end and the leveraging Capital this in our are our Chauffeur provide for more Volkswagen on same production As to and demonstrations turn EyeQX we'll hardware

for joining thanks you, Amnon, and Thank call everyone. the

Mobileye mainly in Before my please related aware exclusion Intel's The of to on begin, comments is be in non-GAAP amortization of intangible XXXX. acquisition refer profitability numbers will I non-GAAP that primary which Mobileye's to is all assets, measurement.

We also in than exclude projected. we EyeQ back volumes They we as with doubled versus stock-based outlook the compensation. Starting January. with were closely QX more aligned results. provided QX QX

partners that volumes X the Our higher inventory excess QX. in Tier of and in digested significantly in QX resulted most

the end QX. SuperVision Tier inventory fully of X, on customers of levels volumes from larger supply expected. discussions As customer believe back of to almost demand of are normal, our worth our large QX and reporting QX, as in and and analysis the in own volume at based XX,XXX we increase inventory

higher QX, to X on rose of compared higher within to in slightly where of and substantially revenue, by operating revenue as inventory margin a lower minus operating mix North margin normalization Number be America and significantly On was partially to excess As conversion base. expenses revenue and three, higher year-over-year conversion gross than X main Number margin due million recovered gross due offset EyeQ significantly well to basis, below based customers to the as at higher China. XXXX XX% two, $XX the inventory most to a EyeQ margin which of across regional in QX gross recovered QX Tier tend margins cost. Adjusted one, of our operating Europe, to prices SuperVision profit versus XX% approximately single-chip normalized. percentage the higher factors. Number a next-generation to total above also remains expenses. similar is operating due controller, XX%

well EyeQX-based support our are to moving technology expenses must like to flex operating software expenses and of changes points on and make technology program our with sales evident data on revenue statement products growing significant mid-XXXX, that. We All in many starting of to as and guidance, platform current now execute execution the Drive. an BrainX note I'll solutions in related overarching marketing continue hardware our Before customers the beyond that Chauffeur, promotion general expenses. will primarily other levels. operating on It's and and to these development, to Difficulty] important programs not scaling surround R&D and platform core advanced with [Technical specifically. program EyeQX to customer based Therefore, SuperVision, based

driver to of to per which content However, pace new begin leverage trajectory last significant surround do expect to of of years, as the after data development particular, OpEx the we as down, advanced to scale. adds in enable products several In I segment accelerated operating the will growth the over leverage addition rise SuperVision Chauffeur. as important it see the the strong operating and vehicle growth slow

year midpoint, Turning are that to both income. are we through. reason the revenue the XXXX adjustments went updated reducing full exclusively guidance. for for adjusted The At Amnon volume-related the and operating outlook almost

$XX to Our is previously. to to reduced from million $XX And EyeQ $XX to to million compared $XX guidance as million XXX,XXX volumes to to volume reduced XXX,XXX are previously. SuperVision million XXX,XXX XXX,XXX

bit accounts about China SuperVision expected half the for detail and little to volumes QX QX. remainder. A XXXX, total a a approximately more the In expectation expected lower and At in in above half, for in The the ASP terms in $XX.X level that in of revenue our market tariffs. improvements, little volume volumes with total are lower expectation. the XX% with SuperVision to the some to below XX% with uncertainties dynamics EyeQ proportion, offset the versus to of related to of approximately QX million expected expected midpoint, second higher of back EyeQ QX. accounting volume, by XX% conservatism respect in reflects XX,XXX with are on

our expect the generated outlook half of operating reduced to everything as we we've income. than net expenses, adjusted of year-over-year discretionary year higher growth. With about XX% approximately operating by we We and XX% prior our million growth $XX respect was compared of full cash looked now $XX consider first forecast flow, terms to In in million. at adjusted the

We the in dynamic continue expect second this to half.

our XX% in terms comparison in a of for effective assume rate, of and to expectation XX%. between XXXX tax of we XX% XX% to Lastly, rate non-GAAP tax prior

do profit We based that adjust have tax on pretax not items levels. some

And pushed now reduced will rate your for Thank the XXXX profit we questions. you. tax take being the So outlook. to up is mathematically due

