Mobileye (MBLY) - 2024 Q1 - Quarterly Results

Executive Summary Mobileye's Q1 2024 results reflect an anticipated supply chain reset, with significant progress in ADAS design wins and advanced product pipelines CEO Commentary Mobileye's CEO noted Q1 2024 results align with anticipated supply chain reset, emphasizing progress in design wins and advanced program execution - Q1 2024 financial results reflect a supply chain reset as excess customer inventory is consumed, with recovery on track as laid out in January[3] - Q1 was productive in generating traction across multiple waves of future growth, including record ADAS design wins and expansion of SuperVision and Chauffeur development pipelines, partly due to the Volkswagen Group design win[3] - The main focus for 2024 is to successfully execute current advanced programs and convert unprecedented opportunities into series production awards[3] Q1 2024 Financial & Business Highlights Mobileye reported a 48% revenue decrease to $239 million in Q1 2024 due to inventory drawdown, yet maintained strong financial health and secured a major Volkswagen Group award Q1 2024 Key Financial Highlights | Metric | Q1 2024 | YoY Change | | :-------------------------------- | :------ | :--------- | | Revenue | $239M | (48)% | | Diluted EPS (GAAP) | $(0.27) | - | | Adjusted Diluted EPS (Non-GAAP) | $(0.07) | - | | Net Cash from Operating Activities | $40M | - | | Cash and Cash Equivalents (as of March 30, 2024) | $1.2B | - | | Debt | $0 | - | - Inventory consumption and EyeQ SoC deliveries are on track with prior guidance[4] - Volkswagen Group announced a wide-ranging production award for Mobileye's advanced products, expanding the pipeline of advanced discussions with other global OEMs[4] First Quarter 2024 Business Overview Mobileye advanced its core ADAS, SuperVision, Chauffeur, and Drive products, securing major design wins and progressing towards scalable self-driving systems Core ADAS and Cloud-Enhanced ADAS Developments Mobileye's EyeQ6L SoC began production-candidate shipments, contributing to a record 26 million units in Q1 design wins for core ADAS - EyeQ6L System-on-Chip achieved first production-candidate shipments and will be in production vehicles during 2024, offering incremental advanced features at a similar price[5] - Core ADAS business remains strong, with Q1 design wins totaling over 26 million units in projected future volume, a record amount[5] SuperVision, Chauffeur, and Drive Product Expansion A multi-billion dollar Volkswagen Group award for SuperVision, Chauffeur, and Drive products expanded Mobileye's OEM pipeline, affirming the importance of these features - Volkswagen Group announced a potential multi-billion dollar production award for SuperVision, Chauffeur, and Drive products, a milestone achievement that expanded Mobileye's OEM discussion pipeline[5] - OEMs are increasingly recognizing SuperVision-type feature sets as critical for competitiveness in the medium and long term, supporting a scalable platform for Level 3 eyes-off driving and beyond[5] Mobility-as-a-Service (MaaS) Progress Mobileye advanced its MaaS ecosystem with new production awards from Volkswagen and P3, expecting first Drive 64 ECU samples in 2024 - Progress in creating a MaaS ecosystem with multiple vehicle platforms and customers, including new production awards from Volkswagen and P3[5] - First samples of the Drive 64 ECU are expected to be delivered during 2024, representing a meaningful step towards a scalable self-driving system[5] Advanced Technology Development Mobileye is on track to deploy B-samples of EyeQ6H-based ECUs for next-gen SuperVision, Chauffeur, and Drive products in Q3 2024, incorporating advanced AI - B-samples of EyeQ6H-based ECUs for next-generation SuperVision, Chauffeur, and Drive products are on track for deployment in Q3 2024[5] - The software stack for these systems will include state-of-the-art novel AI systems, such as end-to-end perception and end-to-end actuation running in parallel for redundancy[5] First Quarter 2024 Financial Summary and Key Explanations Q1 2024 financial results show significant declines in revenue and profitability due to customer inventory drawdown and SuperVision's impact on gross margins GAAP Financial Results Mobileye's Q1 2024 GAAP results show a 48% revenue decrease to $239 million, leading to a diluted EPS of $(0.27) and significant declines in profitability Q1 2024 GAAP Financial Summary | U.S. dollars in millions | Q1 2024 | Q1 2023 | % Y/Y Change | | :----------------------- | :------ | :------ | :----------- | | Revenue | $239 | $458 | (48)% | | Gross Profit | $54 | $207 | (74)% | | Gross Margin | 23% | 45% | (2,260)bps | | Operating Income (Loss) | $(238) | $(81) | (194)% | | Operating Margin | (100)% | (18)% | (8,190)bps | | Net Income (Loss) | $(218) | $(79) | (176)% | | EPS - Diluted | $(0.27) | $(0.10) | (174)% | Non-GAAP Financial Results Q1 2024 Non-GAAP results reflect a 54% decrease in Adjusted Gross Profit to $148 million, resulting in an Adjusted Operating Loss of $(65) million and Adjusted Diluted EPS of $(0.07) Q1 2024 Non-GAAP Financial Summary | U.S. dollars in millions | Q1 2024 | Q1 2023 | % Y/Y Change | | :--------------------------- | :------ | :------ | :----------- | | Revenue | $239 | $458 | (48)% | | Adjusted Gross Profit | $148 | $324 | (54)% | | Adjusted Gross Margin | 62% | 71% | (876)bps | | Adjusted Operating Income (Loss) | $(65) | $124 | *NM | | Adjusted Operating Margin | (27)% | 27% | *NM | | Adjusted Net Income (Loss) | $(55) | $115 | *NM | | Adjusted EPS - Diluted | $(0.07) | $0.14 | *NM | Key Financial Explanations Q1 2024 financial declines were primarily due to lower EyeQ shipments from customer inventory drawdown and SuperVision's impact on gross margins, with operating expenses remaining stable - All key operating metrics were impacted by significantly lower EyeQ shipments due to the expected large drawdown of inventory at Tier 1 customers[7] - Gross margin was impacted by the higher percentage of revenue attributed to SuperVision, which has lower percentage gross margin due to higher hardware content, despite generating more gross profit dollars per unit[7] - Operating margin was impacted by lower gross profit without an associated reduction in operating expenses, as the company remains confident in its business outlook and long-term strategy[7] Revenue and Average System Price Analysis Q1 2024 revenue decreased 48% year-over-year to $239 million due to lower EyeQ SoC shipments, partially offset by increased SuperVision revenue and a higher Average System Price - Revenue decreased 48% YoY to $239 million, driven by a 58% decrease in EyeQ SoC-related revenue due to Tier 1 customer inventory usage, partially offset by increased SuperVision revenue[10] Average System Price Trend | Metric | Q1 2023 | Q1 2024 | Change | | :-------------------------- | :------ | :------ | :----- | | Average System Price (USD) | $53.9 | $61.0 | +$7.1 | Gross Margin Analysis GAAP Gross Margin declined by nearly 23 percentage points in Q1 2024, primarily due to increased SuperVision revenue percentage and consistent amortization costs on a lower revenue base - GAAP Gross Margin declined by nearly 23 percentage points YoY, primarily due to the increased percentage of SuperVision revenue and similar amortization costs on a significantly lower revenue base[10] - Adjusted Gross Margin declined by nearly 9 percentage points YoY, primarily due to the increase in percentage of revenue attributable to SuperVision[10] Operating Income (Loss) / Margin Analysis GAAP Operating Margin turned negative in Q1 2024 due to lower Gross Margin and operating expenses remaining similar despite a significantly reduced revenue base - GAAP Operating Margin declined to a negative margin YoY, primarily due to lower Gross Margin and similar operating expenses on a significantly lower revenue base[10] - Adjusted Operating Margin declined to a negative margin YoY, due to lower Adjusted Gross Margin and higher operating expenses as a percentage of the unusually low revenue base[10] Operating Cash Flow Mobileye generated $40 million in operating cash flow for Q1 2024, with $22 million used for property and equipment purchases Q1 2024 Cash Flow Highlights | Metric | Q1 2024 (USD in millions) | | :-------------------------------- | :------------------------ | | Operating Cash Flow | $40 | | Purchases of Property and Equipment | $(22) | Financial Guidance for the 2024 Fiscal Year Mobileye reaffirmed its full-year 2024 financial guidance, projecting revenue between $1.83 billion and $1.96 billion, with an adjusted operating income range Full Year 2024 Outlook Mobileye reaffirmed its 2024 financial guidance, projecting revenue between $1.83 billion and $1.96 billion, and an Adjusted Operating Income between $270 million and $360 million - Financial guidance for the full year 2024 remains unchanged from expectations first disclosed on January 4, 2024[11] Full Year 2024 Financial Guidance | U.S. dollars in millions | Low | High | | :------------------------ | :---- | :---- | | Revenue | $1,830 | $1,960 | | Operating Loss | $(468) | $(378) | | Adjusted Operating Income | $270 | $360 | - Adjusted Operating Income excludes significant non-cash expenses such as