Earnings call transcript Q2 2023

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Operator

Good day, and welcome to the Arbe Robotics Second Quarter 2023 Earnings Results Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Miri Segal of MS-IR. Please go ahead.

Miri Segal

Thank you, operator and everyone, for joining us today. Quarter Results Second Call. Arbe's to XXXX Conference Financial Welcome

and remind would that call Before to statement this statements, also I press to in may safe our today's outlined forward-looking call. this we begin, pertains on like listeners release harbor provided certain contain the information

release, section If company's of you the website. have in it a received view not the the of copy please Investor Relations

our business base the we Then Co-Founder CEO, the Today, Kobi are the begin a by financials. who Karine who turn call will Marenko with to Pinto-Flomenboim, update. joined we will over will and call CFO, review

Finally, the call open we for will the question-and-answer session. up

like Marenko. turn ahead. go With call over to Kobi, that, please to Kobi I'd the

Kobi Marenko

us. business begin our review Thank and some our of then I highlights, the reviewing detail share you, best Good for outlook. will financials everyone, Miri. by CFO, recent morning, Pinto-Flomenboim, and Karine our thank more will in joining you

for we call Finally, session. open will the the question-and-answer

with have progress pleased We we the made second are the quarter. in

Our year. is chipset of achieve end to by the we a this and product are on production-ready development poised track

for with demand Our key auto our sales bank collaboration enable enhancing cutting will product Notably, Weifu XXXX, X Tier with we technology preliminary placed projects we've radar reinforcing been and role chipset which since edge customers market. order to X important an high-technology plays for working increasingly an for across $XX.X million our foods a XXXX our meet China. in the customers' rapidly our in evolving, position Tier next-generation group, global offering. is

comprehensive such from coming provide the Weifu with solutions space players surrounding. advanced as preliminary us perception forward. is are mapping for key that strong vehicles the in perception automotive one is large We know of opportunity the for region, can aware, fastest-growing going many As radar free of are a to of most demand world, this and represents you we providing industries there a order committed China and the radar

testing advanced for services a from and lab Arbe. services, Additionally, Weifu of including order $X engineering million support placed professional a set up

mentioned in constructing base of represents are ab-ling expansion established already revenues production well. successfully Other are final in This more actively production lines represents as has one we which As has the our the and B starting sample line QX, production a CXs and their Weifu China from milestone for configuration. functional operation strategy, in a development achievement XXXX. stages

chipsets our We of and will equities preliminary well raised $XX related have as are funds, funds to we In for parallel, in major year. directors. very small that premium we that with and of radar in micro-cap radars successfully markets, for full with happy special our in and are applications to in our our value-driven QX, meet with and funds stages were in have you for confidence and some current see selection best familiar momentum Level In collection mainly China. those United Situation invest selections this million with we both Israel as of are based not XX our public of final Special growth-oriented on Canada. a are X X++ they OEMs in case States, situations who the investors targets In Europe Level

distant states state-of-the-art companies materialize future to to that fund small critically the those trends. with then trends is in The its likely in that technology complex solutions invest identify mission enable and too not

balance expedite efforts, line the to to expect our strengthened sheet. announce automotive and We the safety regulations on chipset market our use Chinese capacity further capitalized increase penetration R&D recently our our proceeds in proposed

realtime long fusion. industry participated speed at and showcased architecture camera radar object where and algorithms Arbe's our BMW, latest and in the capabilities enhanced international we vehicles data, participate with Just detection enable consortium high recently, breakthrough sensor empowering wireless during ranges. radar camera of by automotive conference tracking fusion advanced at we AI QX, hosted

environment is for on and like. solution it designed incumbent pathways innovative truly making to in to This the ultimately drivers excel provide pedestrian detecting and multiple safe and highways objects clear

half As we we in of the we committed the look and adding year, to customers' confident remain XXXX. position, wins by the our second are to of X end

our it now Now I'd go to like the over to turn to over CFO, financials. Karine

Karine Pinto-Flomenboim

in including our and production. more Thank the XXXX and quarter as preliminary million, $X.X expectations. results of you, quarterly was our decrease a Gross is revenue like to to in slightly of margin quarter I'd XXXX gross second result orders. and hello, financial negative the second preliminary was revenue of XXXX XX.X% reduced for positive compared detail. transition higher-end mass in not $X.X X X% review QX million, below Weifu Kobi, the margin our $X.X everyone. for on a previously August we in as and Backlog QX focus as announced QX, Total from million XXXX

