Mark Delaney, I cover Innoviz for Goldman Sachs, and I am very pleased to have with us Eldar Cegla, the CFO of Innoviz. Thanks for taking the time out of your busy schedule, Eldar. Hi, thank you. A pleasure joining you. Sorry we couldn't do it in person, but I'm sure we will communicate well even through Zoom. Absolutely. Maybe to kick things off, just talking about the technology that Innoviz can provide for the LiDAR space. There's a lot of competition in the LiDAR industry. Other merchant providers, some companies do LiDAR in-house. Maybe talk a little bit more around what Innoviz offers and how you think you're differentiated from some of the competitive options that are out there. Sure, so Innoviz is doing basically two main products. One is on the hardware side, the LiDAR, the 3D sensor. We are targeting this sensor in terms of spec and performance, power consumption, form factor, and so on for Level 2+ and beyond, Level 3, Level 4, and on top of it, we are providing the software, which is a software stack. It does many things, but the main task there is the computer vision, perception, understanding what the LiDAR sees, and providing this data to the sensor fusion and then the driving decision platform that operates the car and the driving. And I think that the differentiators are in many aspects, starting from technology. At the end of the day, when you try to solve the autonomous driving problems that car makers have or want to solve in order to have better, more safe cars, we are actually in the second phase of this trend. The first trend was very high, a lot of hype, a lot of tests that were being done, but also a lot of disappointments because at the end of the day, it's a complex issue. At the end of the day, you need to drive a car safely without it running over people and not hurting everybody, and I think the industry today matured and understood what kind of specs do you need out of each of the components. And I think Innoviz today, on the technical level, is providing one of the best LiDARs in the industry that definitely answers the specs and can bring cars into Level 3 to drive not only safely, but also very comfortable, that you feel that the driving is like a human would drive. More than that, when you go to Level 4, you don't only need a safe solution, you also need an available solution, meaning that the solution functions in any condition. And we have proven, and this is something we showed during our last quarter, we had some clips that the LiDAR can perform in very adverse conditions, like you have some mud on the sensors and it still drives, and obviously at night and when the camera is blinded, when it rains and so on. So this is the first level. The second level, I would say, is the fact that we are already deployed on the Level 3 platform together with BMW, so there is a lot of experience, both on the LiDAR side, also on the software side. It's a qualified solution. It's safe. It doesn't run over people, and the industry is usually, when you are around functional, safe, mission-critical components, the industry usually takes what is proven, so this is another element. Also, the fact that we provide both the LiDAR and the software, so we provide more of the solution, is very relevant. Recently, we also announced that we have taken our InnovizTwo platform, the LiDAR that we today offer everybody, and have adjusted it not only for long range, but also for short range, which means it can give our clients. We can give more to our clients, one-stop shop for LiDARs, long range, short range. It's very important for Level 4. There are some other benefits, like we are at Tier 1 and so on, but I think I said the main points around our benefits. No, that's a great overview and a lot for us to dig into throughout the discussion. Maybe just you talking about how the industry rollout may progress in your view. You mentioned you're already deployed in L3, very small scale, right? And that's sort of an industry broader phenomenon. How and when do you see L3 becoming more material in volumes? And also, what about L4? Again, there's some robotaxis that are out in various cities in China and in the U.S. How do you see L4 progressing, and when does that become more meaningful? Yeah. So, maybe I'll start with quoting some market research and then say something about our pipeline that we see. We usually refer to the IHS number. This is, I would say, the gold standard of the market research around the automotive and definitely LiDAR. So they predict that during 2030, there will be six to seven million LiDARs sold per year for light vehicles, consumer vehicles, and this number will double five years afterwards. So we, in our pipeline, see a similar market size of our pipeline if we aggregate everything together and we look at 2030, look at a similar number, maybe eight to ten million, slightly higher, and similarly growing or doubling these numbers towards 2035. So the opportunity is very big. When does it start to ramp up? So there are some Level 3 solutions already in the market today. We are working with BMW. You can buy a Level 3 car today, but this is a soft launch of Innoviz, which we expect maybe next year to go into China as well. But the big ramp in volumes we expect as of 2026, we have together with clients such as Volkswagen, which is our second client. Together with that, we see some pickup of Level 4 solution, mainly around public transportation or commercial applications such as robotaxis, shuttles, some trucking as well. And this we see starting to pick up as well as of 2026 and onwards. Very helpful. And I believe the revenue per vehicle opportunity for Innoviz varies a little bit level to level, and especially for robotaxi, you have a lot more LiDARs per vehicle. Maybe talk around what your content opportunity may look like for L2+ or L3, and then how that trends as you go to higher levels of autonomy. Yeah. So usually, the consumer vehicles, most of the volumes that we see in front of us in our pipeline is mainly Level 2+ and Level 3. And usually, in these applications, there is one or maximum two LiDARs, either located in the grille or on the rooftop. And these applications, consumer applications, are more