Good evening, welcome to the Mobileye second quarter 2023 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the call, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dan Gal, Chief Communications Officer. Please, you may begin. Hello, everyone, welcome to Mobileye's second quarter 2023 earnings conference call for the period ending July 1st, 2023. Please note that today's discussion contains forward-looking statements based on the business environment as we currently see it. Such statements involve risks and uncertainties. Please refer to the accompanying press release, which includes additional information on the specific factors that could cause actual results to differ materially. On this call, we will refer to both GAAP and non-GAAP figures. A reconciliation of GAAP to non-GAAP financial measures is provided in our posted earnings release. Joining us on the call today are Professor Amnon Shashua, Mobileye's CEO and President, and Moran Shemesh Rojansky, Mobileye's acting CFO. Thanks. Now I'll turn the call over to Amnon. Hello, everyone, thanks for joining our earnings call. On the revenue side, the quarter was in line to better than our expectations. Customers were very cautious in the first half of 2023, which led to below normal growth, but we have seen the production schedule solidify for the second half of the year, where we expect to grow 16% year-over-year on much higher volumes than the first half. Profitability was better than expected, with adjusted operating margin of 31%, up four points versus Q1. At the midpoint of our updated guidance, adjusted operating margin for 2023 is 29.5%, nearly three points higher than our original guidance back in January. The good news on the cost side is a combination of macro factors, negotiations with customers on engineering reimbursement, and result of a continual refinement of our spending plans in order to heighten efficiency and optimize returns. Importantly, despite the lower base of operating expenses in 2023, we still see OpEx growth rates in future years moderating to more normal levels compared to 2022 and the 30% growth we originally planned for 2023. This should support good operating leverage over time. Turning to business development for our advanced product portfolio, we continue to move more and more OEMs towards the design win phase. We can now count nine large established OEM prospects in what we consider advanced stages for products like SuperVision and Chauffeur. In most cases, we are not competing against anyone. The process is about physical testing to convince the OEM of the performance and the design domain of the system, establishing what role the OEM will have in customizing the system, and often negotiating the bundling of different products like SuperVision and Chauffeur across various brands, vehicle segments, and launch dates. Beyond our history of execution and our ability to prove the capability in physical testing across long distances, multiple road types and conditions, what appeals to the OEM is that our product portfolio is scalable, cost efficient, engineering design efficient, and above all, displaying leading and cutting-edge performance. In terms of scalability, the core technologies of computer vision and extremely efficient EyeQ processing platform, boosted by REM mapping, forms the baseline for solutions that are relevant across all vehicle price points and a wide range of feature sets from eyes on, hands on, all the way to eyes off, hands off, and driver off. Our work with Volkswagen Group is a good example. Since 2018, all new vehicles across the group have used Mobileye-provided ADAS, and this relationship exists well into the 2030. Beginning in 2021, REM mapping functionality was added to the NED platform, leading to a relatively low-cost way to provide class-leading lane centering capability, among many other functions, and providing an early opportunity for the OEM to generate recurring subscription revenue. The success of this product, which we call Cloud-Enhanced ADAS, led to a recent design win to cascade REM across most of the entire group over time. Next, we have the SuperVision design win with Porsche. Porsche shares common platforms with other premium brands of the Volkswagen Group. While not formalized yet, we expect SuperVision to be adopted by the other premium brands to increase economies of scale. In fact, Audi and Bentley executives are already on record expressing excitement to bring SuperVision to their products. An additional benefit of SuperVision to our OEM customers is that it creates a bridge to our consumer-level eyes-off solution called Chauffeur. The surround computer vision, REM, and EyeQ-based domain controller on SuperVision is also the baseline for Chauffeur. The difference in the systems is the addition of secondary perception system made up of radar and lidar, which results in significant increase in the Mean Time Between Failures, which is obviously key to enabling the eyes-off. In other words, full driver disengagement under a broad set of conditions and road types. This also forms a baseline for our Mobileye Drive Mobility-as-a-Service solution. On this front, there has been recent news on our delivery of multiple self-driving systems, which have been integrated into Volkswagen's ID. Buzz for testing by Volkswagen Commercial Vehicles in both the US and Europe. The fact that Volkswagen has recently demonstrated these vehicles with analysts and media after only several months of us working together, is a testament to how evolved this technology already is. The ability to provide efficient and high-probability products across all vehicle price points, for both consumer-owned and Mobility-as-a-Service solution, all based on the same proven core technology, is a huge selling point to OEMs. As is the increased flexibility of our technology, we provide tools to OEMs to both tune the system and also develop and deploy their own software in order to differentiate and to enable true ownership of their systems. For example, with the Porsche SuperVision program, our software team is providing about 600 tunable parameters that Porsche engineers can adjust to create a