QX in and in in to QX and XXXX $X.X to million on we $XX In expenses. Moving total million The to from driven in expenses general research in QX in XXXX. QX expenses $X.X administration $XX.X a operating compared decrease primarily from was a of to by million XXXX million XXXX, XXXX. $X development operating XXXX, in $X.X decrease reported and in expenses QX QX million decrease million

in The expenses, to a was subcontractor primarily decrease reduction in related both

million favorable our insurance extent, in a from an XXXX. employee to exchange and QX as QX related $X.X rates as recent and in XXXX by costs costs. reduction increase million to partially expenses share-based an Sales fundraising compensation lesser increased grants in well $X.X increase to in D&O costs. offset marketing in

remains second marketing an quarter of to level the million was expenses, million $XX.X share-based in compared Excluding Operating second XXXX sales loss $XX.X unchanged. quarter loss and of XXXX. compensation operating of in the

and non-GAAP $X.X excludes was which as million items, of measurement, XXXX. loss nonrecurring Adjusted a for expenses costs, compensation EBITDA, such QX fundraising a share-based for of in

quarter to $X.X of Net a Net of a net $X.XX million to was loss to quarter in compared of quarter of income loss XXXX second expenses QX of the in financial compared Over-performed $XX.X revaluation, exchange million from second includes and to financial the in company's of $XX.X of related mainly million XXXX. the by second expectations in and warrant XXXX. QX to XXXX $X.X deposits in million, mainly offset loss revaluation. million related included XXXX Net of interest income loss revaluations. warrant loss rate

sheet. balance our to Moving

$XX.X As of to year, shared. With bank June no and we XX, our in cash to in would respect what short-term previously guidance with and for equivalents XXXX, reiterate debt. like Arbe $XX.X million we had cash deposits million the

be $X million to is range X million, the of to XXXX weighted in the goal which is automakers. Our for to back achieve Revenue be the $X heavily design-ins of will year. end with expected towards

the range $XX million. expected EBITDA $XX Adjusted million to loss a to is of in be

Now take to be Operator? we your questions. will happy

Operator

[Operator Fargo. Instructions] question from The first today Mobley with comes Wells Gary

Gary Mobley

backlog your about of from and of out and from bubble order can silicon of quantities production-ready having if both a the from the fruition of partner? update foundry Is As preliminary HiRain. some GLOBALFOUNDRIES. give the And conversion maybe some having available you stand production Weifu in where you the think we Weifu that primarily function on us

Kobi Marenko

means. you the question. is thank Basically, for it Gary, what this Hi yes,

next we has and in that at have for means from our around China, dollar this of year capacity partners GLOBALFOUNDRIES XXXX. us least So value XX-something for for orders million this

or automotive plan. of production, in Regarding less months line with in XX chips in around to the we more our Production plan. the are is progress XX

and production automotive And our stages AEC-QXXX basically the in of right resolution and meeting don't basically, for final the now. are weeks. in right now, qualification X with safety expect we we for issues are milestones And of any chips the

the office. radar all production have They the chips, already in samples. ships We our functioning are on

big to are we that production Tier chips The finish includes the stance version. from the in when needs that just to and we get there sample X. just sample the is base are at So saying the they qualified. order time It -- those to work of final chips need that then a final

Gary Mobley

know hoping been years radar on -- environment That's about XD I and give update has the can company think an for X that us helpful, that was I time. market over Kobi. the publicly have competitive you evolved you I And to see for it's an slower-than-expected give on don't if can there you it say given pace, but environment? we competitors update the Maybe opportunity a competitive you how up. if is an can some catch us nevertheless, maybe

Kobi Marenko

Yes.

is So that thing the first that landscape of competitive didn't main change. the I all, think

X So based on that or right on and on German in Tier we chipset in we Continental as all see now, of RFPs processor are the TI premium mainly side the a a FPGA. as see and RF the we that with OEMs

solution. our an lower that order So same chip we we amount this that the is that a know, the radar know, magnitude of has channels performance of and than this is same

a X, from believe on we or advantage that the based we to less, of mobilize in into less radar we and what that think our And production we similar but direction have the more took challenged bit that as an price we years XX% opposed solution, of side, Mobileye. to and a the as channels less amount other -- ahead of the maturity than in have we Mobileye similar trying -- I of terms we system see still is X in have take patents -- architect with

basically as million to on new that So I both market. now $XXX million, in to this as sector solution. of order markets players in new $XXX will in no private get to allow dollars not a competitor in. well believe basically, high-tech the environment there's the public the It's reach

by now, this believe, two main X that's mobilize Magna that of we're bigger and of a us production. X our was has Tier -- was market see gives the player end picture company, big especially So us, and the decade, X I that behind in is that there I Veoneer the Tier into we much the course, think, that is till that a solution purses our right fact big the comfort a that's horse the main is solution race our pushing that