[Operator Instructions] follow-up we One we At one poll participants this while and limiting question to question. questions. moment please are time, one for

Canaccord from Capital from from George comes apologies. Gianarikas It question first Baruah Loop Markets. it's looks Ananda Genuity. My Our like

and do guess I a Yes, follow-up I can one here.

regards sort as So if And well. could of And China thought what's I a which, to me the have lower you you're dynamics, follow-up that level just And the is, the it provide then with to Chinese degree any guess, competition like having also? is around that? context process impact? I seeing

Thank Okay. you.

different The think from is at global market. dynamics currently large. very I volatile are automotive China a markets

Europe, tailwinds we that On current markets. see major requirements, as higher in For and due the stable CK testable Solution near term governance mainly skewed is governance increased trends ongoing trade-off testing of where in and ground believe primarily lack a OEMs opposite content, GSR follow XXXX, volatility mandate one, which FMVSS the think in serve to that we the trend is is sustained of the our of in bar safety Chinese performance multi-camera regulatory considerable in I with shines. We KPIs NCAP XXXX, criteria ADAS ]. and top for the that, to as global of U.S. Global ADAS base AEB. This in short-lived. is all new balance functions performance we where ratings see for of with XXX in between [ will for the sales global believe cost see expansion the Euro U.S., and we which the amongst Europe, Mobileye Eventually, like as requirements, clear such China

includes when we us enable China the establishing only our promote with solutions announced will strong not local for grounds build of technologies in would the with the prepare further our but players morning our this to solutions into OEM collaborations stabilize. for is by that PR also selling market industry customers are our like localization infrastructure long-lasting to focus This This Zeekr. that our China cars in support China, So with will will global China.

chip markets In addition, with emerging for basic right for we're EyeQ requirements. compute ADAS also entry-level preparing most the the just

So our cost down into a we're it just is up of XXXX. lower this because cater on right selling come around down customers will of also all And Yes. somewhere the investment we'll volatility important all, Western beginning doubling for that And I in And also is short-lived. other the China. solutions customers, very China with compute. think, road

That's you And super announcement. around touched my context was to of love additional importance would be, going what the press on just announced. the helpful. that but morning that on your actually follow-up the that Zeekr was this should aware to the get be We've read structural we collaboration context just release, of

Next question please.

Our question Canaccord George Genuity. comes next from Gianarikas from

a So start give of could a for just you line maybe time RFQs the hitting you do suspect could if some you about the and see announcements? discussed of P&L little ramp maybe please that could emerging When third win bit some us we that the segment.

George. Thanks,

just So to recap this maybe category.

seen mid-trim. everywhere push a And regulation-certified generation volume prices a solutions there is that is in for have Premium but X segment. the recently, high different the Traditionally, in new kind couple we still vehicle or which we that a categories see they is high-end past for This the eyes-off have. solutions for what low-cost and is So Entry hands-off development of is highways. passenger for of -- looking functionality, have today nonperformance. in are what the quarters segment. affordable is for category OEMs of we the new

for X comfort OEMs development. new and Now from of still but cost push simplify in car, this to structure a generation there one the consolidate category that driving in improve ADAS. want features offer their forces the Number are architecture, is

force second from is driving the regulation. The pool

standards. of and terms safety global sensors software So ] sophisticated ratings at NCAP seeing of line the really all the the and latest road [ the drives more to the map in add to more from top NITA be industry and

door of are X driving that to demonstrate really, only X we've to latest of in in a targets short to generate are technology quarters. of end These Now these 'XX a process automakers Mobileye, XXXX we've and with that really truly very able or combination the SOPs. been able time, opened from RFQs unique or amount the few to forces been carmakers in X X

at So second the most early ramp XXXX. half and the up 'XX of will likely start

Amnon RFQs entry say our segment. with to earlier, as of combined kind by significant these of ADAS the of the opposed mentioned volumes are Important the than the -- as level a OEMs today. an expansion ASP, As is this and derivative of the to potential considering tailwind down SuperVision are revenue higher a that the in the significantly entry

and that us SuperVision So at these And of one continuing least SuperVision with who and customers not X -- SuperVision work are Chauffeur side-by-side and in are on we of are, or living the have as parallel, with instead to of with Chauffeur. RFQs well.