amortization of acquisition-related intangibles ($444 million) and share-based compensation expense ($294 million)[12][13] Non-GAAP Financial Measures Mobileye uses non-GAAP measures, excluding amortization and share-based compensation, to provide clearer insights into operational performance and trends Definitions and Rationale Mobileye uses non-GAAP measures, excluding specific non-cash expenses, to enhance transparency for investors and facilitate period-over-period performance comparisons - Non-GAAP measures (Adjusted Gross Profit/Margin, Operating Income/Margin, Net Income, EPS) exclude amortization of acquisition-related intangibles and share-based compensation expense, and related income tax effects[15] - These non-GAAP measures are used by management for strategic decisions, business planning, trend identification, and performance evaluation, providing greater transparency for investors and enabling comparison of financial trends[16] Company Information & Disclaimers Mobileye, a leader in autonomous driving technologies, provides company background and cautions on forward-looking statements due to inherent risks and uncertainties About Mobileye Global Inc. Mobileye Global Inc. is a leader in autonomous driving and driver-assistance technologies, with approximately 170 million vehicles globally incorporating its innovations since 1999 - Mobileye leads the mobility revolution with autonomous driving and driver-assistance technologies, utilizing computer vision, AI, mapping, and data analysis expertise[17] - Pioneered technologies include REM™ crowdsourced mapping, True Redundancy™ sensing, and Responsibility Sensitive Safety (RSS), with approximately 170 million vehicles worldwide built with Mobileye technology[17] - Mobileye listed as an independent company separate from Intel in 2022, with Intel retaining majority ownership[17] Forward-Looking Statements Mobileye's forward-looking statements are subject to risks and uncertainties, including market trends, product development, and geopolitical factors, and are not guarantees of future performance - Statements regarding business outlook, guidance, and future expectations are forward-looking and subject to risks, uncertainties, and assumptions, and are not guarantees of performance[19] - Important factors affecting forward-looking statements include future business performance, market trends, consumer demand, product and technology development, regulatory frameworks, cost and pricing trends, production capacity, and adverse conditions in Israel due to war and geopolitical conflict[20] - Estimates for future production volumes and sales prices are based on OEM projections and management estimates, but actual results may deviate, and achieving design wins is not a guarantee of revenue[21] Condensed Consolidated Financial Statements (Unaudited) The unaudited Q1 2024 financial statements detail significant declines in revenue and net income, alongside a stable cash position and total assets Condensed Consolidated Statements of Operations The Q1 2024 statements show a net loss of $(218) million, driven by a 48% revenue decrease and increased operating loss, despite stable operating expenses Condensed Consolidated Statements of Operations (Q1 2024 vs Q1 2023) | U.S. dollars in millions | March 30, 2024 | April 1, 2023 | | :------------------------------------------ | :------------- | :------------ | | Revenue | $239 | $458 | | Cost of revenue | 185 | 251 | | Gross profit | 54 | 207 | | Research and development, net | 243 | 235 | | Sales and marketing | 34 | 33 | | General and administrative | 15 | 20 | | Total operating expenses | 292 | 288 | | Operating income (loss) | (238) | (81) | | Net income (loss) | (218) | (79) | | Earnings (loss) per share: Basic and diluted | (0.27) | (0.10) | Condensed Consolidated Balance Sheets As of March 30, 2024, Mobileye maintained $1.223 billion in cash and cash equivalents, with total assets of $15.342 billion and total equity of $14.763 billion Condensed Consolidated Balance Sheets (March 30, 2024 vs Dec 30, 2023) | U.S. dollars in millions | March 30, 2024 | December 30, 2023 | | :-------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $1,223 | $1,212 | | Trade accounts receivable, net | 120 | 357 | | Inventories | 456 | 391 | | Total current assets | 1,931 | 2,066 | | Total non-current assets | 13,411 | 13,511 | | TOTAL ASSETS | $15,342 | $15,577 | | TOTAL LIABILITIES | $579 | $653 | | TOTAL EQUITY | 14,763 | 14,924 | Condensed Consolidated Cash Flows Mobileye generated $40 million in operating cash flow in Q1 2024, with cash and cash equivalents increasing by $12 million to $1.238 