price sensitive. So at this point of time, still, these kind of features are to some extent costly. So you see them on high-end or to mid-range consumer cars. When you go to Level 4, it's a different business model. And the price sensitivity is different because you don't need to have a driver. You basically replace the driver by the Level 4 platform. And so we have announced that on these Level 4, we are working together with the Level 4 platform. We are offering nine LiDARs in each vehicle, which basically means even though that the Level 4, most of the Level 4 application, the commercial application, deploy less number of vehicles, but since it's nine LiDARs per vehicle, the multiples are bringing you practically to the same volume that you will have from Level 3. So I think that the most mature is Level 3 on the consumer side. Level 4, nine LiDARs, is maturing now. And it actually is equivalent to the Level 3. It's practically doubled our TAM, I would say, if you can call it, or the opportunity that Innoviz has. In terms of content per vehicle, so when you sell nine LiDARs per vehicle, and we said in the past that the cost per LiDAR is between $500 to $850 dollars per LiDAR. So it's in the thousands for Level 4, while a few hundreds of dollars in Level 3. So it is significant. Yeah, that's very helpful. You spoke about your partnership with a platform provider for autonomous vehicles. You announced that partnership this year, where you'll provide the LiDAR and be associated with the chipsets and software of this platform provider. Maybe talk about what led to that partnership. I mean, why would they want to have a preferred LiDAR partner rather than being able to leave more flexibility there or leave that decision up to some of the customers? And And what do you think led to your win? I think that the initial step was that Innoviz decided to take the Level 2 LiDAR platform, long-range LiDAR, basically. And because of its agility, I would say, and the modality, we could turn it also very quickly into an offer it as a short-range LiDAR as well. Once we had a more broad solution, level long range, short range, it was easier for the platform, for Level 4, which you need both long range and short range LiDAR to adopt us. And we have mentioned in the past that we are working basically with the three main or in good connection with the main three platform providers. It's Mobileye, NVIDIA, Qualcomm. With Mobileye, we have announced that we are working on the ID. Buzz, the Volkswagen ID. Buzz. We showcased it in last CES. So I think our experience and that really in our offering helped us to integrate into the platform. And then at the end of the day, once you are integrated and are starting to win programs together, usually the switching cost is very high. It means that an OEM can decide, "I don't want to work. I would like to adopt the platform, but I want a different LiDAR," can be made, but then you will pay for it in NREs and services, tens of millions of dollars just to switch. The time until this platform will mature will take longer, and the risk, obviously, is higher. So usually, the industry consolidates. Once you win one program or are integrated into one platform, it gives you a benefit for future wins. No, that's helpful. And I think even on the last earnings call, if I remember correctly, you had a couple of additional deployments that you were able to secure wins for based on this partnership in the L4 space, if I'm not mistaken. Yeah. So exactly. So through this integration with the Level 4 platform, we have won and started working on two new OEMs together with the platform. And basically, it means that every win of that platform, of a new OEM, provides us another win. So the winning cycle is much faster. So I would expect looking forward that this gives us a better chance of winning additional business. And hopefully, we will be able to communicate that we are winning more business, not too far away. Yeah. And just to work, I think we're all conceptualizing this properly. I mean, the volumes for a commercial shuttle or a robotaxi, more commercial use cases, so the number of vehicles is probably much lower than if you were on a high-volume consumer car, but then you've got nine LiDARs instead of one or two. And so the revenue opportunity is still very attractive in totality. Yeah. Yeah. So I think we mentioned it also on our last earnings call. Usually, these commercial vehicles platforms, the number of vehicles is between a few tens of thousands of vehicles to a few hundreds of thousands. And if you sell a few thousands of dollars into per vehicle, it means a very sizable business for Innoviz. And the ability to win more is much greater here. Again, you have a platform, you are integrated, and it's relatively a shorter cycle in order to win new business. It's been a very exciting last several months and year for the broader autonomous industry. Consumers can now take ride in robotaxis. There's a lot of work being done at the OEMs, and that's led to a lot of engagement in terms of RFIs and RFQs for Innoviz. I mean, you already spoke about some wins you have with VW and BMW, but I think there's something like 15 programs in the RFI or RFQ stage that you guys mentioned on the last earnings call, you said you were hopefully close with OEMs making some final decisions, so maybe give us a little bit of an update if you could around how some of those engagements are progressing. Yeah. So a few things I would like to say about it. First of all, the fact that you see that we have this pipeline, basically, many of the names, these are well-known names that you see on the street, well-known brands, which means that, as I mentioned before, the industry is maturing. The industry understands better what is the problem and how to solve it. And the industry is very motivated to go towards autonomous driving because safety, I mentioned it before, but also because it is a differentiator and because it provides additional margins, especially when you have EVs around and the market starts to commoditize around EVs. So these factors of margins, additional margins, additional safety, and additional differentiator is very important. And we see