Arbe Robotics Q1 2025 Earnings Call Transcript

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May 20, 2025

There are 7 speakers on the call.

Operator

Good day, and welcome to the Arbe Robotics First Quarter twenty twenty five Earnings 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 Mary Sagal of Arbeys Investor Relations.

Operator

Please go ahead.

Speaker 1

Thank you, operator, and good day, everyone. 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 pertains 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 Morenko, Arbe's Co Founder and CEO, who will begin the call with a business update. Then we will turn the call over to Corinne Pinto Flomenboim, CFO, who will review the financials.

Speaker 1

Finally, we will open the call up for the question and answer session. With that, I'd like to turn it over to Kobi Marenko. Kobi, please go ahead.

Speaker 2

Good morning, everyone, and thank you for joining us. I will begin by reviewing some of our recent business highlights. During the first quarter, we continued to make meaningful progress in Europe, getting closer to potential design wins with leading OEMs. We secured radar systems orders supporting advanced data collection programs. The OEM data collection program is one of the final steps in the automotive sourcing process.

Speaker 2

We are seeing increased investment from our Tier 1s and from OEMs who are developing their own AI driven perception algorithms that leverage our radar data. These initiatives are aligned with the path to OEM selection and we anticipate that RBAS radar technology will serve as a key enabler for high volume twenty twenty eight passenger vehicle platforms in Europe. We believe that our solid balance sheet coupled with the capital we previously raised positions us well to support these programs with revenues projected to begin in 2027. In China, our Tier one high end technologies reached a critical milestone in April with the launch of its LRR615, a production intent, long range imaging radar system built on our high performance chipset. Designed for the demanding needs of the Chinese autonomous driving market, the LRR615 offers ultra high resolution and dependable performance in all weather and lighting conditions.

Speaker 2

This achievement highlights the industrial scalability of our platform and demonstrates our partner's capability to bring RBL powered solutions to the market. We also saw continued traction beyond the automotive sector. Our Tier one Sensorad placed a significant order for over 1,000 imaging radar chips to serve diverse customers across multiple use cases. This order reflects growing commercial demand and the versatility of our technology in broader industrial and mobility markets. One of the most significant collaborations in the first quarter was with NVIDIA, a leader in advanced in vehicle computing.

Speaker 2

Through its drive platform, NVIDIA is a front runner in providing the computing backbone for autonomous driving and ADAS, together with advanced radar based free space mapping and AI driven precision capabilities, a critical enabler for next generation autonomous systems. By integrating our high resolution imaging radar with the NVIDIA DRIVE AGX platform, we are delivering a powerful combination of sensing and computing performance. This collaboration was prominently featured at CES twenty twenty five where ARDE showcased the integration in real world driving scenarios. It's a strong validation of our technology and a clear signal of our expanding role in the software defined vehicle ecosystem. Since January, we've demonstrated what we believe is the most advanced radar solution available at premier automotive trade shows across China, Japan, Germany and The United States.

Speaker 2

Featuring on chip super resolution processing and real time performance at 20 frames per second, our perception radar sets a new industry benchmark for radar image quality. The response from OEMs and Tier 1s has been overwhelmingly positive, further reinforcing our leadership in next generation radar sensing. Finally, in January 2025, we successfully raised $33,000,000 through an underwriting registered direct offering, including a $4,000,000 over allotment option fully exercised by the underwriters laid by Canaccord Genuity. In addition, in January 2025, dollars '20 '1 point '5 million was released to ARBET from the escrow account following the conversion of convertible bonds we issued on the Tel Aviv Stock Exchange in 2024. This capital strengthens our balance sheet and enhances our financial stability as we scale operations, invest in productization and support expanding global engagement.

