Arbe Robotics (ARBE) Q1 2025 Earnings Call May 20, 2025 08:30 AM ET Company Participants Miri Segal-Scharia - Investor RelationsKobi Marenko - CEO, Co-Founder & DirectorKarine Pinto-Flomenboim - Chief Financial Officer Conference Call Participants George Gianarikas - Managing Director and Senior AnalystSuji Desilva - Managing Director, Senior Research AnalystMatthew Galinko - SVP & Senior Research Analyst Operator Good day, and welcome to the Arbe Robotics First Quarter twenty twenty five Earnings Results C ...

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $0.04 million, down from $0.1 million in Q1 2024, reflecting a 60% decrease year-over-year [11] - Gross profit for Q1 2025 was negative $0.3 million, unchanged from Q1 2024, primarily due to fixed cost components [11] - Operating loss for Q1 2025 was $13.4 million, compared to a loss of $12.8 million in Q1 2024 [12] - Net loss in Q1 2025 was $13.8 million, compared to a net loss of $12.8 million in Q1 2024 [13] - Cash and cash equivalents as of March 31, 2025, were $36.7 million, with long-term bank deposits at $35.2 million [13] Business Line Data and Key Metrics Changes - The company secured radar systems orders supporting advanced data collection programs, indicating progress in the automotive sourcing process [4] - A significant order for over 1,000 imaging radar chips was placed by Tier one Sensorad, reflecting growing commercial demand [6] - The company anticipates revenues from OEM partnerships to begin in 2027, with a focus on high-volume passenger vehicle platforms in Europe [5] Market Data and Key Metrics Changes - In China, the launch of the LRR615 radar system marks a critical milestone for the autonomous driving market, showcasing the company's capabilities [5] - The company is engaged with various clients in smart cities and heavy industrial applications through partnerships, indicating a diversification of market applications [20][21] Company Strategy and Development Direction - The company aims to pursue four design ins with automakers in 2025, focusing on the adoption of ultra-high-resolution radar technology [14] - Collaborations with NVIDIA and other partners are positioned to enhance the company's role in the software-defined vehicle ecosystem [7] - The company is strategically focusing on the European market for hands-free driving technology, with expectations of revenue growth in China ahead of the U.S. market [19] Management's Comments on Operating Environment and Future Outlook - Management noted that broader economic shifts have led to short-term delays in automakers' rollout of advanced driver assistance systems, but they remain optimistic about future engagements [14] - The company expects a significant ramp-up in revenue in the third and fourth quarters of 2025, driven by OEM selections and new orders [22] - Management emphasized that delays in OEM decisions are not related to the company's technology but rather market conditions [27] Other Important Information - The company raised $33 million through a direct offering in January 2025, strengthening its financial position [9] - Adjusted EBITDA for 2025 is projected to be a loss in the range of $29 million to $35 million [15] Q&A Session Summary Question: Can you outline the negotiations with OEMs and expected wins? - The company is involved in a three-way collaboration with Magna and leading OEMs in Europe, with high chances of winning orders due to the readiness of their solutions [17][18] Question: What geographies are these OEMs located in? - The focus is primarily on Europe, with expectations of earlier revenue generation in China compared to the U.S. market [19] Question: Any momentum in industrial applications? - The company is partnering with Sensorad for industrial applications, which are customized and have lower volume per application [20][21] Question: Revenue guidance implies a ramp in the latter half of the year; where will it come from? - Revenue will come from a major order from Sensorad and selections from leading OEMs, with production ramping up in China by Q4 [22][24] Question: Status of RFPs with other auto customers? - Progress is being made, but delays are due to market conditions rather than technology issues [27] Question: Partnerships in China? - The company is working with both NVIDIA and local vendors like Horizon Robotics to provide comprehensive solutions for the autonomous market [29] Question: Timeline for volume ramp in China? - Production ramp-up in China is expected by the end of 2025, with final stages nearing completion [33] Question: R&D expenditure for the year? - The expected operating expense burn for the year is between $32 million to $34 million, with R&D estimated at $25 million [36] Question: Gross margin expectations during ramp-up? - Gross margins during the initial ramp-up are expected to be around 30% to 35% due to additional testing costs [39]