that the market is going towards these features because these features provide exactly that. We expect, or I would say, the more mature programs that we are seeing today is A, around the Europeans. The Europeans The Europeans are usually the first ones that will adopt technology, and we see additional traction or movement in the U.S. The reason that we see that the U.S. is now moving faster, I believe, is related also to the DoD, I would say, banning of Chinese LiDAR. So it blocked to some extent much of the competition that is coming out of China. And today, there are very few players in the LiDAR space that can offer to the U.S. market and also to the European market LiDAR solution. And hopefully, Innoviz will be one of the leading solutions in this sense. And again, also we see this acceleration of the processes moving from RFI to RFQs also in the U.S. Maybe one additional interesting factor that there is a considerable amount of emerging OEMs that also are stepping into adding autonomous features into their vehicles. This is also a trend of more agile, fast-moving OEMs, emerging OEMs that wanted to adopt new technologies and new features into their vehicles. That's great. I know when decisions are made is out of your control, right? You guys can do the technology and put yourself in a position to hopefully get bookings, but ultimately, that rests with the customer or potential customer. But anything you can share around when to expect potential awards and indications that they may be providing to you? Yeah. This is one of the trickiest questions because basically, we are communicating what is communicated to us. So the usual internal, I don't want to say a joke, but the usual saying is the decision is next month, or the board meeting is next month, and the decision is in the following week, and you see usually that it takes some time. We don't really control it, but I do see some traction, so with Volkswagen, we see constant progression, and we have already been working on two programs, and the third one, we are supporting, and with the Level 3 L4 platform, we announced two wins, so I think things are happening, and there is some progress. We do expect that the next decision won't take years, but rather a few months and not too long. So I would expect that, I don't know if I would win, but I do expect that there will be design win decisions being made soon enough. Great. Well, we'll stay tuned for hopefully some good news in the weeks and months ahead. And I know you guys will be at CES, so you'll have a lot of industry announcements around that trade show. So hopefully, we get some updates around that. So we'll all stay tuned. Can I double-click on the North America opportunity? I mean, you spoke a little bit about it. You talked about the geopolitical overlay in terms of what customers are sorting through. But I do think, especially with Waymo deployed, with what Tesla is trying to do, obviously without LiDAR, perhaps that's a catalyst for some of the other OEMs to try and move more quickly to L3 or L4 solutions. And maybe specifically in the North America market, you can talk about what sort of traction you're seeing with Innoviz. I think you alluded a bit to this on your last earnings call. Yeah. So in the U.S. market, I think there is an acceleration of the processes. I think the U.S. market was involved already in programs. Again, the U.S. market, there was some. I would say this is the second wave after the certain disappointment of some programs that didn't go through. I think that today, the U.S. market comes to it much more mature. We see more than two, but two leading OEMs in the U.S. with Level 3 and Level 4 programs for consumer vehicles. I guess that in the next year, we will probably get some. We will understand, oh, there will be some nomination for SOPs that probably start as of 2027 and going onward. So basically, by the way, if you want to have a car in 2027, it means you need to make a decision sometime early 2025. So we do expect some decisions out of this market. And again, I think the market has matured and is ready to make the decisions. That's all very helpful. I mean, we've been speaking about these awards tied to higher levels of autonomy, L3, L4, but I think there's also some regulatory momentum for safer vehicles, things like emergency braking. Talk about what that might mean for Innoviz and any opportunities you may have tied to some of those sorts of government mandates. Yeah. So I think that the industry is always pushed internally, but also by regulators for having safer and better solutions once and also as the technology develops. So I think emergency braking was a good example for that, that basically the needs are the U.S. regulator required that emergency braking will be tested also during night. So it appears to be that most emergency braking situations happen actually at night when the visibility is not so well, but systems were not tested at night, meaning that the automatic systems might fail at night because they're simply not tested and not qualified for emergency braking at night. And then the regulator required for an active sensor. The regulator said, "Okay, you need to test it at night, which means you need an active sensor." So I summarize the passive sensor. It needs light in order to operate. LiDAR is an active sensor because it sprays laser beams all around and scans the environment. And it's an active sensor, which is capable of working at night. So basically, in order to meet the new regulation and have emergency braking tested at night, you basically need a LiDAR. So sorry for that. So this supports our systems, our LiDARs. Sorry. And we see more and more support for that in terms of regulation. No, that's all great. I'll let you get a drink of water. Maybe shifting gears a little bit to some of the financial topics. If we have time left at the end, I can go back to some of the industry questions. But on the financials, guidance for this year for revenue implies about $6 million of revenue in the fourth quarter. It's a bit of a sequential step up. Maybe talk about what's driving that. Is that more NRE related or shipping for serious production programs? Yeah. So basically, we