So opposed we consider to be level of an us. development very, from this potentially cannibalizing is for our very expansion entry as SuperVision, to important a which

from take OEMs mentioned you release and what to Western to the for to follow-up, wins sort so a far? half announce year. as is appear of what maybe as subdued offering to the that you second given have significant Tesla's in curious I'm from this from FSD in of -- appetite FSD adopt advanced rates solutions the autonomy SuperVision be particularly And Chauffeur press

Yes.

continuing are OEMs make So it's we in activities well. all And big Tesla better continue China, forces intelligent today that more includes see be next in offerings some intelligent all I at make advanced and mentioned driving driving. them evident or -- to in OEMs. at progress this and more the invest where the driving markets beginning innovative this practically. call, Chinese from across with we development This business of to you The of the will -- as are least think most as progress differentiator OEMs and our the for of

what a a they rates. which today and very will is right impact to you Potentially, can take will performance, that high can continue a function think high this on OEMs offer, understand years point, and X -- now, improve. performance price that not performance price very Mobileye mostly the what can get consumers offer is a if optimal X to to a I attractive at rate opposed point have to they from which to which take as reliable in price, then having high maybe of negative can level have at see Now

-- to Tesla performance still to you of a and have rates, and though it's a X good there improve like X lower, as on from continues realization can now, So even today, is reliability as would unique, these from years systems. systems go to that will to Mobileye very, might improve data demand which prices launch to is consumers there some take which where systems, is these is very continue where OEMs be these

to Just this. to an give evidence you

is realize for X And years XXXX because of Mobileye the price consider to the the best have high only performance China. global very have they they have to them and of OEMs solution course we in path engagements out did with opened that compete compete next a One of United for and them for reached there generation, new actually they with some States. was the They in our during the that not level to performance of is business that one demonstrations. these is opportunity the they that [Technical with us Difficulty] for really these did the planned And and ratio. versus OEMs in not demonstrations, affordable,

order is to have in this be an Mobileye. of to effective on need of I'll to testing. player, the one just the said Nimrod also advantages what is big not road, And that, development and we technology add

gaining in experience. This of Western experience global and markets. of has the the category are lot into be only a this We SuperVision will translated And lot we China. are that supplier

So this experience is something that takes time.

we're And cannot X, cool and advantage perfect. you a and lot that just and Today, Mobileye's lot everything expect develop of sit you day when algorithms a experience. is the road. this on system, it's of great in will that on launch Now SuperVision a lab gaining the be

And I this comment think question. add one to just last to

progression technologies the that we're not is to these we the are today obvious year just an OEMs engagements and towards Just number seeing evidence, support a but with to also by that compared have the market quantity, ago, with. who there engaged the just of in

niche talking in about just the create have let's in OEM start-ups XX to say, a OEMs now are have We is top -- vehicle -- this want differentiating the, that global that angle. incumbents production not

incumbents resources looking So these nomination systems. growing those lot we and are approaching OEM promoting for the of are technologies pragmatist these for number and a see us the that into a of investing

Thank you, George.

question, Next please.

Research. Chkaiban from question Antoine comes from next Our Street New

lowered So shipments midpoint. XX,XXX yes, I believe you XXXX your SuperVision projections by at the

the could to maybe lower have systems tariffs? the by are those us follow-up. by splits what that proportion you on this expected a tariffs maybe between the ship that how And impacted will customers years provide how more color So by impacted of you impact XXXX some 'XX, SuperVision baseline and various 'XX, I the the in ramp-up systems telling in

by being Look, for SuperVision challenged forecast our accurate China. ability the is to in make volatility

up like forecasted, but is and XXX the platforms initially global taking Europe. we recently partly in than are imposed ramp Polestar our of and Some being the markets, to exported targets to longer U.S. due X Zeekr

Additionally, we Zeekr the down anticipate may on solution our necessarily that road, SuperVision models be not standard.