Speaker 2

In closing, the progress we've made across OEM partnerships, Tier one integrations and cross sector adoption demonstrates the maturity of our execution and the strength of our ecosystem. Baked by a solid financial foundation, we're positioned to lead the industry in the adoption of ultra high resolution radar and unlock long term value for our stakeholders. We look forward to sharing more as we continue to move forward. Now, I'd like to turn it over to our CFO, Karim, to go over the financials.

Speaker 3

Thank you, Kobi, and hello, everyone. Let me review our financial results for the first quarter of twenty twenty five in more detail. Revenue for Q1 twenty twenty five were $40,000 compared to $100,000 in Q1 twenty twenty four. Backlog as of 03/31/2025 was $250,000 Gross profit for Q1 twenty twenty five was negative $300,000 unchanged from Q1 twenty twenty four, primarily reflecting the impact of fixed cost components giving reduced revenue year over year. Turning to expenses.

Speaker 3

Total operating expenses for Q1 twenty twenty five were $13,100,000 compared to $12,500,000 in Q1 twenty twenty four. The increase was primarily driven by a one time expense associated with the progression of our chip development toward final production, most notably tape out. A decrease in non cash share based compensation expenses related to the finalization of certain vesting periods was offset by year over year provision adjustment. Operating loss for the first quarter of twenty twenty five was $13,400,000 compared to a $12,800,000 loss in the first quarter of twenty twenty four. Adjusted EBITDA, a non GAAP measurement, which excludes expenses for non cash share based compensation and for non recurring items, was a loss of $9,700,000 in Q1 of twenty twenty five compared to a loss of $8,500,000 in the first quarter of twenty twenty four.

Speaker 3

We believe that this non GAAP measurement is important in management's evaluation of our use of cash and in planning and evaluating our cash requirements for the coming period. Net loss in the first quarter of twenty twenty five was $13,800,000 compared to a net loss of $12,800,000 in the first quarter of twenty twenty four. As of 03/31/2025, Arbe held $36,700,000 in cash and cash equivalents and short term bank deposits and $35,200,000 in long term bank deposits. With respect to our guidance, we would like to reiterate what we previously said. Arbez leading radar technology remains a top priority for key decision makers in the automotive industry.

Speaker 3

Recent cash infusion totaling $70,000,000 further underscore investors' confidence in our market potential and growth trajectory. While broader economic shifts have led to short term delays in automakers rollout of advanced driver assistance, decision timelines have been extended. As a result, Arbek continues to engage closely with industry leaders, through RFQ stages and strengthening its position for adoption. We continue with our goal to pursue four design ins with automakers in 2025. '20 '20 '5 annual revenue are expected to be in the range of $2,000,000 to $5,000,000 and will be weighted towards the end of the year.

Speaker 3

Adjusted EBITDA for 2025 is projected to be in the range of $29,000,000 loss to $35,000,000 loss. Now we will be happy to open the call for questions. Operator?

Operator

Thank you. We will now begin the question and answer session. Our first question will come from George Gianarikos with Canaccord Genuity. Please go ahead.

Speaker 4

Hi, everyone. Thank you for taking my questions. Maybe to start, can you just sort of please outline for us maybe in a little bit more detail the negotiations and the discussions you're having with OEMs and why you continue to expect wins to happen possibly in the second half of this year? Thank you.

Speaker 2

Yes. So basically,

Speaker 5

just

Speaker 2

to be to make sure you understand, is not selling directly to OEM. Abe is selling to Magna, the chips, and Magna is selling the total radar to the OEM. But we are deeply involved with all of the phases that are leading to the stage that Magna will get the order and Aldey will get, of course, for Magna, the order for the chip. So, it's a kind of a three way corporation. With the leading OEMs in Europe today, we are working closely with Magna and with them.

Speaker 2

And Magna already delivered to them systems that are used in order to staff data collection for their stack. There were back and forth in the last quarter of requests that are related to final production. And most of them are on the software side and we supported Magna heavily on providing those. And we believe that today, the solution that we have or Magna has with those OEMs is final and ready for final selection. And also since Magna radars are used as the main data collection platform, we believe that our chances to win are more than very high.

