Question-and-Answer SessionJoseph SpakUBS Investment Bank, Research Division So a lot to talk about here. I think the Mobileye story is almost a sort of continual sort of evolution, right? You have the base ADAS products, which is sort of the core competency of the business. That was evolving more into SuperVision, which started to launch and then sort of for reasons we don't sort of need to go in here today sort of took a little bit of a backseat. And then you sort of have the surround ADAS sort of come in ...

Financial Data and Key Metrics Changes - Q3 revenue reached $504 million, a 4% increase year over year, driven by an 8% growth in IQ volume, significantly outpacing the 1% growth in overall vehicle production among the top 10 customers [3][4] - Operating cash flow was $167 million in Q3, with year-to-date cash flow nearly $500 million, reflecting a 150% increase year over year [3][15] - The company raised its full-year revenue outlook by 2% and adjusted operating income by 11%, with expected volumes about 2 million units higher than original guidance [4][16] Business Line Data and Key Metrics Changes - The core ADAS business is performing well, with healthy volume ranges maintained for the last five quarters [3] - SuperVision volume exceeded 20,000 units in Q3, with a full-year expectation of around 50,000 units, significantly higher than initial projections [12][13] - Gross margin declined by over 100 basis points year over year, primarily due to increased volumes from Chinese OEMs and higher costs associated with IQ5 programs [13][14] Market Data and Key Metrics Changes - Stronger-than-expected results in China contributed positively to overall performance, with significant shipments to both Chinese OEMs and Western OEMs operating in China [4] - The company expects to outperform the production of its top 10 OEM customers globally by about 5 percentage points in 2025 [4] Company Strategy and Development Direction - Mobileye is focusing on expanding its advanced product offerings, including surround ADAS, SuperVision, Chauffeur, and Drive, leveraging the IQ6 High-inference chip [5][6] - The company aims to transition from eyes-off to minds-off autonomy by 2029, with significant advancements expected in the next few years [8][9] - The growth potential in emerging markets like India is becoming increasingly clear, supported by regulatory environments [5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to meet future demand for higher performance at lower costs, emphasizing that eyes-off capability is becoming a commercially viable reality [10] - The company is focused on execution in 2026, with significant software innovations expected in the near term [38][39] - Management highlighted the importance of maintaining strong relationships with OEMs and the competitive advantages of their technology in the evolving market landscape [46][72] Other Important Information - The company is actively pursuing robotaxi opportunities, with plans to remove safety drivers in the U.S. by 2026 and expand operations in Europe [10][81] - Mobileye is expanding its REM data collection efforts, which are crucial for enhancing AI training and improving front-facing camera performance [84] Q&A Session Summary Question: Clarification on Western OEM design win - The recent nomination is for a second surround ADAS program from a leading Western OEM, expected to be a significant portion of their vehicle lineup [21][22] Question: Gross margin impact from IQ5 and IQ6 - IQ5 volumes are expected to peak at around 15%, but the profitability difference between IQ5 and IQ6 is not significant [23][25] Question: Q4 expectations and market factors - The company does not expect material impacts from recent chip issues and anticipates Q4 volumes to align with full-year expectations [30] Question: Details on Lyft robotaxi program - The first city for the Lyft robotaxi program will be Dallas-Fort Worth, with advanced testing currently underway [32] Question: Competitive landscape for surround ADAS - Mobileye has a first-mover advantage in surround ADAS, focusing on cost optimization and efficient design to meet OEM needs [71][72]