Although into be taking would from the still that conservative Zeekr, that approach indication this of prudent. forecast is believe we no baked

that but launched we volatility see into likely more and markets. XXXX would sustain SuperVision models in this global So believe is until we short-lived,

small with have inherent really that volatility we One things. number in is X is models of So SuperVision. this a

So everything volatile. is

automotive China we the why forecast. volatile. This very, difficult very accurate took conservative It's is is approach. Second, forecast very to make a --

we that for So such case the what guidance this change we year. again took XXXX, would worst be need don't to throughout

of not does reflects So of this is of it SuperVision optimistic our case in reflect guidance not because control. view. worst volatility most heightened our our that view our It

that OEMs over the last that with, XX with you're XX quarter, How on likelihood number of update was XX working the conversion on I OEMs? the maybe believe the those So last days? same the has you changed maybe can

Yes.

-- and right have to direction all towards we we nomination. move on of what access I in So these in progress think the continue we the make programs,

As evaluating and architecture are we system, activities OEM, of relatively is from the the cetera. needed starting previous et evaluations, the system process the complicated mentioned changes in technically reviewing performance building involves calls, many global nominating and that by doing expedition different this prototypes,

vehicle In and point, we to obviously to addition investments right program. when the that part negotiated to be the there about to in this, the needs price discussed And needed to even it to this commercial and different hundreds order especially to or build should get have their another is incumbent plans agreed talk in which I [Technical incorporated of least or the launch Difficulty] also need another say. that question into models, challenge inserts answer, that they dozens at future, cars

that many it's this think backbone it year, to some a takes more of years converge to continue cases, in for same likely time, fact a these years these months decision. At very than OEM the magnitude come. to activities, the be but given it's I few the So solutions decisions, for or will the having made natural the that selected

have in world the in of of us in So we believe technology give of for come But our the portions XX next-generation a it platforms. for -- OEMs years very terms afterwards will do as the today. acquiring top process ourselves are out we announced, locking in this believe months, now to good stability for provider the these of few next that as the we we OEM once we partners the

of seen little So percentages, I developments into this in it's complicated. positive and bit think But in what quantify terms are have a only we the nomination. towards quarter past to likelihood

Joe from comes UBS. Spak question next Our from

[ on is Gabriel Hi, ] for Joe. this

to RFQs changed you ] XX business, choosing again, Lite. are are not incremental So SuperVision. the the this OEM base only number over are SuperVision now prior quarter just of But the so the Lite customers and I XX SuperVision [ those saying that think mentioned from hasn't X

of those Lite inclusive and were X the did XX So the well? OEMs X last was by wins? X Or these off drop SuperVision new OEMs replaced as

that we're of disclosing to was X. more this more the XX be align defined having -- last precisely, now definition. this we wanted it's category the a So to with number of and consistent also these explicitly we're inclusive more And

call Lite. don't it we And SuperVision

Yes.

accelerated But a the frame further on Zeekr exactly large Chinese you seeing to this know mentioned these just a your What focus on still What's OEMs. are in-house the to business your with And technology you that on earlier vehicles? question. win I time within And of entail? domestic getting does follow-up confidence integration Okay. region? developments

the development really First Group OEMs critical as was [Technical our global led and see SuperVision and capacity, to other many Zeekr for engagement. because example, which for deal was to China a a a key background, in it our for the in with factor proof point Volkswagen capability Difficulty] current us winning, launching

solution, So are we a It's on market. global the that super, in it's because just continuing to solution. down investments not to the fact global double have we have right? a important super China It's Chinese

only the Western and in are the in we Now about says China. challenges system supplier in lot operating category a this of a this

will it Chinese is allow Group with standardized. It So very, benefit more a we data as our parties. the helping with because our allow be REM both that solution believe the Geely regulation will very if bolster whole, will and localizing challenging. to we complying It Zeekr relationship

parties. There extension So if on help also technology. It in that us collaborate of details, of vehicles we we amount in are operations. solution, activity be not kind us data. And Zeekr Volkswagen together area the both on are will to but will commercial of kind of some doing announced also sending also to we're targeting with get expand we with Robotaxi, benefit of the the the also ID going it considerably this Buzz. to that what can We'll material help course, they I think localizing Mobileye's of are terms

