Earnings call: InnoVizz Q4 Revenue Soars with Strategic Partnerships

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Earnings call: InnoVizz Q4 Revenue Soars with Strategic Partnerships

In a recent earnings call, InnoVizz Technologies (ticker not provided), a leading provider of LiDAR solutions for autonomous driving, reported a significant year-over-year (YoY) revenue increase for the fourth quarter and full-year 2023. The company announced Q4 revenues nearing $15 million, marking an 850% surge compared to the previous year, and full-year revenues close to $21 million, up 246% YoY.

InnoVizz also unveiled strategic partnerships with automotive giants BMW (ETR: BMWG ) and Volkswagen (ETR: VOWG_p ), and a focus on their InnoVizz two sensor and perception software platform following a strategic realignment. The company ended the year with strong liquidity of $150 million and provided a positive outlook for the upcoming year with revenue guidance of $5 to $6 million for Q1 2024.

Key Takeaways

  • InnoVizz reported nearly $15 million in Q4 revenues, an 850% increase YoY, and almost $21 million in full-year revenues, up 246% YoY.
  • Strategic partnerships announced with BMW and Volkswagen, including shared programs and vehicle deployments.
  • The company is focusing on the InnoVizz two sensor and perception software platform, reducing headcount by 13%, and consolidating R&D units.
  • Ended the year with $150 million in liquidity and aims for Q1 2024 revenues of $5 to $6 million.
  • InnoVizz is leveraging its neutral position as an Israeli company to serve global markets, including China.

Company Outlook

  • InnoVizz is targeting Q1 2024 revenue between $5 to $6 million, representing a 400% to 500% increase YoY.
  • The company plans to secure two to three additional programs from both existing and new customers.
  • Expects 2024 NRE service revenues to range from $20 to $70 million.
  • They are simplifying their guidance structure to three metrics and will provide quarterly revenue guidance.

Bearish Highlights

  • The company reported a reduction in headcount by approximately 13% as part of its cost-saving measures.
  • Some OEMs are cautious about advancing projects due to technical discussions and internal team changes, causing delays in the RFI and RFQ process.

Bullish Highlights

  • InnoVizz's strategic realignment and investment in the InnoVizz two sensor and perception software platform are expected to extend the company's cash runway.
  • The company's contract manufacturing strategy allows rapid scaling of production capacity without building their own factories.
  • With multiple RFQs, InnoVizz is working towards 2026 and 2027 SOP targets, positioning itself as a leader in the industry.


  • Liquidity decreased from $186 million at the beginning of the year to $150 million at year-end.
  • Delays in the RFI and RFQ process have been experienced due to OEMs' cautious approach to design freezes and project kick-offs.

Q&A Highlights

  • The company is confident that geopolitical dynamics are in its favor and that their technology leadership will unlock growth opportunities.
  • InnoVizz prefers contract manufacturing to maintain flexibility and high quality, but may consider building its own facility for higher volumes.
  • A soft launch is expected for BMW's level three program, with plans to scale up in China.

In conclusion, InnoVizz Technologies has demonstrated robust financial performance and strategic growth through partnerships and a focus on their core technology platform. The company remains optimistic about its future prospects, citing strong customer progress, strategic realignment, and a competitive contract manufacturing strategy. Despite some challenges in the RFI and RFQ process, InnoVizz is confident in its ability to capitalize on the shift towards higher levels of vehicle autonomy and maintain its competitive edge in the global market.

InvestingPro Insights

In light of InnoVizz Technologies' recent financial results and strategic moves, investors and industry observers are keenly watching the company's performance metrics and market valuation. Here are some key insights based on the latest data from InvestingPro:

  • The company's market capitalization stands at $262.18 million, reflecting investor sentiment and the market's valuation of InnoVizz's business.
  • With a Price to Earnings (P/E) ratio of -1.92, and an adjusted P/E ratio for the last twelve months as of Q3 2023 at -2.06, the figures indicate that the company is not currently profitable, which aligns with the InvestingPro Tip that analysts do not anticipate the company will be profitable this year.
  • Revenue growth remains a strong point for InnoVizz, with a notable increase of 23.46% over the last twelve months as of Q3 2023. This growth trajectory is supported by an InvestingPro Tip highlighting that analysts anticipate sales growth in the current year.

InvestingPro Tips further suggest that while InnoVizz holds more cash than debt on its balance sheet, it is quickly burning through cash, which may raise concerns about its long-term financial sustainability. Additionally, the company's significant return over the last week is a metric that investors may want to consider in the context of the company's overall performance and recent stock price volatility.

For those looking to delve deeper into InnoVizz's financial health and prospects, InvestingPro offers a wealth of additional tips. Currently, there are 13 more InvestingPro Tips available, which can provide further insights into the company's valuation, profitability, and market performance.