unique customer experience. As an enabler for tuning, we have designed a formal high-level tuning language, which we call Driving Policy behavior shaping, that allows one to describe the desired Driving Policy as if one writes code on top of our Driving Policy operating system. We have EyeQ Kits on top of that to offer them bespoke support software integration within the Mobileye stack, as well as the potential to deploy non-Mobileye functions such as automated parking or driving monitoring on the EyeQ, saving the cost of additional ECUs. Final topic before turning it over to Moran, is the continued rollout of the software to Zeekr vehicles on the road. As you all know, the full SuperVision capability is being delivered to Zeekr vehicles over time through over-the-air updates. Mapping is key to this. The complexities of mapping in China means that data collection must be done through Chinese partners, and as a result, data collection started much later in China than North America and Europe. The map coverage in China is behind those other regions, but it's quickly building. All Zeekr vehicles have had a very sophisticated highway assist system for many months now. Until recently, the full point-to-point Navigate on Pilot functionality was only available to a fairly small number of beta users. We are very pleased that Zeekr recently significantly broadened the number of users with highway Navigate on Pilot. We expect a full rollout to all users within weeks. Initial feedback has been very good. Zeekr's system is performing much better than other NOP systems in terms of ability to complete maneuvers without takeover in many difficult situations like construction areas, highway merges, heavy traffic, performing lane changes within tight curves. Influencers and media have also highlighted the strength of the system versus competitors, focusing on the assertive, human-like performance of the car. Several calling it the most efficient and capable Navigate on Pilot they have ever experienced. Any negative feedback has been around some dead spots in the map, which will be rapidly built out over the following months. The eyes-on, hands-free market is much more developed in China than other regions, it's a significant proof point to other OEM customers that Zeekr's system is outperforming. This supports the feedback we have gotten from other OEMs that have performed benchmark tests of their own in a test environment, but proof points from actual production vehicles driven by non-engineers is obviously much more powerful. I now turn it over to Moran to go over the technical, go over the financial results and dive into more detail. Thank you, Amnon. Thanks for joining the call, everyone. Before I begin, please be aware that all my comments on profitability will refer to non-GAAP measurements. The primary exclusion in Mobileye non-GAAP numbers is amortization of intangible assets, which is mainly related to Intel's acquisition of Mobileye in 2017. We also exclude stock-based compensation. Starting with Q2, overall revenue was down about 1% year-over-year, with core EyeQ revenue also down 1% year-over-year, as higher ASPs did not fully offset a modest volume decline. We do believe that this stocking of inventory at our tier one customers impacted the growth rate in both Q1 and more sharply in Q2. Looking ahead to the second half, our guidance implies that we will be back to meaningfully outperforming industry production volumes. SuperVision shipments were 10,000 units in the quarter. This was exactly as expected. As we noted on the April earning call, Q1 shipments of 25,000 were significantly higher than end market volumes. The intent in Q2 was to fully reduce that inventory build from Q1. The strong recovery in Zeekr end market volumes and our intentionally low shipments accomplished this goal. Gross margins were in line with our expectations. On a sequential basis, EyeQ margin was stable. The approximate one point increase in Q2 as compared to Q1 was simply due to SuperVision revenue being a smaller mix of overall revenue. Operating expenses were lower than we expected, and this led to strong adjusted operating margins of 31%, up about four points versus Q1. The following three areas accounted for the majority of the lower-than-expected costs in the quarter are: number one, on the payroll side, depreciation of the Israeli shekel led to payroll savings in U.S. dollar terms. The FX rate was approximately 4% favorable to what we had forecast for the quarter. Number two, the move into our new Jerusalem campus was delayed from May until the fall of 2023. The higher facility expenses from the new campus will now begin later in the year than we expected. Number three, we also experienced lower costs for our efforts around Mobility-as-a-Service. We are constantly reviewing our activities to ensure that our product rollout is as efficient as possible. In the case of Mobility-as-a-Service, we have de-emphasized plan to certify an EyeQ 5-based new fleet of vehicles for our customers in the near term. The costs simply weren't justified relative to the volumes that were possible on the new base platform. The benefit of the new base fleet, however, still exists in terms of continued testing and validation of the software. In terms of scaling production volumes from the Mobileye Drive self-driving system, our go-to-market strategy is focused on integration of the system into purpose-built vehicles from vehicle builders, including Schaeffler, Holon, and Volkswagen Commercial Vehicles. We expect these vehicle platforms to begin serial production in 2025, which also coincides with volume production of our EyeQ 6-based compute platform and our software-defined imaging radars, each important for scaling the Mobility as a Service business. In terms of cash flow, we continue to rebuild our strategic inventory of EyeQ chips, which have been largely consumed over the course of 2021 and 2022 during the supply chain crisis. Our ability to satisfy demand during recent years, partially by consuming our inventory buffer, was a big positive. Rebuilding of the inventory is a very important activity so that we will be prepared in case