管理層發言
Good morning, and welcome to the Arbe Robotics Third Quarter 2024 Financial Results Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Miri Segal of MS-IR. Please go ahead.
Thank you, operator and everyone for joining us today. Welcome to Arbe's third quarter 2024 financial results conference call. Before we begin, I would like to remind our listeners that certain information provided on this call may contain forward-looking statements and the safe harbor statement outlined in today's press release also applies to this call. If you have not received a copy of the release, please view it in the Investor Relations section of the company's website. Today, we are joined by Kobi Marenko, Arbe's Co-Founder and CEO, who will begin the call with the business update. Then, we will turn the call over to Karine Pinto-Flomenboim, CFO, who will review the financials in more detail. Finally, we will open the call for the question-and-answer session. With that, I'd like to turn it over to Kobi Marenko, Arbe's CEO. Kobi, please go ahead.
Thank you, Miri. Good morning, everyone, and thank you for joining us. On this call, we are happy to share the progress we've made this quarter with our Tier 1s and OEMs. First, we've seen growth in both the number and the depth of our OEM engagement. This quarter, we worked with 16 OEMs, 12 of which have moved to the big stage and eight OEMs have entered the advanced perception project base demonstrating their dedication by investing in algorithm development and sensor data processing, marking a significant milestone in the selection process. While the timeline for some of these projects has been longer than expected, we are pleased with the advancement and believe these opportunities will drive growth for Arbe in the coming quarters. We look forward to updating you as we continue to make progress. Next, we've been working with a leading European truck manufacturer to improve truck safety using our imaging radar.
This manufacturer plans to integrate our radar into its next-generation sensor suite, a major step in advancing their safety offering and an important validation of our technology. HiRain, one of our Tier 1s, is developing a radar-based ADAS system for a Chinese OEM. This system powered by our chipset combines radar and camera fusion, eliminating the need for LiDAR while maintaining high standards of safety. Pending final OEM approval, mass production is anticipated to begin by the fourth quarter of next year. This project demonstrates that OEMs have an alternative to LiDAR with high-resolution radar, which offers highly detailed perception at a significantly lower cost and better quality of service. This solution enables OEMs to benefit from imaging radars' durability and reliable performance in all weather and lighting conditions. Additionally, the affordability of imaging radar makes it an ideal choice for mass market adoption.
Sensrad, another one of our Tier 1s, announced it has entered into a formal agreement to provide 4D imaging radar powered by our chipset to Tianyi Transportation Technology in China. This agreement follows a full year of development and evaluation. The selection of Sensrad radar based on Arbe’s chipset also highlights the growing demand for advanced radar solutions in additional industries beyond automotive. We are seeing increased interest in our radar technology for a variety of new markets, including infrastructure, surveillance, and other transportation sectors. These industries recognize the potential of advanced radar solutions for applications like safety, automation, and environmental monitoring. Our Tier 1s are actively engaging with customers to explore these emerging opportunities. This allows us to expand our total addressable market within new verticals and drive innovation across multiple industries.
These advancements will reinforce our position as a technology leader and demonstrate the trust that leading manufacturers place in our solution. They validate our innovation, highlight our competitive advantage, and set the stage for expanding our market share and attracting additional OEMs. Finally, we are happy to report that we successfully completed a public offering of up to $49 million earlier this month. As part of the offering, $15 million were received upfront with an additional $34 million subject to cash exercise of long-term and milestone-linked warrants. The offering was led by AWM Investment, one of our major investors, who led our 2023 offering along with new investors. Their proceeds will support our planned production ramp-up in 2025. We believe this funding marks an important step as we move closer to production and aim to be cash flow positive in 2027. Lastly, our executive team will be meeting with investors at CES from January 7 to January 10, where we will be hosting live demos of our real-time AI-based space mapping. We would love to meet you there. Now I'll hand it over to our CFO, Karine to review the financials.
Thank you, Kobi, and hello, everyone. I'd like to review our financial results for the third quarter of 2024 in more detail. Total revenue in the third quarter was $0.1 million, a decrease from $0.5 million in Q3 2023. Backlog as of September 30 was $0.3 million and is expected to be recognized as revenue in the coming quarters. Negative gross margin for Q3 2024 was $0.3 million compared to a positive gross margin of $0.1 million or 24% in Q3 2023. The decrease in gross margin was primarily related to revenue reduction with a fixed cost level of expenses. Moving on to expenses. In Q3 2024, we reported total operating expenses of $12.2 million compared to $11.7 million in Q3 2023. The increase in operating expenses was primarily driven by an increase in our research and development, labor costs, and subcontractor costs, as we strengthen our investment in advanced software development, chip readiness, and safety certification towards production readiness.
Operating loss in the third quarter of 2024 was $12.4 million, an increase from an $11.6 million operating loss in the third quarter of 2023. Net loss in the third quarter of 2024 increased to $12.6 million compared to a net loss of $11.7 million in the third quarter of 2023. Net loss in the third quarter of 2024 included $0.1 million of financial expenses. Adjusted EBITDA and non-GAAP measurements, which exclude expenses for share-based compensation and for non-recurring items, was a loss of $8.2 million in Q3 of 2024. This is compared to a loss of $7.5 million in the third quarter of 2023. Please see our earnings release for a reconciliation to GAAP net loss. Moving to our balance sheet. As of September 30, 2024, Arbe had $19.1 million in cash and cash equivalents. With respect to our guidance for the year, we would like to reiterate what we previously shared. Our goal of achieving four design-ins with automakers remains unchanged as we observed continued strong interest in our market-leading offering.