Financial Data and Key Metrics Changes - Q2 revenue increased by 15% year over year, driven by strong demand for the IQ product across regions and OEMs [6][21] - Adjusted operating income rose by 34%, with adjusted operating margin increasing by three points to 21% [6] - Operating cash flow exceeded $200 million for the quarter and over $300 million for the first half, representing about 33% of revenue [7] - Full year revenue outlook raised by 4% and adjusted operating income outlook increased by 14% at the midpoint [7][26] Business Line Data and Key Metrics Changes - The core ADAS business maintained volumes at or above 8.5 million units per quarter for the last four periods [7] - Supervision volumes are expected to reach about 40,000 units at the midpoint, a significant increase from previous expectations [27][46] - The IQ six Lite chip is positioned as the future high-volume chip for the ADAS segment, with systems already deployed in multiple regions [8][9] Market Data and Key Metrics Changes - Demand for advanced products is increasing, with OEMs showing interest in transitioning from single camera programs to multi-camera surround ADAS bundles [10] - The company noted a growing demand from OEMs to consolidate ECUs and integrate technology on a single SoC [10] - The Chinese market showed improved performance, with IQ volumes in 2025 expected to be around 18.1 million units, reflecting a stable demand environment [22][68] Company Strategy and Development Direction - Mobileye is focusing on scaling its Robotaxi operations, with partnerships with OEMs like Volkswagen and demand generators like Uber and Lyft [17][56] - The company aims to leverage its unique technology and partnerships to achieve rapid scalability in the Robotaxi market [17][59] - The strategy includes transitioning from driver-operated vehicles to fully autonomous systems by 2026, with significant revenue expected in 2027 [46][126] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to meet safety and scalability goals for Robotaxi operations [12][13] - The operating environment is viewed positively, with no tangible headwinds anticipated for Q4 volumes [26] - OEMs are increasingly clarifying their planning and decision-making processes, indicating a more favorable outlook for the company's products [18] Other Important Information - The company is maintaining strong working capital discipline, with inventory levels closely monitored [24][90] - Management highlighted the importance of competitive pressure in driving OEMs to adopt new technologies [31][32] - The company is not expecting significant growth in operating expenses in the near future, indicating efficient resource allocation [72] Q&A Session Summary Question: Can you elaborate on the momentum at Chauffeur and the slower decision-making in supervision? - Management noted a lack of competitive pressure in Europe and the U.S., which is causing OEMs to take their time with decisions [31][32] Question: What is driving the increase in supervision volume expectations? - The increase is attributed to better-than-expected vehicle sales from OEMs like Zika and Polestar [45] Question: How do you view the competitive landscape for Robotaxi? - Mobileye sees itself as a unique player in the market, with strong partnerships and a scalable business model [58][59] Question: What is the expected timeline for the launch of supervision and chauffeur programs? - Production for Audi's chauffeur program is expected to start in late 2026, with significant revenue anticipated in 2027 [46] Question: How does the company manage its capital expenditures? - Mobileye has a different philosophy regarding capital expenditures, focusing on efficient compute needs rather than high spending [96][98] Question: What is the lead time for securing awards in Surround Data? - The typical lead time is two to two and a half years from nomination to start of production [116]

Financial Data and Key Metrics Changes - Q2 revenue increased by 15% year over year, driven by strong demand for the IQ product across regions and OEMs [5][20] - Adjusted operating income rose by 34%, with adjusted operating margin increasing by three points to 21% [5] - Operating cash flow exceeded $200 million for the quarter and over $300 million for the first half, representing about 33% of revenue [6][23] - Full year revenue outlook raised by 4% and adjusted operating income outlook increased by 14% at the midpoint [6][25] Business Line Data and Key Metrics Changes - The core ADAS business maintained volumes at or above 8.5 million units per quarter for the last four periods [6] - Supervision volumes are expected to reach about 40,000 units at the midpoint, a significant increase from previous expectations [26][44] - The IQ six Lite chip is positioned as the future high-volume chip for the ADAS segment, with systems already deployed in multiple regions [7] Market Data and Key Metrics Changes - Demand for advanced products is growing, with OEMs shifting from single camera programs to multi-camera surround ADAS bundles [9] - The company noted a lack of competitive pressure in Europe and the U.S., which is slowing OEM decision-making [31] - The China market showed improved performance, with IQ volume growth of around 13% year over year in Q2 [65] Company Strategy and Development Direction - Mobileye is focusing on scaling its Robotaxi operations, with plans for commercial deployment starting in 2026 [15][124] - The company is leveraging partnerships with OEMs like Volkswagen to enhance its market position and scalability [60][61] - The strategy includes a comprehensive product portfolio that addresses various levels of automation, from ADAS to fully autonomous driving solutions [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to meet safety and scalability goals for Robotaxi services [12][118] - The overall business environment is seen as favorable, with no tangible headwinds impacting performance [25] - OEMs are increasingly clarifying their planning and decision-making processes, indicating a positive trend for future volumes [18] Other Important Information - The company is maintaining strong working capital discipline, with inventory levels aligned with demand [21][23] - Management highlighted the importance of safety in the development of autonomous driving technologies, with a focus on achieving high mean time between failures (MTBF) [12][128] Q&A Session Summary Question: Can you elaborate on the momentum at Chauffeur and the slower momentum on supervision? - Management noted a lack of competitive pressure in Europe and the U.S., which is causing OEMs to take their time with decision-making [31][32] Question: What is driving the increase in supervision volumes? - The increase is attributed to better-than-expected sales from Zika and Polestar vehicles, indicating the maturity of the supervision system [44][45] Question: How does Mobileye view the competitive landscape for Robotaxi? - Mobileye sees itself as a unique provider capable of offering a full self-driving system, distinguishing itself from competitors like Waymo and Tesla [59][60] Question: What is the expected timeline for the removal of the driver in Robotaxi? - The driver removal is planned for mid-2026 in the first U.S. city, with a focus on scaling teleoperation technology [124] Question: How does Mobileye manage its capital expenditures? - Mobileye has a different philosophy regarding capital expenditures, focusing on efficient compute needs and maintaining a lower CapEx compared to competitors [94][96] Question: What is the timeline for securing contracts in relation to new ADAS standards? - The typical lead time for securing contracts is two to two and a half years, suggesting that OEMs need to secure contracts by 2026 for 2028 standards [112][114]