terms about where we very, bolstering all less upgrading this we SuperVision we one one localizing solution our in right? In of the meantime in coverage is an critical have have SuperVision events, XX very events the good global both did, by we of -- and much that. critical maps, between China, we with just it's test give of anecdote. When our vehicle REM and it the the U.S., of way, China we at our partner in test When between meantime into hours, than OEMs. So metrics, our look it's the positive, solution. I'll you when

good because we yet the and as of finished is this as -- haven't China. have is the not REM So localization, coverage we outside

is And get So if with we'll we really start Imagine we a is that old what can technology. effectively, do localize will technology. EyeQX unparalleled. this system our solution the when technology more can we of launching EyeQX

Our next comes Rakers from Aaron question from Fargo. Wells

trajectory SuperVision that? This of about see controller if wondering the to progress is on the uplift gross the you're domain could [ margin talk expecting Jake maybe from I ] was you're and just for Aaron. the you making

solution. to cost So gross goal we the the of is are like that. for controller Volkswagen said close margin optimize. our we're more engagements the nomination the there chip. we will the on that it. have Kind a entire We're reduced always working is to main goal not considerably And now we And all we about more something to EyeQX -- with Group building of for for be The reach system now, that EyeQX the that on are expensive. XX% and XX%

we'll better even margin. it's in really of And highly have optimized. optimized gross margin. more So a It's terms gross

think I -- X on the is XX%, XX% So gross XX% achievable. that Tier position really margin

few Great. adoption on OEMs? to significant you the seen change Chinese back And the traditional rates over Have level going change, any maybe especially business. ADAS in just lower last quarters, any at then ADAS

Yes, we indeed. this And what reported. is

the we half, the second The shipments terms second of see of decline in of year. a half

from it come multiple sources. Now could

inventory going residuals to don't some is of in visibility inventory. that is them of -- on have we XXX% what One

be could is of we market and instead Some ours. a get solution share -- a loss local of it where with desourced

in in what's because the XXXX, rating optimization of in governance, the not X-star of opposite that increasing, in the right? quite opening, performance is have system XXXX, ratings. West, on Today's really increasing. is testing In which going the will skewed of governance testing cost West, As X-star have the the China I is mentioned is lack envelope

share. there localization I testing. helps more testing. of either few no The Zeekr, REM we're trade-off also that, also bolstering terms believe it's I coverage, governance add I of balanced. will market months by therefore, sensors, markets ago, completely more And help the launching temporary. ADAS. align compute. China, ADAS. with that ADAS. A program still Once announced rising. In is to is doing of with cost a our bar in The China, have Chery need And our we is would the global it we'll You optimization with cloud-enhanced with cloud-enhanced believe be we doing regain think, full that we're -- in will they

the and in position And increase to dedicated our also coming could ADAS this up chips, So in midterm. markets. China in lower-cost we're are expand which with emerging

in they good that basic have ADAS really less enough markets. the but much is So those compute, basic, needed emerging to do

is is I that but volatility seeing first it it real, of are now, believe So we the all short-lived.

no States, increase in rates will developed are rates. And increasing of to up rates. adoption want what XX have XXX% to continue to higher drop take year, which these continue because terms just like the X/X this and million ADAS and today ADAS pull very requirements. of and ADAS. And Africa in will And content market development, again, are India terms adoption the the benefit countries countries cars Areas today are and XX ADAS to well we increase almost see only the is positioned today have -- Asia regulation adoption is and that very from increase. say, all. rates see per X number low, which at a a have to United take the we in is and trend picking there to add rates globally ADAS take more in seen, don't regulation million I Europe in in let's some and the today, production that that of add this to South to consumers of really positive vehicle are this of like have we rates ADAS, very from to markets is we from And almost

And that there of missed component another is China the ADAS. terms I in

customers, This also affects them share Western of us. customers, losing legacy are Our some China. in

shipment our OEMs. China the this So of share into chips of of also Western because loss affects of of market volume

say wanted You something to more?