To explore these insights and make more informed investment decisions, readers can take advantage of a special offer by using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.

In conclusion, while InnoVizz Technologies has shown impressive revenue growth and strategic partnerships, investors should consider all facets of the company's financials and market performance, including the detailed analysis and tips available through InvestingPro.

Full transcript - Collective Growth (INVZ) Q4 2023:

Rob Moffatt: Good morning, this is Rob Moffatt Vice President of Corporate Development and Investor Relations at InnoVizz, and I want to. Welcome you to our earnings conference call. Joining us today are Omer Keilaf, Chief Executive Officer and Elder Segla, Chief Financial Officer. Following their opening remarks. We will open the call to your questions I would like to remind everyone that this call is being recorded and will be available on the investor relations section of our. Website at ir.InnoVizz.tech Before. We begin, I would like to remind you that our discussion today will include forward-looking statements that are subject to risks and uncertainties relating to future events and the future financial performance of InnoVizz. Actual results could differ materially from those anticipated in the forward-looking statements. Forward-looking statements made today speak only to our expectations as of today, and. We undertake no obligation to publicly update or revise them. For discussion of some important risk factors that could cause actual results to differ materially from any forward-looking statements, please see the risk factors section of our Form 20-F filed with the SEC on March 9, 2023. I will now turn the call over to Omer. Please go ahead.

