Mobileye (US:MBLY)2024-08-01 19:48Financial Data and Key Metrics Changes - Revenue for Q2 2024 was $439 million, representing an 84% increase from Q1 but a 3% decrease year-over-year [4] - Adjusted operating margin improved significantly to 18% compared to -27% in Q1 [4][20] - Operating expenses increased by approximately $40 million year-over-year, impacting the operating margin compared to Q2 2023 [20] Business Line Data and Key Metrics Changes - EyeQ volumes more than doubled in Q2 compared to Q1, with SuperVision volumes reaching 31,000 units [4][20] - SuperVision gross margin rose to slightly above 40% due to a shift to a lower-cost next-generation main controller [20] - Adjusted operating margin recovery was driven by higher revenue and gross profit conversion, despite increased operating expenses [20] Market Data and Key Metrics Changes - Near-term volume challenges are primarily related to market dynamics in China, affecting both ADAS and SuperVision outlooks [5][6] - Global production forecasts have weakened, disproportionately impacting core customers due to share losses in China [5] - The company anticipates lower SuperVision volumes in the second half of 2024 due to increased tariffs on Chinese-produced vehicles [6] Company Strategy and Development Direction - Mobileye aims to lead in next-generation ADAS and autonomy, focusing on diverse product offerings for a broad range of car makers [7] - The EyeQ6 platform is positioned to support all four consumer vehicle categories and Robotaxis, enhancing competitive positioning [7][12] - The company is investing in localization of technologies in China and establishing collaborations with local OEMs to strengthen its market presence [28][49] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that current market dynamics in China are volatile but believes this is a short-lived situation [28] - The company is preparing for a future where regulatory governance in China aligns with global standards, which is expected to stabilize the market [28] - Management has reduced full-year 2024 revenue and adjusted operating income guidance due to volume-related challenges [23][24] Other Important Information - The company is seeing increased interest in its drive platform for mobility as a service, with ongoing collaborations with major OEMs [11] - Mobileye's Brain6 technology is expected to significantly enhance performance and cost efficiency in autonomous driving solutions [12][14] Q&A Session Summary Question: Impact of lower-level Chinese competition - Management noted that the Chinese automotive market is volatile, with a skewed balance between cost and performance due to lack of testing governance [27] Question: Structural importance of the Zeekr collaboration - The collaboration with Zeekr is seen as critical for establishing a strong presence in China and enhancing the localization of Mobileye's solutions [30] Question: Timeline for RFQs in the emerging segment - RFQs from four carmakers are expected to ramp up in the second half of 2026 and early 2027, driven by regulatory pushes and OEM demands [32] Question: Adoption rates of advanced autonomy solutions - OEMs are increasingly recognizing the need for intelligent driving solutions, with expectations of improved performance and pricing in the coming years [34] Question: Impact of tariffs on SuperVision shipments - Management indicated that the volatility in SuperVision forecasts is due to a small number of models and the unpredictable nature of the Chinese market [41] Question: Progress with the 14 OEMs - The likelihood of conversion with the 14 OEMs remains positive, with ongoing progress towards nominations [43]