We have strengthened our positioning in all our RSQ engagements, even though the OEMs have shifted their decision timelines from late '23 to '24. The 2024 annual revenues are expected to be in line with those of 2023, followed by revenue growth in 2025. These revenue projections are based on our expectation that we will be in full production in the second half of 2024, as well as our decision to exclusively focus on getting our chipset into production. We are committed to maintaining a strong and well-managed balance sheet while focusing on cost-effectiveness and the ability to fund our revenue growth. Adjusted EBITDA for 2024 is projected to be in the range of $30 million loss to $36 million loss. Now we will be happy to take your questions.
分析師問答
We will now begin the question-and-answer session. And the first question comes from Suji Desilva with Roth Capital. Please go ahead.
Hi, Kobi. Hi, Karine. Jumping into the progress here. The OEM programs, Kobi, can you give us your perspective on adoption of imaging radar, given the delay in pushouts of some ADAS or EV models? How is that dovetailing with the need to implement a radar? Any thoughts there would be helpful.
Yeah. So I think overall, as you're probably aware, all of the ADAS market suffered from delays. At the beginning, it was because of the supply chain; then it was because of the focus on the EV stuff. But now I believe that we are back on track with major production timelines and major programs in place, in line to achieve hands-free driving and eyes-off driving on the highway. All of the western OEMs have those programs. The selection of imaging radar is a key factor for that. So the only way to achieve real hands-free driving that will be safe on the highway is by using imaging radar that provides the long range that is needed. I think that I've stated this early this year in a conference in Berlin. Dr. Jurgen Dickman, a leading expert in automotive radar, said that in order to have a real-state ADAS system, you must have a long-range radar with a minimum channels of 32x32 channels, which is basically our solution and Mobileye.
Following that, I think all of the major OEMs plan to select an imaging radar with high-channel count in the next few quarters. We know that part of them will make selections even before the year-end. Although only a few weeks are left, we definitely believe that the first selections will be made this year. Customers that have not yet made a decision will do so early next year, Q1 and Q2, in order to start collecting data with a full system that has cameras and radar, some of them also with LiDAR, to train the algorithms and launch real hands-free driving. The second half of the decade, '27 to '28 will be, I think, the starting point, and by 2030, we will see a ramp-up. In 10 years from now, I believe that we will all be in a situation where this kind of service becomes a basic feature of cars, like listening to the radio.
That makes sense, Kobi. And maybe specifically, is there anything pushing them from a regulatory front to have to act on this? Any specific regulatory actions in the geography that you would point out as being initial catalysts?
Yeah. So there is one regulation in the States as well as in Europe that's pushing for long-range radar imaging reads for few ADAS for emergency braking. We hope that this regulation won't change with the new government. But we think that this is a major driver for OEMs to adopt imaging radar, which allows for full automatic braking in any lighting condition up to a very long range.
Okay. And switching over to non-auto, Kobi. You talked about Sensrad and the success in China with GE. Can you talk about the sales cycle and the time to unit revenues there, perhaps versus auto, and whether that can come in sooner? I imagine towards sales cycle, but any color there would be helpful in the non-auto market.
Yeah. I think that in the non-auto market, the sales cycle is more or less similar to auto, but the time to production is much shorter. So in auto, the sales cycle could be two to three years, but then the year they start production, which radar can take another three years. In non-auto, the sales cycle is the same, but we will definitely start to see revenues in '25 and definitely in '26. I can also say that we see opportunities in defense technology for our radar and in other verticals where revenues might come dramatically earlier.
Okay. It's helpful color. Thanks. I'll pass it on.
With no further questions, this concludes our question-and-answer session. Pardon me, looks like we do have a questioner. The next question will come from Dan Parsley as a Private Investor. Please go ahead.
Good morning, Kobi. I have a question just on your forecast for 2024. You mentioned that you'll be in full production by the end of 2024, and here we are at the end of November. So I'd ask you to please comment if you're still on track to be in full production in 2024. And can you give us any insight into the likelihood of ramping revenue in '25? Thank you.
So I think we are more or less on track with our timetable. We believe that by the end of December, we will be able to start shipping engineering samples of our chipset to the project that we mentioned with Sensrad. By early next year, we will have the ability to start shipping production chips, right after the holidays. We expect revenues to start ramping up in the last quarter of '25, maybe a bit earlier, so in the second half of '25, as we mentioned earlier, with the project HiRain has with the leading Chinese car manufacturer.
Okay. And a follow-up to that. Can you comment on how dependent your auto sales are on EV vehicles versus more traditional combustion engine vehicles?
We are not. So basically, imaging radar can be integrated into any kind of vehicle. The question is not about it; it's about the plans of the OEM. Will they launch a full advanced ADAS service on a combustion engine or only on EV? If you would have asked the major OEMs a year ago, they would have said that new ADAS features would be released only on EVs. But I think right now, with a slow uptake of EVs in the West, it will probably be a mix. In China, where we already see around 30% to 35% of new cars sold as EVs, I believe that the new ADAS features will go only to EVs.
Thank you.
Thank you so much for that question. This concludes our question-and-answer session. I would like to turn the conference back over to Kobi Marenko for any closing remarks.
Thank you. We were pleased to have you join us today. For our employees and partners, your continued dedication is deeply appreciated. We look forward to updating you on our best progress in the coming weeks. Look out for updates as we prepare for several investor events. We would love to meet you in person for additional discussions. Please contact us at investor@arberobotics.com or visit our website to schedule a meeting. Thank you all.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.