Omer Keilaf: Thank you Rob and good morning everyone and thank you for joining us.. We have a lot to talk about today. Q4 was a record quarter for us There has been some important customer progress since the years and since the quarter has ended The first thing I want to highlight is the amazing revenue performance full year revenues of nearly $21 million. Were up 246% year-over-year and even with raising guidance mid-year. We came in above the high end of the guidance range In addition to that. We delivered Q4 2023 revenues of nearly $15 million an increase of nearly 850% year-over-year and also above the high end of our quarterly guidance range The strong revenue performance came from a combination of production revenues Robust sample shipments and NREs and it validates our three-pronged approach to growing future revenue streams. We also saw positive customer developments in the quarter with BMW and Volkswagen Unveiled a new shared program with Mobilite as the platform partner and unveiled a strategic realignment to maintain our cost discipline and extend our cash runway as. We position the business for rapid transformational growth. The combination of strong revenues and disciplined cost management led to an impressive cash performance with our quarterly cash burn at just $14.5 million, a record low since InnoVizz became a Public Company, which allowed us to finish the year with approximately $150 million, in cash and equivalents, leaving us with a strong runway that we expect to last through the market share capture window. I'll go through each one of these topics now. Let's start with the news we shared today on BMW In this morning's earnings press release We disclosed that we are working on a second vehicle the geography for the InnoVizz 1 deployment, when we first announced the production award several years ago We said that the InnoVizz 1 was tested and certified on three vehicles the 7 Series the 5 Series and the iX. But to date we've only been able to share details on the 7 x, which is now on sale in Germany with delivery scheduled to begin in the upcoming weeks in March of 2024. Today's news is that we are working on an InnoVizz 1 deployment on the BMW 5 Series in China, a very important geography BMW recently received an approval to begin level 3 testing in China And we are working closely with the teams performing on-road testing and software development Specific to the Chinese market if all goes well, we could see the technology deployed on the locally built 5 Series. It is still early to share a lot of details at this point, but we expect that we'll have more to say in the coming quarters. Moving on to Volkswagen. At CES we unveiled the ID.Bus light commercial vehicle program as our second program with the Volkswagen Group This represents an important development for three reasons first it shows our strength of our Relationship with Volkswagen, our progress towards SOP with our first program is tracking we'll, and they have confidence in our ability to bring a second program to the market within the same time frame. Second the volumes from these programs are incremental to the award that we announced in 2022 supporting additional revenue growth and accelerating our path towards breakeven. And lastly it deepens our relationship with Mobilite who is working as an autonomy platform partner for the VW Group The ID.Bus is a light commercial vehicle Aimed at the mobility market. It will be a level 4 program with multiple riders per vehicle A test suite of vehicles is being deployed in Austin, Texas and Munich, Germany and we expect the program to become increasingly visible to the public, as we go through 2022-2024 and the test suite grows as it progress towards a planned 2026 commercial launch. Additionally development with our first Volkswagen award is progressing nicely. I flew to Germany, to deliver the first batches of our InnoBis 2B sample with our second generation ASIC custom ASIC and our partners at VW couldn't be happier. We are gearing up for advanced winter testing in Germany and Sweden and will remain focused on the B sample phase in 2024, before moving to the C sample and D sample phase in 2025 as we progress towards SOP later in the year. All in I'm very excited with the progress we are making with this important customer Throughout 2023 we said we believe there are additional opportunities for us at Volkswagen Beyond the Series production award we secured in 2022 and with the ID buzz announcement at CES we delivered on that promise. But we are not stopping there. We are actively working on an additional one to two programs within the Volkswagen group encompassing multiple brands multiple platforms and multiple vehicles. It's too early to share any further details than that, but we hope to be able to disclose more as we go through 2024. Volkswagen is the world's second largest automotive OEM, capable of producing over 10 million vehicles per year. We believe that there is a long runway for growth. We also see a long runway for growth with Mobilite, as an autonomy platform partner as you've heard us talk about before There are three leading autonomous driving platforms in the automotive industry. From Mobileye, Qualcomm (NASDAQ: QCOM ) and NVIDIA (NASDAQ: NVDA ), these partners operate the compute hardware and software that integrates the sensing and perception inputs from the various ADAS components such as LiDAR, Radar and Cameras and play an important role in the sensor fusion and driving decision layers of software. We currently have Series production awards with two of these players Mobileye and Qualcomm and we are working on several NVIDIA programs in our RFI and RFQ pipeline for the Epirian platform. For innovators integrating with these platforms establishes a meaningful competitive advantage that can reduce friction in the LiDAR selection process and increase our odds of winning additional business from OEMs. Being already integrated with the major compute platforms on existing programs can significantly reduce the time, cost and risk that it takes for additional automakers to deploy the same system. We're essentially becoming an off-the-shelf solution Making it increasingly easy for OEMs, additional OEMs to choose InnoVizz as their LiDAR supply. This is further enhanced by the work that we are doing ahead of our Volkswagen SOP. In order to be ready to launch on time, we are planning our InnoVizz to production capacity to be prepared to ship by late 2025. There are many OEMs targeting launches in 2026, '27, '28. And the fastest, least expensive and lowest risk way to prepare for this is with an autonomy platform partner like Mobileye Qualcomm or NVIDIA and with a LiDAR supplier that has already proven. They can deliver on SOP milestones and with the technology technological capabilities price point and SOP timeline of the InnoVizz 2 Next I will provide some thoughts on the global regulatory environment and discuss some important updates both on globally and in China and how we see these developments shaping the LiDAR industry As many of you know, the United States Department of Defense continues to be very active in terms of identifying companies that may have ties to the Chinese military To the extent that the DoD places specific LiDAR companies on its 1260 age list It could make it more difficult for these companies to win business with global OEMs that sell into the US market Conversely, if similar actions were to be replicated within the Chinese regulatory environment It could make it difficult for the US LiDAR companies to be deployed on vehicles aimed at the domestic Chinese market This is where InnoVizz has another competitive advantage As an Israeli company, we're not caught up in the politics on either side of this debate, I like to say that InnoViz is the Switzerland of LiDARs. We are neutral and can serve customers globally. We have plans to operate in China with both BMW and Volkswagen. We're actively quoting multiple RFIs and RQs with global OEMs that plan to sell into the US and the Chinese market with the same technology stack. The cost of bringing a level three or level four program to the market is substantial and it'll be extremely expensive for OEMs to run duplicative tech stacks in different markets with different ciders vendors. They need to absorb those costs across as many units as possible with the global LIDAR platform. And with that, let's segue into what I think is some very positive news out of China. In addition to BMW, multiple other OEMs have received permits to begin level three testing in China in late 2023. To date, China has been a level two market. What we are seeing on the ground is a rapid pivot towards accelerating to development of level three autonomy. The Chinese automotive markets moves very fast, as does technology. If regulators there decide to embrace level three autonomy, it can be done in a very short audio and similar to the prior topic, this could have implications globally. Chinese OEMs have proven themselves as very competitive manufacturers of highly capable vehicles at affordable prices, particularly when it comes to EVs. And while Chinese exports haven't found their way to the US market, they are starting to have an early impact in some parts of Europe and the rest of the world. This is a topic that OEMs are paying close attention to. If China rapidly pivots towards embracing level three autonomy in the same way that it rapidly pivoted towards embracing EV technology, this could add another layer to the global competitive environment. At the high level, we foresee Western OEMs accelerating their level three autonomous platform timelines in order to get ahead of incremental competitive threats from Chinese OEMs. This has the potential to accelerate level three timelines globally. It could create a level three gold rush. Next I want to talk a little bit about the strategic realignment we announced at the end of January. As we have talked about in the past with both the InnoViz one and InnoViz two programs in the development stages, we had been running two parallel cost structures, but as the InnoViz one sensor and perception software shifted into series production late last year, much of that development work was completed with InnoViz one work stream. Winding down, we initially reallocated headcount towards development projects like the LIDAR based minimum risk maneuver or MRM software and the InnoViz core AI compute model. In discussing these technologies with new customers, it became clear that most OEMs are hyper-focused on more mature solutions like the InnoViz two sensor and perception software and bringing those technologies to the market as soon as possible before focusing on other products. With that in mind, we made a decision to concentrate the majority of our go forward investment on the InnoViz two sensor and perception software platform and bringing that to the market. With the rich RFI and RFQ pipeline that we already have, we allocated as much of our staff as possible to InnoViz two focused projects by the transition offer an opportunity to train some planned expenses to help reduce our burn and extend our cash runway. As a result of these changes, roughly 13% of the company headcount was reduced along with some relaxed related OpEx and CapEx. The cost of actions are expected to be fully completed by the end of the first quarter and are expected to reduce our planned cash outlays by $22 to $24 billion on an annualized basis. We also use it ion as an opportunity to integrate our hardware and software development departments into one unified R&D unit, which had been running separately. The new combined group will be led by Aisha Musci, who has served as our head of software reporting to me for the past several years. As part of that transition, Oren Buskila, our current chief R&D, will be moving on to pursue a new opportunity outside the latter industry. We thank him for his many years of service and wish him the best of luck. Aisha has already begun his work on integrating the two departments and reorganizing the work streams in a more efficient way that allows for faster product development and simplified customer planning across both hardware and software. This is not just a reorganization of a few teams. It's about entirely different workflows and processes aimed at positioning the company for rapid transformative growth across multiple customers. It's an important reset of our organizational structure that will allow us to serve a much larger number of clients in the coming years. One example of how we are focusing our go forward investment on the Inno two sensor and software platform includes a new slim design sub variant that team developed. We have a customer in the pipeline that is focused on going to the market with behind the windshield lighter solution. It would sit in the area around the rear view mirror. A deployment like this requires a very slim profile as there are already other sensors and technology in the same part of the car, and because it's easier to integrate it into the windshield, due to the curve of the glass, the customer is a top 10 global automaker with potential of meaningful ladder volumes. So the team worked how to develop a hardware solution that could meet their strict physical requirements without sacrificing performance or requiring a meaningful re-engineering of the interior components. This part was critical from our perspective as we want to share as much of the interior engineering cost customers as possible to reduce bespoke hardware work driving volume-based costs lower and incremental margins higher. It took some time to solve for, but ultimately there were several creative solutions that overcame the challenges. In the end, it resulted in a new exterior design that reduced the height of the sensor from 45 millimeter to potentially a smallest 25 millimeter. The customer has impressed, was impressed, and with our solution, and we have continued to move forward in the bid process. And this work isn't specified to just one customer. We think it can be broadly relevant to future program interested in behind the windshield or slimmer roof line deployments where the new profile could be appropriate. This is just one example of how concentrating our time focus and investment and leveraging the strengths of the InnoViz two platform can result in solutions with a broad market fit and earlier potential payoff and likely higher overall return on investment. And with that, I will turn the call over to Eldar to review our Q4 '23 and 2023 financials.