Company Performance - Arbe Robotics Ltd. reported a quarterly loss of $0.09 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.08, but an improvement from a loss of $0.14 per share a year ago, indicating a year-over-year improvement [1] - Industrial Tech Acquisitions posted revenues of $0.04 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 60%, and down from $0.14 million in the same quarter last year [2] - The current consensus EPS estimate for Industrial Tech Acquisitions is -$0.13 on $0.3 million in revenues for the coming quarter and -$0.54 on $2.3 million in revenues for the current fiscal year [7] Market Performance - Industrial Tech Acquisitions shares have lost about 12.4% since the beginning of the year, while the S&P 500 has gained 1.4%, indicating underperformance relative to the broader market [3] - The company has surpassed consensus EPS estimates just once over the last four quarters, reflecting challenges in meeting market expectations [2] Earnings Outlook - The earnings outlook for Industrial Tech Acquisitions is mixed, with the current Zacks Rank at 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6] - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] Industry Context - The Technology Services industry, to which Industrial Tech Acquisitions belongs, is currently in the top 20% of over 250 Zacks industries, indicating a favorable industry outlook [8] - Alithya Group, another company in the same industry, is expected to report quarterly earnings of $0.02 per share, reflecting a year-over-year change of -50%, with revenues expected to be $85.25 million, down 4.7% from the previous year [9]

This Presentation contains "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, both as amended by the Private Securities Litigation Reform Act of 1995. The words "expect," "believe," "estimate," "intend," "plan," "anticipate," "may," "should," "strategy," "future," "will," "project," "potential" and similar expressions indicate forward-looking statements. Forward-looking statements are predictions, projections and other statements about futu ...

Core Insights - Arbe Robotics Ltd. reported financial results for Q1 2025, highlighting progress in securing orders and collaborations, despite a net loss [1][8][11] Financial Performance - Q1 2025 revenues were $0.04 million, down from $0.1 million in Q1 2024 [8] - Gross profit for Q1 2025 was negative at ($0.3) million, consistent with the previous year [9] - Operating expenses increased to $13.1 million in Q1 2025 from $12.5 million in Q1 2024, primarily due to one-time expenses related to chip design [9][10] - The operating loss for Q1 2025 was $13.4 million, compared to a loss of $12.8 million in Q1 2024 [10] - Net loss for Q1 2025 was $13.8 million, compared to a net loss of $12.8 million in Q1 2024 [11] - Adjusted EBITDA for Q1 2025 was a loss of $9.7 million, compared to a loss of $8.5 million in Q1 2024 [12] Strategic Developments - Arbe made significant progress in securing design wins with leading European OEMs, with radar technology expected to enable high-volume production for 2028 vehicle platforms [2] - HiRain Technologies launched a production-intent long-range imaging radar system, the LRR615, for the Chinese market, utilizing Arbe's chipset [3] - Sensrad placed an order for over a thousand imaging radar chips, indicating growing commercial traction in non-automotive sectors [4] - A collaboration with NVIDIA was launched to enhance radar-based mapping and AI capabilities, showcased at CES 2025 [5] Capital and Liquidity - In January 2025, Arbe raised $33 million through a direct offering, with an additional $21.5 million released from an escrow account [6] - As of March 31, 2025, Arbe had $36.7 million in cash and cash equivalents and $35.2 million in long-term bank deposits [13] Market Outlook - The company expects annual revenues for 2025 to be between $2 million and $5 million, with a focus on the latter part of the year [15] - Adjusted EBITDA for 2025 is projected to be in the range of ($29 million) to ($35 million) [16] - Arbe aims to pursue four design-ins with automakers in 2025, despite delays in the rollout of advanced driver assistance systems [15]

Company Overview - Arbe Robotics Ltd. is a global leader in perception radar solutions, focusing on enabling safe driver-assist systems and paving the way for full autonomous driving [5] - The company's radar technology is 100 times more detailed than any other radar on the market, making it a critical sensor for L2+ and higher autonomy [5] - Arbe is based in Tel Aviv, Israel, with additional offices in China, Germany, and the United States, serving automakers, Tier-1 suppliers, and various safety applications [5] Conference Call Details - The first quarter 2025 conference call is scheduled for May 20, 2025, at 8:30 a.m. Eastern Time, with financial results to be issued before the market opens [1] - Key speakers will include Kobi Marenko, Co-Founder and CEO, and Karine Pinto-Flomenboim, CFO [2] - Participants can access the call via telephone or through a live webcast, with a replay available until June 3, 2025 [2][4]