of any potential disruption in the future. Capital expenditure in the quarter were consistent with our view that CapEx should be roughly similar this year versus 2022. Turning to the guidance, revenue is tracking in line with our prior guidance, which we are reaffirming today, both for the core EyeQ business and SuperVision. On EyeQ, schedules have become more solid over the last couple of months, and customer requests to move volume around have largely ceased. Customer orders support a steep ramp of expected volume in the second half, with Q3 up over 10% versus Q2 and Q4 up more than 20% versus Q3 levels. On SuperVision, Zeekr end- market volumes recovered strongly in Q2, which both reduced the inventory built in Q1 and solidified the volume trajectory for the second half. We continue to expect full year shipments consistent with our prior guidance. Q4 will be higher than Q3, given the new vehicle launches and the Zeekr 001 entry into Europe. Gross margin for individual product lines are stable. We expect SuperVision revenue mix to be higher in Q3 and Q4 versus Q2, which will drive some reduction in overall gross margin versus Q2 levels. On the adjusted operating income side, the positive update to our guidance is related to lower than expected operating expenses. Year-over-year growth of OpEx is now expected to be around 22%-23% versus our prior indication of 30% growth. Nearly half of the reduction already occurred in Q2. The rest of the reduction is primarily coming from the following two areas. Number one, to varying degrees, the areas of lower cost in Q2, like payroll, facilities, and Mobility-as-a-Service, are generating some saving in the second half of the year as well. Number two, non-recurring engineering reimbursements in the second half of the year are now expected to be higher than we had originally forecasted. In terms of tax rate, we continue to expect an effective tax rate in between the 12% and 13% range for the year. Before we start the Q&A session, I'd like to thank Anat Heller for being an amazing mentor to me and for her continued support as an advisor to the finance team and management. I'd also like to thank our entire finance team for their professional and tireless work since we've become a public company. Thank you. We will now take your questions. Priscilla, we're ready to start the Q&A session. Excuse me. We will now be conduct a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the questioning queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your headset before pressing the keys. One moment, please, while we pull for questions. Thanks, everybody. It's Dan. Just in the interest of time, please, limit yourself to one question and one follow-up, please. Thank you. Thank you. Our first question comes from Aaron Rakers with Wells Fargo. Yeah, thank you for taking the questions. I do have one question and one quick follow-up. You know, I think in the prepared remarks, you had started with a comment that you now have nine large, you know, e-estimated OEMs engaged in terms of Mobileye Chauffeur and SuperVision. I think last quarter you talked about having six large OEMs kind of deployed, looking out in the 2024 timeframe. I'm just curious, can you walk us through? Is that a change? How things have changed in terms of your pipeline of design wins on SuperVision? ... Okay, thank you. I'll take this question. We, we noted in the press release that our serious engagements on SuperVision and Chauffeur have expanded versus the beginning of the year in terms of the number of OEMs. I'm defining serious engagement as where OEM engineers are fully aligned with Mobileye, that Mobileye is the right path forward in terms of technology, performance, and cost. Where we already are in production, executing an official product program, or in a funded physical concept phase. Currently, this list of OEMs represents about 30% of global volume. This is very encouraging because the vast majority of the rest of the industry remains very open to us. For these OEM engagements, we're not competing with another company or technology. There are other complexities in the decision-making process that have nothing to do with competitive landscape. Things like go-to-market and consumer pricing strategies, how to best align the product into the portfolio launch plan, defining roles within the program, what to do with the internal development assets. Real level 2 +, what we call eyes-on, hands-off, and the path to eyes-off as well, is a new, potentially gigantic automotive TAM, with strategic implications and complexities that make the decision-making process more complex than a simple ADAS program. Working in our favor is an increase in competitive pressure as Tesla and the China startups, including Zeekr, push the envelope on hands-free technology. We have noted an increase in seriousness within the OEMs over the past one, two years, and have seen some OEMs that appear to be far away from us on advanced technology move rapidly to align behind our approach. This is all very positive for us as a technology and cost leader. We still see high likelihood of significant design wins, announcements in the second half. Yep. That's very helpful and very interesting. Then, you know, I guess on the other front is I'm just curious, as we think about Zeekr, you know, 001, 009, you've got Polestar 4. You know, I guess it sounds like the, you know, inventory, you know, dynamic and the issues that Zeekr's kind of normalized themself out. As we look forward, I guess I'm trying to understand, you know, what are you embedding as far as the Zeekr volumes for the full year? You know, reiterating the full year guide, or what I'm trying to gauge is how do we think about the potential upside if these volumes continue to improve? Just, you know, updated views on just Zeekr and what you've seen, you know, as a setup into the back half of the year. I think 2023 is very solid in terms of our corrected guidance that we did the last quarter. Regarding 2024, look, we provided a long-term outlook for, you know, SuperVision volumes at CES early January. We'll make annual updates, but we're not going to update this on an ad hoc