Speaker 5

And can you just reiterate to

Speaker 4

us which geographies you believe these OEMs are headquartered in?

Speaker 2

Europe. Think Europe right now we're leading the path towards the hands free eyes of driving with The U. S. Coming a bit behind. China, of course, is a different story.

Speaker 2

In China, we are engaged with hiring and we believe that revenues and production there will come a year before.

Speaker 4

Maybe to talk a little bit about any momentum you're seeing in sort of your industrial applications. There seems to be a little bit of recent momentum in that market. Any discussions you're having with any color on

Speaker 2

those would be appreciated. Thank you. So, with industrial application, we decided not to directly do those sales. And so, have this partnership with Sensorad since it's there is a nice amount of applications, but each one of them has quite low volume per application, hundreds of units or thousands of units per application. We sit right now talking to Sensor, we understand that they have clients in smart cities, tolls.

Speaker 2

They have clients in heavy industrial applications, in heavy machinery and even in factory applications. All of those are each one of those application needs, I would say, a kind of a customized software mainly. And this is the reason that Sensorad is supporting it and gives those customization to the customers across Europe and China.

Speaker 4

And maybe final one for me. Your revenue guidance for the year implies a pretty material ramp in the third and fourth quarters. Can you just sort of illuminate for us again where you expect that revenue to come from? Thank you.

Speaker 2

So first of all, have we just announced today on the call a major order from Sensrad. The order came after the end of Q1. So, in terms of revenue recognition, we need first to give them the chips in order to collect the money. So, the revenues will be recognized later. We also have some support, NRE agreement with them to help them increase their ability to support applications.

Speaker 2

And the other revenue sources should come mainly from the selection of one of the leading OEMs. We believe that this will get us for hundreds a few hundreds of systems more for data collection as well as a small NRE. And we believe that by Q4, we will be able to start ramping up the production in China with hiring. And this would be already revenues for real final production of chips.

Speaker 4

Thank you.

Operator

Our next question will come from Suji Desilva with ROTH Capital. Please go ahead.

Speaker 6

Hi, Kobi. Hi, Kareem. So, when I look at the RFPs, the other auto customers that you're targeting, other than the one you talked about, where are those in the process right now? How far along are they the other three relative to the one you discussed previously?

Speaker 2

I think in all of the programs that we are involved, we are making progress and the car manufacturers are making progress in parallel. The delays on selection are not related to our technology, but more for the market itself and the ability of the OEMs to actually put the resources that they need for nailing down the program. I think that the last few months, due to the tariff and all of those issues, this brought a bit of delays on the decisions of the OEMs because it wasn't really clear, what will happen with the hardware that they are buying and what will happen with the manufacturing of the car. Right now, I think that we're coming closer to agreement and they have the understanding what will happen. And I believe that this will release a bit the decision process of the OEM.

Speaker 4

Okay.

Speaker 6

Great. And then my other question is on China and the autonomous market there working with Irene. Do you also have partnerships with the central auto processor companies that have traction in China? Is it NVIDIA or is it local vendors? And are you working with all those?

Speaker 6

Do you need to for the solution to gain traction in China?

Speaker 2

Yes. We are working also with Horizon Robotics same as with NVIDIA. But basically, our channel there is high end. High end is also building their full stack for level two plus plus and free driving. And next it will be ISO driving.

Speaker 2

So, they are using the central process as well as our radar and cameras in order to provide a full solution. And also, HiRen is our channel to the robotaxis companies, the local robotaxis companies in China.

Speaker 6

And Kobi, did I hear you on the call talk about a timeframe for volume ramp in China? It sounds like it might have been earlier, but I might have misheard that.

Speaker 2

We didn't it wasn't on the script, but it didn't change. We believe that end of this year, we will start ramping up production in China. The fact that HiRen announced that they have a production ready radar, I think, means that basically, it's now a matter of technicality when they will be able to start real final real mass production, whether it will be Q4 this year or it will slip few weeks to next year. But we are in the final stages there. All of what needs to be done is there.