Financial Performance - The company incurred a net loss of approximately $49.3 million on revenues of approximately $0.8 million for the year ended December 31, 2024, compared to a net loss of approximately $43.5 million on revenues of approximately $1.5 million for the year ended December 31, 2023[34]. - The company expects to continue incurring significant losses as it invests in R&D before generating sufficient revenues to cover these expenses[37]. - The company does not expect to achieve profitability in the near term due to various market and operational challenges[55]. - The company has incurred approximately $4.0 million in grants from the Israel Innovation Authority through December 31, 2024, for research and development efforts[145]. - The company must maintain shareholders' equity above $5 million at the end of two consecutive quarters and have cash and cash equivalents of at least $5 million at the end of one quarter[133]. Research and Development - Research and development expenses were approximately $35.1 million in 2024, $34.1 million in 2023, and approximately $36.7 million in 2022, indicating a consistent investment in R&D[43]. - The company continues to invest in research and development, but higher expenses may not be offset by sufficient revenue growth[54]. - The company is focused on developing new products and innovations to meet changing market needs, but delays could harm customer relationships[56]. - The company is pursuing market opportunities beyond the automotive sector, but these markets may develop more slowly than anticipated[64]. - The company is collaborating with four Tier-1 manufacturers to develop seven different radar products, with two projects progressing towards selection by top five global OEMs in 2025 and 2026[214]. Market and Business Strategy - The company plans to transition to production of its radar chip for sale to customers during 2026, although there is no assurance that this timetable will be met[34]. - The company has broadened its focus to seek contracts with Tier 1 suppliers and OEMs for orders in commercial quantity, which is critical for reducing losses and achieving production[39]. - The company anticipates that market adoption of its products may lag behind initial applications, impacting overall business performance[49]. - The company targets large multinational customers with significant negotiating power, which may adversely affect sales if products are not selected[52]. - The company is investing in new applications and markets, but success in commercialization remains uncertain[59]. Risks and Challenges - The company may require additional capital to fund its growth strategy, with no assurance that such financing will be available on acceptable terms[47]. - The company is subject to various risks, including international conflicts and economic shifts, which could materially affect its business operations[45]. - The company faces risks associated with agreements with Tier-1 suppliers, including potential non-performance and reputational harm[60]. - The company may face significant impacts from international trade issues, including tariffs and export restrictions on advanced chips, which could increase costs and delay product development[71]. - The company is subject to compliance with the Dodd-Frank Act regarding conflict minerals, which may increase costs and limit supply[127]. Competition and Market Conditions - The company operates in a highly competitive market with established competitors and new entrants, which may lead to pricing pressure and reduced margins[83]. - The automotive industry is sensitive to various external conditions, including climate change and government regulations, which could adversely affect the company's business and financial condition[97]. - The trading price of the Company's ordinary shares has been volatile and subject to wide fluctuations due to various factors beyond its control[179]. - The company faces intense competition for skilled personnel, particularly in Israel, which may lead to increased compensation costs and challenges in hiring and retaining qualified employees[91]. - The company is subject to increased legislation and regulation affecting autonomous driving technology, which could raise manufacturing and compliance costs[81][82]. Intellectual Property and Legal Matters - The company may face challenges in protecting its intellectual property rights, which could adversely affect its competitive position and financial results[99]. - Unauthorized use of the company's proprietary information could occur, leading to potential competitive disadvantages and costly litigation[104]. - The company faces potential legal claims related to product liability and breach of contract, which could divert management attention and increase costs[78][79]. - The company has agreements to indemnify customers against intellectual property infringement claims, which may vary in scope and could impact financial results[107]. - The company may face costly litigation or licensing fees due to third-party claims of intellectual property infringement[106]. Financial Structure and Capital Management - The company issued convertible bonds in the principal amount of NIS 110,000,000 to Israeli investors, with proceeds placed in an escrow account[161]. - As of January 2025, bonds in the principal amount of NIS 78,462,184 were converted, releasing approximately $22.4 million from the escrow account[163]. - The company is subject to restrictive covenants under the deed of trust, limiting operational and financial flexibility, including negative pledges prohibiting secured debt[165]. - The company has diversified its cash investments to mitigate risks associated with financial institutions, particularly following the restructuring of Silicon Valley Bank[130]. - The company may issue additional ordinary shares or other securities without shareholder approval, which could dilute existing ownership interests[171]. Product and Technology Development - Arbe Robotics Ltd. is a provider of 4D imaging radar solutions, enabling safe driver-assist systems and paving the way for fully autonomous driving[204]. - The company's radar technology features a groundbreaking 2,304-channel array, providing 100 times more detailed resolution than any commercial radar currently on the market[205]. - The radar chipset solution can sense the vehicle environment at a range of 350 meters with a wide field of view and a rate of up to 30 frames per second, generating ultra-high-definition images under all weather and lighting conditions[213]. - The radar systems are expected to comply with Euro-NCAP and NHTSA standards for Level 2 and higher autonomous vehicles, enhancing safety features[217]. - The radar chipset solution is anticipated to facilitate the integration into mass production due to its projected affordable price point[230].