basis. You know, in order to provide some more color, you know, everything is on track with new SuperVision customers that we talked about in January. We closed the Porsche design win and the expansion of the SuperVision platform to other Volkswagen Group brands, that's proceeding as planned. The pipeline of OEMs has advanced the discussion of SuperVision. You know, it has grown versus where it was in January. In terms of 2024, the number of vehicle models with SuperVision systems, that has not changed. We expect to have five vehicles in production by Q1 of 2024, compared to one at the beginning of this year. Two of those vehicles are sold outside of China. The one thing that has changed is that our 300K unit outlook for next year assumed that Zeekr 001 would sustain its Q4 2022 demand pace in China. That was the best data point available in January. The pace in Q2 of this year for that specific vehicle was about 60,000 units lower than the Q4 2022 pace on an annualized basis. That's consistent with what we assumed in our guidance update last quarter, but that gap is a risk to the 2024 forecast we provided January. Now, I'll point out that there has already been a significant adjustment in expectations from about half of our covering analysts, who are projecting volume in the 220K range for 2024. Yep. Thank you very much. Thank you. Our next question comes from Chris McNally with Evercore. Please go ahead. Hey, team. Two roadmap questions. First on SuperVision rollout, I appreciate the 2024 update. I think that's been clear. You know, my question is really around maybe, you know, as we think about 2025, and it's more not asking about a target, but more, are you starting to get the visibility on some of these, you know, larger, more consequential programs on whether they could launch in 2025 or 2026? Or is it just too early at this point? The OEMs themselves, you know, are still trying to determine launch timing mode. When is that sort of typical go, you know, no-go, where you would sort of have an idea, you know, whether 2025 programs would be significant? Well, we're probably more confident in the 2026 forecast than 2024. The business will be much more diverse in 2026, with Porsche and likely several other automakers being added, as well as significant volume outside China, with Zeekr and other Geely, Geely-related brands like Polestar. This will reduce the reliance on just a few vehicles and one region like we have now, and would lead to less fluctuation in volumes. All the high probability potential wins that we included in our 2026 forecast still look very good in terms of booking design wins and launching over the course of 2025 and early 2026. We feel very confident in the overall trajectory of the SuperVision business line, in terms of big inflection point in volumes around the 2026 time frame. We also see the potential for SuperVision platform to spread to more models within OEM customers that also as automakers get more bullish on the potential profit-making opportunities. This could positively impact our midterm projections. I think we're very confident on 2026. Things look brighter than they looked back in January. Okay, that's great. The quick follow-up, always a sort of a delicate one, but, you know, regarding the more aggressive talk of Full Self-Driving licensing over the last six months, you know, maybe just even very generally, you could talk about the recent tone of your customer conversations with respect to Full Self-Driving specifically, you know, either good or bad. I mean, it could honestly make some OEMs move faster to compete with their offering, or maybe, you know, some OEM discussions, you know, could slow down if they just want to take a free look, you know, when and engage Tesla. Any, you know, it's just such a relevant topic. Anything that you can add on, you know, that, that tone, if it's had any effect on the conversations that you're having, directly? All right. I think that, you know, Tesla has mentioned this several times in the past about licensing their FSD, so it's not really a new way, a new concept. It's not new to have competitive noise in the market. I, I would say that we have lots of respect to what Tesla has accomplished with FSD. In fact, we see their rapid development as a significant positive for us, as it pushes the market to move faster, to implement advanced solutions like SuperVision. Specific question of Tesla working with OEM. I think there is one argument that really clarifies the matter. I, I would put it as performance versus cost of the system. If you look at SuperVision, it's an FSD-like category, 11 cameras and the radar or few radars. Supervision is also REM, you know, the high-definition mapping, in addition to what FSD can offer. Today, we have 120,000 Supervision-enabled vehicles in China, more than 1,000 beta testers, and the response in terms of a, you know, comparative analysis is very, very good. It's, you know, on par or superior to FSD that's measured by the rate of intervention and ability to handle complex maneuvers. REM is a stronger differentiation. Now let's look at the cost. The price of a Supervision subsystem, including the cameras and radars, you know, the ECU, software, REM, is approximately somewhere in the $2,500 range. Now, if Tesla matches that system price, OEMs will be able to offer, you know, Supervision or FSD at less than half the price that FSD is offered to Tesla car owners. This would immediately cannibalize Tesla, whose strategy appears to be to reduce gross margins on the vehicle and rely almost solely on the value of the FSD for creating growth. I would also mention, and this bodes well with our OEM customers. There are 400,000 FSDs on the road since 2019, and Mobileye has already 120,000, and in approximately two years, will surpass the 1 million bar, and from there will grow much faster. There are also important differences with respect to access of data, something that Tesla has very often highlighted as an advantage, and that's another key advantage that OEMs recognize. For example, at their March investor day, Tesla noted they had a video cache of 30 petabytes and were intending to grow to 