have four revenue sources: NREs, samples that we sell at high ASPs, thousands of dollars, software, and production units. So production units and software we sell today mainly to BMW, but most of the revenues today and next year are expected from mainly NRE, the services that we are providing to the OEM during the development phase. Usually, new programs can bring additional NRE services in tens of millions of dollars per program. So it can be very meaningful and incremental. And as I said before, 2026 is the year we expect programs to start launch, meaning we are selling production units in growing volumes. So as of 2026, I expect to see more revenues coming from production units and software. So this is roughly the split between the two. NREs, since we became a Tier 1, we were able to tap into these services that we are providing: integration, qualification, validation services that we are providing to the OEMs. These balance off. First of all, they impact our top line. Each program brings additional NREs incrementally. On one hand, we see better and better top line, but also it supports our gross margins, which you can see quarter over quarter, year over year, getting better and better. Hopefully, they will go to the positive. They are almost at zero. So hopefully, they will go to the positive in the next year. Once we hit mass volume production in 2026, obviously, there will be another significant increment there. You guys are taking a lot of cost out in terms of your operating expenses. Maybe help us understand where that goes from here. I mean, I know you're already trying to be very efficient and focused with your spending. And of course, you need to invest to grow, which is clearly the right long-term decision. But to the extent industry fundamentals remain soft next year, I mean, there's a lot of macro volatility and pressure on some of the auto OEMs. I mean, if the business is softer than you expect, I mean, is there more levers you can pull on the OpEx front? Yeah. So first of all, we are a very focused company on the InnovizTwo platform. We did some realignment at the beginning of the year. We had two platforms: one InnovizOne for BMW, InnovizTwo for the going forward. Once InnovizOne got to maturity and to production, we could focus the company around InnovizTwo. We always were a very responsible company and always took our cost structure very seriously. So we always look at this side as well, not only on increasing the top line, but managing very carefully the cost structure. So I think at any point of time, there are always opportunities and always analysis that we are doing in order to see if we need to adjust anything to continue. But I think we are today in a different position than we were last year, both because we gained additional wins. We represent a larger volume, potential volume, because we won additional programs, which means this opens for us more strategic opportunities, both on our partner side, which would like to be our partners because we represent more volume, so we have additional leverage that we can do, and this helps us also on the cost side, and also, I would say, to some extent, we are more strategic or more important to our clients. We represent a lot of volume. The integration is in the middle, and there are some strategic opportunities around that as well, which as a whole, if you look at the company as a whole and a balance sheet, our top line, and so on, I feel very comfortable where I'm standing today. Maybe we could follow up there on the balance sheet. I think you had $88 million cash on hand, if I remember correctly, as of last quarter. You're still using cash. How are you guys thinking about managing the balance sheet? And what are maybe some of the sources of potential funding? I mean, NREs is something you've mentioned you're getting some bookings from. I don't know if that plays a role in how you think about getting better cash flow, but talk a bit more on liquidity and cash, if you could, please. Yeah, sure. So it's true. We have $87-point-something to $88 million of liquidity. In addition to that, we show that the cash burn decreased significantly. Last year, it was over $28 million. Now it's under $20 million, around $18 million a quarter. So we show a gradual, but very consistent decrease in our cash burn as we win. So first of all, you need to win more business. This is what we are doing. Q3 was important to show we brought additional to OEMs. All this is very important because this supports this year, next year, NREs, which, again, once you win these programs, basically all the programs are for the same platform, InnovizTwo, which means I'm able to balance off my expenses better and better as I win more programs because financing basically the same platforms. So this is one direction. The other, I talked about it just a minute ago, very shortly. As you win more volumes, it means you have a more significant position in the market, which means you have some strategic or other opportunities to finance the company. And by financing the company, I don't mean necessarily dilutive opportunities. Just as an example, I can give an example. You can offer your customers down payments for some benefits in the future. This is something that an opportunity I didn't have a year ago because the business was not large enough. The number of wins was not enough. Today, it's a different situation. Same goes for my partners. I don't use contract manufacturers, for instance. I'm sorry, I'm not doing the manufacturing myself. I'm using contract manufacturers. So the relationship there can also support my cost structure and take some of my costs on the other side, on the other side instead of me having these costs and so on. So again, I had more than one opportunity in order to support the company in addition to the standard, "Okay, let's have more revenue," which is obviously something that I'm working on. Great. Well, I know a lot of exciting things the company is working on. We're all looking forward to updates going forward. And unfortunately, we're out of time today, but Eldar, I want to thank you so much for joining us. Thank you very much. A pleasure. Okay. Take care, everybody. Thank you.