Financial Data and Key Metrics Changes - Total revenue in Q4 2024 was $0.1 million, down from $0.35 million in Q4 2023. For the full year 2024, total revenue was $0.8 million compared to $1.5 million in 2023 [17] - Gross margin loss for Q4 2024 was $0.2 million, consistent with Q4 2023. The full year gross margin loss for 2024 was $0.8 million compared to a break-even gross margin in 2023 [18] - Operating loss for Q4 2024 was $12.8 million, compared to a loss of $12.1 million in Q4 2023. The full year operating loss totaled $49.7 million, up from $46.9 million in 2023 [21] - Net loss in Q4 2024 was $12.2 million, compared to a net loss of $9.3 million in Q4 2023. The full year net loss for 2024 was $49.3 million, compared to a loss of $43.5 million in 2023 [21] Business Line Data and Key Metrics Changes - The company reported a backlog of $0.3 million as of December 31, 2024 [18] - R&D expenses for Q4 2024 were $9 million, up from $8.4 million in Q4 2023. Full year R&D expenses were $35.1 million compared to $34.1 million in 2023 [20] Market Data and Key Metrics Changes - The company highlighted significant opportunities in the non-automotive market, particularly through collaborations with companies like Sensrad and Tianyi Transportation Technology [12] - The company anticipates shipping around 5 million imaging radar chipsets by 2030 based on current engagements [13] Company Strategy and Development Direction - The company is focused on advancing radar technology and has established collaborations with major players like NVIDIA and HiRain Technologies to enhance vehicle safety and autonomy [7][8] - The company aims to pursue four design-ins with automakers in 2025, with projected annual revenue expected to be between $2 million and $5 million, weighted towards the end of the year [25] Management's Comments on Operating Environment and Future Outlook - Management noted that while broader economic shifts have led to delays in automakers' rollout of advanced driver assist systems, the total addressable market continues to expand [24] - The company expressed confidence in its market potential, supported by recent fundraising initiatives totaling nearly $17 million [15] Other Important Information - As of December 31, 2024, the company had $24.6 million in cash and equivalents. Following a recent fundraising round, the current cash balance is approximately $73 million [23][35] Q&A Session Summary Question: What programs are expected to drive $1 million-plus revenue quarters towards the end of 2025? - Management identified three leading projects in final stages: Tianyi (non-automotive), trucks in Europe, and a project with HiRain for a Chinese car manufacturer, expecting to start shipping chips upon full production [31] Question: What is the current cash balance and share count post-fundraising? - The current cash balance is above $70 million, approximately $73 million, with a share count of 85.7 million [35][38] Question: Can you provide an update on the China EV market opportunity? - The company noted that Chinese car manufacturers are focusing on launching self-driving services and are looking for radar solutions to enhance their capabilities [39] Question: What is the status of discussions with OEMs? - Management indicated that evaluations with OEMs are in final stages, with the company shortlisted against one or two competitors, highlighting advantages in performance and pricing [45] Question: What is the outlook for operating expenses over the next few years? - The company expects operating expenses to remain similar in the next couple of years, with additional investments in next-generation technologies projected to increase expenses by $5 million to $15 million [47]