200 petabytes. Our video database is 400 petabytes. Not to mention all the data that we collect for the program, the high-definition mapping. We collected almost 9 billion mi of this type of data in 2022 alone. Tesla talks about 300 million mi of driven to date. I think overall, when you look at what Tesla has accomplished, it's a very, very big positive for us. You know, we believe that SuperVision is a much more optimal solution for our customers, both in terms of cost and performance and customization basis. All of Tesla's accomplishments actually creates a very positive momentum to have other OEMs wanting to have this type of, this category of a solution in their own cars. Appreciate the detail. Thanks, Chris. Our next question comes from Joshua Buchalter with TD Cowen. Please go ahead. Hi, team. Thanks for taking my question. Congrats on the results. Appreciate the color that you gave on the how you're thinking about SuperVision in 2024, in particular, on the lowered 001 production numbers. I was curious, compared to the original expectations, how you're thinking about, I guess, the other four that should be meaningfully in the 24 numbers. Has there been any more, I guess, incremental handicapping to how you're thinking about those vehicles, given, you know, those are new vehicles that haven't really launched yet with the new technology? Are your expectations for those similar to what they were six to nine months ago? Thank you. Thanks, Joshua. It's Dan. I'll take this one. We feel good about the other models, right? The Zeekr 009, for example, is performing exactly to the expectations that Zeekr provided to us and that we baked into the forecast. There's another vehicle launching right now, Polestar 4 looks to be on track to launch. Yeah, we're feeling good about the expectations, you know, and in 2023 as well, like relative to, you know, the revisions that we made last quarter, the Zeekr 001, the Zeekr 009 are performing exactly as we expected. You know, with some minimal volumes from the additional launches in the back half, we should be able to comfortably get into our guidance for that product. We feel good about kind of, you know, how the performance is going in 2023. Everything looks solid for 2024, you know, except for that gap that we identified, versus where we originally expected back in January. Got it. Thanks, Dan. Congrats on the VW win for the more fully autonomous vehicle. I was hoping you could help us understand any guardrails you can give on timing and scope of this project. When should we expect this to contribute to initial AV revenues? Is this planned for, you know, the press release had read like commercial vehicles, but is this planned and do you see a roadmap for the Chauffeur-type technology moving into more consumer types of vehicles? Thank you. The only reason that we mentioned the ID. Buzz is because, you know, Volkswagen in their own PR, as they mentioned, the Austin, you know, vehicles, they ship to Austin with our technology for test and also in Germany. It's still ongoing. The all the formalities of actual design win for this, but there are already, you know, more than 30 vehicles already in testing phase at the VW. Hopefully, this will mature into an official design win, hopefully this year. Thank you. Our next question comes from Mark Delaney with Goldman Sachs. Please go ahead. Yes, thank you very much for taking the questions. If you could provide more details on your latest outlook on the AV opportunity with Mobileye Drive. I think you mentioned in the prepared remarks, now putting less emphasis on upfitting NIO vehicle, NIO vehicles, and it making more sense to ramp on purpose-built vehicles in the 2020-2025 timeframe. Could you share a bit more on what changed that led you to have that view and your confidence on purpose-built platforms being ready in 2025? Sorry, Mark, you broke up a little bit. Can you just repeat the question? No. Mark, sorry. Can you repeat the question? You broke up a little bit. Yeah, of course, Dan. Yes, sorry about that. Hopefully you can hear me a little bit better now. I was hoping for some updated and added details on your AV plan with Mobileye Drive. I believe, if I heard correctly, you're now putting less emphasis on upfitting NIO vehicles. And you mentioned it making more sense to ramp AVs on purpose-built vehicles in the 2025 timeframe. I was hoping for a bit more color on what's changed, you know, and led you to have that new strategy and what your confidence is in having those purpose-built vehicles ready in the 2025 timeframe. Yeah, I'll take that. Back at the CES, we mentioned that we are working with the platform builders. We mentioned Schaeffler, we mentioned Benteler, with their daughter company, Holon. We mentioned also a third company, who by now, they made their own press releases, which is Volkswagen Commercial Vehicles on the ID, on the ID. Buzz. We're working also with another personal car maker called the T3. I think we announced that a while ago, with the Mobileye Drive 64. The focus is on collaborating with or partnering with platform builders, rather than having our own vehicle and homologating our own vehicle, and then, performing the entire, you know, chain of, you know, owning vehicles, operating vehicles, customer-facing applications. We do that through partnerships. That is the new focus that we announced back at the CES. Everything is on track, including what you saw in the press, a few weeks ago by Volkswagen on actual testing of ID. Buzzes equipped with our technology. Okay. That's helpful. Thanks. I was hoping you could also share a little bit more of an update on the progress you're making in developing your own radar and lidar sensors, as I believe they could be helpful in supporting your opportunity with both the Chauffeur offering as well as Mobileye Drive. Thank you. The imaging radars, we are on track for end of 2024 SOP. We are already been interacting and engaging with a tier one partner to work together on offering the radar to the market. It's on track for end of 2024. The FMCW lidar is on track for second generation lidars around the 2027-2028 timeframe, where we, where we feel that