just from Yes, for initial the seeing industry from much one beginning focused mention, going trend. the to is of very indications OEM, are with pretty was order to consistent on specific the the non-Chinese the year OEMs. the It we gap I'm new

that's than reductions. rest OEMs, the didn't of aligned the industry And For half also of with non-Chinese have them any more trend.

market for our going where focused for mention example. down for OEMs. important non-Chinese trend [indiscernible] very in So to was It it's much them the also saw on we China,

from comes from Jonas question Adam Morgan next Our Stanley.

right investments CapEx $XXX Mobileye's running at kind year So million are a around of now.

a allocate a to the it towards autonomy machine needs capital CapEx in and year, particularly your does example, investment change billions of compute? of are the wondering, needs much change communicate And Mobileye competitors developments compute. you'd how to I'm developments in recently For Some like many BrainX, like that investing AI at quantum material that on way in feels do today? learning Mobileye

But definitely we indeed. Well, need transparent. be nodes. But the million more AXXXs -- don't been recently, months, I of not of dollars. of in dollars in billions cloud X compute, in on-prem, much think the to billions investing to investments. have just HXXX yes, It's we're of and those $XXX the we spending kind past close in

we're what's who say been for lot tens be now cloud investing And investing -- buying with we We're have not are that there. knows them. provider. We going thousands needs, a of not of a and just quite our HXXX to

models investing still no it's in car, a your chip in need capacity. matter are chip end limited the the the limited we capacity of strong in is a So we they AI what fit that generative of how at day, terms into

EyeQX that our yet about you the mentioned at better far. technology, see than meantime I before, have been if networks. And you this amount the U.S., that technology, look we the have does AI not XX.X old of of small between so So Xx there, released generative drives if the the in in it's critical testing that which has size look I latest the version as the events data at

online our BrainX, generative of show not AI that it's we have with lots So offline behind components, magnitude -- we orders we far, we testing, the we'll catch that improvement. get and all up. and to need EyeQX, are testing the trailing X so of where have And with

built more events. camera talking of we're than system, between meantime the So critical X,XXX about hours just

billions dollars. So of see don't yes, I our need invest to investments, we have but increased the

magnitude, that's at AI and the for incredible. cutting And orders of been Two you've Mobileye -- computer is vision doing decades. bleeding clearly. this a of edge edge

not banned intervention NVIDIA that that on XXXx into The improvements avoiding you technology leading-edge seem Do that there momentum of to you applications military that objects really considering applications? obvious and be to is risk entity, one the systems similar is mean, advanced AI a provided you're Amnon, your weapon you may technologies driving types evolution U.S. and I Amnon? a due selling that you're has others autonomous chips of of from than lot controlled-U.S. targeting the the dual-use easier also objects, technologies are As that are And and gaining of see argue. does a a and physical know, stupid China. of could question, aware increasingly types for you these forward. It company China,

at stupid No, it's could not come that But... you. stupid out of a all. I not anything don't think question,

I would think I disagree actually.

TOPS, Orin chip high-performance And about we're XXX operations [ XX, right? is about the ] per second. So is NVIDIA not EyeQX terms same XX, tera in computing. context. in things league talking put let's But of

tera to need of there So any in per category terms I ban don't operations kind chip is this think of a of that second.

without second. excel we can operations terms is of brute hardware. per can autonomy we a provide solve We -- and embedding in software what think I force tera

So that the metrics of the not really in U.S. should high-performance measure not that is. because this by it's banned when I the computing of you be us list believe what high-performance really chips computing puts short

from Advisors. from Fox Our Steven next comes question Fox

bigger you the wins. the business becoming had and is and little type bit a China, multinationals more for now a it and relative share risk giving here in like thing, which are I of think that seems factor losing your a of bigger I it's year, that? bit the Can numbers if how Like on you much little you how do it, year? adjust offset becomes just How a but about worry sort beyond a of in this for we this that that bigger isolate trend, more? not should

Yes.