Eldar Cegla: Thank you Omer, and good morning everyone. Starting with cash, we ended Q4 2023 with approximately $150 million in cash bank deposit, marketable securities, and short term restricted cash on the balance sheet. The combination of strong revenues coupled with disciplined cost management led to the lowest quarterly cash burn in our history. Since becoming a public company, cash used in operations and capital expenditures came in at roughly $14.5 million, which compares to prior trends in the $27 million to $29 million range. Needless to say, we were excited with this outcome and it demonstrates the impact that growing revenues coupled with cost management can have on the trajectory of cash line. Looking to the income statement, revenues in Q4 2023 came in at $14.9 million compared to Q3 2023 revenues of $3.5 million delivering a 328% quarter-over-quarter increase. On a year-over-year basis, it compared to Q4 2022 revenues of $1.6 million delivering a growth of nearly 850% year-over-year. This led to a full year 2023 revenue of $20.9 million, well ahead of the high end of our guidance re -- guidance range coming in at a very strong 245% year-over-year growth in revenues. On the cost side, operating expenses for Q4 2023 were $29.5 million, a decrease of 12% from $33.5 million in Q4 2022 and on a full year basis, 2023 operating expenses of $121 million came in roughly $4 million lower than the full year of 2022 for a 3% decline. This quarter's operating expenses included $5.5 million of share-based compensation compared to $5.3 million in Q4 2024 in Q2 in Q4 2022, sorry. Research and development expenses for Q4 2023 were $22.1 million, a decrease from $26.2 million in Q4 2022. The quarters R&D expenses included $3.6 million attributable to share-based compensation compared to $3.4 million in Q4 2022. In conclusion, the financial performance in the fourth quarter and the full year of 2023 was stellar. We exceeded our revenue targets all while controlling our cost and executing on critical milestones like the BMW-SOP, and it led to a fourth quarter cash burn that was our lowest in history since becoming a public company. Going forward, the strategic realignment shows a continued focus on a disciplined management of cost, which when coupled with continued revenue growth as a potential to extend our cash runway through the remainder of the market share capture window. And with that, I will turn the call back to Omer.