first generation autonomous vehicles would be served with time-of-flight lidars and second generation with the FMCW. Thank you, Mark. We'll take the next question, please, Priscilla. Our next question comes from Shreyas Patil with Wolfe Research. Please go ahead. Hey, thanks so much for taking my question. Maybe just first, just thinking about the how to think about the revenue or potential margin upside that you could see from Zeekr as they're now unlocking some of these more advanced features. Is that something that we would be seeing more into 2024 potentially, or could we see some of that even in the back half of this year? I think that potential we'll see in 2024, because the NOP feature powered by REM is for the first 6 months, is going to be offered for free to all the Zeekr customers. Then we'll start seeing revenue based on a certain traction. We will see revenue. That should kick in in 2024. We're talking about hundreds of dollars per vehicle potential in 2024. Okay, understood. Then, I'm not sure if this is relevant, so, you know, feel free to discuss, to dismiss if I'm off base on this. Does the current political situation in Israel have any implications for you from a business perspective? Well, you know, it's a... It's creating distress. It's creating personal distress, and I think also most of Mobileye, if not all of Mobileye employees, are kind of experiencing this kind of distress. When you look at the Mobileye employees are all professionals. We haven't seen any effect on efficiency and productivity in the past few months. We're not manufacturing anything in Israel. Israel is not a source of revenue for Mobileye. We don't see any material impact for the political upheaval that is going on in Israel. Okay. Just, maybe just a quick modeling one. Just how do you think about the benefit of the engineering reimbursements that you mentioned in the second half? What's driving that increase? Is it from the Drive business, or is it also from SuperVision or the base ADAS? Thanks. Yeah. Yeah, it's basically coming from base ADAS. We have in our programs, we have NRE reimbursement that, you know, for most of our programs, and sometimes these are things we cannot expect at the beginning of the year. We might get additional benefits on these reimbursements, but it mainly relates to ADAS, ADAS reimbursement for this year, for 2023. I think that there was one, one smaller item, related to Mobileye Drive that we're expecting now as well. Yes. Thanks, Shreyas. Okay, thank you. We'll take the next question, please. Thank you, Shreyas. Our next question comes from George Gianarikas with Canaccord Genuity. Please go ahead. Hi, everyone. Thanks for taking my question. You characterized a couple times in the script about not seeing, you know, competition in many of the discussions you're having with OEMs. I'm wondering if you just kind of take a step back and help us understand your view of the competitive landscape, not relative to, you know, Tesla FSD, but more to some of the other internal OEM efforts and some of the, you know, point solutions in the marketplace, and how you see the market evolving, you know, over the next 12, 24, 36 months? Thank you. I think when we're talking about competitive landscape of the, the category of the SuperVision and going upwards to Eyes-Off, the competition comes from. The majority of the competition comes from in-house development of the OEMs. We have seen in the past kind of year or so, some form of awakening of OEMs that went through this process of building an in-house solution for a SuperVision-like type of a product or even trying to do an Eyes-Off product. They tend to be somewhere between 4x to 6 x more expensive than our solution. Performance-wise, we don't see advantage. They also come to the conclusion that it will, you know, it may satisfy a very, very slim piece of their business in terms of very high-end models and keep a big gap in terms of the medium segment vehicles. This brings OEMs back to us to talk about the SuperVision. We have, you know, a large number of serious engagements with OEMs that in the past were, you know, very bullish on talking only about in-house development. We are now around the table talking with them about the SuperVision products and beyond the SuperVision. That's the majority of the competitive landscape. It's not, you know, it's not the likes of NVIDIA and Qualcomm. They are offering the tools for in-house development of OEMs. The competitors are the OEMs themselves. As I said before, we see a certain wave of awakening from that, from that effect. George, just to follow up with one point. You know, what we said specifically was that OEMs that represent about 30% of global volume were in these serious engagements, where, you know, essentially these OEMs have aligned behind our approach and are telling us there's not, you know, that there is we have no competition there. You know, the rest of the industry is still in this. You know, so I don't wanna make the comment that we don't have any competition. Like Amnon said, it's mostly coming from internal efforts, but with these 30%, that was what the comment was really reflecting. Thank you. Just as a follow-up, you know, you talked about this awakening. Is there one particular element of what you bring to the table that's causing that? Is it the REM mapping, RSS? Is there anything that you can point to that's more important than the other component pieces? Thanks. I, I'll point you to, kind of, the competitive landscape in China, for example. You know, you have XPeng, you have Li Auto, you have NIO. They have products on the road. We look at their products, they have many more sensors than a SuperVision. All of them have front-facing lidars. Some of them have multiple front-facing lidars. They have much more compute, sometimes somewhere between 10x to 20 x more compute than we have. Very, very expensive products. When, you know, we start doing benchmarking, you know, we are superior in terms of the performance in, in almost every aspect. This, this gets exposed to other OEMs. Once we started putting vehicles on the road with our technology, where people can test, OEMs