Mobileye (MBLY)2024-10-31 15:34Financial Data and Key Metrics - Q3 revenue increased by 11% sequentially compared to Q2, indicating normalized inventory levels at customers [5] - Year-over-year revenue decline in Q3 was fully accounted for by a 9% reduction in EyeQ volumes [6] - Operating expenses annualized at slightly over 126 million in Q3, with similar performance expected in Q4 [7] - Gross margin declined by 1 point, mainly due to lower EyeQ ASPs and higher EyeQ-related costs per unit, partially offset by higher SuperVision gross margins [25] Business Line Data and Key Metrics - Shipments to top 10 customers were down 4% globally, outperforming OEMs' overall production decline of 9% in Q3 [6] - Volume to automakers outside the top 10, mainly domestic China OEMs, was down around 50% [6] - SuperVision volume in Q4 is expected to be around 15,000 units, with half coming from Q4 [31] - EyeQ volumes for 2024 are expected to be between 28.4 million and 28.8 million units, with SuperVision volumes between 110,000 to 120,000 units [30] Market Data and Key Metrics - China represented about 20% of overall revenue in Q3, split between EyeQ units to local China OEMs (3%), EyeQ units to non-Chinese OEMs producing in China (12%), and SuperVision for vehicles sold in China (5%) [32] - In Q4, China is expected to represent a similar percentage of revenue, with SuperVision units for vehicles sold in China representing about 2% of revenue [33] Company Strategy and Industry Competition - Strategic objectives include securing long-term ADAS position with core customers, deploying EyeQ5-based SuperVision in China, and developing EyeQ6-based products [8][9] - The company has achieved follow-on ADAS design wins from all top 10 customers, extending business into the early 2030s [11] - Regulatory environment is creating tailwinds, with end-of-decade testing protocols expected to require more sophisticated ADAS systems [12] - The successful launch of SuperVision in China has led to interest from global customers, including Volkswagen Group [13][14] Management Commentary on Operating Environment and Future Outlook - The company expects advanced products to lead to a major acceleration of growth beginning in the second half of 2026 [15] - Management remains confident in converting pre-design win engagements into production agreements, citing C-suite endorsement and OEM commitment [15] - The company is increasingly confident in its AI-driven software stack and EyeQ6 High execution, which is driving progress towards design wins [16] Other Important Information - The company will host a Capital Markets Day in Munich in December, featuring demonstrations of current and future technologies [19][20] - The company has posted detailed presentations on its technology approach, including its compound AI methodology, on its YouTube page [18] Q&A Session Summary Question: SuperVision and Chauffeur volumes for 2025 [35] - The company expects 2025 to benefit from resolution of inventory digestion in the first half of 2024, with a focus on top 10 customers' production growth or decline [36][37] - Visibility on 2025 SuperVision volumes is limited due to volatility, with more details expected in January or at the investor day in December [40] Question: Core ADAS growth in western customers [42] - The company expects to outgrow top 10 customers' global production by mid-single digits due to ADAS adoption growth and increasing market share [43] - Regulatory push for more sophisticated ADAS systems is expected to drive ASP growth in the coming years [46] Question: Customer engagements with advanced solutions [49] - No decisions have been made against the company in the past 90 days, with continued progress in advanced product engagements [49] - OEMs are securing necessary components for advanced solutions, indicating strong commitment [50] Question: Inventory levels and cyclical environment [53] - Inventory levels have normalized, with Q3 and Q4 reflecting market demand [54][55] - Production decreases in some OEMs were offset by better performance from China local OEMs [56] Question: 2026 program launches and take rates [57] - The company is on track with project milestones for 2026 launches, with more details to be provided at the Capital Markets Day [57][58] Question: Intervention thresholds for autonomous driving [60] - The company is working towards an intervention rate of 1000 hours for the camera subsystem in EyeQ6, with further improvements expected with active sensors [62] - A comprehensive safety outlook will be published, with more details at the Capital Markets Day [61] Question: Competitive pressures from Tesla [65] - Tesla's Robotaxi Day has reinforced the viability of Robotaxis, with the company highlighting its own Robotaxi activity and partnerships [65][66] - OEMs are increasingly interested in advanced ADAS systems, with the company well-positioned to meet future demands [69][70] Question: 2025 SuperVision volume trends [73] - The current run rate is a good starting point for 2025, with upside potential from new customers and downside risks from Chinese OEMs [74] Question: Earnings power and R&D funding [77] - The company's Q3 OpEx of 1.4 billion to support growth and acquisitions [83] Question: Emerging market chipsets [85] - The company is working on cost-optimized systems for emerging markets, with production readiness expected within a year [87] - Progress has been made in India, with the company well-positioned to lead the market [89] Question: Sensor evolution over the next decade [90] - Imaging radar is seen as a key sensor, with production on track for next year [91] - The company is using cameras, radar, and LiDAR in its current systems, with potential for future optimization [92] Question: Zeekr's in-house system [96] - Zeekr's in-house system has similar performance to the company's SuperVision but at twice the cost [97] - The company continues to benefit from its relationship with Zeekr, particularly in building REM in China [99] Question: Challenges in building REM in China [100] - The company has been compliant with local standards and will continue to work with local map providers to ensure compliance [101] Question: Competitive environment at higher autonomy levels [102] - As autonomy levels increase, the competitive environment is expected to decrease due to the complexity of achieving high precision and safety [103][104] - The company's technology and execution capabilities give it a strong competitive advantage [106] Question: SuperVision volumes for Q3 [111] - SuperVision volumes for Q3 were around 30,000 units [111] Question: Waymo's 150,000 rides per week [113] - Waymo's success is seen as encouraging for the Robotaxi industry, with the next challenge being economies of scale [114][115] Question: EU tariffs on Chinese OEMs [117] - The EU tariffs were expected and have already been reflected in the company's metrics [118] Question: ASP drop and EyeQ mix [120] - No significant changes in ASP trajectory are expected, with volatility in EyeQ mix due to inventory issues [121] - EyeQ6 Lite is not expected to cannibalize SuperVision shipments, as it targets a different market segment [124]