Omer Keilaf: Thank you, Eldar. Looking back at 2023, I'm proud to say that we have delivered on many accomplishments. Our most meaningful progress was on the existing customer side with BMW, we successfully managed to transition into full series production on the I seven with the InnoViz 1 making us the only other pure play company with a level three passenger car on the road. And for the InnoViz 2, we initiated the B sample work we announced in August, which we expect to be a foundation for an expansion of additional development work packages. On the Volkswagen side, we disclosed a second program with the ID buzz and we made meaningful progress on securing one to two additional programs that we think we can get over the finish line in 2024. As a reminder, the ID buzz is incremental to the Volkswagen Award that we announced in 2022 and the additional one to two programs that we hope to convert soon could be meaningfully incremental to our existing Volkswagen volumes. Growing our contracted production volumes is our number one goal. We are indifferent where the volumes come from, whether it's from an existing customer or a new customer, each brings its own benefits, additional volumes, and NRE service revenues with an existing customer can require less incremental work and relationship management, along with other synergies resulting in a stronger margin profile over time and volumes with new customers can offer entry points for new growth in additional vehicles and platforms down the road. In addition to locking up incremental market share volume from either source helps absorb our fixed cost and bring us closer to being breakeven and ultimately free cash flow positive 2023 was very productive in terms of growing our relationships with new customers. And while we made meaningful progress, particularly on the RFQ side of our pipeline, we didn't reach sign series production awards with new customers before the end of '23, though we hope to convert them in 2024. Out of the 10 to 15 programs in the pipeline and the roughly half that are in the more advanced RFQ stage, we had three programs in particular with new customers that were further along than others and were planned to make a decision by year end. Two of the programs are for global deployment of level three vehicles. Those program decision timeline has been pushed to into 2024, and we remain very active on the programs in advance RFQ process that we believe includes only five. A few final players will remain confident that we have a strong position in these RFQs and that we have a, we have good odds of converting them into production. One of the three programs was targeting a global deployment of LIDAR enabled level two vehicles very late in the year. The customer pivoted this program to be a China only vehicle and is now exploring a separate global level three program for a different vehicle at a different date. We were not the natural choice for a China only basic level two deployment and the award went to a local Chinese player. But through the process, we have built a solid relationship with the customer and they appreciate and respect our technology and we are expecting the RFI process for the new global level three vehicles in the coming months. While the revised China only RFQ has moved out of the pipeline, we had two new RFIs from major global OEMs come in, resulting in a net positive gain of one program and leaving the pipeline still in the range of 10 to 15 programs with roughly half still in the RFQ process. As for the NRE booking, while we were able to secure only roughly $12 million of new booking, having the new customer programs decision move into 2024 made it difficult for us to hit our '23 targets. But similar to our new customer targets, we simply viewed this metrics as pushed out. We rolled this target over into 2024 Outlook where we are confident that we can meet an ideal exceed. There are many deals on the table and we believe that we are in a strong position to bring it at least several of them over the finish line. For the cash collection target too of the payments planned for December '23 for work completed in '23 came in a few weeks later, arriving in the early '24, these late payments would've pushed us towards the midpoint of the guidance range. On the revenue side, '23 was very strong. Full year revenues of nearly $21 million were up 246% year-over-year. And even with raising guidance midyear, we came in above the high end of the guidance range. We accomplished that through a combination of production revenues, sample shipments, and NRE service revenues. And while customer decision timelines which are out of outside of our control, didn't conclude before year end, I feel like the outperformance on the revenue line is a proof point of our desire to build a longer term track record of under promising and over delivering. Based on the conversations we are having with customers, OEMs are still very much focused on making autonomy a reality. In fact, we are seeing a shift in OEM's priority away from electrification and towards autonomy. OEMs know that consumers are increasingly buying cars based on technology, not horsepower and market share trends will be awarded to those that are on the cutting edge. With the EV evolution, stalling OEMs are eager to pivot to the next big mega trend and there appears to be a growing consensus that it'll evolve around level two plus and level three autonomy. On the competitive side, we are seeing a LIDAR players struggling with their technology and SOP timelines. Meanwhile, their customers see the progress that occurring that occurring with InnoViz at BMW and Volkswagen. As a reminder, the ID buzz was a competitive conquest win. Looking forward to 2024 and beyond, we believe there could be additional opportunities for conquest for 2024. We're simplifying our guidance structure to three metrics. Since much of the activity that we're expected to conclude in late 2023 is still ongoing and very active, we're essentially rolling over those targets into '24. If the scope of activity that we think is possible plays out, we are confident that they will prove conservative and we could have the ability to raise them during the year as we did with revenues during 2023. On the customer front, we expect two to three additional programs from both existing and new customers. On the NRE service revenue side, we expect that we'll translate into 20 to $70 billion of new NRE bookings in 2024. For revenue, we are going to revert to quarterly guidance. Last year was the first year we gave annual guidance, and it was a little premature for well, our business is, there are many factors that can influence full year numbers, including lumpy and income that mean maybe recognized as either revenue or a contract expense to l and d depending on the accounting treatment, which is difficult to know in advance at, at the beginning of the year. It is also difficult to know in advance what take rates on the I seven in Germany might look like and the timing for adding additional vehicles on vehicles or additional geographies such as the five series in China to the InnoViz 1 deployment. We saw how display played out in 2023. We initially set the bar too low with at $12 million to $15 million, then we raised it to $15 million to $20 million, and even that proved conservative by year end. We don't want to set the bar too high, but we have, but we don't want to set it too low, and we feel like quarterly guidance will ultimately be more prudent and accurate way to approach revenue targets. At this point, we, with this in mind, we are targeting first quarter of '24 revenue of five to $6 million, which would be up roughly 400% to 500% year-over-year. Similar to 2023. We expect revenues to be more back half weighted based on seasonality, chat channel field and customer activity. All in all, we are off to another exciting year in 2024. We are extremely busy pursuing additional programs with both new and existing customers, and we know that we have a lot to deliver on. We are also ramping up our work towards the InnoViz two SOP, which is right around the corner. We are already deep into the first quarter of 24 and to be ready for 2026 shipments, we are preparing the InnoViz two product roadmap and production capacity to be ready for late 2025. This will be here sooner than you expect. This is obviously important for our existing customers, but it also gives us a critical competitive advantage that is becoming a point of increasing focus in our conversations with new customers. Even though OEM's decisions are moving, moving slower than planned, their SOP timelines mostly haven't changed. We have multiple RQs that are still working towards 2026 and 2027 SOP targets. And for those OEMs, engaging with a lighter supplier while the wheels are already in motion to be ready for production in late 2025 is a significant advantage. We also have the benefit of our contract manufacturing strategy. This allows us to be infinitely flexible. If addition awards come in, we can rapidly ramp up new lines at our manufacturing powder in any region of the world that a customer would want us to produce without the disruption delay, or capital requirements of building our own factories, the capital needs would be minimal and the pace at which we could deploy capacity would be substantial. We are in a great position heading into 2024, and I'm confident that we will be, that we will have a lot more to talk about in the coming quarters. With that operator, please turn it over to Q&A. Thank you.