can test, now also the public can start testing. The difference is becoming visible, it's all about cost versus performance, right? Even if they have the same performance as the SuperVision, but they cost four times more, then it's not competitive. I think this is becoming visible now that things are really in production. I think that that's exactly right. It's, it's that, that fact of being in production, being able to demo the systems over thousands of miles because the, the REM maps are, are now existing, across U.S. and Europe. It's the, you know, the actual cost of the system. Because it's in production, you know, it's no longer a projected cost, it's, it's really an actual cost. Then it's this pressure from, you know, from other automakers moving fast, like, Tesla and some of the Chinese OEMs that, that Amnon's referred to as well. These are all kind of areas where, you know, we think is driving this awakening. Thank you. Next question please, Priscilla. Our next question comes from Itay Michaeli with Citi. Please go ahead. Great, thanks. Hi, everybody. Just the first question, going back to the engagements with the nine large automakers. Can you talk about just the reception thus far, the EyeQ Kit, as well as the Driving Policy behavior model? Secondly, roughly, when do you expect these automakers to make their sourcing decisions? Is it partially this year, next year, or maybe mostly this year? We believe that the sourcing decisions will take a number of months. Somewhere this year, beginning of next year, first quarter next year, this is kind of the time frame that we are seeing. In terms of, you know, working together, EyeQ Kit and the behavior shaping language that we have built, where as we move forward, we're adding more and more capabilities for allowing OEM to really have hands-on onto our system. We're gradually creating this as a platform. The behavior shaping language is really something very powerful. It allows the OEM to write actual code, kind of XML files, that describe in great detail, you know, lots of aspects of the Driving Policy that they wish to have, and it's all running on top of our Driving Policy. You can't. You have a very, you know, powerful Driving Policy that when you test, you are simply amazed how good it is, and now you can shape it to your own needs. It's like writing code on top of an operating system. You don't need to write the operating system in order to innovate and write code on top of it. This is as we move forward, we're adding more and more innovations that allow OEMs to have, you know, serious hands-on on top of our platform. This has a very good reception. That's very helpful. As a quick follow-up, I was hoping you could touch upon the second generation of the REM maps. I think you know, you're developing or maybe launching in terms of what that does to the journey from eyes on to Eyes-Off, and maybe when you expect that to roll out? The great maps is a continuous development. It's not that there is a first generation or second generation. Our focus now is expansion in China and also activating, you know, the REM maps in Europe and the U.S. China is the first priority because this is where the production vehicles are now being deployed. We are adding more and more automations to the REM maps. This is necessary in China because, you know, to comply with the Chinese regulations, you know, foreign entity cannot even view the data. It makes us more efficient and much better in order to comply with those regulations. This is our first priority. As we move forward with the Porsche program and additional programs that will come in 2025, 2026, also Polestar coming out, outside of China later in 2024, the priority will start shifting towards Europe and the U.S. to make the REM maps there, you know, productized for deployment. That's very helpful. Thank you. Our next question comes from Ananda Baruah with Loop Capital Markets. Please go ahead. Hey, thanks, guys. Appreciate you taking the questions. Two quick ones: Is there any way to provide context about how we should anticipate the interplay between the mix that you talked about, kind of heading into 2024 and the various OpEx dynamics? You mentioned some cost savings. You also mentioned some costs coming on. How those things play together, the gross margin OpEx dynamic as we head into 2024. Then I have a quick follow-up after that. Thanks. I'll pass the cost saving and all of that to Moran, our Acting CFO. Yeah, as for the OpEx growth, what we said in the past, that 2022 and 2023 will be higher than our historical levels, so in terms of percentage growth of operating expenses. We believe that 2024 will be returning to our historical levels of between 15% and 20%. 2022 was almost 35% growth, and our original expectation for 2023 was around 30%. Despite the good news on 2023 OpEx, we still believe that 2024 will be close to 20% growth than 30%. The OpEx growth would be. The fact that we are the base is decreasing, we're still not going to increase the expectation for 2024. Very helpful. Then the quick follow-up is, you had actually mentioned, I believe, this might be more of a clarification, that tier one OEM inventory destocking has had some impact in demand, and you had talked about a time frame over which it will normalize. Can you just clarify the time frame that you expect that to normalize? That's it for me. Thanks. yeah, so yeah, Ananda, are you talking about SuperVision inventory or EyeQ? No, no, I think EyeQ. EyeQ. Yeah, the EyeQ. Okay. That's right. You're talking about the strategic inventory. Got it. Okay, sorry. Yep. Yeah. Actually, you know, we've seen that for the second quarter, and also the first quarter, the fluctuation between the quarters was pretty big, and we see the second half is much more robust than the first half. This is, we think it's a result of our customers coming into the beginning of the year with higher levels of inventory, maybe resulting from increasing the price in the price increase at the beginning of 2023. Now we see schedule stabilizing in terms of EyeQ. If for the beginning of the year, we had requests for shift of volumes from Q2 to Q3 or Q3 to Q4, we are no