Innoviz Technologies .(INVZ) - 2023 Q4 - Annual Report

Executive Summary Innoviz delivered strong Q3 2023 results, surpassing revenue guidance and reaffirming full-year targets, with a strategic focus on securing new production awards Q3 2023 Performance Highlights Innoviz exceeded Q3 2023 revenue guidance with strong growth, reiterating full-year targets and expecting Q4 revenue increases - Q3 2023 revenues exceeded guidance with 138% growth quarter-over-quarter and 297% growth year-over-year[1] - Innoviz reiterates full year 2023 commercial and financial targets and expects another meaningful step-up in revenues in Q4 2023[1] CEO Commentary CEO Omer Keilaf highlighted the focus on new series production awards and operational resilience, viewing the LiDAR market as 'winner takes most' - Innoviz is shifting focus towards winning the next rounds of series production awards, believing the LiDAR market will ultimately be a 'winner takes most' industry[2] - Despite tragic events in Israel, Innoviz's global business continued to operate as planned, with international manufacturing unaffected and Israeli headquarters operations quickly normalized due to business continuity planning[2] Commercial and Strategic Updates Innoviz achieved key program milestones, advanced product development, and expanded market presence through strategic partnerships Key Program Milestones Innoviz achieved significant commercial milestones, including BMW Group series production shipments and progress in other key programs - BMW Group series production unit shipments began in the third quarter of 2023, delivering InnovizOne LiDAR sensor components and perception software[3] - The InnovizOne-based shuttle program transitioned from a four-LiDAR to a six-LiDAR configuration, expected to increase total revenue content per vehicle[3] Product Development and Innovation Innoviz unveiled an upgraded InnovizTwo B-Sample with a new custom ASIC, enhancing performance and strengthening RFQ positioning, and continued BMW Group Gen 2 development - An upgraded version of InnovizTwo B-Sample (B2.0) with a new custom ASIC was shipped to multiple customers, unlocking new levels of accuracy, increased range, broader field of view, and higher resolution[7] - Development continued on the InnovizTwo-based second-generation LiDAR sensor and software suite for the BMW Group, including the all-new InnovizCore AI compute module and Minimum Risk Maneuver (MRM) software[7] - Innoviz plans to display a Level 3 BMW 7 Series with an integrated InnovizOne LiDAR at the Consumer Electronics Show (CES) in January[7] Market Expansion and Partnerships Innoviz's capital raise strengthened its RFQ positioning, targeting two new OEMs and pursuing additional growth within the Volkswagen Group and a new light commercial vehicle program - An August capital raise strengthened Innoviz's positioning heading into RFQ decision-making, with three programs progressing to more advanced financial and operational audits[3] - The company continues to target adding two new OEMs to its customer lineup in 2023[3] - Innoviz is working towards additional growth opportunities with the Volkswagen Group, in addition to its initial 2022 series production award, with the program tracking towards a mid-decade SOP[7] - A new light commercial vehicle program remains on a rapid development path for a mid-decade SOP, with test vehicles featuring multiple InnovizTwo LiDARs expected on public roads later in 2023[7] Third Quarter 2023 Financial Results Innoviz reported strong Q3 2023 revenue growth, a decrease in operating expenses, and a solid liquidity position Revenue Analysis Q3 2023 revenues significantly exceeded guidance, showing strong sequential and year-over-year growth, primarily due to increased InnovizTwo unit sales and NRE revenue Q3 2023 Revenue Performance | Metric | Q3 2023 | Q2 2023 | Q3 2022 | | :----- | :------ | :------ | :------ | | Revenues | $3.5 million | $1.5 million | $0.9 million | - Revenues increased 138% quarter-over-quarter, driven by 102% sequential growth in InnovizTwo unit sales and incremental NRE revenue[4] - The year-over-year growth in revenues was a combination of higher sample shipments and higher NRE revenue, partially offset by lower production-level component pricing for the BMW first generation program[4] - Growing non-recurring engineering (NRE) revenue contribution in Q3 2023 validated the Company's strategy to transition to a Tier 1 automotive supplier and pursue increasing amounts of pre-production NRE revenue[7] Operating Expenses Operating expenses decreased year-over-year in Q3 2023, primarily due to deferred NRE expenses, despite a slight increase in share-based compensation Q3 2023 Operating Expenses | Metric | Q3 2023 | Q3 2022 | YoY Change | | :--------------- | :------ | :------ | :--------- | | Operating Expenses | $27.8 million | $31.3 million | -11% | | Share-based Comp. | $5.0 million | $4.9 million | +2% | - The year-over-year decrease in operating expense was driven primarily by $2.9 million of deferred NRE expenses, which will be matched to future NRE revenue and recognized as COGS[5] Liquidity As of September 30, 2023, Innoviz maintained a strong liquidity position with over $160 million in cash and equivalents Liquidity as of September 30, 2023 | Metric | Amount (USD) | | :----- | :----------- | | Cash and cash equivalents, short term deposits, short term restricted cash and marketable securities | ~$163.8 million | 2023 Financial Targets and Outlook Innoviz projects substantial full-year 2023 growth across revenues, cash collection, and NRE bookings, alongside securing new customer programs Full Year 2023 Guidance The company expects substantial growth across key financial metrics for the full year 2023, including revenues, cash collection, and NRE bookings, alongside securing new customer programs Full Year 2023 Financial Targets | Metric | Range (USD) | YoY Growth | | :-------------------------- | :---------- | :--------- | | Revenues | $15-20 million | +150-230% | | Cash Collection from Customers | $20-30 million | +295-490% | | Net new NRE bookings | $20-70 million | +80-530% | - Innoviz targets securing 1-3 additional programs with existing customers and 2 new series production awards with new customers in 2023[12] Q4 2023 Revenue Expectations Innoviz anticipates a significant increase in revenues for Q4 2023, projecting growth of 470-790% year-over-year Q4 2023 Revenue Expectations | Metric | Range (USD) | YoY Growth | | :----- | :---------- | :--------- | | Revenues | $9-14 million | +470-790% | Financial Statements This section presents Innoviz's consolidated statements of operations, balance sheets, and cash flows for the third quarter of 2023 Consolidated Statements of Operations For Q3 2023, Innoviz reported revenues of $3.5 million and a net loss of $27.0 million, with basic and diluted net loss per ordinary share of $0.18 Consolidated Statements of Operations (Q3 2023 vs Q3 2022) | Metric (USD in thousands) | Q3 2023 (Unaudited) | Q3 2022 | | :------------------------ | :------------------ | :-------- | | Revenues | 3,483 | 878 | | Cost of revenues | (5,721) | (4,593) | | Gross loss | (2,238) | (3,715) | | Operating expenses | 27,793 | 31,253 | | Operating loss | (30,031) | (34,968) | | Net loss | (27,029) | (34,205) | | Basic and diluted net loss per ordinary share | (0.18) | (0.25) | Consolidated Balance Sheets As of September 30, 2023, total assets were $236.6 million, with current assets at $171.5 million, total liabilities at $59.3 million, and total shareholders' equity at $177.3 million Consolidated Balance Sheets (as of Sep 30, 2023 vs Dec 31, 2022) | Metric (USD in thousands) | Sep 30, 2023 (Unaudited) | Dec 31, 202