China, with to footprint joint It's China, ventures by that that So we're OEMs. keep that Western presence monitoring in our with entities, the closely and it comprised by Western track Chinese in of. a important as OEMs trend that presence in Chinese our sell our other presence say the indicators we our by that in is in is directly have the

it today. But also hard the what to some Chinese see they and compared press in are you the, is that needs OEMs, with today comes further competitive are it that release, although products assume currently as the sure they in what make as improve I of a ones in presence we China we strong don't are disclosed exacerbate have OEMs, improve the challenge headwinds, can the to look OEMs. When let's doing can our disclosed is we that of still that to our trend relationships the that have to can still for aware a best as Western if possible and China, Chinese business China we in Westerns, local amongst presence some any all solution -- or regardless entities global have the bigger this Chinese. be OEMs say, Western especially Chinese competitiveness can have today that solution. Our the OEMs, so remains And so the of in very it's China, work stable the in good to we that for And some of competitiveness. uniform we

built on new get can units could forward? is risk we China, That's wins an Western just maybe -- us going idea that tied OEM What sense the helpful. so you in a you on Any that chance for percentage to won? give of

Yes.

can numbers from a can really know market and But generally, you as numbers terms and So of the can because don't you market globally are consequence. China OEMS going vary. public derivative our and sell many you these how -- as know our in their in have share to share really don't and base math the we customer do don't know customers. exactly cars our it they're We themselves the

Lu Misiosio from Our [ next comes question ] from Daiwa.

help for I second look going continued You've visionary there is maybe about XXXX But what XXXX push-outs. have picture paint and about strategic of Can lot like? to about commented question I financial half you ramp. a questions then the one. sort a of one one guess already us is

thought that? maybe comment follow-up. all improve give and not just So even will about XXXX us I how but maybe things XXXX And have XXXX, you some for then one into in you guidance, as about

Okay.

volatility levels next beginning. regarding is the only believe normalized. because our But that We XXXX, persist that will we much cannot can year. process now during we inventory China say say be So that we planning believe would

the next this shipments we them year, So we that will all lost year. see

XXXX. XXXX and be out. say will is with And then, coming completely OEMs platforms up normalized. the to closely and of picture XXXX are global closer have with the SuperVision year end we out SuperVision monitoring different more Western and are we'll for to also inventory because ramp So also Chinese of a with the experts SuperVision the OEMs are coming

hopeful in be So completely we'll XXXX. And compared I much SuperVision further that terms that programs in will different to those of very SuperVision are think ramp XXXX XXXX, volumes XXXX, forecast, the XXXX additional we'll months. reducing higher get volatility that and come get programs assuming that in nominations but started in even up nominations, the we of would of of coming

quite months volatility focused is and which X the and China. in really it's volatile the So XXXX, next is exclusively

and a as is operating of your it we helpful. on up can model very is it. on you flat being look and where trying are gross press to hit you cut numbers how the most? that we being Just that's understand Okay. help margin year When model really Is impacted is you the follow-up sort going or going impact OpEx is us full have new OpEx adjusted And understand, how most my to basis, in basis the release, -- the out that just too? then margin this at going a

Yes.

margin base margin update. we having think gross that revenue our QX, that's estimation -- lower for operating expenses, being I similar not year-on-year in So I changed bigger a with for and larger this haven't on that mentioned driver much the operating

margin operating reduced margin from with We operating beginning $XX just outcome. is aligned an the is our gross expenses So reduction expectations the million, year. The but higher. of much better revenue was

expenses. also operating So for XXXX this reason operating -- that's margin. And for have I XX% in we the year, growth say

of meaningful not XXXX will numbers. it revenue in growth OpEx, in the that to have terms balance kind out new with of We

Yes.

a So investments doing technology of we that we in supplier won, the programs for X XXXX. programs, all we will have had that a OpEx increase Tier All say, in are significant be launch let's some the to becoming XXXX. the that meet, new

We XXXX. a OpEx XXXX. in we this in don't So did see increase major happening in

think execute any increase have what said, and any meaningful we -- need meaningful to OpEx XXXX. I to in So as forward go Moran see we

concludes Dan This I floor the like would session. closing question-and-answer for our comments. to over back turn Galves to

this quarter. executive you. team all to thanks the Thanks, in talk Kat, and for We'll participating you call. the and to Thank next audience

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