longer seeing that, so it's pretty stabilized. We think that, you know, the last two years have been very bumpy in terms of the supply chain crisis and production volumes. Of course, it's not the same situation as we entered this year, and that's why we see the volume increase and inventory issue, we think played a role more in the first half of the year. Yeah, I think I'll add a bit. In terms of. There are two types of inventory, right? Inventory that our customers have, you know, piled up in terms of EyeQ chips, and that is being. That, as Moran said, it has stabilized, right? We don't see any request to push volumes from quarter to quarter. There is our own inventory that we build six months ahead of EyeQ chips, just to make sure that if another crisis, you know, knocks on our door, we'll be prepared, and that inventory has been completed. That affected kind of cost because we had to buy more EyeQ chips than we normally have in order. Yeah ... to build our inventory, and that I think we have completed, or it's going to be completed till the end of the year. Yeah, till the end of the year. That's all very helpful. Thank you so much. Very helpful. Thanks, Ananda. Our next question comes from Dan Levy with Barclays. Please go ahead. Hi. Good afternoon to you. Thank you for taking the questions. Just first, a clarification on some of the volume commentary that you received as far as it relates to sequential improvements. Maybe you could just clarify again, you know, just what the cadence of volume should be over the next couple of quarters as far as it relates to SuperVision. Thank you. Thanks. Thanks, Dan. Yeah, just to clarify what we said in the prepared remarks, we were referring to EyeQ volumes being up more than 10% versus Q2 levels, and then Q4 levels being more than 25% above Q3. We should also see some average selling price increases because of SuperVision becoming a bigger part of the mix, and that was really not part of the comment about the volumes. Just really wanted to kind of, you know, support that, you know, volume expectations, volume orders from our customers have been very solid and point to, you know, much higher volumes in the second half of the year. Great. Thank you. Wanted to just follow up on, you know, the conversation, specifically on Chauffeur. It sounds like ADAS, there is maybe more of a focus on dedicated platforms, less retrofitting, more partnership, et cetera. Chauffeur, maybe you can give us some sense. I know that was part of the engagement conversation that you mentioned, but, you know, how significant is your spend on Chauffeur right now? What is the interest in Chauffeur? Are your customers seeing this as sort of an evolution of SuperVision, so it's very aligned with the SuperVision spend, or is this a separate stream, and it's something that maybe the timing is getting pushed out a bit more, and that's playing into the OpEx commentary? No, it's very aligned with the SuperVision. You can think of it as kind of an incremental addition to a SuperVision. SuperVision is mostly camera-based. There are some radars as an option. For example, in the Zeekr 001, there is a front-facing radar. In the Porsche program, there's also surround radars. When you go to Eyes-Off the Chauffeur, you're adding some lidars as well, in order to create more redundancy and create a bit more compute. Instead of two EyeQ 6 that we have in the Porsche program, it's three EyeQ 6. It's really incremental. The heavy lifting is not so much on the development, it's on the validation. You need to prove that you are multifold times better than human statistics, crash statistics, and that creates an effort of validation. This is something that we're working together with the OEMs. We're creating Hardware-in-the-Loop farms of thousands of ECUs for each program. For example, for the SV62, for the CH63, for the DR64, each one has a Hardware-in-the-Loop farm of many, many thousands of ECUs in order to run through thousands of hours of data per night. This is ongoing and part of our budget, part of our OpEx growth. It's not something that we did not anticipate or would come as a surprise. In terms of the OEM traction, we're in serious engagement with a number of OEMs. I believe that at least two of them will be able to close this year. Great. Thank you. Thank you. Our next question- Priscilla, we can only take one more question. Okay. our next question comes from Adam Jonas with Morgan Stanley. Please go ahead. Hi, thanks, everybody. Amnon, what are your thoughts on the advantages or disadvantages of using custom silicon versus a GPU, such as an NVIDIA A100 for vision neural net training? Curious what Mobileye's strategy is, you know, regarding custom versus GPU, and is there any effort to move towards a custom system in a vertically integrated way, the way some of your competitors are? Our system is vertically integrated. We have an EyeQ chip, but instead of GPUs, we have our own, you know, accelerator families. We have five different families of accelerators, and that what makes our chip very efficient. If you look at the SuperVision, the two EyeQ 5 chips now on Zeekr 001, you know, on paper, the total TOPS is 30 something compared to that's one tenth of the TOPS on paper of the competing solution, and you don't see any advantage in terms of performance for the competing system. So we have highly efficient solution, and the advantage of a highly efficient solution is cost, power consumption, you know, size of the ECU, whether you need to cool it. Power is very important when you're talking about an electric vehicle. Our approach, which is not a general purpose chip like the A100, it's really customized to the type of, you know, workloads that we need in order to power both computer vision and Driving Policy, has great advantages of efficiency. Thanks. I'll leave it there. I'll hold a follow-up. Thanks. Thank you. Thank you so much. Thanks, everyone, for joining the earnings call. We will talk to you next quarter. Thank you. He didn't understand my question. This concludes today's conference call. You may disconnect your lines at the time. Thank you for your participation, and have a great day.