Speaker 6

Okay, great. Appreciate all the color. Thanks, Kobi.

Operator

Our next question will come from Matthew Galinko with Maxim Group. Please go ahead.

Speaker 5

Hey, thanks for taking my question. First, maybe can you I think you mentioned you had a tape out expense in the first quarter. What's a good R and D number to use for the balance of the year?

Speaker 3

Hey, Matt. So I think our burn for our OpEx burn for the year is about $32,000,000 between $32,000,000 to $34,000,000 and out of which R and D number for the year could be about $25,000,000 annually.

Speaker 5

Great. 25,000,000 annually. Got it. And then I guess as far as timing for North America, it sounded like it's maybe did you say it was about a year behind Europe, so we'd be looking at 2029 model years and maybe start up revenue in 2028. Is that a realistic timeline?

Speaker 2

Yes. I think there is yes, I think that there was few issues in all of the American companies had few issues. GM had the issue with Cruise that they needed to merge it inside GM and this created generated a bit of delays. Ford had Argo with the same issue. And I think that right now, they are trying to stabilize and to select.

Speaker 2

GM just announced that they are going with NVIDIA, which is I think good for us as a partner of NVIDIA. And we believe that in U. S, we will begin to see our revenues coming in 2018.

Speaker 5

Got it. Thank you. Maybe last question for me is just, I guess going back to gross margin expectations as we sort of hit the beginning of the ramp in China and then beginning of the ramp in Europe, what should we expect from gross margin in kind of the early days of that ramp up?

Speaker 3

So gross margin again in ramp up in those years should be in the range of 50% to 60%, fifty five % margin. On our first ramp up year, actually the first one hundred thousand to 200,000 units, we have what is called the safe launch, which is an extra testing on each chip and burning, and this increases the cost, which reduces the margin to a level of 30% to 35% on this time frame.

Operator

Great. Thank you.

Speaker 5

Sure.

Operator

With no further questions, this will conclude our question and answer session. I would like to turn the conference back over to Kobi Morenko, Arbe's CEO for any closing remarks.

Speaker 2

Yes. So, thank you everyone. We were so pleased to have you join us today. To our employees and partners, your continued dedication is deeply appreciated. We look forward to updating you further on August progress in the coming months.

Speaker 2

Look out for updates as we prepare for several investor events, including the Landenburg Tech Expo tomorrow May 21 in New York and the Rot London Conference June twenty five. We'd love to meet you in person for further discussion. Please contact us at investorsalverrobotics dot com or visit our site to schedule a meeting. Thank you all.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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Key Takeaways

  • Europe OEM Design Wins: Arbe is in advanced data collection programs with leading European OEMs and expects its RBAS radar technology to be selected for high-volume 2028 passenger vehicle platforms, with revenues projected to begin in 2027.
  • China Production Ramp: Partner Tier 1 HiRain launched the production-intent LRR615 long-range imaging radar on Arbe’s chipset, aiming for end-of-year mass production and earlier revenue recognition in China.
  • NVIDIA Collaboration: Integration of Arbe’s high-resolution imaging radar with the NVIDIA DRIVE AGX platform was showcased at CES, validating the joint solution for next-generation autonomous driving and software-defined vehicles.
  • Q1 Financial Results: In Q1 ’25, revenue was $40K (down from $100K), net loss was $13.8M (versus $12.8M), and the balance sheet held $36.7M in cash plus $35.2M in long-term deposits after raising $33M via a registered direct offering and $20M from bond conversion.
  • 2025 Guidance: Arbe targets four design-ins with automakers, projects annual revenue of $2M–$5M (weighted to H2), and anticipates an Adjusted EBITDA loss of $29M–$35M.
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Earnings Conference Call
Arbe Robotics Q1 2025
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