Operator: Thank you. [Operator instructions] Our first, our first question comes from the line of Mark Delaney, from Goldman Sachs. Mark, please go ahead.

Mark Delaney: Yes. Thanks so much for taking the questions. To start, I was hoping you could comment on how the Forward Looking order book has evolved, which at one point I think was estimated to be north of $6 billion, and to what extent the order book and future Revenue Pipeline is being impacted by slower projected customer sales of EVs using your LiDAR. Thank you.

Omer Keilaf: Sure. We didn't update the order book having that, the main change in the order book comes from the addition of the ID buzz. As we said in the past, we would not make updates to the other book based on a senior customer in order to not reflect the, the program size in respect to our customer confidentiality. So we will make updates once we bring more programs and then we can communicate them.

Mark Delaney: I guess though, if you, if you could talk more around how you would see revenue progressing over the next two to three years, you know, g GI given some of the changes in you projected EV sales from, from you know, some of the models that may be using your LiDAR, you have you, have you seen any shifts in, in, in customer plans around or around volumes that you can share even if on a qualitative basis?

Eldar Cegla: Sure. I mean, I would say that we were not getting any feedback from customers concerning their slowdown of EV or not ev the, the LIDAR platform is not correlated specifically to EVs that can operate on combustion engines just as well. So, so far we didn't get any communication around ev slow down related to the volumes that they expect.

Mark Delaney: Understood. One, one last one from me. If I could please, I realize you're not guiding 2024 revenue, but I am hoping to better understand how you're thinking of the shape of the year. Would you anticipate first quarter revenue to be the low point of the year, given what you know about customer schedules and NR EOP opportunities, or is there any other qualitative Colorado shape of the year that you may be able to share? Thanks.