billion by period-end Condensed Consolidated Cash Flows (Q1 2024 vs Q1 2023) | U.S. dollars in millions | March 30, 2024 | April 1, 2023 | | :------------------------------------ | :------------- | :------------ | | Net cash provided by operating activities | $40 | $171 | | Net cash used in investing activities | $(22) | $(26) | | Net cash used in financing activities | $(4) | $(3) | | Increase in cash, cash equivalents and restricted cash | $12 | $138 | | Balance of cash, cash equivalents and restricted cash, at end of period | $1,238 | $1,173 | Reconciliation of Non-GAAP Financial Measures This section reconciles GAAP to Non-GAAP financial measures, highlighting the impact of non-cash expenses like amortization and share-based compensation on profitability Gross Profit and Margin Reconciliation Q1 2024 GAAP Gross Profit of $54 million was adjusted to Non-GAAP Adjusted Gross Profit of $148 million by adding back $94 million in amortization of acquired intangible assets Q1 2024 Gross Profit and Margin Reconciliation | U.S. dollars in millions | Q1 2024 Amount | Q1 2024 % of Revenue | Q1 2023 Amount | Q1 2023 % of Revenue | | :---------------------------------- | :------------- | :------------------- | :------------- | :------------------- | | Gross Profit (GAAP) | $54 | 23% | $207 | 45% | | Add: Amortization of acquired intangible assets | 94 | 39% | 116 | 25% | | Add: Share-based compensation expense | — | —% | 1 | —% | | Adjusted Gross Profit (Non-GAAP) | $148 | 62% | $324 | 71% | Operating Income and Margin Reconciliation Q1 2024 GAAP Operating Loss of $(238) million was adjusted to a Non-GAAP Adjusted Operating Loss of $(65) million, primarily by adding back amortization and share-based compensation Q1 2024 Operating Income and Margin Reconciliation | U.S. dollars in millions | Q1 2024 Amount | Q1 2024 % of Revenue | Q1 2023 Amount | Q1 2023 % of Revenue | | :---------------------------------------- | :------------- | :------------------- | :------------- | :------------------- | | Operating Income (Loss) (GAAP) | $(238) | (100)% | $(81) | (18)% | | Add: Amortization of acquired intangible assets | 111 | 46% | 133 | 29% | | Add: Share-based compensation expense | 62 | 26% | 72 | 16% | | Adjusted Operating Income (Loss) (Non-GAAP) | $(65) | (27)% | $124 | 27% | Net Income Reconciliation Q1 2024 GAAP Net Loss of $(218) million was reconciled to a Non-GAAP Adjusted Net Loss of $(55) million, after accounting for amortization, share-based compensation, and tax effects Q1 2024 Net Income Reconciliation | U.S. dollars in millions | Q1 2024 Amount | Q1 2024 % of Revenue | Q1 2023 Amount | Q1 2023 % of Revenue | | :---------------------------------- | :------------- | :------------------- | :------------- | :------------------- | | Net Income (Loss) (GAAP) | $(218) | (91)% | $(79) | (17)% | | Add: Amortization of acquired intangible assets | 111 | 46% | 133 | 29% | | Add: Share-based compensation expense | 62 | 26% | 72 | 16% | | Less: Income tax effects | (10) | (4)% | (11) | (2)% | | Adjusted Net Income (Loss) (Non-GAAP) | $(55) | (23)% | $115 | 25% | Supplemental Financial Data Supplemental data reveals an increase in Average System Price to $61.0 in Q1 2024, driven by a higher proportion of SuperVision revenue despite fewer units shipped Average System Price Trend Mobileye's Average System Price increased to $61.0 in Q1 2024, driven by a higher proportion of SuperVision revenue despite a significant decrease in units shipped Average System Price and Shipments Trend | Metric | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | | :------------------------------------ | :------ | :------ | :------ | :------ | :------ | | EyeQ and SuperVision revenue (USD in millions) | $438 | $430 | $507 | $611 | $219 | | Number of systems shipped (in millions) | 8.1 | 8.3 | 9.4 | 11.6 | 3.6 | | Average system price (USD) | $53.9 | $51.7 | $53.8 | $52.7 | $61.0 | Additional Information This section provides details on the Q1 2024 earnings conference call and contact information for investor and media relations Earnings Conference Call Webcast Information Mobileye hosted a conference call on April 25, 2024, to discuss Q1 2024 results and provide a business update, with a webcast replay available online - Mobileye hosted a conference call on April 25, 2024, at 8:00 am ET to review Q1 2024 results and provide a business update, with a webcast replay available on ir.mobileye.com[14] Contacts Contact information for Mobileye's Investor Relations and Media Relations is provided for inquiries - Contact information for Investor Relations (Dan Galves) and Media Relations (Justin Hyde) is provided[30]