Operator

Cowen. Buchalter The from next TD Joshua question comes with

Unidentified Analyst

Josh. is Lanny on This for

in on was you're Is full engagement? just China. your of the leading the selection region final to could of production Are You of confidence these chips? in terms have kind XX they're OEMs hoping and they [indiscernible] stages magnitude in called the Europe cost for and follow-up. elaborate And out you of if a that [indiscernible] premium I

Kobi Marenko

hear couldn't I question. the Sorry,

please bad. question? Can too you was line repeat Your the

Unidentified Analyst

Sure.

XXXX X you're premium out you the a Europe your for I will follow-up. different stages the that to elaborate of And color you regions? across progress you XX or your kind levels of meet convert goal? was confidence magnitude could the can OEMs on hoping have engagement that provide final So that and China. in on I that any of these And called of the selection in

Kobi Marenko

Yes.

for are we China of I model, are much all, the a in general, U.S. first the in much revenues So Europe that and will that in than that means earlier think see year selections which earlier

cars So And selection this China, final to Xs of to in second to 'XX. the we 'XX, in QX, which the now that need in that are need chips means go from from production they early QX 'XX. get that should half they us that radars car means Tier of get a by

ability that we those projection selections provide the and our to fulfill 'XX believe for definitely So will us 'XX. with

Also, elaborate, is for OEMs will but themselves. deals major also some I wants in produce China, cannot by to NRE that major definitely And the include us. two those radar there

year are will basically meet we well as In guidance as 'XX our right revenues out there. help 'XX. targeting the it also us second to and even now Europe, half model So

But Europe OEM that another technology, big So technology. And is our volume of China select after lot the much course, it's car it will for revenues. of terms the a manufacturer higher. fact premium of course in a means the year Europe German in in our

Unidentified Analyst

Great.

unique, hoping course your If that in could requirements we million Weifu my more. for technology estimated and with I of this expect model layer For about XXXX, of is the was a time? that kind for their $XX.X follow-up, to order bit talk how layer can you into this

Kobi Marenko

HiRain $XX a million 'XX. is $XX.X another expectation for million of 'XX. we preliminary Weifu the last from you for have basically, of quarter from remind order -- is I that the also This

So this this what is Altogether, our is for focus 'XX. giving basically is us

Operator

The next from question Jaime with comes Perez RF Lafferty.

Jamie Perez

margins meet up you took annual quarter. gross everybody. give you day, and revenue? as some mean I color on progression this Could us hit the expectations ramp the a for Good

Kobi Marenko

margins sorry the it. take that gross think -- I Just

Karine Pinto-Flomenboim

the cost fixed fixed margin margin, the of as this of our Just The is margin is a first, But this to say, the of XX%. expectations of half the above second still COGS. will levels contributed we for toward expected. portion and portion quarter. the of as That's it's revenue is, our year, course, why which progress the only profitable driving revenue cost our revenues, on profitability with meet for remain for X

it all percentage of of ones. us higher positive a mixture taking drive So to it and, will into -- course,

Jamie Perez

All right.

right it. of this reading levering mean, into ramp you let's right. as costs. say, which now, I So we're at, then up, so fixed you variable and the looking All sort cost

those to Next, to meet client? when the guidance, the do chips annual ship you revenue need to

book sold revenue or to the And is receive when of are them question recognition? revenues they do What One -- my you . the when is, client? cars the sort

Kobi Marenko

it begin maybe to be to we -- the we be Karine On end will ship in to 'XX. the of -- shift Tier but early the X. can some year, is Basically recognition to begin elaborate to and we early Basically, will going majority in delivery. believe, of by chips will we this year, the early ship upon able revenue of the begin next it

Karine Pinto-Flomenboim

Thank you, yes. Shipments, Jaime.