Eldar Cegla: So, so yeah. So specifically as we said on the, on the, on the earnings call previously we are expecting that the second half will be more meaningful, but we, we don't give any specific for each quarter since it is very lumpy because the, the, the structure of the revenues that we are expecting.

Operator: Okay. Thank you. Our next question comes from the line of Andres Shepherd from Cantor Andres, please go ahead.

Andres Shepherd: Yes good afternoon everyone. Congratulations on the quarter and thanks for taking our questions. Maybe to follow up on that last question specifically regarding the $20 to $70 million in new NRE bookings that you're targeting for 2024, I'm wondering if you have a sense as to when the majority of this will be recognized. Is this a Q4 Q3 story, or is this something that maybe will be expected gradually throughout the year? And if, if you have a sense of whether some of it or most of it will be likely be recognized as revenue versus a contract expense? Thank you.

Eldar Cegla: Yeah, so the NREN-R-E booking will be recognized over the lifetime of a program up to SOP, that, which means basically whatever we book this year, it will probably be recognized over a few, a couple of years, maybe two to four years until the SOP and as we mentioned before, it's difficult to say how you recognize it and what point of time and it, if it will be recognized as revenue or rather contrary to the expense side.

Andres Shepherd: I mean, when we talk with customers, we try to draft the agreement in a way that we can recognize it as as revenues. Maybe you can give examples on ways on kind of…

Eldar Cegla: Yeah, I don't, I don't want to go into the, the accounting side, but if it's usually you look at the, a specific contract, if it's specific to a cu a customer or it's more generic, and then based on that you are able to recognize it accordingly.

Andres Shepherd: Got it. Okay. That, that's helpful. And maybe as a follow up I'm wondering if you could maybe give us some direction on your path to break even gross margins. You know, I know, I know you're not guiding gross margins, but, you know, do you anticipate this could potentially be a 2024 timeframe, or, or are we looking more into perhaps next year in, in onwards? Thank you.

Eldar Cegla: So I think, I think you need to look at the trend that we have shown over the past year in 2023. So QQ one was roughly almost 400 negative margins, and then Q4 was negative 15% margins. So I, I think you see a nice trend here. We are hoping that the trend will, will continue. I, I don't want to say when we expect to be positive, but i, I, we, we are expecting or we are hoping that this trend will continue and at least we will be flat due this year.

Andres Shepherd: Got it. Okay. And maybe one last one if I could just in regards to your liquidity. So you have now roughly 150 million. Just curious as to how you're thinking about future capital racing opportunities. What is the run rate with the current liquidity on hand? Thank you.

Eldar Cegla: So I think that in terms of liquidity, we, we were able to end the year with $150 million. We, we started the year with $186 million. And so we were able to put some additional cash on our balance sheet on the last quarter. We were able, as we said to start collecting NRE, which we said will balance off significantly our expense. So as we win more programs, we will be able to continue to balance off our expense side. And our goal is a, to be to be viable all through the window of opportunity that we are seeing in front of us the capture and each program that we win extends our runway with additional NREs

Omer Keilaf: What, what I can add maybe to this. So we're seeing in front of us several big opportunities that we are working on for quite a long time, and that can unlock opportunities for us for, I would say for the next two years. We've been spending a lot of effort and time in trying to bring those opportunities and unlock them, and I believe that Innova's position very strongly to make that a reality. And I feel that if we will continue to be successful as we were in the last two years I believe that our technology is currently leading the pack in many ways. I believe that our experience, our customer base is giving us many advantages. I think some of the dynamics in the geopolitics, et cetera, gives us a big step up right now. So I feel that there are several opportunities in front of us that could be very meaningful. I I'm positive that we'll be able to reach to them.

Operator: Thank you. Our next question comes from the line of Kevin Cassidy from Rosenblatt Securities. Kevin, please go ahead, you can unmute.

Kevin Cassidy: Sure. Yes, thank you for letting me ask the question and congratulations on the progress. Just on the RFI and RFQ process, you know, you mentioned there are delays. Can you go into more details on what the delays are? Is it, is it the additional competition or OEMs just more cautious or you know, technical obstacles may maybe if just give some details on that.

