indie Semiconductor(INDI) - 2022 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q3 2022 increased by 147% year-over-year and 17% sequentially to just over $30 million [8][40] - Gross margin expanded beyond 50% for the first time, reaching 50.4%, an increase of 740 basis points year-over-year and 180 basis points sequentially [8][40] - Operating loss for Q3 was $15.8 million, with a net loss of $15.3 million, translating to a net loss per share of $0.10 [43][40] Business Line Data and Key Metrics Changes - The strategic backlog reached $4.3 billion, more than doubling from $2 billion at the time of the IPO [9][49] - The ADAS (Advanced Driver Assistance Systems) and user experience solutions are gaining traction with design wins across leading Tier 1s and global automotive OEMs [8][49] - The vision business unit captured its first design win during the quarter, indicating growth potential in this area [23] Market Data and Key Metrics Changes - EV (Electric Vehicle) sales grew by 67% in Q3 2022, while overall US auto sales were down around 1% [37] - The penetration of EVs in the US new vehicle sales increased to 6%, nearly tripling in the last two years [37] - The company is well-positioned to benefit from the electrification megatrend due to strong relationships with leading EV OEMs [38] Company Strategy and Development Direction - The company aims to capitalize on a $27 billion annual serviceable market opportunity and sustainably outpace industry peers [50] - Investment in a range of automotive sensor modalities, including ultrasonic sensors, vision sensors, LiDAR, and RADAR, is a key focus [18][19][27] - The company is technology-agnostic, believing that multiple sensor modalities will be critical for next-generation vehicles [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continuing to outpace the broader automotive market and capturing a disproportionate share of new programs [11] - The company anticipates reaching profitability in the second half of the following year, with narrowing losses and a target of 60% gross and 30% operating margins [47][90] - Management noted that supply chain constraints have eased in certain areas, but challenges remain in specific nodes [63] Other Important Information - The company has successfully scaled its business nearly five-fold since its IPO, increasing gross margin by 1,500 basis points in less than 24 months [41] - The company exited the quarter with $150.8 million in cash and limited debt, indicating a strong financial position [43] Q&A Session Summary Question: Progress on Vision and Computer Vision - Management highlighted that the first design win in the vision area is expected to be the first of many, with a focus on edge interfaces rather than competing directly with larger players like Mobileye [55][57] Question: Supply Chain Environment - Management noted significant easing in certain aspects of the supply chain, particularly in packaging and testing, while some trailing nodes remain tight [63][64] Question: Composition of Strategic Backlog - Management indicated that the radar space is becoming a larger percentage of the backlog, with products in that space typically carrying higher gross margins [67][68] Question: Radar Solution Hurdles and Timing - Management expressed confidence in the technology and the speed of ramping production, with a strong motivation to get the radar solution into production quickly [72][73] Question: LiDAR Market Position - Management sees LiDAR as a relevant technology but believes it will be further out in the market compared to other products [77] Question: Employee Growth and M&A Strategy - Management mentioned a digestion phase in employee growth and emphasized that M&A remains a core part of the strategy, focusing on high standards for potential acquisitions [88][89] Question: Confidence in Profitability Transition - Management cited the strategic backlog, continued gross margin expansion, and nominal growth in operating expenses as key factors for confidence in reaching profitability [90]