Operator

next comes Maxim [Operator from Galinko Matthew Instructions] Group. The with question

Matthew Galinko

the see growth the major we that where number. talked Tier I guess Xs the is coming about, backlog we've in So excluding just from? if progression that's X backlog the curious I'm

Karine Pinto-Flomenboim

our the So million but orders, -- year. received, it included and in order it and of preliminary for recent HiRain services, second PR be stated, we the we'll orders, able Weifu the it does will also from to we in -- of which end be our which the and $X towards I yes, recognize half that's as the include of as excludes well Weifu mentioned

Matthew Galinko

Okay.

the you I have in was mentioned expectations might your that for revenue below prepared also quarter. internal think

. the I guess, change on really that full Or just why year view maybe does So full and timing doesn't is on you can influence that for range? expectation? a the does just we it touch your year it land where issue

Kobi Marenko

were really The first meaningful. X year quarters' this not revenues

expectation, So it's or -- $XX,XXX below below when we say it's something.

radar and a matter So that models a between few of shifted it's shifting of QX of chipsets few QX.

year's So are are think revenues up. The this basically, is important. I real that and ones the not revenues XX% really

still we're chipset radars and on. selling some so evaluation, year, This [indiscernible] for for evaluation,

production. we full will before So shipping start

about way the is anything I not level really and meaningless. showing the think our the It's other basically maybe that of revenues around. traction, revenues the

XX the of through coming, So be relevant. to end their day, our on another on selections customers with it's to our the by supporting XXX XX that, can sell ability from are we Tier not chips and will of clients selections laser-focused X the us or they is, going the that course, always systems or buy XXX radar that

are focused the take. lines we that can always the We not on big selections big and projects small laser on on

Matthew Galinko

for Got then just it. And one me. final

touched I demonstration. camera, radar think fusion you a sensor on

are that sensor you OEMs Just into the about out their it? you curious, as the as how starting is far years? are to XX think direction looking stack Or model pull that thinking

go-to-market, your at does And that impact how if all?

Kobi Marenko

final adapt the will customers, as software help our fast acquiring as basically, we So car that the technology we're can much build can. to they as as stack manufacturers

them working Space with to objects with the based the help the with fusion. classification radar also the Free we Mapping, and the of So on are

take we production. going for effort So not this this we as those order provide -- our in is for to a into code this reference just are software the reduce code technologies to stack production, customers taking to and them it will to

Operator

Suji with Desilva from comes The question next ROTH Capital.

Suji Desilva

the understand sort decisions, final are on progress stage here what remaining process? are customers of just are and steps The in there the between the they here. so evaluating that of the that congrats Kobi, So remaining final selection, process and we are in that

Kobi Marenko

selection. get two Tier meet to here in things I needs to X into that order think is the there

First and that Magna. with product that they good, the to sample sample think to the a have of the X, in What big clear very we it's price sample of to and last all, are especially the better the The also competition evaluations the that from Tier but technology in, is we from have a hiring. and full going a is all we fact HiRain see the the also of are version from Magna from from I is attractive. waiting than production need chips big with Weifu is

be This September. is around, believe, during to I expected

So stages bring already of and the -- it's the up. they both them in harbor, final have to

we So we to able this will left negotiation of selection. in major then some be the price. not is October, the believe a selected And be but last final September, we the that will milestone by for with on projects. the those be least, And

Suji Desilva

And if single auto they're if that that I is working not does then is multiple wanted Or in -- OEMs OEM? auto, the it's announcement, just if this. you a it already question, one audit? with that other or clarify cover Weifu covered automotive I that apologize to

Kobi Marenko

of with It's that Level and is we X part of the it a DiDi part announced together OEM the won we is project quarter. -- last -- it for trucks. That for

Operator

our concludes conference for session. Arbe's CEO, Kobi back closing over question-and-answer Marenko, to remarks. the I any turn to like would This

Kobi Marenko

you us and is Thank progress Track you. pleased Look Arbe's in months. the the further dedication We look on partners, semis including prepare Jefferies We updates August Conference were Conference joined out appreciated. to XX our continued forward investor to on happens we today, Chicago so the that events, the updating employees JPMorgan September as your deeply several for that today XX. coming Jefferies for Auto Israel Tech you and

to Please investors@arberobotics.com schedule at contact our meeting. us a or sites visit

Thank you, and now. for goodbye

Operator

presentation. you concluded. now The today's conference for attending Thank has

may now You disconnect.

Arbe Robotics (ARBE) 9 Aug 232023 Q2 Earnings call transcript