Eldar Cegla: So it depends on the, on the OEM there are several discussions with one customer related to their desire to I would say continue discussions on some interface cybersecurity. I mean, that's, that's specifically what we're doing having that they wanted to check if we can support different kind of interface. It sounds very technical, but eventually this, this requires a, a strong integration between us and, and the compute platform they're using. And they, it requires, I would say a good alignment before they can feel comfortable with, you know, the nomination based on this architecture. So there is several technical discussions on this, and you need to understand that one, once you kick off a project, you, the customer needs to feel very confident that nothing changes. If for any reason they learn they need to change something in the product on either side, whether it's the LiDAR on all the compute platform, it's, it's I would say it's a very expensive decision to make and therefore they're, they are cautious on kind of freezing the design and kicking off. That's one. Another OEM I think it's mostly related to their internal kind of change of teams. They added a new team coming from another activity they, they, they stopped working on, and that team had to be integrated into the team, which kind of slowed down things towards the end of the year. But I, I, I can say that the progress in the last few weeks was very on, on steroids, I would say. So I think that we're catching up there. I mean, they're catching up.

Kevin Cassidy: Okay. Okay, great. Maybe you touched on something there about the platforms, and I wanted to ask about that. You, you had mentioned you're on the Qualcomm and a mobile I platform, and that, that's great news, but is the decision still I, I guess they're not packaged together. It's still the OEM can decide one platform with Qualcomm and then even choose a competitor's LiDAR?

Eldar Cegla: Yeah, definitely. I mean, eventually it's the OEM decision on which LiDAR to use, but I would say the following, right? Eventually when they make those decisions, there are many different metrics they they look at before making that decision. And, and one of them is risk related to doing something that someone else didn't do. And second is cost. I mean, obviously when, if someone would ask you know, Qualcomm or, or [indiscernible] to start developing their platform based on another LiDAR, that would be a very expensive effort. And I'm sure they would not just carry the cost themselves, they would just throw that back into the, to the, to the OM. And I think that from cost perspective, I, I don't think there's a lot of motivation for anyone to do that, but it's, it's never the decision of the platform player, but it's, they, they have ways to, I would say give the motivation to the OEM, not to add too much effort when it's not needed.

Operator: Thank you. Our next question comes from the line of Kevin Garrigan from West Park Capital. Kevin, please go ahead. I think you unmuted the wrong, Kevin?

Kevin Garrigan: Yeah. Hey, Omar and Elder, thanks for taking my question. And let me echo my congrats on the progress. Can you talk a little bit more about, your contract manufacturing strategy? You know, just remind us how many manufacturing partners you have, you know, what have you learned working with them and any thoughts on, on eventually building kind of your own manufacturing facility? Or do you feel contract manufacturers are kind of the best strategy?

Omer Keilaf: So, you know, it's, it's always depends on the, the return on investment that you're making compared to the market volume. I mean, eventually right now we are trying to be elastic in, in terms of supporting different OEMs in different locations. We don't want to be committed to one geography. One once we, while we are trying to scale our ability to work with contract manufacturers, is I, I think it's one of our strengths today because we have access to different facilities that we don't need to make investment in, in, in ramping them up. Another part, which I think is maybe, you know, I think it's important when you go through an audit with an OEM and this, you know, primarily for the top 10 OEMs that set quality standards are the highest. When you are audited for a program, they cannot audit you. They cannot nominate you based on the facility, does not exist. When you're certified as a tier one to an OEM, it's and nominated for serious production, the teams need to be in the, in the facility and audited and make sure that the activity and the operation is meeting the standards. You cannot be nominated based on a future to be a facility that one day will meet their requirements. We did not have any alternative other than work with project manufacturers because, for example, when we were audited by Audi at the time, they wanted to be in the facility that eventually will serve them, and they want to make sure, and we, we provided them five options of different contact manufacturers. They had preference to one specific because of their previous engagement, audited it, and successfully managed to, to go through. Now that specific contract manufacturer has different facilities in different areas around the world, and that gives us that flexibility. I believe that once the program volumes would reach the several millions a year production, it would start to make sense for InnoViz to make those investments. But I think at this point of time it, it makes more sense and I think it's part, part of our advantages.

Kevin Garrigan: Yes. Got it. Got it. Okay. Yeah, that, that makes sense. And I, I appreciate the color on that. My second question, just with BMW getting ready for deliveries, can you just talk about how unit projections, you know, change from when you originally win the contract when you're about a quarter out or so, from kind of starter production? I mean, I'm assuming you kind of get more color on the units, but do you kind of go from yearly projections to the OEM giving you weekly or quarterly estimates, or do they kind of stick with kind of the yearly projections?

Omer Keilaf: So, I mean, eventually we, you know, BMW is launching for the first time, they'll, they'll level three program as expected that will be a soft launch kind of filling the water. There are plans to launch additional vehicles. As I mentioned. One of them is also in China. But I cannot say right now the volumes. I mean, I, I believe that with over the course of the following quarters, we'll see the, the ramp and, and, and probably we'll get a better understanding of how fast it'll get to the maximum capacity.

Operator: Thank you. There are no further questions, so thank you all for your participation, and this concludes your call..

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