Radar Revolution. Delivered. Q4 and FY 2024 Financial Results Investor Presentation 1 Revenue v v 0.35 0.1 Q4 2023 Q4 2024 Q4 Revenue ($M) Yearly Revenue ($M) 1.5 0.8 2023 2024 2 v Gross Margin Operating Expenses v Q4 Operating Expenses ($M) 8.4 9 11.9 12.6 Q4 2023 Q4 2024 R&D Operating Expenses ($M) Operating Loss ($M) (46.9) (49.6) 2023 2024 34.1 35.1 46.8 48.9 2023 2024 R&D v v Profitability v v -8.4 -8.4 -7.5 -8.2 -8.5 -7.5 -8.2 -9 Net Loss ($M) Adjusted EBITDA ($M)* Q1.23 Q2.23 Q3.23 Q4.23 Q1.24 Q2.24 ...

Financial Data and Key Metrics Changes - Total revenue in Q4 2024 was $0.1 million, a decrease from $0.35 million in Q4 2023. For the full year 2024, total revenue was $0.8 million compared to $1.5 million in 2023 [17] - Gross margin loss for Q4 2024 was $0.2 million, consistent with Q4 2023. The full year gross margin loss for 2024 was $0.8 million compared to a break-even gross margin in 2023 [18] - Operating loss for Q4 2024 was $12.8 million, compared to a loss of $12.1 million in Q4 2023. The full year operating loss totaled $49.7 million, up from $46.9 million in 2023 [21] - Net loss in Q4 2024 was $12.2 million, compared to a net loss of $9.3 million in Q4 2023. The full year net loss for 2024 was $49.3 million, compared to a loss of $43.5 million in 2023 [21] Business Line Data and Key Metrics Changes - The company reported a backlog of $0.3 million as of December 31, 2024 [18] - R&D expenses for Q4 2024 were $9 million, up from $8.4 million in Q4 2023. For the full year, R&D expenses totaled $35.1 million compared to $34.1 million in 2023 [20] Market Data and Key Metrics Changes - The company highlighted significant opportunities for growth in the non-automotive market, particularly through collaborations with key partners [12] - The company expects to ship around 5 million imaging radar chipsets to customers by 2030 based on current engagements [13] Company Strategy and Development Direction - The company is focused on driving radar technology evolution and enhancing customer relationships, with a commitment to innovation [5][6] - Collaborations with major players like NVIDIA and partnerships with top global auto OEMs are central to the company's strategy [7][8] - The company aims to pursue four design-ins with automakers in 2025, with projected annual revenue between $2 million to $5 million [24] Management's Comments on Operating Environment and Future Outlook - Management noted that while broader economic shifts have led to delays in automakers' rollout of advanced driver assist systems, the total addressable market continues to expand [24] - The company remains optimistic about its market potential, supported by recent fundraising initiatives totaling nearly $17 million [15][23] Other Important Information - The company raised gross proceeds of $54.5 million in January 2025, enhancing its financial stability [23] - The company maintains a strong focus on R&D to ensure continuous innovation and technological advancements [20] Q&A Session Summary Question: What programs are expected to drive $1 million-plus revenue quarters towards the end of 2025? - Management identified three leading projects in final stages: Tianyi (non-automotive), trucks in Europe, and a collaboration with HiRain for a Chinese car manufacturer [31] Question: What is the current cash balance and share count post-fundraising? - The current cash balance is approximately $73 million, with a share count of 85.7 million [35][38] Question: Can you provide an update on the China EV market opportunity? - The company noted that Chinese car manufacturers are focusing on launching self-driving services and are looking for radar solutions to enhance their offerings [39] Question: What is the status of discussions with OEMs? - Management indicated that evaluations with OEMs are in final stages, with the company shortlisted against one or two competitors [44] Question: What is the expected operating expense trajectory over the next few years? - The company expects operating expenses to remain similar over the next few years, with additional investments in next-generation technologies [47]